Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Apr. 10, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | PCT LTD | |
Entity Central Index Key | 0001119897 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity Incorporation, State or Country Code | NV | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-31549 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Interactive Data Current | Yes | |
Is Entity Emerging Growth Company? | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 527,813,393 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Shell Company | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS | ||
Cash | $ 6,669 | $ 4,893 |
Accounts receivable | 103,872 | 49,140 |
Inventory | 4,803 | 7,105 |
Prepaid expenses | 44,980 | 218,494 |
Other Assets | 2,110 | 2,110 |
Total current assets | 162,434 | 281,742 |
PROPERTY AND EQUIPMENT | ||
Property and equipment, net | 446,346 | 499,972 |
OTHER ASSETS | ||
Intangible assets, net | 3,782,652 | 4,059,775 |
Operating lease right-of-use asset | 7,878 | |
Deposits | 5,499 | 5,499 |
Total other assets | 3,796,029 | 4,065,274 |
TOTAL ASSETS | 4,404,809 | 4,846,988 |
CURRENT LIABILITIES | ||
Accounts payable | 359,817 | 350,593 |
Accrued expenses - related parties | 72,137 | 54,033 |
Accrued expenses | 670,872 | 362,436 |
Operating lease liability | 9,125 | |
Current portion of notes payable - related party, net | 834,886 | 93,000 |
Current portion of notes payable, net | 278,100 | 399,664 |
Current portion of convertible notes payable, net | 1,334,040 | 161,280 |
Derivative liability | 5,538,198 | 322,976 |
Preferred series A stock liability | 144,352 | |
Total current liabilities | 9,097,175 | 1,888,334 |
LONG TERM LIABILITIES | ||
Notes payable - related parties, net of current portion and discounts | 733,826 | |
Notes payable, net of current portion and discounts | 126,707 | |
Convertible notes payable, net of current portions and discounts | 392,534 | |
TOTAL LIABILITIES | 9,097,175 | 3,141,401 |
MEZZANINE EQUITY | ||
Preferred stock series A, $0.001 par value; 1,000,000 authorized; 500,000 and nil issued and outstanding at September 30, 2019 and December 31, 2018, respectively; Preferred stock series B, $0.001 par value; 1,000,000 authorized; 1,000,000 and nil issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 215,398 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock series C, $0.001 par value; 5,500,000 authorized; nil issued and outstanding at September 30, 2019 and December 31, 2018 | ||
Common stock, $0.001 par value; 1,000,000,000 authorized; 262,360,042 and 44,559,238 issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 262,361 | 44,560 |
Additional paid-in capital | 14,971,340 | 11,588,030 |
Accumulated deficit | (20,141,465) | (9,927,003) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (4,907,764) | 1,705,587 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 4,404,809 | $ 4,846,988 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 7,500,000 | 1,000,000 |
Preferred stock, shares issued | 1,500,000 | |
Preferred stock, shares outstanding | 1,500,000 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 262,360,042 | 44,559,238 |
Common stock, shares outstanding | 262,360,042 | 44,559,238 |
Preferred stock series A | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 500,000 | |
Preferred stock, shares outstanding | 500,000 | |
Preferred stock series B | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 1,000,000 | |
Preferred stock, shares issued | 1,000,000 | |
Preferred stock, shares outstanding | 1,000,000 | |
Preferred stock series C | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, shares authorized | 5,500,000 | |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
REVENUES | ||||
Product | $ 110,739 | $ 13,624 | $ 209,578 | $ 86,837 |
Licensing | 29,500 | 8,000 | 108,000 | 8,000 |
Equipment leases | 79,794 | 19,500 | 217,274 | 58,500 |
Total Revenue | 220,033 | 41,124 | 534,852 | 153,337 |
OPERATING EXPENSES | ||||
General and administrative | 468,897 | 827,168 | 1,554,992 | 1,885,962 |
Costs of product, licensing and equipment leases | 51,483 | 39,216 | 148,214 | 59,690 |
Depreciation and amortization | 84,467 | 84,070 | 253,568 | 250,928 |
Total operating expenses | 604,847 | 950,454 | 1,956,774 | 2,196,580 |
Net loss before other expenses | (384,814) | (909,330) | (1,421,922) | (2,043,243) |
OTHER INCOME (EXPENSES) | ||||
Loss on change in fair value of derivative liability | (4,169,978) | (7,121,619) | ||
Gain (loss) on change in fair value of preferred series A stock liability | 72,473 | |||
Gain on sale of intangible assets | 52,498 | |||
Gain on sale of equipment | 16,185 | 16,185 | ||
Gain (Loss) on settlement of debt | 16,706 | (67,703) | ||
Interest expense | (1,225,906) | (46,950) | (1,728,189) | (112,398) |
Total other income (expenses) | (5,379,178) | (30,765) | (8,792,540) | (96,213) |
Loss from operations before Income taxes | (5,763,992) | (940,095) | (10,214,462) | (2,139,456) |
Income taxes | ||||
NET LOSS | $ (5,763,992) | $ (940,095) | $ (10,214,462) | $ (2,139,456) |
Basic and diluted net loss per share | $ (0.03) | $ (0.02) | $ (0.10) | $ (0.05) |
Basic and diluted weighted average shares outstanding | 206,524,228 | 44,448,368 | 102,223,061 | 43,184,183 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash Flows from Operating Activities | ||
Net loss | $ (10,214,462) | $ (2,139,456) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 253,568 | 250,928 |
Amortization of debt discount | 735,582 | 30,518 |
Amortization of operating lease right-of-use asset | 35,452 | |
Common stock issued and issuable for services | 151,391 | 903,946 |
Loss on change in fair value of derivative liability | 7,121,619 | |
Gain on change in fair value of preferred series A stock liability | (72,473) | |
Series B preferred stock issued for services | 155,000 | |
Loss on settlement of debt | 67,703 | |
Gain on sale of intangible assets | (52,498) | |
Gain on sale of equipment | (16,185) | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (137,092) | (14,748) |
Inventory | 21,707 | (24,009) |
Prepaid expenses | 173,514 | (1,487) |
Other assets | (55,000) | |
Operating lease liability | (34,205) | |
Accounts payable | 66,737 | 178,815 |
Accrued expenses - related party | 18,104 | 26,302 |
Accrued expenses | 1,113,652 | |
Deferred revenue | 25,000 | |
Net cash used in operating activities | (596,701) | (835,376) |
Cash Flows from Investing Activities | ||
Proceeds from sale of intangible assets | 111,323 | |
Proceeds from the sales of equipment | 22,500 | |
Purchase of property and equipment | (2,516) | (3,900) |
Purchase of intangible assets | (5,000) | (9,500) |
Net cash provided by investing activities | 103,807 | 9,100 |
Cash Flows from Financing Activities | ||
Proceeds from notes payable - related parties | 17,544 | 109,000 |
Proceeds from notes payable | 138,600 | 287,500 |
Proceeds from convertible notes payable | 480,750 | 350,000 |
Proceeds from common stock issued | 115,000 | |
Repayment of notes payable - related parties | (20,044) | (15,000) |
Repayment of notes payable | (31,180) | (20,000) |
Repayment of convertible notes payable | (91,000) | |
Net cash provided by financing activities | 494,670 | 826,500 |
Net change in cash | 1,776 | 224 |
Cash and cash equivalents at beginning of period | 4,893 | 7,838 |
Cash and cash equivalents at end of period | 6,669 | 8,062 |
Supplemental Cash Flow Information: | ||
Cash paid for interest | 40,914 | 20,060 |
Cash paid for Income taxes | ||
Non-Cash Investing and Financing Activities | ||
Debt discounts on notes payable – related parties | 20,000 | |
Debt discounts on notes payable | 10,204 | 13,464 |
Debt discounts on convertible notes payable | 610,125 | 84,087 |
Modification of notes payable | 20,590 | |
Common stock issued in conversion of convertible notes payable | 2,644,325 | |
Accounts receivable netted against notes payable | 28,090 | |
Initial operating lease right-of-use asset and liability | 43,330 | |
Default penalty on convertible notes payable | 665,731 | |
Preferred series A stock reclassification from liability to mezzanine equity | 60,398 | |
Extinguishment of notes payable | 175,814 | 250,000 |
Common stock issued for prepaid expenses | 1,383,000 | |
Property plant & equipment transferred to inventory | $ 19,405 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 41,179,238 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 41,180 | $ 10,001,323 | $ (6,744,520) | $ 3,297,983 |
Common stock issued for cash, shares | 110,000 | |||
Common stock issued for cash, amount | $ 110 | 54,890 | 55,000 | |
Common stock issued for services, shares | ||||
Common stock issued for services, amount | 43,836 | 43,836 | ||
Beneficial conversion feature | 58,401 | 58,401 | ||
Net loss | (531,302) | (531,302) | ||
Ending balance, shares at Mar. 31, 2018 | 41,289,238 | |||
Ending balance, amount at Mar. 31, 2018 | $ 41,290 | 10,158,450 | (7,275,822) | 2,923,918 |
Beginning balance, shares at Dec. 31, 2017 | 41,179,238 | |||
Beginning balance, amount at Dec. 31, 2017 | $ 41,180 | 10,001,323 | (6,744,520) | 3,297,983 |
Net loss | (2,139,456) | |||
Ending balance, shares at Sep. 30, 2018 | 44,459,238 | |||
Ending balance, amount at Sep. 30, 2018 | $ 44,460 | 11,571,130 | (8,883,976) | 2,731,614 |
Beginning balance, shares at Mar. 31, 2018 | 41,289,238 | |||
Beginning balance, amount at Mar. 31, 2018 | $ 41,290 | 10,158,450 | (7,275,822) | 2,923,918 |
Common stock issued for cash, shares | 120,000 | |||
Common stock issued for cash, amount | $ 120 | 59,880 | 60,000 | |
Common stock issued for services, shares | 2,050,000 | |||
Common stock issued for services, amount | $ 2,050 | 982,114 | 984,164 | |
Beneficial conversion feature | 16,686 | 16,686 | ||
Net loss | (668,059) | (668,059) | ||
Ending balance, shares at Jun. 30, 2018 | 43,459,238 | |||
Ending balance, amount at Jun. 30, 2018 | $ 43,460 | $ 11,217,130 | $ (7,943,881) | $ 3,316,709 |
Common stock issued for services, amount | $ 1,000,000 | |||
Common stock issued and issuable for services, shares | 1,000 | 354,000 | 355,000 | |
Net loss | $ (940,095) | $ (940,095) | ||
Ending balance, shares at Sep. 30, 2018 | 44,459,238 | |||
Ending balance, amount at Sep. 30, 2018 | $ 44,460 | 11,571,130 | (8,883,976) | 2,731,614 |
Beginning balance, shares at Dec. 31, 2018 | 44,559,238 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 44,560 | 11,588,030 | (9,927,003) | 1,705,587 |
Common stock issued for services, shares | 575,000 | |||
Common stock issued for services, amount | $ 575 | 98,352 | 98,927 | |
Common stock issued and issuable for services, shares | 5,383,810 | |||
Common stock issued and issuable for services, amount | $ 5,383 | 800,012 | 805,395 | |
Net loss | (920,323) | (920,323) | ||
Ending balance, shares at Mar. 31, 2019 | 50,518,048 | |||
Ending balance, amount at Mar. 31, 2019 | $ 50,518 | 12,486,394 | (10,847,326) | 1,689,586 |
Beginning balance, shares at Dec. 31, 2018 | 44,559,238 | |||
Beginning balance, amount at Dec. 31, 2018 | $ 44,560 | 11,588,030 | (9,927,003) | 1,705,587 |
Net loss | (10,214,462) | |||
Ending balance, shares at Sep. 30, 2019 | 262,360,042 | |||
Ending balance, amount at Sep. 30, 2019 | $ 262,361 | 14,971,340 | (20,141,465) | (4,907,764) |
Beginning balance, shares at Mar. 31, 2019 | 50,518,048 | |||
Beginning balance, amount at Mar. 31, 2019 | $ 50,518 | 12,486,394 | (10,847,326) | 1,689,586 |
Common stock issued for services, shares | ||||
Common stock issued for services, amount | 23,125 | 23,125 | ||
Common stock issued in conversion of convertible notes payable, shares | 26,341,913 | |||
Common stock issued in conversion of convertible notes payable, amount | $ 26,342 | 261,034 | 287,376 | |
Net loss | (3,530,147) | (3,530,147) | ||
Ending balance, shares at Jun. 30, 2019 | 76,859,961 | |||
Ending balance, amount at Jun. 30, 2019 | $ 76,860 | 12,770,553 | (14,377,473) | (1,530,060) |
Common stock issued and issuable for services, shares | 1,000,000 | |||
Common stock issued and issuable for services, amount | $ 1,000 | 28,339 | 29,339 | |
Common stock issued from exercise of warrants, shares | 12,030,881 | |||
Common stock issued from exercise of warrants, amount | $ 12,031 | 220,803 | 232,834 | |
Common stock issued in conversion of convertible notes payable, shares | 172,469,200 | |||
Common stock issued in conversion of convertible notes payable, amount | $ 172,470 | 1,951,645 | 2,124,115 | |
Net loss | (5,763,992) | (5,763,992) | ||
Ending balance, shares at Sep. 30, 2019 | 262,360,042 | |||
Ending balance, amount at Sep. 30, 2019 | $ 262,361 | $ 14,971,340 | $ (20,141,465) | $ (4,907,764) |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The unaudited interim condensed consolidated financial statements of PCT LTD (the “Company”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of our balance sheet, statements of operations, stockholders’ equity (deficit), and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2018 audited financial statements as reported in its Form 10-K, filed on April 15, 2019. Nature of Operations PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on August 27, 1986. The Company changed its domicile to Nevada on August 26, 1999. On August 31, 2016, the Company entered into a Securities Exchange Agreement with Paradigm Convergence Technologies Corporation (“Paradigm”) to affect the acquisition of Paradigm as a wholly-owned subsidiary. Under the terms of the agreement, Bingham issued 16,790,625 restricted common shares of Bingham stock to the shareholders of Paradigm in exchange for all 22,387,500 outstanding common shares of Paradigm stock. In addition, Bingham issued options exercisable into 2,040,000 shares of the Bingham’s common stock (with exercise prices ranging between $0.133 and $0.333) in exchange for 2,720,000 outstanding Paradigm stock options (with exercise prices ranging between $0.10 and $0.25). These 2,040,000 options have been adjusted at the same exchange rate of 75% that the outstanding common shares were exchanged. As a result of this share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer. Paradigm is located in Little River, SC and was formed June 6, 2012 under the name of EUR-ECA, Ltd. On September 11, 2015, its Board of Directors authorized EUR-ECA Ltd to file with the Nevada Secretary of State to change its name to Paradigm Convergence Technologies Corp. Paradigm is a technology licensing company specializing in environmentally safe solutions for global sustainability. The company holds a patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm provides innovative products and technologies for eliminating biocidal contamination from water supplies, industrial fluids, hard surfaces, food processing equipment, and medical devices. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships. Effective on February 29, 2018, the Company changed its name from Bingham Canyon Corporation to PCT LTD to more accurately identify the Company’s direction and to develop the complimentary relationship and association with its wholly-owned operating company, Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”). Principles of Consolidations The accompanying consolidated financial statements include the accounts of PCT LTD (“Parent”) and its wholly owned subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm” or “Subsidiary”). All intercompany accounts have been eliminated upon consolidation. Use of Estimates The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less. The cash of $6,669 and $4,893 as of September 30, 2019 and December 31, 2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of September 30, 2019 and December 31, 2018. Fair Value Measurements The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: • Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of our financial instruments, including, cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short maturities of these financial instruments. Derivative liabilities and preferred series A stock liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Our financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2019, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Derivative liability (1) 5,538,198 — — 5,538,198 Total 5,538,198 — — 5,538,198 Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred series A stock liability (1) 144,352 — — 144,352 Derivative liability (1) 322,976 — — 322,976 Total 467,328 — — 467,328 (1) The Company has estimated the fair value of these liabilities using the Binomial Model. Derivative and Preferred Series A Stock Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, “ Derivatives and Hedging Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 7 for additional information. Accounts Receivable Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. The Company provided allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable is periodically evaluated for collectability bases on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. Based on management’s evaluation, the Company provided an allowance for doubtful accounts of $0 at September 30, 2019 and December 31, 2018, respectively. Inventories Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. We record the value of our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, future pricing and market conditions. As of September 30, 2019 and December 31, 2018, the inventory consisted of parts for equipment sold as replacement parts to existing customers or sold to new customers. The Company has recorded a reserve allowance of $0 and $0 as of September 30, 2019 and December 31, 2018, respectively. The Company has determined that some of the supplies inventory is necessary to be placed into service, after assembly into equipment to be used in product manufacturing and classified as Machinery and Equipment. The balance at September 30, 2019 and December 31, 2018 of such supplies and equipment not yet placed in service amounted to $276,428 and $319,735, respectively. Property and Equipment Property and equipment are stated at purchased cost and depreciated utilizing a straight-line method over estimated useful lives ranging from 3 to 7 years after the asset has been placed in service. Upon selling equipment that had been under a lease agreement, the company discontinues the depreciation on that piece of equipment, as it transfers ownership to another entity. Additions and major improvements that extend the useful lives of property and equipment are capitalized. Maintenance and repairs are charged to operations as incurred. Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any related gains or losses are recorded in the results of operations. Impairment of Long-lived Assets The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the fair value. Under similar analysis no impairment was recorded during the nine months ended September 30, 2019. Intangible Assets Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 1 to 15 years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. The recorded impairment expense was nil for the nine months ended September 30, 2019. Research and Development Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable. Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets and lease liabilities for our lease agreements with original terms of greater than one year. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $43,330 and operating lease liability of $43,330. Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required. See Note 5 for further details. Revenue Recognition On May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606) The Company has the following three revenue streams: 1) product sales (equipment and/or fluid solutions); 2) licensing (contract-based use of the Company’s US EPA Product Registration, returning revenue in licensing fees and/or royalties from minimum or actual fluid sales); and 3) equipment leases (under systems service agreements, usually 3-year contracts for the provision of the Company’s equipment and service of such, under contract to customers, with renewable terms). The Company recognizes revenue from the sale of products when the performance obligation is satisfied by transferring control of the product to a customer. The Company recognizes revenue from the leasing of equipment as the entity provides the equipment and the customer simultaneously receives and consumes the benefits through the use of the equipment. This revenue generating activity would meet the criteria for a performance obligation satisfied over time. As a result, the Company recognizes revenue over time by using the output method, as the Company can measure progress of the performance obligation using the time elapsed under each obligation. The Company’s licenses provide a right to use and create performance obligations satisfied at a point in time. The Company recognizes revenue from licenses when the performance obligation is satisfied through the transfer of the license. For licenses that include royalties the Company will recognize royalty revenue as the underlying sales or usages occur, as long as this approach does not result in the acceleration of revenue ahead of the entity’s performance. The Company has disclosed disaggregated revenue via revenue stream on the face of the statement of operations. The Company did not have any contract assets or liabilities at September 30, 2019. Basic and Diluted Loss Per Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. As of September 30, 2019, there were outstanding common share equivalents (options, warrants, convertible debt and preferred series A stock) which amounted to 960,689,801 shares of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive. Recent Accounting Pronouncements The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 2. GOING CONCERN The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has limited assets, has incurred losses since inception of $20,141,465 and has negative cash flows from operations. As of September 30, 2019, the Company had a working capital deficit of $8,934,741. The Company has relied on raising debt and equity capital in order to fund its ongoing day-to-day operations and its corporate overhead. The Company will require additional working capital from either cash flow from operations, from debt or equity financing, or from a combination of these sources. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3. PROPERTY AND EQUIPMENT Depreciation expense was $18,947 and $18,644 for the nine months ended September 30, 2019 and 2018, respectively. Property and equipment at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Machinery and leased equipment $ 151,719 $ 138,209 Machinery and equipment not yet in service 321,565 369,754 Office equipment and furniture 20,064 20,064 Website 2,760 2,760 Total property and equipment $ 496,108 $ 530,787 Less: Accumulated Depreciation (49,762 ) (30,815 ) Property and equipment, net 446,346 499,972 On July 30, 2019, the Company transferred $17,790 of equipment not yet in service and offset accounts receivable of $23,209 in exchange for $13,939 and the settlement of accounts payable and accrued liabilities of $43,766. As result the Company recorded a gain on the settlement of debt of $16,706. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4. INTANGIBLE ASSETS Amortization is computed using the straight-line method and is recognized over the estimated useful lives of the intangible assets, which range from 1 to 15 years. Amortization expense was $234,621 and $232,284 for the nine months ended September 30, 2019 and 2018, respectively. Intangible assets at September 30, 2019 and December 31, 2018 consisted of the following: September 30, 2019 December 31, 2018 Patents $ 4,505,489 $ 4,514,989 Technology rights 200,000 235,500 Intangible, at cost 4,705,489 4,750,489 Less: Accumulated amortization (922,837 ) (690,714 ) Net Carrying Amount $ 3,782,652 $ 4,059,775 Estimated Future Amortization Expense: $ For year ending December 31, 2019 76,947 For year ending December 31, 2020 303,613 For year ending December 31, 2021 302,003 For year ending December 31, 2022 302,003 For year ending December 31, 2023 to December 31, 2034 2,798,086 Total 3,782,652 On May 10, 2019, the Company sold intangible assets with a carrying value of $92,502 for $111,323 of cash and the settlement of $33,677 of liabilities owed to the buyer. The Company recorded a gain on sales of intangible assets of $52,498. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
LEASES | NOTE 5 – LEASES In February 2016, the FASB issued ASU No. 2016-02, Leases The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date. The following table sets forth the ROU assets and liabilities as of September 30, 2019: September 30, 2019 Operating lease right-of-use asset $ 7,878 Operating lease liability: Current operating lease liability $ 9,125 Noncurrent operating lease liability — Total operating lease liability $ 9,125 Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the nine months ended September 30, 2019, the Company recognized operating lease expense of $44,447. Operating lease costs are included within selling, administrative and other expenses on the condensed consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities were $43,200 for the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company reduced its ROU liabilities by $34,205 from cash paid. Our weighted average discount rate is 41% and the weighted average remaining lease term is 2 months. Lease payments over the next five years and thereafter are as follows: September 30, 2019 2019 - remaining $ 9,600 2020 and thereafter — Total lease payments 9,600 Less: imputed interest (475 ) Total ROU liabilities $ 9,125 As previously disclosed in our 2018 Form 10-K under the prior guidance of ASC 840, minimum payments under operating lease agreements as of December 31, 2018 were as follows: December 31, 2018 2019 $ 52,950 2020 — Total $ 52,950 |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 6. Notes Payable The following tables summarize notes payable as of September 30, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at September 30, 2019 Balance at December 31, 2018 Note Payable(v) *** $ 150,000 5/18/2016 6/1/2019 19.00 % $ 150,000 $ 150,000 Note Payable *** $ 25,000 5/8/2017 6/30/2018 0.00 % $ 27,500 $ 27,500 Note Payable $ 130,000 6/20/2018 1/2/2020 8.00 % $ 130,000 $ 130,000 Note Payable (a) $ 126,964 6/20/2018 8/31/2018 6.00 % $ — $ 126,964 Note Payable (b) $ 26,500 6/26/2018 10/1/2019 10.00 % $ 10,090 $ 26,500 Note Payable $ 60,000 10/30/2018 12/30/2018 8.00 % $ — $ 60,000 Note Payable *** $ 8,700 11/15/2018 6/30/2019 10.00 % $ 8,700 $ 8,700 Note Payable (c) $ 52,063 4/8/2020 4/8/2020 41.38 % $ 42,854 $ — Note Payable (d) $ 40,000 6/20/2019 12/31/2019 8.00 % $ 40,000 $ — Note Payable (e) $ 6,741 6/21/2019 4/8/2020 41.38 % $ 6,741 $ — Note Payable (d) $ 90,596 9/15/2019 3/16/2020 8.00 % $ 90,596 $ — Subtotal $ 284,420 $ 529,664 Debt Discount $ (6,320 ) $ (3,293 ) Balance, net $ 278,100 $ 526,371 Less current portion $ (278,100 ) $ (399,664 ) Total long-term $ — $ 126,707 *** Currently in default a) On January 28, 2019, the Company agreed to convert $131,327 of principal and interest of its note payable with a non-related party into 987,421 shares of the Company’s common stock. The company recorded a loss on settlement of debt of $38,319 equal to the difference between the fair value of the common shares of $177,736 and the carrying value of the note and interest. b) On February 1, 2019, the Company modified note by extending the maturity date to October 1, 2019. Further, the Company and the lender agreed that the customer’s minimum monthly royalty payments of $1,500 would be applied to reduce the principal and interest of the note. Total accounts receivable from the noteholder of $28,090 was applied to the note during the nine months ended September 30, 2019. c) On April 8, 2019, the Company entered into a promissory bank loan with a non-related party for $52,063 of which $9,563 was the loan fee or original issue discount resulting in cash proceeds to the Company of $42,500. The note is due on April 8, 2020 and results in an annual percentage rate of 41.38%. d) On June 20, 2019 the Company entered into a promissory note with a non-related party for $40,000. The note is due December 31, 2019, is unsecured and bears an interest rate of 8% per annum. On September 15, 2019, the Company received an additional $50,000 from the lender and issued a new promissory note for $90,596 which was equal to the original $40,000 note, $596 of accrued interest and the additional $50,000 advanced. The promissory note is due March 16, 2020, is unsecured and bears an interest rate of 8% per annum. e) On June 21, 2019, the Company entered into a promissory bank loan with a non-related party for $6,741 of which $641 was the loan fee or original issue discount resulting in cash proceeds to the Company of $6,100. The note is due on April 8, 2020 and results in an annual percentage rate of 41.38%. The following table summarizes notes payable, related parties as of September 30, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at September 30, 2019 Balance at December 31, 2018 Note Payable, RP *** $ 30,000 4/10/2018 1/15/2019 3.00 % $ 30,000 $ 30,000 Note Payable, RP $ 380,000 6/20/2018 1/2/2020 8.00 % $ 380,000 $ 380,000 Note Payable, RP $ 350,000 6/20/2018 1/2/2020 5.00 % $ 339,000 $ 350,000 Note Payable, RP $ 17,000 6/20/2018 1/2/2020 5.00 % $ 17,000 $ 17,000 Note Payable, RP *** $ 50,000 7/27/2018 11/30/2018 8.00 % $ 50,000 $ 50,000 Note Payable, RP $ 5,000 10/9/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP $ 5,000 10/19/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP ** $ 3,000 10/24/2018 Demand 0.00 % $ — $ 3,000 Note Payable, RP (f)** $ 2,544 1/3/2019 6/30/2019 3.00 % $ — $ — Note Payable, RP (g) $ 15,000 8/16/2019 2/16/2020 8.00 % $ 15,000 — Subtotal $ 837,500 $ 840,000 Debt Discount $ (2,614 ) $ (13,174 ) Balance, net $ 8,34,886 $ 826,826 Less current portion $ (834,886 ) $ (93,000 ) Total long-term $ — $ 733,826 ** Paid off during the period f) On January 3, 2019, the Company entered into a promissory note with the Chairman and President of the Company for $2,544. The note is due September 30, 2019, is unsecured and bears an interest rate of 3.0% per annum. At September 30, 2019, the remaining balance of this note was $0. g) On August 16, 2019, the Company entered into a promissory note with a Director of the Company for $15,000. The note is due February 16, 2020, is unsecured and bears an interest rate of 8.0% per annum. The following table summarizes convertible notes payable as of September 30, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at September 30, 2019 Balance at December 31, 2018 Convertible Note Payable (h) $ 450,000 3/28/2018 3/31/2021 8.00 % $ — $ 450,000 Convertible Note Payable ** $ 38,000 7/30/2018 7/25/2019 12.00 % $ — $ 38,000 Convertible Note Payable ** $ 53,000 8/29/2018 8/27/2019 12.00 % $ — $ 53,000 Convertible Note Payable (i) * $ 50,000 12/6/2018 12/6/2019 5.00 % $ 36,123 $ 50,000 Convertible Note Payable (j) * $ 65,000 12/6/2018 12/6/2019 5.00 % $ 43,599 $ 65,000 Convertible Note Payable(k) *** $ 63,000 12/12/2018 12/5/2019 22.00 % $ 42,800 $ 63,000 Convertible Note Payable (h) $ 539,936 1/15/2019 1/15/2020 8.00 % — — Convertible Note Payable (l) *** $ 33,000 1/16/2019 1/15/2020 22.00 % $ 49,500 $ — Convertible Note Payable (m) *** $ 100,000 1/18/2019 1/16/2020 8.00 % $ 100,000 $ — Convertible Note Payable (n) * $ 60,000 1/29/2019 1/22/2020 8.00 % $ 60,000 $ — Convertible Note Payable (o) * $ 50,000 2/1/2019 10/22/2019 12.00 % $ 50,000 $ — Convertible Note Payable (p) * $ 60,000 2/21/2019 2/14/2022 0.00 % $ 60,000 $ — Convertible Note Payable (q) $ 55,125 2/21/2019 2/20/2020 8.00 % $ 55,125 $ — Convertible Note Payable (r) *** $ 53,000 2/26/2019 2/20/2020 22.00 % $ 79,500 $ — Convertible Note Payable (s)*** $ 75,000 3/18/2019 12/13/2019 12.00 % $ 75,000 $ — Convertible Note Payable (t) *** $ 38,000 5/2/2019 4/29/2020 22.00 % $ 57,000 $ — Convertible Note Payable (u) *** $ 26,000 9/16/2019 9/11/2022 0.00 % $ 26,000 $ — Convertible Note Payable (v) $ 175,814 9/27/2019 9/25/2020 8.00 % $ 175,814 $ — Subtotal $ 1,334,040 $ 719,000 Debt Discount $ — $ (165,186 ) Balance, net $ 1,334,040 $ 553,814 Less current portion $ (1,334,040 ) $ (161,280 ) Total long-term $ — $ 392,534 * Embedded conversion feature accounted for as a derivative liability h) On January 15, 2019, the Company executed a new, consolidated convertible note with a non-related party by extinguishing the March 28, 2018 convertible note in the amount of $450,000 with interest due of $28,898 and a $60,000 term note, dated October 31, 2018 with interest due of $1,038. The new convertible note is in the amount of $539,936, is due on or before January 15, 2022, has an 8% per annum interest rate and may be converted into shares of the Company’s common stock at $0.20 per share. The new note incorporates an anti-dilution feature if the Company issues more than 60,000,000 shares of its common stock. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $292,651. The company recorded a loss on extinguishment of debt of $350,117 equal to the initial fair value of derivative liability on the new note and the previous unamortized debt discount balance of one the old notes. On March 27, 2019, the Company agreed to convert $548,686 of principal ($539,936) and interest ($8,750) of its convertible note payable into 3,597,989 shares of the Company’s common stock. The company recorded a gain on settlement of debt of $359,857 equal to the difference between both the fair value of the common shares of $523,867 and the fair value of the conversion feature at conversion of $335,038 compared to the carrying value of the note and interest. i) During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $26,390 added to the principal of the note. During the nine months ended September 30, 2019, $44,723 of principal ($42,223) and interest ($2,500) of the convertible note payable was converted into 76,154,631 shares of the Company’s common stock. j) During the nine months ended September 30, 2019, the Company defaulted on the note. During the nine months ended September 30, 2019, $64,558 of principal ($58,058) and interest ($6,500) of the convertible note payable was converted into 66,290,000 shares of the Company’s common stock. k) In the prior year, on December 12, 2018, the Company entered into a convertible promissory with a non-related party for $63,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $60,000. The note is due on December 5, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum. Any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days (June 10, 2019) of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 3 lowest trading prices during the 15-trading day period prior to the conversion date. One June 10, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $142,265 and resulted in a discount to the note payable of $60,000 and an initial derivative expense of $82,265. On June 19, 2019, the Company defaulted on the note, resulting in a default penalty of $32,650 added to the principal of the note and the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $74,200 of the convertible note payable was converted into 18,559,816 shares of the Company’s common stock. l) On January 16, 2019, the Company entered into a convertible promissory with a non-related party for $33,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $30,000. The note is due on January 15, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On June 19, 2019, the Company defaulted on the note, resulting in the note becoming immediately convertible and a default penalty of $16,500 added to the principal of the note. On June 19, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $116,540 and resulted in a discount to the note payable of $30,000 and an initial derivative expense of $86,540. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. m) On January 18, 2019, the Company entered into a convertible promissory note with a non-related party for $100,000 of which $5,000 was an original issue discount and $5,000 was paid directly to third parties resulting in cash proceeds to the Company of $90,000. The note is due on January 16, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. On July 17, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $239,668 and resulted in a discount to the note payable of $90,000 and an initial derivative expense of $149,668. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $4,508 of the convertible note payable and $179 of accrued interest was converted into 5,207,600 shares of the Company’s common stock. n) On January 29, 2019, the Company entered into a convertible promissory note with a non-related party for $60,000 of which $3,000 was an original issue discount and $8,000 was paid directly to third parties resulting in cash proceeds to the Company of $49,000. The note is due on January 22, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 18% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to the lower of 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date or $0.12. On July 28, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $640,053 and resulted in a discount to the note payable of $49,000 and an initial derivative expense of $591,053. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $214,690 added to the principal of the note. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $8,640 of the convertible note payable was converted into 7,500,000 shares of the Company’s common stock. o) On February 1, 2019, the Company entered into a convertible promissory note with a non-related party for $50,000 of which $5,000 was an original issue discount resulting in cash proceeds to the Company of $45,000. The note is due on October 22, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal 50% of the lowest trading price during the 20-trading day period prior to the conversion date. As the closing sales price fell below $0.03, an additional 15% discount was attributed to the conversion price. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $104,382 added to the principal of the note. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $158,142 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $113,142. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $2,196 of the convertible note payable and $953 of accrued interest was converted into 4,999,000 shares of the Company’s common stock. p) On February 21, 2019, the Company entered into a convertible promissory note with a non-related party for $60,000 of which $5,000 was an original issue discount and $8,000 was paid directly to third parties resulting in cash proceeds to the Company of $47,000. The Company also issued a warrant with a term of five years to purchase up to 300,000 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on February 14, 2022 and bears interest on the unpaid principal balance at a rate of 0% per annum. Stringent pre-payment terms apply (from 10% to 40%, dependent upon the timeframe of repayment during the note’s term) and in the event of default an additional 40% of the principal and interest balance shall be owed. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to the lower of 60% of the lowest trading price during the 20-trading day period prior to the conversion date or $0.12. If at any time the closing sales price falls below $0.01, then an additional 10% discount will be attributed to the conversion price. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $40,000 added to the principal of the note. The embedded conversion option and warrant qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $124,796 and the warrant of $51,856 resulted in a discount to the note payable of $60,000 and an initial derivative expense of $129,652. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $5,000 of the convertible note payable was converted into 5,555,555 shares of the Company’s common stock. q) On February 21, 2019, the Company entered into a convertible promissory note with a non-related party for $55,125 of which $2,500 was an original issue discount and $2,625 was paid directly to third parties resulting in cash proceeds to the Company of $50,000. The note is due on February 20, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. On August 20, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $172,120 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $122,120. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $13,000 of the convertible note payable was converted into 3,054,511 shares of the Company’s common stock. r) On February 26, 2019, the Company entered into a convertible promissory with a non-related for $53,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $50,000. The note is due on February 20, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On June 19, 2019, the Company defaulted on the note, resulting in the note becoming immediately convertible and a default penalty of $26,500 added to the principal of the note. On June 19, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $187,924 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $137,924. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. s) On March 18, 2019, the Company entered into a convertible promissory note with a non-related party for $75,000 of which $10,250 was an original issue discount resulting in cash proceeds to the Company of $64,750. The Company also issued a warrant with a term of five years to purchase up to 187,500 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on December 13, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 50% of the lowest trading price during the 25-trading day period prior to the conversion date. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $185,618 added to the principal of the note. The embedded conversion option and warrant qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $139,196 and the warrant of $25,401 resulted in a discount to the note payable of $75,000 and an initial derivative expense of $99,847. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $27,804 of the convertible note payable and $5,287 of accrued interest was converted into 11,490,000 shares of the Company’s common stock t) On May 2, 2019, the Company entered into a convertible promissory with a non-related party for $38,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $35,000. The note is due on April 29, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On June 19, 2019, the Company defaulted on the note, resulting in the note becoming immediately convertible and a default penalty of $19,000 added to the principal of the note. On June 19, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $135,455 and resulted in a discount to the note payable of $35,000 and an initial derivative expense of $100,455. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. u) On September 16, 2019, the Company entered into a convertible promissory note with a non-related party for $26,000 of which $6,000 was an original issue discount resulting in cash proceeds to the Company of $20,000. The note is due on September 11, 2022 and bears interest on the unpaid principal balance at a rate of 0% per annum and a default interest rate of 0% per annum. The Company also issued a warrant with a term of five years to purchase up to 300,000 shares of common stock of the Company at an exercise price of $0.10 per share and subject to adjustment for dilutive issuances and cashless exercise. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal 60% of the lowest trading price during the 20-trading day period prior to the conversion date. As the closing sales price fell below $0.01, an additional 10% discount was attributed to the conversion price. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $58,453 and warrants $2,768 resulted in a discount to the note payable of $20,000 and an initial derivative expense of $41,221. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. v) During the nine months ended September 30, 2019, the $150,000 note and $25,814 of accrued interest was repaid by a cosigner to the loan. On September 25, 2019, the Company entered into a convertible promissory note with the non-related party for $175,814 in consideration for repaying the note. The note is due on September 25, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum and a default interest rate of 8% per annum. The Note will be repaid in cash or by conversion to common shares at a mutually acceptable rate not less than the market price of the Company’s common stock. |
DERIVATIVE AND PREFERRED STOCK
DERIVATIVE AND PREFERRED STOCK LIABILITIES | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
DERIVATIVE AND PREFERRED SERIES A STOCK LIABILITIES | NOTE 7 – DERIVATIVE AND PREFERRED SERIES A STOCK LIABILITIES The embedded conversion option of (1) the convertible debentures described in Note 6; (2) preferred series A stock liability; (3) warrants; contain conversion features that qualify for embedded derivative classification. The fair value of the liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments. Upon the issuance of the convertible notes payable described in Note 6, the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options. The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company’s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the warrants described in Note 10, qualified for derivative classification. The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities. September 30, 2019 December 31, 2018 Balance at the beginning of period $ 322,976 $ — Original discount limited to proceeds of notes 540,750 100,000 Fair value of derivative liabilities in excess of notes proceeds received 1,653,887 247,033 Settlement of derivative instruments (2,447,147 ) — Change in fair value of embedded conversion option 5,467,732 (24,057 ) Balance at the end of the period $ 5,538,198 $ 322,976 The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option and warrant liabilities as their fair values were determined by using the Binomial Model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At issuance 128-394% 1.60-2.51% 0 % 0.49-5.00 At September 30, 2019 225-480% 1.55-1.91% 0 % 0.06-4.95 On December 1, 2018, the Company’s Board of Director authorized an offering for 1,000,000 Preferred Series “A” stock at $0.10 per share and with 100%, regular or cashless exercise at $0.10 per share of common stock warrant coverage. At December 31, 2018, the Company received $60,000 of subscriptions for the issuance of 600,000 shares of Preferred Series “A” stock to three accredited investors who are related parties. On December 1, 2018, the Company issued 600,000 warrants subject to cashless exercise at $0.10 per share for 5 years. The Company was unable to issue the subscriber the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock had been duly validly authorized. As the Company had not filed the Certificate of Designation, and as the Company could not issue the preferred shares to settle the proceeds received, it was determined the subscriptions were settleable in cash. As a result, the Company classified the subscriptions received as a liability in accordance with ASC 480 Distinguishing Liabilities from Equity. The fair value of the liability of the preferred series A stock at December 31, 2018 was $144,352. On March 29, 2019, the Company executed a settlement agreement that included the settlement of 100,000 of the Series A Preferred Shares and 100,000 of the warrants subscribed for as part of the December 1, 2018 offering. The Company agreed to issue 164,000 shares of its common stock as payment in full $25,000 owed to the subscriber for services rendered; the Company agreed to accept conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. The Company recorded the fair value of the shares issued of $103,792 and recorded a loss on the settlement of the subscriptions and the amounts payable of $55,830. On April 12, 2019, the Company filed the Certificate of Designation for the Series A Convertible Preferred Stock. The fair value of the liability of the preferred series A stock on April 12, 2019 was $60,398. On April 12, 2019, the Company adjusted the fair value of the preferred series A stock to $60,398 and reclassified the fair value of the preferred series A stock to mezzanine equity. The Company uses Level 3 inputs for its valuation methodology for the preferred series A stock liability as their fair values were determined by using the Binomial Model based on various assumptions. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations: Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At April 12, 2019 170% 2.36% 0 % 3.00 |
STOCKHOLDERS' DEFICIT AND STOCK
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS | NOTE 8 - STOCKHOLDERS’ DEFICIT Preferred Stock Series A Preferred Shares Effective March 23, 2018, the Company amended the articles of incorporation and authorized 10,000,000 shares of preferred stock with a par value of $0.001 per share; of which 1,000,000 shares were designated as Series A Convertible Preferred Stock as of September 30, 2019. The preferred stock may be issued from time to time by the board of directors as shares of one or more classes or series. On December 1, 2018, the Company’s Board of Director authorized an offering for 1,000,000 Preferred Series “A” stock at $0.10 per share and with 100%, regular or cashless exercise at $0.10 per share of common stock warrant coverage. At December 31, 2018, the Company received $60,000 of subscriptions for the issuance of 600,000 shares of Preferred Series “A” stock to three accredited investors who are related parties. The Company was unable to issue the subscriber the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock has been duly validly authorized. See Note 7 for liabilities related to the Company’s commitment to issue shares of Series A stock upon the designation. On April 12, 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State designating 1,000,000 shares of its authorized preferred stock as Series A Convertible Preferred Stock. The principal terms of the Series A Preferred Shares are as follows: Issue Price The stated price for the Series A Preferred shall be $0.10 per share. Redemption This Company may at any time following the first anniversary date of issuance (the “Redemption Date”), at the option of the Board of Directors, redeem in whole or in part the Shares by paying in cash in exchange for the Shares to be redeemed a price equal to the Original Series A Issue Price ($0.10) (the “Redemption Price”). Any redemption affected pursuant to this provision shall be made on a pro rata basis among the holders of the Shares in proportion to the number of Shares then held by them. Dividends None. Preference of Liquidation In the event of any liquidation, dissolution or winding up of the Company, the holders of Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of this Company to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of (i) $0.10 for each outstanding Share (the “Original Series A Issue Price”) and (ii) an amount equal to 6% of the Original Series A Issue Price for each 12 months that has passed since the date of issuance of any Shares (such amount being referred to herein as the “Premium”). For purposes of this provision, a liquidation, dissolution or winding up of this Company shall be deemed to be occasioned by, or to include, (A) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (B) a sale of all or substantially all of the assets of the Company; unless the Company’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity. If upon the occurrence of such liquidation, dissolution or winding up event, the assets and funds thus distributed among the holders of the Shares shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of series of preferred stock that may from time to time come into existence, the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Shares in proportion to the preferential amount each such holder is otherwise entitled to receive. In any of such liquidation, dissolution or winding up event, if the consideration received by the Company is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows: A. Securities not subject to investment letter or other similar restrictions on free marketability (covered by (B) below): 1) If traded on a securities exchange (NASDAQ, AMEX, NYSE, etc.), the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty day period ending three (3) days prior to the closing; 2) If traded on a quotation system, such as the OTC:QX, OTC:QB or OTC Pink Sheets, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty day period ending three (3) days prior to the closing; and 3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock. B. The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock. Voting The holder of each Share shall not have any voting rights, except in the case of voting on a change in the preferences of Shares. Conversion Each Share shall be convertible into shares of the Company’s Common Stock at a price per share of $0.10 (1 Share converts into 1 share of Common Stock), at the option of the holder thereof, at any time following the date of issuance of such Share and on or prior to the fifth day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with respect to the Shares, at the office of this Company or any transfer agent for such stock. Each Share shall automatically be converted into shares of Common Stock on the first day of the thirty-sixth (36th) month following the original issue date of the Shares, at the Conversion Price per share. The Company was unable to issue the subscribers the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock had been duly validly authorized. As the Company had not filed the Certificate of Designation, and as the Company could not issue the preferred shares to settle the proceeds received, it was determined the subscriptions were settleable in cash. As a result, the Company classified the subscriptions received as a liability in accordance with ASC 480 Distinguishing Liabilities from Equity. The filing of the Certificate of Designation and issuance of the preferred shares resulted in the reclassification of the Series A Preferred Shares from a liability to temporary equity or “mezzanine” because the preferred shares include the liquidation preferences described above. The fair value of the preferred series A stock on April 12, 2019 was $60,398 and was valued by using the Binomial Model based on various assumptions. As of September 30, 2019, there were 500,000 shares of Series A Convertible Preferred Stock issued or outstanding. Series B Preferred Shares Effective August 13, 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State thereby designating 1,000,000 shares of its authorized preferred stock as Series B –Preferred Stock. The principal terms of the Series B Preferred Shares are as follows: Voting Rights Holders of the Series B Preferred Stock shall be entitled to cast five hundred (500) votes for each share held of the Series B Preferred Stock on all matters presented to the stockholders of the Corporation for stockholder vote which shall vote along with holders of the Corporation’s Common Stock on such matters. Redemption Rights The Series B Preferred Stock shall be redeemed by the Corporation upon the successful receipt by the Corporation of at least $1,000,000 in equity capital following the issuance of the Series B Preferred Stock. Conversion Rights The Series B Preferred Stock is not convertible into shares of Common Stock of the Corporation. Protective Provisions So long as any shares of Series B Preferred Stock are outstanding, this Corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the Holders of the Series B Preferred Stock which is entitled, other than solely by law, to vote with respect to the matter, and which Preferred Stock represents at least a majority of the voting power of the then outstanding shares of such Series B Preferred Stock: a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of; b) alter or change the rights, preferences or privileges of the shares of Series B Preferred Stock so as to affect adversely the shares; c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock; d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Series B Preferred Stock with respect to dividends or upon liquidation, or (ii) having rights similar to any of the rights of the Series B Preferred Stock; or e) amend the Corporation’s Articles of Incorporation or bylaws Dividends None. Preference of Liquidation None. Upon designation, the Company issued 500,000 shares of the Series B preferred stock to each of its CEO and President (1,000,000 shares in total) pursuant to their employment agreements. As the Series B Preferred Shares represent share-based payments that are not classified as liabilities but that could require the employer to redeem the equity instruments for cash or other assets the Company classified the initial redemption amount of the shares of $155,000 as temporary equity or “mezzanine”. As of September 30, 2019, there were 1,000,000 shares of Series B Preferred Stock issued or outstanding. Series C Preferred Shares Pursuant to the September 18, 2019 majority consent of stockholders in lieu of an annual meeting (including the consent of the Series A Convertible Preferred Stockholders), the Registrant filed a Certificate of Designation with the Nevada Secretary of State designating 5,500,000 shares of its authorized preferred stock as Series C Convertible Preferred Stock. The Registrant is awaiting the file stamped Certificate of Designation from the Nevada Secretary of State. The rights and preferences of such preferred stock are as follows: The number of shares constituting the Series C Convertible Preferred Stock shall be 5,500,000. Such number of shares may be increased or decreased by resolution of the Board; provided, that no decrease shall reduce the number of shares of Series C Convertible Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series C Convertible Preferred Stock. Conversion Rights Each Share shall be convertible into shares of the Company’s Common Stock at a price per share of $0.01 (1 Share converts into 100 shares of Common Stock) (the “Conversion Price”), at the option of the holder thereof, at any time following the date of issuance of such Share and on or prior to the fifth (5th) day prior to a redemption Date, if any, as may have been fixed in any redemption notice with respect to the Shares, at the office of this Company or any transfer agent for such stock. Voting Rights The holder of each Share shall not have any voting rights, except in the case of voting on a change in the preferences of Shares. Protective Provisions So long as any Shares are outstanding, this Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of Shares which is entitled, other than solely by law, to vote with respect to the matter, and which Shares represents at least a majority of the voting power of the then outstanding Shares: a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of; b) alter or change the rights, preferences or privileges of the Shares so as to affect adversely the Shares; c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock; d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Shares with respect to upon liquidation, or (ii) having rights similar to any of the rights of the Preferred Stock; or e) amend the Company’s Articles of Incorporation or bylaws. Other Rights There are no other rights, privileges, or preferences attendant or relating to in any way the Shares, including by way of illustration but not limitation, those concerning dividend, ranking, other conversion, other redemption, participation, or anti-dilution rights or preferences. At September 30, 2019, there were no Series C Preferred Shares outstanding. Common Stock Effective March 23, 2018, the Company amended the articles of incorporation and increased the authorized shares of common stock with a par value of $0.001 per share from 100,000,000 to 300,000,000 shares. Effective October 4, 2019, the Company amended the articles of incorporation and increased the authorized shares of common stock with a par value of $0.001 per share from 300,000,000 to 1,000,000,000 shares. The number of shares outstanding of the registrant’s common stock as of September 30, 2019 was 262,360,042. On January 1, 2019, the Company entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The terms of the contract call for an annual salary of $90,000 for the first year, effective March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operational results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020; 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. On January 1, 2019 the fair value of the restricted stock award totaled $240,000 which will be expensed over vesting period. As of September 30, 2019, 375,000 shares were issued and the Company had recognized $102,391 of expense. On January 28, 2019, the Company agreed to convert $131,327 of principal and interest of the notes payable described in Note 6(a) into 987,421 shares of the Company’s common stock. On March 25, 2019, the Company issued 200,000 shares of common stock to two employees of the Company as compensation in lieu of commission on sales of the Company’s products. The Company recorded the fair value of the common shares of $34,000 in consulting expense. On March 29, 2019, the Company executed a settlement agreement with a contractual consultant, UCAP Partners, LLC for the settlement of $25,000 owed to the contractor for the provision of services as related to the March 15, 2018 agreement between UCAP and us. The settlement terms include acknowledgement that the Company owes UCAP $25,000 as payment for said services; that UCAP purchased and fully paid for Series A Preferred Stock and Warrants from the Company on December 3, 2018 (100,000 Preferred Series A Shares and 100,000 warrants to purchase common shares at $0.10/share); the settlement is outlined as follows: the Company shall issue 164,000 shares of its common stock as payment in full for the services rendered on the consulting contract; the Company shall accept UCAP’s conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of UCAP’s 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt to UCAP, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. As a result of this transaction, 3,597,989 shares of Company’s common stock were issued and a $55,830 loss on settlement of debt was recognized. During the nine months ended September 30, 2019, the Company issued a total of 76,154,631 shares of the Company’s common stock upon the conversion of $44,723 of principal ($42,223) and interest ($2,500) pursuant to the convertible note payable described in Note 6(i). During the nine months ended September 30, 2019, the Company issued a total of 66,290,000 shares of the Company’s common stock upon the conversion of $64,558 of principal ($58,058) and interest ($6,500) pursuant to the convertible note payable described in Note 6(j). During the nine months ended September 30, 2019, the Company issued a total of 18,559,816 shares of the Company’s common stock upon the conversion of $74,200 of the convertible note payable pursuant to the convertible note payable described in Note 6(k). During the nine months ended September 30, 2019, the Company issued a total of 5,207,600 shares of the Company’s common stock upon the conversion of $4,508 of the convertible note payable and $179 of accrued interest pursuant to the convertible note payable described in Note 6(m). During the nine months ended September 30, 2019, the Company issued a total of 7,500,000 shares of the Company’s common stock upon the conversion of $8,640 of principal pursuant to the convertible note payable described in Note 6(n). During the nine months ended September 30, 2019, the Company issued a total of 4,999,000 shares of the Company’s common stock upon the conversion of $2,196 of principal and $953 of interest pursuant to the convertible note payable described in Note 6(o). During the nine months ended September 30, 2019, the Company issued a total of 5,555,555 shares of the Company’s common stock upon the conversion of $5,000 of principal pursuant to the convertible note payable described in Note 6(p). During the nine months ended September 30, 2019, the Company issued a total of 3,054,511 shares of the Company’s common stock upon the conversion of $13,000 of principal pursuant to the convertible note payable described in Note 6(q). During the nine months ended September 30, 2019, the Company issued a total of 11,490,000 shares of the Company’s common stock upon the conversion of $27,804 of the convertible note payable and $5,287 of accrued interest pursuant to the convertible note payable described in Note 6(s). On August 16, 2019, the Company issued 5,989,500 shares of common stock upon the cashless exercise of 6,000,000 warrants. On September 24, 2019, the Company issued 6,041,381 shares of common stock upon the cashless exercise of 6,057,143 warrants. On August 1, 2019, the Company entered into a consulting agreement for investor relations services through September 30, 2019. The agreement called for 1,000,000 restricted shares of common stock to be issued to the consultant. As of September 30, 2019, the Company recorded $15,000 in additional paid-in capital for the consulting expense related to the consulting services provided, due to the fact that the 1,000,000 common shares were issued subsequently on March 11, 2020. NOTE 9 – STOCK OPTIONS The Company did not grant any stock options during the year ended December 31, 2018 or the nine months ended September 30, 2019. Below is a table summarizing the options issued and outstanding as of September 30, 2019: Number of Weighted average exercise price Balance, December 31, 2018 2,287,500 0.34 Granted — — Expired (1,905,000 ) 0.16 Settled — — Balance, September 30, 2019 382,500 1.24 As at September 30, 2019, the following share stock options were outstanding: Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 01/01/2016 75,000 75,000 0.33 0.25 12/31/2019 25,000 01/01/2016 90,000 90,000 0.33 0.25 12/31/2019 30,000 09/15/2016 10,000 10,000 1.00 0.25 12/31/2019 10,000 10/01/2016 7,500 7,500 1.00 0.25 12/31/2019 7,500 01/26/2017 200,000 200,000 2.00 2.33 01/26/2022 400,000 382,500 382,500 $ 472,500 The weighted average exercise prices are $1.24 for the options outstanding and exercisable, respectively. The intrinsic value of stock options outstanding at September 30, 2019 was $Nil. |
WARRANTS
WARRANTS | 9 Months Ended |
Sep. 30, 2019 | |
Guarantees and Product Warranties [Abstract] | |
WARRANTS | NOTE 10 – WARRANTS As described in Note 6, from February 14 through September 11, 2019, the Company issued 487,500 warrants subject to an exercise price of $0.20 per share for 5 years and 300,000 warrants subject to an exercise price of $0.10 per share for 5 years. If the Company issues any common stock or common stock equivalents at an effective price per share less than the warrant’s exercise price the exercise price of the warrants will be reduced to the lower price. In addition, the number of common shares issuable upon conversion of the warrants is increased so that the number of shares issuable multiplied by the exercise price equals the aggregate exercise price of the warrants immediately prior to the exercise reduction. During period, convertible notes were exercised at a price less than the original exercise price of these warrants, resulting in an adjustment to the number of warrants and exercise price. The Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible instruments. The initial fair value of the warrants issued during the period was calculated using the Binomial Model as described in Note 7. The following table summarizes the continuity of share purchase warrants: Number of Weighted average exercise price Balance, December 31, 2018 650,000 0.09233 Adjustment to warrants outstanding 431,007,738 0.00041 Granted 787,500 0.00131 Settled (12,130,881 ) 0.00117 Balance, September 30, 2019 420,314,357 0.00053 As at September 30, 2019, the following share purchase warrants were outstanding: Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 11/28/2018 142,857,143 * 142,857,143 * 0.00035 * 2.16 11/28/2021 $ 50,000 12/3/2018 500,000 500,000 0.10 4.18 12/3/2023 50,000 2/14/2019 159,397,690 * 159,397,690 * 0.00035 * 4.38 2/14/2024 55,789 3/13/2019 107,142,857 * 107,142,857 * 0.00035 * 4.45 3/13/2024 37,500 9/11/2019 10,416,667 * 10,416,667 * 0.00288 * 4.95 9/11/2024 30,000 420,314,357 420,314,357 $ 223,289 *The number of warrants outstanding and exercisable is variable based on adjustments to the exercise price of the warrant due to dilutive issuances. The intrinsic value of warrants outstanding at September 30, 2019 was $2,513,523. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 11 – RELATED PARTY TRANSACTIONS The Company has agreements with related parties for consulting services, accrued rent, accrued interest, notes payable and stock options. See Notes to Financial Statements numbers 6, 9, 8 and 12 for more details. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12 – COMMITMENTS AND CONTINGENCIES Consulting Agreements On January 1, 2018, the Company entered into a contract for consulting services with a Florida-based agricultural advocacy group. The agreement included a $5,000 initial engagement fee and $1,250 per month through January 1, 2019. On March 15, 2018, the Company entered into a 12-month service agreement, expiring on March 15, 2019, for strategic planning, financing, capital formation, up listing and expansion of the Company’s shareholder base. The consulting company received a $5,000 non-refundable initial fee and the agreement included $2,500 per month through March 14, 2019 and received 2,000,000 shares of the Company’s restricted common stock. On July 2, 2018, the Company entered into a 6-month service contract for investor relations services through January 2, 2019. The agreement called for 1,000,000 restricted shares of common stock to be issued to Life Sciences Journeys, Inc. The shares were issued on October 9, 2018. The Company placed a stop transfer order on the shares, discussed the benefits of services provided by Life Sciences Journeys and rescinded its stop transfer, allowing the contract to continue through its end. On November 28, 2018, the Company re-engaged the services of a prior contractor for finance assistance related to obtaining a line of credit based on the Company’s equipment and/or contracts, through November 27, 2019. If the Company obtains a line of credit based on the Company’s equipment and/or contracts the Company will incur a fee of 4% of financings from $1,000,000 to $5,000,000, 3% of financings from $5,000,001 to $10,000,000, and 0.25% of financings over $10,000,000. On December 3, 2018, the Company engaged a consultant for services related to business development in the healthcare market. The contract is in place through June 3, 2019 and the consultant received 100,000 restricted shares of the Company’s common stock for the services. On August 1, 2019, the Company entered into a consulting agreement for investor relations services through September 30, 2019. Pursuant to the agreement the Company issued 1,000,000 restricted shares of common stock with a fair value of $15,000. As described in Note 13, on October 1, 2019 the Company entered into a second agreement with the consultant for the provision of investor relations services through March 31, 2020. The agreement called for a cash payment of $25,000 and 12,000,000 0restricted shares of common stock to be issued to the consultant. The Company issued the 12,000,000 common shares to the consultant on March 16, 2020. In addition to contracts for service, the Company also regularly uses the professional services of securities attorneys, a US EPA specialist, professional accountants and other public-company specialists. Employment Agreements – On September 1, 2017, the Company entered into a five-year employment agreement with Marion E. Paris, Jr. to be the Vice President for Business Development and Director of Intellectual Properties for Paradigm. Under the terms of the employment agreement, Mr. Paris is to be paid an annual base salary of $90,000 and other benefits, including four weeks paid vacation. On January 1, 2019, the Company entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The terms of the contract call for an annual salary of $90,000 for the first year, effective March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operation results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020, 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. On August 12, 2019, the Company amended the Employment Contract with F. Jody Read, CEO, whereby 500,000 Preferred Series B shares were issued to Read. All other terms of the January 1, 2019 employment agreement remain in effect. On August 12, 2019, the Company entered into a four-year employment agreement with Gary, J. Grieco, its President, whereby Mr. Grieco will continue to receive $24,000 per year for services to Company as its President and whereby 500,000 Preferred Series B shares were issued to Grieco. The employment agreement begins on August 12, 2019, is automatically renewable for two years unless terminated earlier as per the terms of the agreement. Other Obligations and Commitments – On April 12, 2018, the Company entered into a Purchase agreement with a third party to purchase its exclusive rights to US EPA Product Registration No. 83241-1 for a fixed fee. The Company paid $5,000 on execution of the agreement and has continued to make periodic installment payments for the purchase of this Registration. On March 27, 2019, the Company entered into a letter of intent (the “LOI”) with Magnolia Columbia Limited (“Magnolia”), a Canadian company traded on the TSXV under the symbol “MCO”. Pursuant to the terms of the LOI, the parties agreed to negotiate and enter into a definitive agreement on or before April 27, 2019. As of April 28, 2019, we had not entered into a definitive agreement with Magnolia or agreed to any extensions of the LOI, therefore the LOI terminated. On July 12, 2019, the Company entered into a binding Letter of Intent (“LOI”) to negotiate in good faith a transaction with 2705908 Ontario Inc. for a definitive loan and option agreement to include the acquisition of at least 51% control of the Company, in addition to the other terms and commitments. On July 30, 2019, the LOI due diligence and negotiations were slated to terminate, but both parties agreed to extend the term of the LOI through August 19, 2019. On August 19, 2019 the Company and 2705908 Ontario Inc. allowed the LOI to expire. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13. SUBSEQUENT EVENTS On October 1, 2019, the Company entered into a consulting agreement for investor relations services through March 31, 2020. The agreement called for a cash payment of $25,000 and 12,000,000 restricted shares of common stock to be issued to the consultant. The Company issued the 12,000,000 common shares to the consultant on March 16, 2020. On October 3, 2019, the Company entered into a promissory note with a non-related party for $50,000. The note is due on April 3, 2020 and bears interest at a rate of 12%. On October 9, 2020, the Company had repaid $12,599 of the loan. On March 8, 2020, the Company agreed to settle the remaining $39,054 of principal and accrued interest outstanding on the note through the issuance of 39,000 Shares of Series A Preferred Stock and the payment of $54. On October 4, 2019, F. Jody Read stepped down from his position as Chief Executive Officer of the Registrant due to increased workload in the Registrant’s wholly-owned operating subsidiary. Mr. Read remains as a director and Chief Operating Officer of the Registrant. Concurrent with Mr. Read stepping down from the position of Chief Executive Officer, the Registrant appointed Mr. Gary J. Grieco to act as President and Chief Executive Officer of the Registrant. On October 7, 2019, the Company entered into a convertible promissory with a non-related party for $53,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $50,000. The note is due on October 7, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On October 8, 2019, the Company issued 6,399,302 shares of common stock upon the cashless exercise of 6,424,286 warrants. On October 22, 2019, the Company issued 6,498,105 shares of common stock upon the cashless exercise of 6,528,571 warrants. On October 29, 2019, the Company entered into a convertible promissory with a non-related party for $50,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $47,000. The note is due on October 29, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On November 12, 2019, the Company entered into a promissory note with a non-related party for $17,500. The note is due November 12, 2020, is unsecured and bears an interest rate of 8% per annum. On December 12, 2019, the Company entered into a loan with a non-related party for $12,250 of which $2,250 was the loan fee or original issue discount resulting in cash proceeds to the Company of $10,000. The note is to be repaid through 12 monthly payments ending on May 12, 2020. On December 19, 2019, the Company sold future receivables of $83,400 in consideration for $58,200. The advance is to be repaid through $3,208 weekly payments. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory. On December 20, 2019, the Company sold future receivables of $148,362 in consideration for $100,000. The advance is to be repaid through $2,958 weekly payments. On December 31, 2019, the Company sold future receivables of $87,540 in consideration for $60,000. The advance is to be repaid through $3,651 weekly payments. The Company paid $3,625 of finance fees and includes default fees of up to $2,500 and a default rate of interest of 9%. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory. As of the date of filing the Company had only received advances of $15,575. On January 1, 2020, the Company entered into a four-year employment agreement with Gary, J. Grieco, its President and CEO, whereby Mr. Grieco will receive $48,000 per year commencing April 1, 2020, and receive 15,000,000 shares of the Company’s common stock for services to the Company as its President and CEO. In addition, once monthly revenue exceeds monthly expenses the salary will be increased and Mr. Grieco will be issued an additional 10,000,000 shares of the Company’s common stock. The employment agreement begins on January 1, 2020, and is automatically renewable for two years unless terminated earlier as per the terms of the agreement. On February 11, 2020, the Company received a $1,500 advance from the President of the Company and a $2,000 advance from a Director of the Company. The advances are unsecured, non-interest bearing and due on demand. On February 18, 2020, the Company sold future receivables of $32,978 in consideration for $22,000. The advance is to be repaid through daily payments of $660. The Company paid $794 of finance fees and the agreement includes default fees of up to $15,000. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory. On February 18, 2020, the Company received an additional tranche of $8,888 pursuant to the convertible note described in Note 6(i). The additional tranche consisted of a $888 original issue discount resulting in cash proceeds to the Company of $8,000. On February 28, 2020, the Company entered into a promissory note with a non-related party for $20,000. The note is due May 28, 2020, is unsecured and bears an interest rate of 8% per annum. On March 2, 2020, the Company entered into a convertible promissory with a non-related party for $45,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $42,000. The note is due on March 2, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On March 5, 2020, the Company received an additional tranche of $30,000 pursuant to the convertible note described in Note 6(i). The additional tranche consisted of a $3,000 original issue discount resulting in cash proceeds to the Company of $27,000. On March 9, 2020, the Company entered into an agreement to settle the $175,814 convertible note payable described in Note 6(v) and $5,279 of interest accrued on the note through the issuance of 181,000 Shares of Series A Preferred Stock and the payment of $93. As of April 6, 2020, the Company sold 270,000 Series C Convertible Preferred Shares for $270,000. From October 1, 2019 through March 25, 2020, the Company issued a total of 265,453,351 shares of common stock upon the conversion of $286,043 of principal, $20,306 of interest and of fees pursuant to the convertible notes payable described in Note 6. On April 1, 2020, the Company entered into a settlement agreement to settle the $60,000 and $26,000 convertible notes described in Notes 6(p) and (u). The Company agreed to pay $100,000 to settle the principal and accrued interest and penalties relating to the two convertible notes. On April 1, 2020, the Company issued 4,623,093 shares of common stock upon the cashless exercise of 4,640,371 warrants. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on August 27, 1986. The Company changed its domicile to Nevada on August 26, 1999. On August 31, 2016, the Company entered into a Securities Exchange Agreement with Paradigm Convergence Technologies Corporation (“Paradigm”) to affect the acquisition of Paradigm as a wholly-owned subsidiary. Under the terms of the agreement, Bingham issued 16,790,625 restricted common shares of Bingham stock to the shareholders of Paradigm in exchange for all 22,387,500 outstanding common shares of Paradigm stock. In addition, Bingham issued options exercisable into 2,040,000 shares of the Bingham’s common stock (with exercise prices ranging between $0.133 and $0.333) in exchange for 2,720,000 outstanding Paradigm stock options (with exercise prices ranging between $0.10 and $0.25). These 2,040,000 options have been adjusted at the same exchange rate of 75% that the outstanding common shares were exchanged. As a result of this share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer. Paradigm is located in Little River, SC and was formed June 6, 2012 under the name of EUR-ECA, Ltd. On September 11, 2015, its Board of Directors authorized EUR-ECA Ltd to file with the Nevada Secretary of State to change its name to Paradigm Convergence Technologies Corp. Paradigm is a technology licensing company specializing in environmentally safe solutions for global sustainability. The company holds a patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm provides innovative products and technologies for eliminating biocidal contamination from water supplies, industrial fluids, hard surfaces, food processing equipment, and medical devices. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships. Effective on February 29, 2018, the Company changed its name from Bingham Canyon Corporation to PCT LTD to more accurately identify the Company’s direction and to develop the complimentary relationship and association with its wholly-owned operating company, Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”). |
Principles of Consolidations | Principles of Consolidations The accompanying consolidated financial statements include the accounts of PCT LTD (“Parent”) and its wholly owned subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm” or “Subsidiary”). All intercompany accounts have been eliminated upon consolidation. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less. The cash of $6,669 and $4,893 as of September 30, 2019 and December 31, 2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of September 30, 2019 and December 31, 2018. |
Fair Value Measurements | Fair Value Measurements The Company follows ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value: • Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities. • Level 2 - Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. • Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The carrying values of our financial instruments, including, cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short maturities of these financial instruments. Derivative liabilities and preferred series A stock liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. Our financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2019, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Derivative liability (1) 5,538,198 — — 5,538,198 Total 5,538,198 — — 5,538,198 Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred series A stock liability (1) 144,352 — — 144,352 Derivative liability (1) 322,976 — — 322,976 Total 467,328 — — 467,328 (1) The Company has estimated the fair value of these liabilities using the Binomial Model. |
Derivative and Preferred Series A Stock Liabilities | Derivative and Preferred Series A Stock Liabilities The Company accounts for derivative instruments in accordance with ASC Topic 815, “ Derivatives and Hedging Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 7 for additional information. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. The Company provided allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable is periodically evaluated for collectability bases on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. Based on management’s evaluation, the Company provided an allowance for doubtful accounts of $0 at September 30, 2019 and December 31, 2018, respectively. |
Inventories | Inventories Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. We record the value of our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, future pricing and market conditions. As of September 30, 2019 and December 31, 2018, the inventory consisted of parts for equipment sold as replacement parts to existing customers or sold to new customers. The Company has recorded a reserve allowance of $0 and $0 as of September 30, 2019 and December 31, 2018, respectively. The Company has determined that some of the supplies inventory is necessary to be placed into service, after assembly into equipment to be used in product manufacturing and classified as Machinery and Equipment. The balance at September 30, 2019 and December 31, 2018 of such supplies and equipment not yet placed in service amounted to $276,428 and $319,735, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at purchased cost and depreciated utilizing a straight-line method over estimated useful lives ranging from 3 to 7 years after the asset has been placed in service. Upon selling equipment that had been under a lease agreement, the company discontinues the depreciation on that piece of equipment, as it transfers ownership to another entity. Additions and major improvements that extend the useful lives of property and equipment are capitalized. Maintenance and repairs are charged to operations as incurred. Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any related gains or losses are recorded in the results of operations. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the fair value. Under similar analysis no impairment was recorded during the nine months ended September 30, 2019. |
Intangible Assets | Intangible Assets Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 1 to 15 years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. The recorded impairment expense was nil for the nine months ended September 30, 2019. |
Research and Development | Research and Development Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable. |
Leases | Leases In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets and lease liabilities for our lease agreements with original terms of greater than one year. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $43,330 and operating lease liability of $43,330. Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required. See Note 5 for further details. |
Revenue Recognition | Revenue Recognition On May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606) The Company has the following three revenue streams: 1) product sales (equipment and/or fluid solutions); 2) licensing (contract-based use of the Company’s US EPA Product Registration, returning revenue in licensing fees and/or royalties from minimum or actual fluid sales); and 3) equipment leases (under systems service agreements, usually 3-year contracts for the provision of the Company’s equipment and service of such, under contract to customers, with renewable terms). The Company recognizes revenue from the sale of products when the performance obligation is satisfied by transferring control of the product to a customer. The Company recognizes revenue from the leasing of equipment as the entity provides the equipment and the customer simultaneously receives and consumes the benefits through the use of the equipment. This revenue generating activity would meet the criteria for a performance obligation satisfied over time. As a result, the Company recognizes revenue over time by using the output method, as the Company can measure progress of the performance obligation using the time elapsed under each obligation. The Company’s licenses provide a right to use and create performance obligations satisfied at a point in time. The Company recognizes revenue from licenses when the performance obligation is satisfied through the transfer of the license. For licenses that include royalties the Company will recognize royalty revenue as the underlying sales or usages occur, as long as this approach does not result in the acceleration of revenue ahead of the entity’s performance. The Company has disclosed disaggregated revenue via revenue stream on the face of the statement of operations. The Company did not have any contract assets or liabilities at September 30, 2019. |
Basic and Diluted Loss per Share | Basic and Diluted Loss Per Share Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. As of September 30, 2019, there were outstanding common share equivalents (options, warrants, convertible debt and preferred series A stock) which amounted to 960,689,801 shares of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Financial assets and liabilities carried at fair value measured on a recurring basis | Our financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2019, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Derivative liability (1) 5,538,198 — — 5,538,198 Total 5,538,198 — — 5,538,198 Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following: Total fair value at Quoted prices in active markets Significant other observable inputs Significant unobservable inputs Description: Preferred series A stock liability (1) 144,352 — — 144,352 Derivative liability (1) 322,976 — — 322,976 Total 467,328 — — 467,328 (1) The Company has estimated the fair value of these liabilities using the Binomial Model. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | September 30, 2019 December 31, 2018 Machinery and leased equipment $ 151,719 $ 138,209 Machinery and equipment not yet in service 321,565 369,754 Office equipment and furniture 20,064 20,064 Website 2,760 2,760 Total property and equipment $ 496,108 $ 530,787 Less: Accumulated Depreciation (49,762 ) (30,815 ) Property and equipment, net 446,346 499,972 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Components of intangible assets | September 30, 2019 December 31, 2018 Patents $ 4,505,489 $ 4,514,989 Technology rights 200,000 235,500 Intangible, at cost 4,705,489 4,750,489 Less: Accumulated amortization (922,837 ) (690,714 ) Net Carrying Amount $ 3,782,652 $ 4,059,775 |
Estimated future amortization expense of intangible assets | $ For year ending December 31, 2019 76,947 For year ending December 31, 2020 303,613 For year ending December 31, 2021 302,003 For year ending December 31, 2022 302,003 For year ending December 31, 2023 to December 31, 2034 2,798,086 Total 3,782,652 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
ROU assets and liabilities | September 30, 2019 Operating lease right-of-use asset $ 7,878 Operating lease liability: Current operating lease liability $ 9,125 Noncurrent operating lease liability — Total operating lease liability $ 9,125 |
Remaining lease payments | September 30, 2019 2019 - remaining $ 9,600 2020 and thereafter — Total lease payments 9,600 Less: imputed interest (475 ) Total ROU liabilities $ 9,125 |
Minimum payments under operating lease agreements | December 31, 2018 2019 $ 52,950 2020 — Total $ 52,950 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes payable | The following tables summarize notes payable as of September 30, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at September 30, 2019 Balance at December 31, 2018 Note Payable(v) *** $ 150,000 5/18/2016 6/1/2019 19.00 % $ 150,000 $ 150,000 Note Payable *** $ 25,000 5/8/2017 6/30/2018 0.00 % $ 27,500 $ 27,500 Note Payable $ 130,000 6/20/2018 1/2/2020 8.00 % $ 130,000 $ 130,000 Note Payable (a) $ 126,964 6/20/2018 8/31/2018 6.00 % $ — $ 126,964 Note Payable (b) $ 26,500 6/26/2018 10/1/2019 10.00 % $ 10,090 $ 26,500 Note Payable $ 60,000 10/30/2018 12/30/2018 8.00 % $ — $ 60,000 Note Payable *** $ 8,700 11/15/2018 6/30/2019 10.00 % $ 8,700 $ 8,700 Note Payable (c) $ 52,063 4/8/2020 4/8/2020 41.38 % $ 42,854 $ — Note Payable (d) $ 40,000 6/20/2019 12/31/2019 8.00 % $ 40,000 $ — Note Payable (e) $ 6,741 6/21/2019 4/8/2020 41.38 % $ 6,741 $ — Note Payable (d) $ 90,596 9/15/2019 3/16/2020 8.00 % $ 90,596 $ — Subtotal $ 284,420 $ 529,664 Debt Discount $ (6,320 ) $ (3,293 ) Balance, net $ 278,100 $ 526,371 Less current portion $ (278,100 ) $ (399,664 ) Total long-term $ — $ 126,707 *** Currently in default The following table summarizes notes payable, related parties as of September 30, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at September 30, 2019 Balance at December 31, 2018 Note Payable, RP *** $ 30,000 4/10/2018 1/15/2019 3.00 % $ 30,000 $ 30,000 Note Payable, RP $ 380,000 6/20/2018 1/2/2020 8.00 % $ 380,000 $ 380,000 Note Payable, RP $ 350,000 6/20/2018 1/2/2020 5.00 % $ 339,000 $ 350,000 Note Payable, RP $ 17,000 6/20/2018 1/2/2020 5.00 % $ 17,000 $ 17,000 Note Payable, RP *** $ 50,000 7/27/2018 11/30/2018 8.00 % $ 50,000 $ 50,000 Note Payable, RP $ 5,000 10/9/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP $ 5,000 10/19/2018 Demand 0.00 % $ 5,000 $ 5,000 Note Payable, RP ** $ 3,000 10/24/2018 Demand 0.00 % $ — $ 3,000 Note Payable, RP (f)** $ 2,544 1/3/2019 6/30/2019 3.00 % $ — $ — Note Payable, RP (g) $ 15,000 8/16/2019 2/16/2020 8.00 % $ 15,000 — Subtotal $ 837,500 $ 840,000 Debt Discount $ (2,614 ) $ (13,174 ) Balance, net $ 8,34,886 $ 826,826 Less current portion $ (834,886 ) $ (93,000 ) Total long-term $ — $ 733,826 ** Paid off during the period The following table summarizes convertible notes payable as of September 30, 2019 and December 31, 2018: Type Amount Origination Date Maturity Date Annual Interest Rate Balance at September 30, 2019 Balance at December 31, 2018 Convertible Note Payable (h) $ 450,000 3/28/2018 3/31/2021 8.00 % $ — $ 450,000 Convertible Note Payable ** $ 38,000 7/30/2018 7/25/2019 12.00 % $ — $ 38,000 Convertible Note Payable ** $ 53,000 8/29/2018 8/27/2019 12.00 % $ — $ 53,000 Convertible Note Payable (i) * $ 50,000 12/6/2018 12/6/2019 5.00 % $ 36,123 $ 50,000 Convertible Note Payable (j) * $ 65,000 12/6/2018 12/6/2019 5.00 % $ 43,599 $ 65,000 Convertible Note Payable(k) *** $ 63,000 12/12/2018 12/5/2019 22.00 % $ 42,800 $ 63,000 Convertible Note Payable (h) $ 539,936 1/15/2019 1/15/2020 8.00 % — — Convertible Note Payable (l) *** $ 33,000 1/16/2019 1/15/2020 22.00 % $ 49,500 $ — Convertible Note Payable (m) *** $ 100,000 1/18/2019 1/16/2020 8.00 % $ 100,000 $ — Convertible Note Payable (n) * $ 60,000 1/29/2019 1/22/2020 8.00 % $ 60,000 $ — Convertible Note Payable (o) * $ 50,000 2/1/2019 10/22/2019 12.00 % $ 50,000 $ — Convertible Note Payable (p) * $ 60,000 2/21/2019 2/14/2022 0.00 % $ 60,000 $ — Convertible Note Payable (q) $ 55,125 2/21/2019 2/20/2020 8.00 % $ 55,125 $ — Convertible Note Payable (r) *** $ 53,000 2/26/2019 2/20/2020 22.00 % $ 79,500 $ — Convertible Note Payable (s)*** $ 75,000 3/18/2019 12/13/2019 12.00 % $ 75,000 $ — Convertible Note Payable (t) *** $ 38,000 5/2/2019 4/29/2020 22.00 % $ 57,000 $ — Convertible Note Payable (u) *** $ 26,000 9/16/2019 9/11/2022 0.00 % $ 26,000 $ — Convertible Note Payable (v) $ 175,814 9/27/2019 9/25/2020 8.00 % $ 175,814 $ — Subtotal $ 1,334,040 $ 719,000 Debt Discount $ — $ (165,186 ) Balance, net $ 1,334,040 $ 553,814 Less current portion $ (1,334,040 ) $ (161,280 ) Total long-term $ — $ 392,534 * Embedded conversion feature accounted for as a derivative liability |
DERIVATIVE AND PREFERRED STOC_2
DERIVATIVE AND PREFERRED STOCK LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Summary of changes in the fair value of the Company's Level 3 financial liabilities | September 30, 2019 December 31, 2018 Balance at the beginning of period $ 322,976 $ — Original discount limited to proceeds of notes 540,750 100,000 Fair value of derivative liabilities in excess of notes proceeds received 1,653,887 247,033 Settlement of derivative instruments (2,447,147 ) — Change in fair value of embedded conversion option 5,467,732 (24,057 ) Balance at the end of the period $ 5,538,198 $ 322,976 |
Assumptions used in the calculations for fair value of derivative liabilities | Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At issuance 128-394% 1.60-2.51% 0 % 0.49-5.00 At September 30, 2019 225-480% 1.55-1.91% 0 % 0.06-4.95 |
Assumptions used in the calculations for fair value of preferred stock liabilities | Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years) At April 12, 2019 170% 2.36% 0 % 3.00 |
STOCKHOLDERS' DEFICIT AND STO_2
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Summary of options issued and outstanding | Number of Weighted average exercise price Balance, December 31, 2018 2,287,500 0.34 Granted — — Expired (1,905,000 ) 0.16 Settled — — Balance, September 30, 2019 382,500 1.24 |
Stock options outstanding | Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 01/01/2016 75,000 75,000 0.33 0.25 12/31/2019 25,000 01/01/2016 90,000 90,000 0.33 0.25 12/31/2019 30,000 09/15/2016 10,000 10,000 1.00 0.25 12/31/2019 10,000 10/01/2016 7,500 7,500 1.00 0.25 12/31/2019 7,500 01/26/2017 200,000 200,000 2.00 2.33 01/26/2022 400,000 382,500 382,500 $ 472,500 |
WARRANTS (Tables)
WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Guarantees and Product Warranties [Abstract] | |
Summary of the continuity of share purchase warrants | Number of Weighted average exercise price Balance, December 31, 2018 650,000 0.09233 Adjustment to warrants outstanding 431,007,738 0.00041 Granted 787,500 0.00131 Settled (12,130,881 ) 0.00117 Balance, September 30, 2019 420,314,357 0.00053 |
Share purchase warrants outstanding | Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Issued Outstanding Exercisable Price $ Life (Years) Date Exercised 11/28/2018 142,857,143 * 142,857,143 * 0.00035 * 2.16 11/28/2021 $ 50,000 12/3/2018 500,000 500,000 0.10 4.18 12/3/2023 50,000 2/14/2019 159,397,690 * 159,397,690 * 0.00035 * 4.38 2/14/2024 55,789 3/13/2019 107,142,857 * 107,142,857 * 0.00035 * 4.45 3/13/2024 37,500 9/11/2019 10,416,667 * 10,416,667 * 0.00288 * 4.95 9/11/2024 30,000 420,314,357 420,314,357 $ 223,289 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Financial assets and liabilities carried at fair value measured on a recurring basis (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred series A stock liability | $ 144,352 | ||
Derivative liability | 5,538,198 | 322,976 | |
Total | 5,538,198 | 467,328 | |
Quoted prices in active markets (Level 1) | |||
Preferred series A stock liability | |||
Derivative liability | |||
Total | |||
Significant other observable inputs (Level 2) | |||
Preferred series A stock liability | |||
Derivative liability | |||
Total | |||
Significant unobservable inputs (Level 3) | |||
Preferred series A stock liability | 144,352 | ||
Derivative liability | 5,538,198 | 322,976 | |
Total | $ 5,538,198 | $ 467,328 |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | |
Nature of Operations | |||||
Company common stock issued to Paradigm shareholders, shares | 16,790,625 | ||||
Paradigm common stock acquired in Securities Exchange Agreement, shares | 22,387,500 | ||||
Company options issued to Paradigm shareholders, shares exercisable | 2,040,000 | ||||
Paradigm options received in Securities Exchange Agreement, shares | 2,720,000 | ||||
Cash | $ 6,669 | $ 8,062 | $ 4,893 | $ 7,838 | |
Cash equivalents | |||||
Allowance for doubtful accounts | |||||
Reserve allowance for inventory | |||||
Balance of supplies and equipment not yet placed in service | 276,428 | $ 319,735 | |||
Impairment expense | |||||
Antidilutive securities excluded from calculation of earnings per share | 960,689,801 | ||||
Exercise price, minimum | |||||
Nature of Operations | |||||
Exercise prices of options issued | $ 0.133 | ||||
Exercise prices of options received | 0.10 | ||||
Exercise price, maximum | |||||
Nature of Operations | |||||
Exercise prices of options issued | 0.333 | ||||
Exercise prices of options received | $ 0.25 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Losses incurred since inception | $ (20,141,465) | $ (9,927,003) |
Working capital | $ (8,934,741) |
PROPERTY AND EQUIPMENT - Proper
PROPERTY AND EQUIPMENT - Property and equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property, Plant and Equipment [Abstract] | ||
Machinery and leased equipment | $ 151,719 | $ 138,209 |
Machinery and equipment not yet in services | 321,565 | 369,754 |
Office equipment and furniture | 20,064 | 20,064 |
Website | 2,760 | 2,760 |
Total Property and equipment | 496,108 | 530,787 |
Less: Accumulated depreciation | (49,762) | (30,815) |
Property and equipment, net | $ 446,346 | $ 499,972 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ (18,947) | $ (18,644) |
INTANGIBLE ASSETS - Components
INTANGIBLE ASSETS - Components of intangible assets (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents | $ 4,505,489 | $ 4,514,989 |
Technology rights | 200,000 | 235,500 |
Intangible, at cost | 4,705,489 | 4,750,489 |
Less: Accumulated amortization | (922,837) | (690,714) |
Net Carrying Amount | $ 3,782,652 | $ 4,059,775 |
INTANGIBLE ASSETS - Estimated f
INTANGIBLE ASSETS - Estimated future amortization expense of intangible assets (Details) | Sep. 30, 2019USD ($) |
Intangible Assets - Estimated Future Amortization Expense Of Intangible Assets | |
For year ending December 31, 2019 | $ 76,947 |
For year ending December 31, 2020 | 303,613 |
For year ending December 31, 2021 | 302,003 |
For year ending December 31, 2022 | 302,003 |
For year ending December 31, 2023 to December 31, 2034 | 2,798,086 |
Total | $ 3,782,652 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Intangible Assets Details Narrative Abstract | ||
Amortization expense | $ (234,621) | $ (232,284) |
LEASES - ROU assets and liabili
LEASES - ROU assets and liabilities (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Operating lease right-of-use asset | $ 7,878 | |
Operating lease liability: | ||
Current operating lease liability | 9,125 | |
Noncurrent operating lease liability | ||
Total operating lease liability | $ 9,125 |
LEASES - Remaining lease paymen
LEASES - Remaining lease payments (Details) | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
2019 - remaining | $ 9,600 |
2020 and thereafter | |
Total lease payments | 9,600 |
Less: imputed interest | (475) |
Total ROU liabilities | $ 9,125 |
LEASES - Minimum payments under
LEASES - Minimum payments under operating lease agreements (Details) | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 52,950 |
2020 | |
Total | $ 52,950 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | ||
Net lease assets | $ 43,330 | |
Net lease liabilities | $ 43,330 | |
Operating lease expense recognized | $ 44,447 | |
Amounts paid included in measurement of operating lease liabilities | 43,200 | |
Decrease in ROU liabilities from cash paid | $ (34,205) |
NOTES PAYABLE - Notes payable (
NOTES PAYABLE - Notes payable (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Notes Payable (1) | |
Original amount | $ 150,000 |
Issuance date | May 18, 2016 |
Maturity date | Jun. 1, 2019 |
Interest rate | 19.00% |
Balance, beginning | $ 150,000 |
Balance, ending | 150,000 |
Notes Payable (4) | |
Original amount | $ 25,000 |
Issuance date | May 8, 2017 |
Maturity date | Jun. 30, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 27,500 |
Balance, ending | 27,500 |
Notes Payable (14) | |
Original amount | $ 130,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 8.00% |
Balance, beginning | $ 130,000 |
Balance, ending | 130,000 |
Notes Payable (15) | |
Original amount | $ 126,964 |
Issuance date | Jun. 20, 2018 |
Maturity date | Aug. 31, 2018 |
Interest rate | 60.00% |
Balance, beginning | $ 126,964 |
Balance, ending | |
Notes Payable (16) | |
Original amount | $ 26,500 |
Issuance date | Jun. 26, 2018 |
Maturity date | Oct. 1, 2019 |
Interest rate | 10.00% |
Balance, beginning | $ 26,500 |
Balance, ending | 10,090 |
Notes Payable (17) | |
Original amount | $ 60,000 |
Issuance date | Oct. 30, 2018 |
Maturity date | Dec. 30, 2018 |
Interest rate | 8.00% |
Balance, beginning | $ 60,000 |
Balance, ending | |
Notes Payable (18) | |
Original amount | $ 8,700 |
Issuance date | Nov. 15, 2018 |
Maturity date | Jun. 30, 2019 |
Interest rate | 10.00% |
Balance, beginning | $ 8,700 |
Balance, ending | 8,700 |
Notes Payable (19) | |
Original amount | $ 52,063 |
Issuance date | Apr. 8, 2020 |
Maturity date | Apr. 8, 2020 |
Interest rate | 41.38% |
Balance, beginning | |
Balance, ending | 42,854 |
Notes Payable (20) | |
Original amount | $ 40,000 |
Issuance date | Jun. 20, 2019 |
Maturity date | Dec. 31, 2019 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 40,000 |
Notes Payable (21) | |
Original amount | $ 6,741 |
Issuance date | Jun. 21, 2019 |
Maturity date | Apr. 8, 2020 |
Interest rate | 41.38% |
Balance, beginning | |
Balance, ending | 6,741 |
Notes Payable (22) | |
Original amount | $ 90,596 |
Issuance date | Sep. 15, 2019 |
Maturity date | Mar. 16, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 90,596 |
Notes Payable, Related Party (12) | |
Original amount | $ 30,000 |
Issuance date | Apr. 10, 2018 |
Maturity date | Jan. 15, 2019 |
Interest rate | 3.00% |
Balance, beginning | $ 30,000 |
Balance, ending | 30,000 |
Notes Payable, Related Party (14) | |
Original amount | $ 380,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 8.00% |
Balance, beginning | $ 380,000 |
Balance, ending | 380,000 |
Notes Payable, Related Party (15) | |
Original amount | $ 350,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 5.00% |
Balance, beginning | $ 350,000 |
Balance, ending | 339,000 |
Notes Payable, Related Party (16) | |
Original amount | $ 17,000 |
Issuance date | Jun. 20, 2018 |
Maturity date | Jan. 2, 2020 |
Interest rate | 5.00% |
Balance, beginning | $ 17,000 |
Balance, ending | 17,000 |
Notes Payable, Related Party (18) | |
Original amount | $ 50,000 |
Issuance date | Jul. 27, 2018 |
Maturity date | Nov. 30, 2018 |
Interest rate | 8.00% |
Balance, beginning | $ 50,000 |
Balance, ending | 50,000 |
Notes Payable, Related Party (19) | |
Original amount | $ 5,000 |
Issuance date | Oct. 9, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 5,000 |
Balance, ending | 5,000 |
Notes Payable, Related Party (20) | |
Original amount | $ 5,000 |
Issuance date | Oct. 19, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 5,000 |
Balance, ending | 5,000 |
Notes Payable, Related Party (22) | |
Original amount | $ 3,000 |
Issuance date | Oct. 24, 2018 |
Interest rate | 0.00% |
Balance, beginning | $ 3,000 |
Balance, ending | |
Notes Payable, Related Party (23) | |
Original amount | $ 2,544 |
Issuance date | Jan. 3, 2019 |
Maturity date | Jun. 30, 2019 |
Interest rate | 3.00% |
Balance, beginning | |
Balance, ending | |
Notes Payable, Related Party (24) | |
Original amount | $ 15,000 |
Issuance date | Aug. 16, 2019 |
Maturity date | Feb. 16, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 15,000 |
Convertible Note Payable (1) | |
Original amount | $ 450,000 |
Issuance date | Mar. 28, 2018 |
Maturity date | Mar. 31, 2021 |
Interest rate | 8.00% |
Balance, beginning | $ 450,000 |
Balance, ending | |
Convertible Note Payable (3) | |
Original amount | $ 38,000 |
Issuance date | Jul. 25, 2018 |
Maturity date | Jul. 25, 2019 |
Interest rate | 12.00% |
Balance, beginning | $ 38,000 |
Balance, ending | |
Convertible Note Payable (4) | |
Original amount | $ 53,000 |
Issuance date | Aug. 27, 2018 |
Maturity date | Aug. 27, 2019 |
Interest rate | 12.00% |
Balance, beginning | $ 53,000 |
Balance, ending | |
Convertible Note Payable (5) | |
Original amount | $ 50,000 |
Issuance date | Dec. 6, 2018 |
Maturity date | Dec. 6, 2019 |
Interest rate | 5.00% |
Balance, beginning | $ 50,000 |
Balance, ending | 36,123 |
Convertible Note Payable (6) | |
Original amount | $ 65,000 |
Issuance date | Dec. 6, 2018 |
Maturity date | Dec. 6, 2019 |
Interest rate | 5.00% |
Balance, beginning | $ 65,000 |
Balance, ending | 43,599 |
Convertible Note Payable (7) | |
Original amount | $ 63,000 |
Issuance date | Dec. 12, 2018 |
Maturity date | Dec. 5, 2019 |
Interest rate | 22.00% |
Balance, beginning | $ 63,000 |
Balance, ending | 42,800 |
Convertible Note Payable (2) | |
Original amount | $ 539,936 |
Issuance date | Jan. 15, 2019 |
Maturity date | Jan. 15, 2022 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | |
Convertible Note Payable (8) | |
Original amount | $ 33,000 |
Issuance date | Jan. 16, 2019 |
Maturity date | Jan. 15, 2020 |
Interest rate | 22.00% |
Balance, beginning | |
Balance, ending | 49,500 |
Convertible Note Payable (9) | |
Original amount | $ 100,000 |
Issuance date | Jan. 18, 2019 |
Maturity date | Jan. 16, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 100,000 |
Convertible Note Payable (10) | |
Original amount | $ 60,000 |
Issuance date | Jan. 29, 2019 |
Maturity date | Jan. 22, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 60,000 |
Convertible Note Payable (11) | |
Original amount | $ 50,000 |
Issuance date | Feb. 1, 2019 |
Maturity date | Oct. 22, 2019 |
Interest rate | 12.00% |
Balance, beginning | |
Balance, ending | 50,000 |
Convertible Note Payable (12) | |
Original amount | $ 60,000 |
Issuance date | Feb. 21, 2019 |
Maturity date | Feb. 14, 2022 |
Interest rate | 0.00% |
Balance, beginning | |
Balance, ending | 60,000 |
Convertible Note Payable (13) | |
Original amount | $ 55,125 |
Issuance date | Feb. 21, 2019 |
Maturity date | Feb. 20, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | 55,125 |
Convertible Note Payable (14) | |
Original amount | $ 53,000 |
Issuance date | Feb. 26, 2019 |
Maturity date | Feb. 20, 2020 |
Interest rate | 22.00% |
Balance, beginning | |
Balance, ending | 79,500 |
Convertible Note Payable (15) | |
Original amount | $ 75,000 |
Issuance date | Mar. 18, 2019 |
Maturity date | Dec. 13, 2019 |
Interest rate | 12.00% |
Balance, beginning | |
Balance, ending | 75,000 |
Convertible Note Payable (16) | |
Original amount | $ 38,000 |
Issuance date | May 2, 2019 |
Maturity date | Apr. 29, 2020 |
Interest rate | 22.00% |
Balance, beginning | |
Balance, ending | 57,000 |
Convertible Note Payable (17) | |
Original amount | $ 26,000 |
Issuance date | Sep. 16, 2019 |
Maturity date | Sep. 11, 2022 |
Interest rate | 0.00% |
Balance, beginning | |
Balance, ending | 26,000 |
Convertible Note Payable (18) | |
Original amount | $ 175,814 |
Issuance date | Sep. 27, 2019 |
Maturity date | Sep. 25, 2020 |
Interest rate | 8.00% |
Balance, beginning | |
Balance, ending | $ 175,814 |
DERIVATIVE AND PREFERRED STOC_3
DERIVATIVE AND PREFERRED STOCK LIABILITIES - Summary of changes in the fair value of the Company's Level 3 financial liabilities (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019 | Dec. 31, 2018 | |
Notes to Financial Statements | ||
Balance at the beginning of period | $ 322,976 | |
Original discount limited to proceeds of notes | 540,750 | 100,000 |
Fair value of derivative liabilities in excess of notes proceeds received | 1,653,887 | 247,033 |
Settlement of derivative instruments | (2,447,147) | |
Change in fair value of embedded conversion option | 5,467,732 | (24,057) |
Balance at the end of the period | $ 5,538,198 | $ 322,976 |
DERIVATIVE AND PREFERRED STOC_4
DERIVATIVE AND PREFERRED STOCK LIABILITIES - Assumptions used in the calculations for fair value of derivative liabilities (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Derivative liabilities - At Issuance | |
Expected price volatility, minimum | 128.00% |
Expected price volatility, maximum | 394.00% |
Expected dividend yield | 0.00% |
Expected option life, minimum | 5 months 27 days |
Expected option life, maximum | 5 years |
Risk-free interest rate, minimum | 1.60% |
Risk-free interest rate, maximum | 2.51% |
Derivative liabilities | |
Expected price volatility, minimum | 225.00% |
Expected price volatility, maximum | 480.00% |
Expected dividend yield | 0.00% |
Expected option life, minimum | 22 days |
Expected option life, maximum | 4 years 11 months 12 days |
Risk-free interest rate, minimum | 1.55% |
Risk-free interest rate, maximum | 1.91% |
DERIVATIVE AND PREFERRED STOC_5
DERIVATIVE AND PREFERRED STOCK LIABILITIES - Assumptions used in the calculations for fair value of preferred stock liabilities (Details) - Preferred stock liability | 9 Months Ended |
Sep. 30, 2019 | |
Expected price volatility, maximum | 170.00% |
Expected dividend yield | 0.00% |
Expected option life, maximum | 3 years |
Risk-free interest rate, maximum | 2.36% |
DERIVATIVE AND PREFERRED STOC_6
DERIVATIVE AND PREFERRED STOCK LIABILITIES (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Notes to Financial Statements | |
Fair value of preferred series A stock liability | $ 144,352 |
Loss on change in fair value of preferred shares | $ (55,830) |
STOCKHOLDERS' DEFICIT AND STO_3
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS - Summary of options issued and outstanding (Details) | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Stockholders Deficit And Stock Options - Summary Of Options Issued And Outstanding | |
Number of options, beginning balance | shares | 2,287,500 |
Number of options, granted | shares | |
Number of options, expired | shares | (1,905,000) |
Number of options, settled | shares | |
Number of options, ending balance | shares | 382,500 |
Weighted average exercise price, beginning balance | $ / shares | $ 0.34 |
Weighted average exercise price, granted | $ / shares | |
Weighted average exercise price, expired | $ / shares | 0.16 |
Weighted average exercise price, settled | $ / shares | |
Weighted average exercise price, ending balance | $ / shares | $ 1.24 |
STOCKHOLDERS' DEFICIT AND STO_4
STOCKHOLDERS' DEFICIT AND STOCK OPTIONS - Stock options outstanding (Details) - USD ($) | Jan. 27, 2017 | Oct. 02, 2016 | Sep. 16, 2016 | Jan. 02, 2016 | Sep. 30, 2019 |
Options issued and outstanding | |||||
Number outstanding | 200,000 | 7,500 | 10,000 | 75,000 | 382,500 |
Number exercisable | 200,000 | 7,500 | 10,000 | 75,000 | 382,500 |
Exercise price | $ 2 | $ 1 | $ 1 | $ 0.33 | |
Weighted average remaining contractual life | 2 years 3 months 29 days | 3 months | 3 months | 3 months | |
Expiration date | Jan. 26, 2022 | Dec. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2019 | |
Proceeds to Company if exercised | $ 400,000 | $ 7,500 | $ 10,000 | $ 25,000 | $ 472,500 |
Options issued and outstanding (2) | |||||
Number outstanding | 90,000 | ||||
Number exercisable | 90,000 | ||||
Exercise price | $ 0.33 | ||||
Weighted average remaining contractual life | 3 months | ||||
Expiration date | Dec. 31, 2019 | ||||
Proceeds to Company if exercised | $ 30,000 |
WARRANTS - Summary of the conti
WARRANTS - Summary of the continuity of share purchase warrants (Details) | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Guarantees and Product Warranties [Abstract] | |
Number of warrants, beginning balance | shares | 650,000 |
Number of warrants, adjustments to warrants outstanding | shares | 431,007,738 |
Number of warrants, granted | shares | 787,500 |
Number of warrants, settled | shares | (12,130,881) |
Number of warrants, ending balance | shares | 420,314,357 |
Weighted average exercise price, beginning balance | $ / shares | $ 0.09233 |
Weighted average exercise price, adjustments to warrants outstanding | $ / shares | 0.00041 |
Weighted average exercise price, granted | $ / shares | 0.00131 |
Weighted average exercise price, settled | $ / shares | 0.00117 |
Weighted average exercise price, ending balance | $ / shares | $ 0.00053 |
WARRANTS - Share purchase warra
WARRANTS - Share purchase warrants outstanding (Details) - Share purchase warrants outstanding - USD ($) | Sep. 12, 2019 | Mar. 14, 2019 | Feb. 15, 2019 | Dec. 04, 2018 | Nov. 29, 2018 | Sep. 30, 2019 |
Number outstanding | 10,416,667 | 107,142,857 | 171,428,571 | 500,000 | 142,857,143 | 420,314,357 |
Number exercisable | 10,416,667 | 107,142,857 | 171,428,571 | 500,000 | 142,857,143 | 420,314,357 |
Exercise price | $ 0.00288 | $ 0.00035 | $ 0.00035 | $ 0.10 | $ 0.00035 | |
Weighted average remaining contractual life | 4 years 11 months 12 days | 4 years 5 months 15 days | 4 years 4 months 17 days | 4 years 2 months 5 days | 2 years 1 month 28 days | |
Expiration date | Sep. 11, 2024 | Mar. 13, 2024 | Feb. 14, 2024 | Dec. 3, 2023 | Nov. 28, 2021 | |
Proceeds to Company if exercised | $ 30,000 | $ 37,500 | $ 60,000 | $ 50,000 | $ 50,000 | $ 223,289 |