Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 15, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | FLEXPOINT SENSOR SYSTEMS INC | |
Entity Central Index Key | 925,660 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 92,863,464 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 12,832 | |
Accounts receivable, net of allowance for bad debts of $145,179 and $145,194 | 5,317 | 47,254 |
Deposits and prepaid expenses | 18,532 | 10,144 |
Total Current Assets | 23,849 | 70,230 |
Long-Term Deposits | 6,550 | 6,550 |
Property and Equipment, net of accumulated depreciation of $589,566 and $589,006 | 8,024 | 8,584 |
Patents and Proprietary Technology, net of accumulated amortization of $922,889 and $925,790 | 40,156 | 48,295 |
Goodwill | 4,896,917 | 4,896,917 |
Total Assets | 4,975,496 | 5,030,576 |
Current Liabilities | ||
Accounts payable | 276,977 | 227,680 |
Accrued liabilities | 991,996 | 958,810 |
Due to related parties | 20,000 | 20,000 |
Convertible notes payable, net of discount of $50,393 and $72,986 | 869,607 | 807,014 |
Convertible notes payable to related party, net of discount of $21,733 and $33,099 | 92,780 | 81,414 |
Derivative liabilities | 255,380 | 363,680 |
Total liabilities | 2,506,740 | 2,458,598 |
Stockholders' Equity | ||
Preferred stock - $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding | ||
Common stock - $0.001 par value; 100,000,000 shares authorized; 92,863,464 shares and 92,863,464 shares issued and outstanding | 92,863 | 92,863 |
Additional paid-in capital | 29,785,568 | 29,785,568 |
Accumulated deficit | (27,409,675) | (27,306,453) |
Total Stockholders' Equity | 2,468,756 | 2,571,978 |
Total Liabilities and Stockholders' Equity | $ 4,975,496 | $ 5,030,576 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for bad debts | $ 145,179 | $ 145,194 |
Property and Equipment, accumulated depreciation | 589,566 | 589,006 |
Patents and Proprietary Technology, accumulated amortization | 922,889 | 925,790 |
Convertible notes payable, net of discount | 50,393 | 72,986 |
Convertible notes payable to related party, discount | $ 21,733 | $ 33,099 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 92,863,464 | 92,863,464 |
Common stock, shares outstanding | 92,863,464 | 92,863,464 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Design, Contract and Testing Revenue | $ 79,264 | $ 61,065 |
Operating Costs and Expenses | ||
Amortization of patents and proprietary technology | 8,139 | 18,423 |
Cost of revenue | 18,241 | 4,136 |
Administrative and marketing expense | 116,358 | 164,726 |
Research and development expense | 81,877 | 79,366 |
Total Operating Costs and Expenses | 224,615 | 266,651 |
Loss from Operations | (145,351) | (205,586) |
Other Income and Expenses | ||
Interest expense | (78,632) | (101,610) |
Interest income | 12 | 12 |
Gain (loss) on change in fair value of derivative liabilities | 120,749 | 15,687 |
Net Other Income (Expense) | (42,129) | (85,911) |
Net Loss | $ (103,222) | $ (291,497) |
Basic and Diluted Loss per Common Share | $ 0 | $ 0 |
Basic and Diluted Weighted Average Common Shares Outstanding | 92,863,464 | 78,363,464 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (103,222) | $ (291,497) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 3,154 | |
Amortization of patents and proprietary technology | 8,139 | 18,423 |
Amortization of discount on note payable | 46,408 | |
Depreciation | 560 | 560 |
(Gain)/loss on change in fair value of derivative liabilities | (120,749) | (15,687) |
Interest expense recognized for derivative liabilities | 54,661 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 41,952 | 16,580 |
Prepaid expenses and other assets | (8,403) | |
Accounts payable | 49,297 | 6,668 |
Accounts payable - related parties | (1,420) | |
Accrued liabilities | 28,279 | 104,176 |
Net Cash Used in Operating Activities | (57,439) | (104,381) |
Cash Flows from Investing Activities: | ||
Note receivable interest income | ||
Net Cash Used in Investing Activities | ||
Cash Flows from Financing Activities: | ||
Proceeds from bank overdraft | 4,607 | |
Repayments of bank overdrafts | (14,621) | |
Proceeds from borrowings under convertible note payable | 40,000 | 120,000 |
Net Cash Provided by Financing Activities | 44,607 | 105,379 |
Net Change in Cash and Cash Equivalents | (12,832) | 998 |
Cash and Cash Equivalents at Beginning of Period | 12,832 | |
Cash and Cash Equivalents at End of Period | 998 | |
Supplemental Cash Flow Information: | ||
Cash paid for income taxes | ||
Cash paid for interest | ||
Supplemental Disclosure on Noncash Investing and Financing Activities | ||
Recognition of discounts on convertible notes payable | $ 12,449 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 Condensed Consolidated Interim Financial Statements Nature of Operations Use of Estimates Cash and Cash Equivalents Fair Value Measurements Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement. The carrying value of the Companys cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity. The Company has classified the inputs used in valuing its derivative liabilities as Level 3 inputs. The Company valued its derivatives using the binomial lattice model. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company. Accounts Receivable Property and Equipment Valuation of Long-lived Assets Intangible Assets Research and Development Goodwill Revenue Recognition Step 1. Identify the contract with the customer Step 2. Identify the performance obligations in the contract Step 3. Determine the transaction price Step 4. Allocate the transaction price to the performance obligations in the contract Step 5. Recognize revenue when the Company satisfied a performance obligation Stock-Based Compensation Basic and Diluted Loss Per Share Concentrations and Credit Risk - Income Taxes - Recent Accounting Pronouncements In February 2018, the Financial Standards Accounting Board (FASB) issued Accounting Statement Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations. |
GOING CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2018 | |
GOING CONCERN[Abstract] | |
GOING CONCERN | NOTE 2 GOING CONCERN The Company continues to accumulate significant operating losses and has an accumulated deficit of $27,409,675 at March 31, 2018. These factors raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management is seeking additional funding to provide operating capital for its operations until such time as revenues are sufficient to sustain our level of operations. However, there is no assurance that additional funding will be available on acceptable terms, if at all. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended |
Mar. 31, 2018 | |
DERIVATIVE INSTRUMENTS [Abstract] | |
DERIVATIVE INSTRUMENTS | NOTE 3 DERIVATIVE INSTRUMENTS The derivative liability as of March 31, 2018, in the amount of $255,380 has a Level 3 fair value classification. The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of March 31, 2018 and December 31, 2017: Total Balance, December 31, 2016 76,295 Recognition of derivative liabilities upon initial valuation 226,651 Change in fair value of derivative liabilities 60,734 Conversions of derivative liabilities into equity instruments Balance, December 31, 2017 363,680 Recognition of derivative liabilities upon initial valuation 12,449 Change in fair value of derivative liabilities (120,749) Conversions of derivative liabilities into equity instruments Balance, March 31, 2018 255,380 During the year ended 2017 and the period ended March 31, 2018, the Company issued convertible promissory notes which are convertible into common stock. Due to the Companys lack of authorized shares necessary to settle all convertible instruments, in accordance with ASC 815-40-25, the Company determined that the conversion features related to these notes are derivative instruments since we do not have control to increase the number of authorized shares to settle all convertible instruments. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date. At March 31, 2018, the Company marked to market the fair value of the derivatives and determined a fair value of $255,380. The Company recorded a gain from change in fair value of derivatives of $120,749 for the three month period ended March 31, 2018. The fair value of the embedded derivatives was determined using binomial lattice model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 92.26% to 94.39%, (3) weighted average risk-free interest rate of 1.73% to 2.09% (4) expected life of 0.33 to 1.00 years, and (5) the quoted market price of the Companys common stock at each valuation date. In accordance ASC 815-40, the Company has implemented a sequencing policy with respect to all outstanding convertible instruments. The Company evaluates its contracts based upon earliest issuance date. As of March 31, 2018, liabilities measured at fair value on a recurring basis are summarized as follows: Level 1 Level 2 Level 3 Total Derivative Liabilities - - 255,380 255,380 Total $ - $ - $ 255,380 $ 255,380 Convertible Notes Payable At December 31, 2017 there are notes outstanding with principal balances which total $880,000. Of the notes, $840,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate) and are convertible into shares of common stock at the rate of $0.06 to $0.07 per share. The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director. That note was due on December 31, 2015, and bears a default interest rate of 10%. On January 31, 2018, the Company entered into a convertible note for up to $100,000 from a third party. The note has an annual interest rate of 10% and is secured by the Companys equipment. The note has a conversion feature for restricted common shares at $0.07 per share and a maturity date of July 31, 2018. On February 23, 2018 the Company drew $40,000 against this note. Convertible Note Payable Related Party At December 31, 2017 there are notes outstanding with two directors of the Company with balances of $87,257 and $27,256, respectively. The notes bear an 8% annual rate of interest with a 12% default rate. There are $50,000 in notes to the first officer that had due dates of December 31, 2016 and December 31, 2017, and on which interest is being calculated at the default rate. The remaining $37,257 and $27,256 notes have due dates of December 31, 2018. All of the convertible notes issued to directors are convertible into shares of common stock at the rate of $0.07 per share. |
STOCK OPTION PLANS
STOCK OPTION PLANS | 3 Months Ended |
Mar. 31, 2018 | |
STOCK OPTION PLANS [Abstract] | |
STOCK OPTION PLANS | NOTE 4 On August 25, 2005, the Board of Directors of the Company approved and adopted the 2005 Stock Incentive Plan (the Plan). The Plan became effective upon its adoption by the Board and will continue in effect for ten years, unless terminated. This plan was approved by the stockholders of the Company at their annual meeting of shareholders on November 22, 2005. Under the Plan, the exercise price for all options issued will not be less than the average quoted closing market price of the Companys trading common stock for the thirty day period immediately preceding the grant date plus a premium of ten percent. The maximum aggregate number of shares that may be awarded under the plan is 2,500,000 shares. On August 24, 2015, the Board of Directors approved the issuance of options to purchase 2,185,000 shares of the Companys common stock. Of the total issued, 1,960,000 options were issued to replace options held by directors and employees which were to expire and 225,000 options were issued to new employees. Of the options issued, 640,000 have an option price of $0.14 per share, 500,000 have an option price of $0.15 per share, 995,000 have an option price of $0.20 per share, and 50,000 have an option price of $0.25 per share. Options issued as replacement shall have immediate vesting terms. Options which are not replacements shall vest over a two year four month period in equal installments on the last day of 2015, 2016 and 2017, respectively. We relied on an exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act. Projected data related to the expected volatility and expected life of stock options is based upon historical and other information, and notably, the Company's common stock has limited trading history. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of the Company's employee stock options. Between August 25, 2005 and December 31, 2015, the Company granted options to employees to purchase an aggregate 3,096,000 shares of common stock at exercise prices ranging from $0.14 to $2.07 per share. The options vest over three years and expire 10 years from the date of grant. The Company used the following assumptions in estimating the fair value of the options granted: · Market value at the time of issuance Range of $0.14 to 2.07 · Expected term Range of 3.7 years to 10.0 years · Risk-free interest rate Range of 1.60% to 4.93% · Dividend yield 0% · Expected volatility 200% to 424% · Weighted-average fair value - $0.16 to $2.07 All of the options were fully vested at December 31, 2018. As a result there was no stock-based compensation expenses recorded for the three months ended March 31, 2018. The Company recognized $3,154 in stock-based compensation expense for the three month period ended March 31, 2017. There were 2,185,000 and 2,185,000 employee stock options outstanding at March 31, 2018 and December 31, 2017, respectively. A summary of all employee options outstanding and exercisable under the plan as of March 31, 2018, and changes during the three months then ended is set forth below: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at the beginning of period 2,185,000 $ 0.17 7.65 $ -- Granted -- -- -- -- Expired -- -- -- -- Forfeited -- -- -- -- Outstanding at the end of Period 2,185,000 $ 0.17 7.41 $ -- Exercisable at the end of Period 2,185,000 $ 0.17 7.41 $ -- |
CAPITAL STOCK
CAPITAL STOCK | 3 Months Ended |
Mar. 31, 2018 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | NOTE 5 CAPITAL STOCK Preferred Stock There are 1,000,000 shares of preferred stock with a par value of $0.001 per share authorized. At March 31, 2018 and December 31, 2017, there were no shares of preferred stock issued or outstanding. Common Stock There are 100,000,000 shares of common stock with a par value of $0.001 per share authorized. No shares of stock were issued during the three months ended March 31, 2018. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 COMMITMENTS AND CONTINGENCIES The Company currently occupies approximately 11,639 square feet of office and manufacturing space from American Covers, Inc., dba Handstands. In 2014 the Company extended the operating lease agreement for its manufacturing facility in Draper, Utah. Under the terms of a three year lease extension effective January 1, 2015, the monthly rent remained at $8,950 per month for 2015, increased to $9,300 per month for 2016 and to $9,600 per month for 2017. The lease further provides that on the expiration of the lease on December 31, 2017, the lease becomes a month-to-month lease at a rate of the current monthly lease rate ($9,600), plus an increase of 10%, (now $10,560), with a 10% increase on the anniversary date of each succeeding year. The building is located in a business park in Draper, Utah which consists primarily of high tech manufacturing firms and it is located adjacent to Utahs main interstate highway. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 RELATED PARTY TRANSACTIONS At March 31, 2018 and December 31, 2017, the Company had amounts of $20,000 and $20,000 payable to its Chief Executive Office for funds loaned the Company to pay of various operating expenses of the business. At March 31, 2018 and December 31, 2017, the Company had outstanding notes payable to an officer in the amount of $87,257 and an outstanding note payable to a director in the amount of $27,256. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 SUBSEQUENT EVENTS On April 13, 2018 the Company drew $30,000 against the $100,000 line of credit provided by Capital Communications. On April 2, 2018 and April 30, 2018 an officer of the Company made loans to the Company totaling $40,000. In accordance with ASC 855-10 management reviewed all material events through the date of this report. There are no material subsequent events to report other than those disclosed above. |
SUMMARY OF SIGNIFICANT ACCOUN14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Condensed Consolidated Interim Financial Statements | Condensed Consolidated Interim Financial Statements |
Nature of Operations | Nature of Operations |
Use of Estimates | Use of Estimates |
Cash and Cash Equivalents. | Cash and Cash Equivalents |
Fair Value Measurements | Fair Value Measurements Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories: Level 1: Quoted market prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement. The carrying value of the Companys cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity. The Company has classified the inputs used in valuing its derivative liabilities as Level 3 inputs. The Company valued its derivatives using the binomial lattice model. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company. |
Accounts Receivable | Accounts Receivable |
Property and Equipment. | Property and Equipment |
Valuation of Long-lived Assets | Valuation of Long-lived Assets |
Intangible Assets | Intangible Assets |
Research and Development | Research and Development |
Goodwill | Goodwill |
Revenue Recognition | Revenue Recognition Step 1. Identify the contract with the customer Step 2. Identify the performance obligations in the contract Step 3. Determine the transaction price Step 4. Allocate the transaction price to the performance obligations in the contract Step 5. Recognize revenue when the Company satisfied a performance obligation |
Stock-Based Compensation | Stock-Based Compensation |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share |
Concentrations and Credit Risk | Concentrations and Credit Risk - |
Income Taxes | Income Taxes - |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2018, the Financial Standards Accounting Board (FASB) issued Accounting Statement Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations. |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Derivative Instruments Tables | |
Schedule of Changes in Level 3 Financial Liabilities | The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of March 31, 2018 and December 31, 2017: Total Balance, December 31, 2016 76,295 Recognition of derivative liabilities upon initial valuation 226,651 Change in fair value of derivative liabilities 60,734 Conversions of derivative liabilities into equity instruments Balance, December 31, 2017 363,680 Recognition of derivative liabilities upon initial valuation 12,449 Change in fair value of derivative liabilities (120,749) Conversions of derivative liabilities into equity instruments Balance, March 31, 2018 255,380 |
Schedule of Liabilities Measured at Fair Value on Recurring Basis | As of March 31, 2018, liabilities measured at fair value on a recurring basis are summarized as follows: Level 1 Level 2 Level 3 Total Derivative Liabilities - - 255,380 255,380 Total $ - $ - $ 255,380 $ 255,380 |
STOCK OPTION PLANS (Tables)
STOCK OPTION PLANS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
STOCK OPTION PLANS [Abstract] | |
Schedule of Stock Option Activity | A summary of all employee options outstanding and exercisable under the plan as of March 31, 2018, and changes during the three months then ended is set forth below: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at the beginning of period 2,185,000 $ 0.17 7.65 $ -- Granted -- -- -- -- Expired -- -- -- -- Forfeited -- -- -- -- Outstanding at the end of Period 2,185,000 $ 0.17 7.41 $ -- Exercisable at the end of Period 2,185,000 $ 0.17 7.41 $ -- |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Nature Of Business [Line Items] | |||
Accounts receivable, allowance for bad debts | $ 145,179 | $ 145,194 | |
Stock-based compensation expense | $ 3,154 | ||
Anti-dilutive securities excluded from computation of earnings per share amount | 19,875,403 | ||
Sales [Member] | Customer One [Member] | |||
Nature Of Business [Line Items] | |||
Risk percentage | 77.00% | ||
Accounts Receivable [Member] | Customer One [Member] | |||
Nature Of Business [Line Items] | |||
Risk percentage | 9.00% | ||
Minimum [Member] | |||
Nature Of Business [Line Items] | |||
Property and equipment, useful lives | P3Y | ||
Intangible assets, useful lives | 5 years | ||
Maximum [Member] | |||
Nature Of Business [Line Items] | |||
Property and equipment, useful lives | P10Y | ||
Intangible assets, useful lives | 15 years |
GOING CONCERN (Details)
GOING CONCERN (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Going Concern Details | ||
Accumulated deficit | $ (27,409,675) | $ (27,306,453) |
DERIVATIVE INSTRUMENTS (Narrati
DERIVATIVE INSTRUMENTS (Narrative) (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jan. 31, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Aug. 08, 2011 | |
Derivative liabilities | $ 255,380 | ||||
Loss on change in fair value of derivative liabilities | 120,749 | $ 15,687 | |||
Interest expense in connection with recognition of derivative liabilities | |||||
Proceeds from borrowings under convertible note payable | $ 40,000 | $ 120,000 | |||
Convertible notes payable, principal amount outstanding | $ 880,000 | ||||
Derivative Classification [Member] | Minimum [Member] | |||||
Expected volatility | 92.26% | ||||
Risk-free interest rate | 1.73% | ||||
Expected life | 3 months 29 days | ||||
Derivative Classification [Member] | Maximum [Member] | |||||
Expected volatility | 94.39% | ||||
Risk-free interest rate | 2.09% | ||||
Expected life | 1 year | ||||
Convertible Debt [Member] | |||||
Debt instrument, interest rate | 10.00% | ||||
Debt instrument, default rate | 15.00% | ||||
Convertible notes payable, principal amount outstanding | $ 840,000 | ||||
Convertible Notes Payable [Member] | |||||
Debt instrument, maturity date | Dec. 31, 2015 | ||||
Debt instrument, default rate | 10.00% | ||||
Convertible Notes Payable [Member] | Director [Member] | |||||
Debt instrument, face amount | $ 40,000 | ||||
Debt instrument, interest rate | 10.00% | ||||
Convertible notes payable, balance | $ 40,000 | ||||
Convertible Notes Payable [Member] | Minimum [Member] | |||||
Debt instrument, conversion price | $ 0.06 | ||||
Convertible Notes Payable [Member] | Maximum [Member] | |||||
Debt instrument, conversion price | $ 0.07 | ||||
Convertible Notes Payable to Related Party [Member] | Director [Member] | |||||
Debt instrument, interest rate | 8.00% | ||||
Debt instrument, default rate | 12.00% | ||||
Debt instrument, conversion price | $ 0.07 | ||||
Convertible Notes Payable to Related Party [Member] | One Director [Member] | |||||
Debt instrument, maturity date | Dec. 31, 2016 | ||||
Convertible notes payable, principal amount outstanding | $ 87,257 | ||||
Convertible notes payable, balance | $ 37,257 | ||||
Convertible Notes Payable to Related Party [Member] | Two Director [Member] | |||||
Debt instrument, maturity date | Dec. 31, 2017 | ||||
Convertible notes payable, principal amount outstanding | $ 27,256 | ||||
Convertible notes payable, balance | 27,256 | ||||
Convertible Notes Payable to Related Party [Member] | Officer [Member] | |||||
Convertible notes payable, balance | $ 50,000 | ||||
New Convertible Notes Payable [Member] | |||||
Debt instrument, face amount | $ 100,000 | ||||
Debt instrument, maturity date | Jul. 31, 2018 | ||||
Debt instrument, interest rate | 10.00% | ||||
Proceeds from borrowings under convertible note payable | $ 40,000 | ||||
Debt instrument, conversion price | $ 0.07 |
DERIVATIVE INSTRUMENTS (Schedul
DERIVATIVE INSTRUMENTS (Schedule of Changes in Level 3 Financial Liabilities) (Details) - Derivative Financial Instruments, Liabilities [Member] - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Balance | $ 363,680 | $ 76,295 |
Recognition of derivative liabilities upon initial valuation | 12,449 | 226,651 |
Change in fair value of derivative liabilities | (120,749) | 60,734 |
Conversions of derivative liabilities into equity instruments | ||
Balance | $ 255,380 | $ 363,680 |
DERIVATIVE INSTRUMENTS (Sched21
DERIVATIVE INSTRUMENTS (Schedule of Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] | Mar. 31, 2018USD ($) |
Liabilities, fair value | $ 255,380 |
Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | 255,380 |
Level 1 [Member] | |
Liabilities, fair value | |
Level 1 [Member] | Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | |
Level 2 [Member] | |
Liabilities, fair value | |
Level 2 [Member] | Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | |
Level 3 [Member] | |
Liabilities, fair value | 255,380 |
Level 3 [Member] | Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | $ 255,380 |
STOCK OPTION PLANS (Narrative)
STOCK OPTION PLANS (Narrative) (Details) - USD ($) | Aug. 24, 2015 | Mar. 31, 2018 | Dec. 31, 2015 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted during period | ||||
Option pricing assumptions | ||||
Weighted-average fair value of options granted | ||||
Options outstanding | 2,185,000 | 2,185,000 | ||
Unrecognized compensation cost related to employee stock options | $ 3,154 | |||
2005 Stock Incentive Plan [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized | 2,500,000 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 2,185,000 | |||
Options granted during period | 3,096,000 | |||
Exercise price of stock options granted, minimum | $ 0.14 | |||
Exercise price of stock options granted, maximum | $ 2.07 | |||
Option vesting period | 2 years 4 months | 3 years | ||
Option expiration period | 10 years | |||
Option pricing assumptions | ||||
Dividend yield | 0.00% | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Minimum [Member] | ||||
Option pricing assumptions | ||||
Market value per share at time of issuance | $ 0.14 | |||
Expected term | 3 years 8 months 12 days | |||
Risk-free interest rate | 1.60% | |||
Expected volatility | 200.00% | |||
Weighted-average fair value of options granted | $ 0.16 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Maximum [Member] | ||||
Option pricing assumptions | ||||
Market value per share at time of issuance | $ 2.07 | |||
Expected term | 10 years | |||
Risk-free interest rate | 4.93% | |||
Expected volatility | 424.00% | |||
Weighted-average fair value of options granted | $ 2.07 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range One [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 640,000 | |||
Exercise price of stock options granted | $ 0.14 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Two [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 500,000 | |||
Exercise price of stock options granted | $ 0.15 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Three [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 995,000 | |||
Exercise price of stock options granted | $ 0.20 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Four [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 50,000 | |||
Exercise price of stock options granted | $ 0.25 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Employee [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 225,000 | |||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Director [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Issuance of options for purchase of common shares | 1,960,000 |
STOCK OPTION PLANS (Schedule of
STOCK OPTION PLANS (Schedule of Stock Option Activity) (Details) | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Shares | |
Outstanding at the beginning of period | shares | 2,185,000 |
Granted | shares | |
Expired | shares | |
Forfeited | shares | |
Outstanding at the end of Period | shares | 2,185,000 |
Exercisable at the end of the Period | shares | 2,185,000 |
Weighted Average Exercise Price | |
Outstanding at the beginning of period | $ / shares | $ 0.17 |
Granted | $ / shares | |
Expired | $ / shares | |
Forfeited | $ / shares | |
Outstanding at the end of Period | $ / shares | 0.17 |
Exercisable at the end of Period | $ / shares | $ 0.17 |
Weighted Average Remaining Contractual Life (Years) | |
Outstanding at the beginning of period | 7 years 7 months 24 days |
Outstanding at the end of Period | 7 years 4 months 28 days |
Exercisable at the end of Period | 7 years 4 months 28 days |
Outstanding at the beginning of period | $ | |
Granted | $ | |
Expired | $ | |
Forfeited | $ | |
Outstanding at the end of Period | $ | |
Exercisable at the end of the Period | $ |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
CAPITAL STOCK [Abstract] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Stock issued | 0 | 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 3 Months Ended |
Mar. 31, 2018USD ($) | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Operating lease expiration period | Dec. 31, 2017 |
Lease, monthly payment in 2015 | $ 8,950 |
Lease, monthly payment in 2016 | 9,300 |
Lease, monthly payment in 2017 | 9,600 |
Lease, monthly payment in 2018 | $ 10,560 |
Increase lease rate percentage | 10.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Related Party Transaction [Line Items] | ||
Due to related parties | $ 20,000 | $ 20,000 |
Chief Executive Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Accounts payable - related party | 20,000 | 20,000 |
Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Outstanding notes payable amount | $ 87,257 | |
Director [Member] | ||
Related Party Transaction [Line Items] | ||
Outstanding notes payable amount | $ 27,256 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - USD ($) | Apr. 02, 2018 | Apr. 13, 2018 |
Officer [Member] | ||
Subsequent Event [Line Items] | ||
Proceeds from related party debt | $ 40,000 | |
Capital Communications [Member] | ||
Subsequent Event [Line Items] | ||
Maximum borrowing capacity | $ 100,000 | |
Amount drawn against note | $ 30,000 |