Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2015shares | |
Document and Entity Information | |
Entity Registrant Name | Heatwurx, Inc. |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2015 |
Amendment Flag | false |
Entity Central Index Key | 1,533,743 |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 11,017,388 |
Entity Filer Category | Smaller Reporting Company |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | Q3 |
Trading Symbol | hwx |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 15,097 | $ 21,234 |
Accounts receivable | 11,613 | 4,095 |
Prepaid expenses and other current assets | 5,970 | 131,862 |
Inventory | 141,484 | 222,018 |
Consigned inventory | 38,963 | |
Assets held for sale | 109,500 | |
Total current assets | 322,627 | 379,209 |
Other assets: | ||
Equipment, net of depreciation | 175,517 | 466,413 |
Intangible assets, net of amortization | 1,696,430 | |
Total other assets | 175,517 | 2,162,843 |
Total assets | 498,144 | 2,542,052 |
Current liabilities: | ||
Accounts payable | 190,726 | 190,168 |
Accrued liabilities | 101,140 | 105,613 |
Deferred revenue | 22,500 | 58,165 |
Interest payable | 104,150 | 19,541 |
Income taxes payable | 175 | 100 |
Liability related to assets held for sale | 43,549 | |
Loan payable, current | 44,813 | 56,486 |
Senior secured notes payable | 947,361 | 160,000 |
Revolving line of credit | 229,980 | 229,980 |
Current portion of unsecured notes payable | 404,212 | 20,000 |
Total current liabilities | 2,088,606 | 840,053 |
Long-term liabilities: | ||
Loan payable | 27,507 | 133,834 |
Unsecured notes payable | 360,232 | |
Total long-term liabilities | 27,507 | 494,066 |
Total liabilities | $ 2,116,113 | $ 1,334,119 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock value | $ 18 | $ 18 |
Common stock value | 1,102 | 1,095 |
Additional paid-in capital | 14,309,615 | 14,111,944 |
Accumulated deficit | (15,928,704) | (12,905,124) |
Total stockholders' equity | (1,617,969) | 1,207,933 |
Total liabilities and stockholders' equity | $ 498,144 | $ 2,542,052 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Debt discount, unsecured notes payable | $ 15,788 | $ 59,768 |
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 4,500,000 | 4,500,000 |
Preferred Stock, Issued | 178,924 | 178,924 |
Common Stock, Par Value | $ 0.0001 | $ 0.0001 |
Common Stock, Shares Authorized | 20,000,000 | 20,000,000 |
Common Stock, Issued | 11,061,414 | 9,495,045 |
Common Stock, Outstanding | 11,017,641 | 10,952,356 |
Preferred Series B | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 0 | 0 |
Liquidation preference | $ 0 | $ 0 |
Preferred Series C | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 760,000 | 760,000 |
Preferred Stock, Issued | 0 | 0 |
Liquidation preference | $ 0 | $ 0 |
Preferred Series D | ||
Preferred Stock, Par Value | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 1,500,000 | 1,500,000 |
Preferred Stock, Issued | 178,924 | 178,924 |
Liquidation preference | $ 810,859 | $ 810,216 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement | ||||
Equipment sales | $ 17,593 | $ 16,624 | $ 50,353 | $ 101,069 |
Service revenue | 35,997 | 28,870 | 79,872 | |
Other revenue | 40,572 | 45,572 | 4,860 | |
Total revenue | 58,165 | 52,621 | 124,795 | 185,801 |
Costs of goods sold | 42,618 | 25,289 | 82,894 | 104,621 |
Gross profit | 15,547 | 27,332 | 41,901 | 81,180 |
Expenses: | ||||
Selling, general and administrative | 119,299 | 677,398 | 1,188,231 | 2,194,809 |
Research and development | 1,714 | 11,729 | 27,146 | 179,993 |
Impairment of assets held for sale | 84,999 | 84,999 | ||
Impairment of intangible asset | 1,517,859 | |||
Impairment of goodwill | 390,659 | |||
Total expenses | 206,012 | 689,127 | 2,818,235 | 2,765,461 |
Loss from operations | (190,465) | (661,795) | (2,776,334) | (2,684,281) |
Other Income and Expense: | ||||
Gain (loss) on disposal of assets | (44,128) | (51,505) | ||
Interest income | 850 | 1 | 4,651 | 75 |
Interest expense | 61,975 | 130,135 | 168,198 | 303,167 |
Total other income and expense | (105,253) | (130,134) | (215,052) | (303,092) |
Loss before income taxes | (295,718) | (791,929) | (2,991,386) | (2,987,373) |
Income taxes | (25) | (25) | (75) | (75) |
Net loss | (295,743) | (791,954) | (2,991,461) | (2,987,448) |
Preferred stock cumulative dividend and deemed dividend | 10,824 | 79,886 | 32,119 | 139,040 |
Net loss available to common stockholders | $ (306,567) | $ (871,840) | $ (3,023,580) | $ (3,126,488) |
Net loss per common share basic and diluted | $ (0.03) | $ (0.1) | $ (0.27) | $ (0.37) |
Weighted average shares outstanding basic and diluted | 11,017,640 | 8,433,752 | 11,010,854 | 8,366,014 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (2,991,461) | $ (2,987,448) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 81,352 | 67,560 |
Amortization of intangible asset | 178,571 | 267,856 |
Amortization of debt discount | 43,980 | 130,701 |
Impairment of intangible asset | 1,517,859 | |
Impairment of assets held for sale | 84,999 | |
Impairment of goodwill | 390,659 | |
Gain (loss) on disposal of assets | (51,505) | |
Bad debt expense | 5,148 | |
Non-cash expenses exchanged for services | 25,500 | |
Stock-based compensation | 84,178 | 209,854 |
Changes in operating assets and liabilities | ||
(Increase) decrease in receivables | (2,363) | (7,539) |
(Increase) decrease in prepaid and other current assets | 125,892 | (12,468) |
(Increase) decrease in inventory | (19,379) | (56,207) |
(Increase) decrease in consigned inventory | (38,963) | |
Increase (decrease) in income taxes payable | 75 | 75 |
Increase (decrease) in accounts payable | 557 | 38,790 |
Increase (decrease) in accrued liabilities | (36,591) | (284,198) |
Increase (decrease) in deferred revenue | (35,665) | |
Increase (decrease) in interest payable | 98,970 | 6,300 |
Cash used in operating activities | (825,836) | (2,236,065) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | 1,399 | 25,719 |
Cash from acquisition of business | 3,355 | |
Cash used in investing activities | (1,399) | (22,364) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of unsecured notes payable | 2,149,003 | |
Proceeds from issuance of senior secured notes payable | 753,000 | |
Repayment of senior subordinated notes payable | 500,000 | |
Proceeds from issuance of common shares, net | 88,000 | |
Proceeds from issuance of preferred shares, net | 509,963 | |
Repayment of loan payable | 19,902 | 31,667 |
Cash provided by (used in) financing activities | 821,098 | 2,127,299 |
Net change in cash and cash equivalents | (6,137) | (131,130) |
Cash and cash equivalents, beginning of period | 21,234 | 186,864 |
Cash and cash equivalents, end of period | $ 15,097 | $ 55,734 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) | Series D Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity |
Beginning Balance, shares at Dec. 31, 2014 | 178,924 | 10,952,356 | |||
Beginning Balance, amount at Dec. 31, 2014 | $ 18 | $ 1,095 | $ 14,111,944 | $ (12,905,124) | $ 1,207,933 |
Stock issued in private placement, shares | 50,285 | ||||
Stock issued in private placement, value | $ 5 | 87,995 | 88,000 | ||
Stock issued for services, shares | 15,000 | ||||
Stock issued for services, value | $ 2 | 25,498 | 25,500 | ||
Stock-based compensation | 84,178 | 84,178 | |||
Dividends accrued on Series D shares | (32,119) | (32,119) | |||
Net loss for the period | (2,991,461) | (2,991,461) | |||
Ending Balance, shares at Sep. 30, 2015 | 178,924 | 11,017,641 | |||
Ending Balance, amount at Sep. 30, 2015 | $ 18 | $ 1,102 | $ 14,309,615 | $ (15,928,704) | $ (1,617,969) |
Principal Business Activities
Principal Business Activities | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Principal Business Activities | 1. PRINCIPAL BUSINESS ACTIVITIES Organization and Business |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2014, and have been prepared on a consistent basis with the accounting policies described in Note 2 - Summary of Significant Accounting Policies of the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. The CompanyÂ’s accounting policies did not change in the first half of 2015. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any future period. The CompanyÂ’s consolidated financial statements include Dr. Pave, LLC and Dr. Pave Worldwide, LLC; both wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. The CompanyÂ’s financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as described below, certain factors raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. The Company also faces certain risks and uncertainties which are present in many emerging companies regarding product development, future profitability, ability to obtain future capital, protection of patents and property rights, competition, rapid technological change, government regulations, recruiting and retaining key personnel, and third party manufacturing organizations. The Company has previously relied exclusively on private placements with a small group of investors to finance its business and operations. The Company has had little revenue since inception. For the nine months ended September 30, 2015, the Company incurred a net loss of approximately $2,991,000 and utilized approximately $826,000 in cash flows from operating activities. The Company had cash on hand of approximately $15,000 as of September 30, 2015. The Company is not able to obtain additional financing adequate to fulfill its commercialization activities, nor achieve a level of revenues adequate to support the CompanyÂ’s cost structure. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. During the third quarter the Company moved to list the asphalt paving assets and the intellectual property inclusive of patents and trademarks for sale. Several proposals were submitted to the Company, and following review by the Board of Directors, none were deemed suitable to satisfy the financial requirements of the Company moving forward. The Company has significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensees, warehouse inventory and look for potential merger candidates. It is the CompanyÂ’s intention to move forward as a public entity and to seek other potential merger candidates. If the Company fails to merge or be acquired by another company, we will be required to terminate all our operations. As of September 30, 2015, the Company had approximately $15,000 cash on hand and is spending approximately $10,000 per month as a result of the significant reduction in employees and overhead, of which only a minor amount was satisfied by gross proceeds from operations or sale of assets. Hence, the amount of cash on hand is not adequate to meet our ongoing expenses. During the nine months ended September 30, 2015, the Company received cash in the aggregate of $753,000 and converted a $160,000 secured note plus accrued interest and a $20,000 unsecured note into the $2,000,000 senior secured debt offering commenced in February 2015. Based upon the CompanyÂ’s current financial position and inability to obtain additional financing, the Company will not be able to satisfy the mandatory principal payments in 2015 under the $2,000,000 senior secured debt. The Company will continue to work with the lenders to explore extension or conversion options, but there is no guarantee the lenders will agree to modify the repayment terms of the notes under conditions that will allow the Company to continue to repay the notes, if at all. As these notes are secured by all of the assets of the Company, including intellectual property rights, the Company is in default in regards to interest payments on the notes, and the lenders may call the notes and foreclose on the CompanyÂ’s assets. The issues described above raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. Although the Company commenced a $2,000,000 secured debt offering, the Company does not believe it will be able to raise additional amounts under the offering. The Company has been solely reliant on raising debt and capital in order to maintain its operations. Previously the Company was able to raise debt and equity financing through the assistance of a small number of investors who have been substantial participants in its debt and equity offerings since the CompanyÂ’s formation. These investors have chosen not to further assist the Company with its capital raising initiatives and, at this time, the Company is not able to obtain any alternative forms of financing and the Company will not be able to continue to satisfy its current or long term obligations. The Company needs to merge with or be acquired by another company. If a candidate is not identified, the Company will be forced to cease operations all together. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern. Revenue Recognition Other revenue represents revenue on consumables, license fees and franchise fees. Assets held for sale - Measured at Fair Value Recent Accounting Pronouncements The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an EntityÂ’s Ability to Continue as a Going Concern substantial doubt, The Financial Accounting Standards Board recently issued ASU 2014-09 and ASU 2015-14, Revenue from Contracts with Customers (Topic 606) , was issued in three parts: (a) "Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)," (b) "Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables," and (c) "Background Information and Basis for Conclusions." |
Assets Held For Sale Disclosure
Assets Held For Sale Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Assets Held For Sale Disclosure | 3. ASSETS HELD FOR SALE The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: · Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities · Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly · Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities The Company reviews the carrying amounts of long-lived assets whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The Company estimated the fair values of long-lived assets based on the Company’s own judgments about the assumptions that market participants would use in pricing the asset and on observable market data, when available. The Company classified these fair value measurements as Level 3. Assets held for sale Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Equipment Inventory Total Beginning balance $ - $ - $ - Additions 118,049 46,000 164,049 Settlements (54,549) - (54,549) Ending balance $ 63,500 $ 46,000 $ 109,500 Impairment losses recognized $ 67,514 $ 17,485 $ 84,999 |
Note Receivable Disclosure
Note Receivable Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Note Receivable Disclosure | 4. NOTE RECEIVABLE The Company entered into an Equipment Purchase and License Agreement, in which the Company financed $89,964 with a note bearing 12% interest per annum payable monthly in March 2015. Interest only payments were due monthly with principal and unpaid interest due on February 28, 2016. Interest of $4,648 was included in the Note receivable through July 31, 2015. In August, the Company had not received any payments to date under the agreement and made the decision to record the receivable as bad debt. The revenue was recorded in deferred revenue and will not be recognized, and accrued interest receivable was recorded to bad debt expense. There was no note receivable balance as of September 30, 2015. |
Property and Equipment Disclosu
Property and Equipment Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Property and Equipment Disclosure | 5. PROPERTY AND EQUIPMENT A summary of the cost of property and equipment, by component, and the related accumulated depreciation is as follows: September 30, 2015 December 31, 2014 Computer equipment & software $ 23,517 $ 30,152 Demo equipment 301,706 599,432 Leasehold improvements 22,580 22,580 347,803 652,164 Accumulated depreciation (172,286) (185,751) $ 175,517 $ 466,413 Depreciation expense was $23,635 and $81,352 for the three and nine months ended September 30, 2015; and was $22,427 and $67,560 for the three and nine months ended September 30, 2014. The Company recognized a loss on disposal of assets of $44,128 during the three and $51,505 during the nine months ended September 30, 2015. The Company reclassified total assets with a net book value of $185,563 to assets held for sale, at fair market value and recognized a loss on impairment of assets held for sale during the three and nine months ended September 30, 2015 of $67,514. |
Asset Purchase Agreement Disclo
Asset Purchase Agreement Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Asset Purchase Agreement Disclosure | 6. ASSET PURCHASE AGREEMENT On April 15, 2011, the Company entered into an Asset Purchase Agreement with an individual who is a founder and a current stockholder. Pursuant to the agreement, the Company purchased the related business and activities of the design, manufacture and distribution of asphalt repair machinery under the Heatwurx brand. The total purchase price was $2,500,000. The business essentially consisted of the investment in research and development of the technology, the patents applied for as a result of the research and development activities and certain distribution relationships that were in process, but not finalized as of the acquisition date. Collectively, these investments constitute the in-process research and development the Company refers to as the “asphalt preservation and repair solution.” The Company capitalized $2,500,000 of in-process research and development related to this asphalt preservation and repair solution. As of October 1, 2012, in-process research and development is now classified as developed technology and amortized over its estimated useful life of seven years. The initial estimated fair value of the in-process research and development was determined using the income approach. Under the income approach, the expected future cash flows from the asset are estimated and discounted to its net present value at an appropriate risk-adjusted rate of return. Based on the Company’s financial position and substantial doubt about the Company’s ability to continue as a going concern, the Company has chosen to estimate future cash flows at zero. The Company recognized an impairment of $1,517,859 during the second quarter of 2015. As of September 30, 2015, the Company’s developed technology intangible asset had no value. Amortization expense prior to the impairment for 2015 was $178,571. The amortization expense for the three and nine months ended September 30, 2014 was $89,286 and $267,856, respectively. In conjunction with the Asset Purchase Agreement, the Company granted 200,000 performance stock options to a founder of the Company with an exercise price of $0.40 per share and a term of seven years. Following the effectiveness of the seven for one stock split that was completed in October 2011, the 200,000 performance stock options were exchanged for 1,400,000 performance stock options with an exercise price of $0.057 per share. On February 10, 2015, the founder of the Company elected to cancel the 1,400,000 performance stock options. |
Notes Payable Disclosure
Notes Payable Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Notes Payable Disclosure | 7. NOTES PAYABLE Unsecured Notes Payable As of September 30, 2015, the Company has total notes outstanding from the non-public offering in the aggregate principal amount of $350,000 and were issued with an aggregate of 116,665 warrants to the investors. The warrants are detachable and exercisable immediately. The Company allocated the fair value of the warrants in the amount of $102,357 as a discount on notes payable which is amortized over the term of the notes to interest expense in the income statement. The Company recognized amortization of discount on notes payable in interest expense of $15,788 and $43,980 during the three and nine months ended September 30, 2015, respectively. The Company recognized amortization of discount on notes payable in interest expense of $32,439 and $84,875 during the three and nine months ended September 30, 2014, respectively. As of September 30, 2015 there were notes outstanding with a carrying amount of $336,210, net of $13,790 debt discount. On March 1, 2014, the Company commenced a similar non-public offering of notes and warrants up to $3,000,000 which closed December 31, 2014. The promissory notes bear interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on January 6, 2016. Each lender in the offering received one warrant for each $3.00 loaned. The three-year warrants will be exercisable immediately at $3.00 per share. As of September 30, 2015, the Company has total notes outstanding in the aggregate principal amount of $70,000 and were issued with an aggregate of 23,332 warrants to the investors. The warrants are detachable and exercisable immediately. The Company allocated the fair value of the warrants in the amount of $12,801 as a discount on notes payable which is amortized over the term of the notes to interest expense in the income statement. The Company recognized amortization of discount on notes payable in interest expense of $1,875 and $5,565 during the three and nine months ended September 30, 2015, respectively. The Company recognized amortization of discount on notes payable in interest expense of $1,875 and $3,363 for the three and nine months ended September 30, 2014, respectively. As of September 30, 2015 there were notes outstanding with a carrying amount of $68,002, net of $1,998 debt discount. Interest on the unsecured notes payable totaling $24,536 was outstanding at September 30, 2015. Revolving line of credit - Interest on the revolving line of credit totaling $29,286 was outstanding at September 30, 2015. Secured Notes Payable On January 6, 2014, the Company commenced a non-public offering of notes and warrants of up to $1,000,000. The promissory notes will bear interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on January 6, 2016. As additional consideration for a lender to enter into the Loan Agreement, the Company has agreed to issue to each lender one common stock purchase warrant for each $3.00 loaned to the Company. The Warrants expire three years following the date of issuance and may not be offered for sale, sold, transferred or assigned without the consent of the Company. The three-year warrants will be exercisable immediately at $3.00 per share. On December 11, 2014, the Company received $20,000 in short-term unsecured debt. The note bears interest at 12% per annum payable monthly, with principal and unpaid interest due and payable on February 15, 2015. As of December 31, 2014; principal in the amount of $20,000 was outstanding. On February 23, 2015, the note was converted into a senior secured note payable under a $2 million loan agreement with JMW Fund, Richland Fund, and San Gabriel Fund, described below. On February 16, 2015, the Company entered into a Senior secured loan agreement with JMW Fund, Richland Fund, and San Gabriel Fund (collectively, the “lenders”) whereby the lenders agreed to loan to the Company up to an aggregate of $2,000,000. The interest rate on the notes is 12% per annum and monthly interest payments are due the first day each month beginning March 1, 2015. The notes mature six months from the date of issuance. If any interest payment remains unpaid in excess of 90 days, and the lender has not declared the entire principal and unpaid accrued interest due and payable, the interest rate on that amount only will be increased to 18% per annum, until the past due interest amount is paid in full. The notes and any future notes under the loan agreement are secured by all of the assets of the Company, including intellectual property rights. As of September 30, 2015 there were notes outstanding with an aggregate principal amount of $947,361. Interest on the secured notes payable totaling $49,534 was outstanding at September 30, 2015. The Company has not paid the interest on the notes timely and is therefore in default on the senior secured loan agreement. The lenders may call the notes or foreclose upon the assets of the Company. On August 16, 2015; all senior secured notes were extended to a maturity date of February 15, 2016. Equipment Loan Payable In September 2012, the Company financed the purchase of equipment used for transportation and service work performed. The note, in the original amount of $142,290, bears interest at a rate of 2.6% per annum and matures on September 4, 2017. As of September 30, 2015 the Company has six months of past due payments totaling $15,552 in current loan payable. The Company returned the financed equipment subsequent to quarter end. As of September 30, 2015 the Company reflected the equipment in assets and the full loan payable of $72,320 in liabilities. In September 2014, the Company financed the purchase of equipment used in connection with the Heatwurx equipment to facilitate demonstrations and repairs. The loan, in the amount of $49,204; matures on October 15, 2018. As of September 30, 2015 the Company has five months of past due payments totaling $5,169 in current loan payable. The Company reclassified the asset to Assets held for sale and recognized an impairment on the asset in the amount of $17,889. As of September 30, 2015 the outstanding loan balance was $43,549 and is classified as liability relating to assets held for sale. In August 2013, the Company financed the purchase of a truck to transport our equipment used in service and demonstrations. The loan, in the amount of $83,507, bears interest at a rate of 6.1% per annum and matures on December 1, 2018. On September 25, 2015 the Company returned the truck in efforts to relieve the debt. As of September 30, 2015 the Company recognized an impairment on the asset in the amount of $5,215, the difference in the asset carrying value and the previous outstanding loan balance. As of September 30, 2015 there is no liability outstanding. As of September 30, 2015, the loans are subject to mandatory principal payments as follows: Year Payments 2015 $ 296,323 2016 1,396,816 2017 20,071 2018 -- 2019 -- Total principal payments $ 1,713,210 Less: unamortized debt discount 15,788 Less: current portion 1,669,915 Total long-term debt 27,507 Based upon the Company’s current financial position, the Company does not believe it will be able to satisfy the mandatory principal payments in 2015. The Company will work with the lenders to explore extension or conversion options. There is no guarantee the lenders will accommodate our requests. As of September 30, 2015; principal in the amount of $947,361 is outstanding and payable within six months under the secured notes. These notes are secured by all of the assets of the Company, including intellectual property rights. The Company is in default in regards to interest payments on the notes, the Company’s assets may be foreclosed upon. |
Stockholders' Equity Disclosure
Stockholders' Equity Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Stockholders' Equity Disclosure | 8. STOCKHOLDERS’ EQUITY Common Stock - The Company has authorized 20,000,000 common shares with a $0.0001 par value. . On October 1, 2014, the Company commenced a non-public equity offering of units at $1.75 per unit (the “Units”). Each Unit consists of one common share and one-half warrant, with each whole warrant exercisable at $2.00 per share. The purchase price for the Units is payable in either cash, conversion of outstanding Series D preferred shares or certain outstanding promissory notes. During the first half of 2015, the Company issued 50,285 shares of common stock and warrants to purchase 25,141 shares of common stock for cash proceeds of $88,000. On March 13, 2015 the Company issued 15,000 common shares in exchange for consulting services valued at $25,500. Preferred Stock - Series D Preferred Stock - Holders of Series D preferred stock accrue dividends at the rate per annum of $0.24 per share, payable on a quarterly basis. As dividends are accrued and payable quarterly on the Series D preferred stock, the Company paid no dividends during the three months ended September 30, 2015 and $31,475 during the nine months ended September 30, 2015. The Company paid dividends of $49,254 and $138,937 during the three and nine months ended September 30, 2014, respectively. As of September 30, 2015 the Company has dividends payable in accrued expenses of $40,084 . The holders of the Series D preferred stock have conversion rights equivalent to such number of fully paid and non-assessable shares of common stock as is determined by dividing the Series D original issue price of $3.00 by the then applicable conversion price. Each Series D Share will convert into one share of our common stock at any time at the option of the holder of the Series D Shares or will be converted at the option of the Company at any time the trading price of our common stock is at least $4.50 per share for ten consecutive trading days. The conversion ratio is subject to anti-dilution adjustments, including in the event that the Company issues equity securities at a price equivalent to or less than the conversion price in effect immediately prior to such issue. The holders of Series D preferred stock have a liquidation preference over the holders of the Company’s common stock equivalent to the purchase price per share of the Series D preferred stock plus any accrued and unpaid dividends, whether or not declared, on the Series D preferred stock. A liquidation would be deemed to occur upon the happening of customary events, including transfer of all or substantially all of the Company’s common stock or assets or a merger, or consolidation. The Company believes that such liquidation events are within its control and therefore the Company has classified the Series D preferred stock in stockholders’ equity. The holders of Series D preferred stock vote together as a single class with the holders of the Company’s common stock on all action to be taken by the Company’s stockholders. Each share of Series D preferred stock entitles the holder to the number of votes equal to the number of shares of common stock into which the shares of the Series D preferred stock are convertible as of the record date for determining stockholders entitled to vote on such matter. Stock Options Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2013 1,320,000 $ 2.23 3.44 Granted 298,000 $ 3.00 Exercised - - Cancelled (371,500) $ 2.46 Balance, December 31, 2014 1,246,500 $ 2.35 2.83 Granted 425,000 $ 1.50 Exercised - - Cancelled (900,333) $ 2.36 Balance, September 30, 2015 771,167 $ 1.87 3.10 Exercisable, December 31, 2014 882,583 $ 2.20 Exercisable, September 30, 2015 643,000 $ 1.88 On April 30, 2015, the Board of Directors approved the grant of 125,000 options to the former CEO of the Company, David Dworsky, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest immediately and have an exercise price of $1.50 per share, with an expiration date of five years from the grant date. Mr. Dworsky forfeited his vested options of 93,750 and unvested options of 206,250 with an exercise price of $3.00 per share. On April 30, 2015, the Board of Directors approved the grant of 100,000 options to an employee for continued consulting services, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. The options vest immediately and have an exercise price of $1.50 per share, with an expiration date of five years from the grant date. The employee forfeited his vested options of 100,000 and unvested options of 100,000 with an exercise price of $2.00 per share. On April 30, 2015, the Board of Directors approved the grant of 200,000 options to employees of the Company, in accordance with the terms of the 2011 Equity Incentive Plan, as amended. One-half of the options vest immediately, with the remaining vesting on the one year anniversary of the grant date. The options have an exercise price of $1.50 per share, with an expiration date of five years from the grant date. The fair value of each stock option granted was estimated on the date of grant using the Black Scholes option pricing model with the following assumptions: September 30, 2015 Risk-free interest rate range 1.43% Expected life 5.0 Years Vesting period 0 - 1 Year Expected volatility 42% Expected dividend - Estimated forfeiture rate 25% Fair value range of options at grant date $0.259 The Company recorded stock-based compensation expense of $9,101 and $84,178 during the three and nine months ended September 30, 2015, respectively. The Company recorded stock-based compensation expense of $46,133 and $209,854 during the three and nine months ended September 30, 2014, respectively. As of , 201 there was of unrecognized compensation expense related to the issuance of the stock options Performance Stock Options There were no performance stock options granted during the three and nine months ended September 30, 2015. Number of Options Weighted Average Exercise Price Balance, December 31, 2013 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled - - Balance, December 31, 2014 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled (1,400,000) $ 0.06 Balance, September 30, 2015 40,000 $ 2.00 Exercisable, December 31, 2014 and September 30, 2015 40,000 $ 2.00 See Note 6 for further discussion of the performance options. Warrants The Company issued 25,141 warrants in connection with the private equity offering dated October 1, 2014 discussed above. Each unit consisted of one share of Common stock and one-half warrant, with each whole warrant exercisable at $2.00 per share and grants the right to purchase a share of the Company’s common stock. The warrants expire three years from the date of issuance and are exercisable immediately. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2013 363,824 $ 3.00 1.88 Granted 2,061,156 $ 2.39 Exercised - - Cancelled - - Balance, December 31, 2014 2,424,980 $ 2.48 2.28 Granted 25,141 $ 2.00 Exercised - - Cancelled - - Balance, September 30, 2015 2,450,121 $ 2.48 1.54 |
Net Loss Per Common Share Discl
Net Loss Per Common Share Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Net Loss Per Common Share Disclosure | 9. NET LOSS PER COMMON SHARE The Company computes loss per share of common stock using the two-class method required for participating securities. The CompanyÂ’s participating securities include all series of its convertible preferred stock. Undistributed earnings allocated to these participating securities are added to net loss in determining net loss applicable to common stockholders. Basic and Diluted loss per share are computed by dividing net loss applicable to common stockholder by the weighted-average number of shares of common stock outstanding. Outstanding options and warrants underlying 3,261,288 shares were not included in the computation of diluted loss per share because the exercise price was greater than the average market price of the common shares and, therefore, the effect would be anti-dilutive. The calculation of the numerator and denominator for basic and diluted net loss per common share is as follows: For the three months ended September 30, For the nine months ended September 30, 2015 2014 2015 2014 Net Loss $ (295,743) $ (791,954) $ (2,991,461) $ (2,987,448) Basic and diluted: Preferred stock cumulative dividend - Series B (1) -- -- -- (62,227) Preferred stock cumulative dividend - Series C -- -- -- 2,200 Preferred stock cumulative dividend - Series D 10,824 53,054 32,119 172,235 Income applicable to preferred stockholders 10,824 53,054 32,119 112,208 Deemed dividend -- 26,832 -- 26,832 Net loss applicable to common stockholders $ (306,567) $ (871,840) $ (3,023,580) $ (3,126,488) (1) Upon conversion of the Series B preferred stock into common stock, the holders of the Series B preferred stock were no longer entitled to the dividends recorded in the adjustment to net loss applicable to common shareholders in prior periods. As a result, current year reported dividends were adjusted downward to reflect this release of accumulated dividends. |
Commitments and Contingencies D
Commitments and Contingencies Disclosure | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Commitments and Contingencies Disclosure | 10. COMMITMENTS AND CONTINGENCIES Lease Commitments - Total rent expense for the three and nine months ended September 30, 2015 was $11,019 and $41,133, respectively. The rent expense for the three and nine months ended September 30, 2014 was $5,280 and $43,684, respectively. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Related Party Transactions | 11. RELATED PARTY TRANSACTIONS Consulting arrangements The Company has a consulting arrangement with Heather Kearns, the former Interim Chief Financial officer and paid consulting fees of $18,000 and $45,000 during the three and nine months ended September 30, 2015, and has $19,600 in current liabilities as of September 30, 2015. Dividend and Interest activity As of September 30, 2015 the Company has secured notes payable with JMW Fund, LLC, The Richland Fund, LLC, The San Gabriel Fund, LLC and The Arroyo Fund, LLC in the aggregate amount of $947,361; an outstanding balance of $138,000 on the revolving line of credit. Mr. Yorke, as the manager, received or has accrued interest payments from loans payable in 2015 totaling $64,904. See Note 12 for additional disclosure. During the three and nine months ended September 30, 2015, Mr. Gus Blass III, a former member of our board of directors and a stockholder, whom resigned September 15, 2015, received or has accrued dividends from preferred stock totaling $1,008 and $6,926, respectively. In addition, Mr. Gus Blass II, a former member of our board of directors and father to Mr. Gus Blass III, a member of our board of directors, was issued an unsecured note payable in the amount of $250,000 during 2014, paying interest at 12% per annum, with a maturity date of January 6, 2016. Mr. Blass II, received or has accrued interest payments in 2015 totaling $22,438. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Supplemental Cash Flow Information | 12. SUPPLEMENTAL CASH FLOW INFORMATION Nine months ended September 30, 2015 2014 Cash paid for interest $ 25,356 $ 229,571 Series C Dividend payable in accrued expenses $ -- $ -- Series D Dividend payable in accrued expenses $ 40,084 $ 53,054 Non-Cash investing and financing transactions Shares issued for consulting services $ 25,500 $ -- Conversion of unsecured debt to secured note payable $ 20,000 $ -- Financing the purchase of equipment under a 4 year loan agreement $ -- $ 49,204 Beneficial conversion feature on warrants issued in conjunction with Series D preferred shares $ -- $ 24,279 Shares issued in acquisition of Dr. Pave $ -- $ 175,000 Deemed dividend related to warrant extension $ -- $ 26,832 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Notes | |
Subsequent Events | 13. SUBSEQUENT EVENTS The Company sold equipment included in assets held for sale at September 30, 2015 for total proceeds of $3,500 and turned in assets with estimated fair value of $111,662 to relieve the debt outstanding of $115,869. |
Basis of Presentation and Sum20
Basis of Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Policies | |
Basis of Presentation | Basis of Presentation These financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2014, and have been prepared on a consistent basis with the accounting policies described in Note 2 - Summary of Significant Accounting Policies of the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. The CompanyÂ’s accounting policies did not change in the first half of 2015. Operating results for the three and nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or any future period. The CompanyÂ’s consolidated financial statements include Dr. Pave, LLC and Dr. Pave Worldwide, LLC; both wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. The CompanyÂ’s financial statements are prepared using U.S. GAAP applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, as described below, certain factors raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. The Company also faces certain risks and uncertainties which are present in many emerging companies regarding product development, future profitability, ability to obtain future capital, protection of patents and property rights, competition, rapid technological change, government regulations, recruiting and retaining key personnel, and third party manufacturing organizations. The Company has previously relied exclusively on private placements with a small group of investors to finance its business and operations. The Company has had little revenue since inception. For the nine months ended September 30, 2015, the Company incurred a net loss of approximately $2,991,000 and utilized approximately $826,000 in cash flows from operating activities. The Company had cash on hand of approximately $15,000 as of September 30, 2015. The Company is not able to obtain additional financing adequate to fulfill its commercialization activities, nor achieve a level of revenues adequate to support the CompanyÂ’s cost structure. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. During the third quarter the Company moved to list the asphalt paving assets and the intellectual property inclusive of patents and trademarks for sale. Several proposals were submitted to the Company, and following review by the Board of Directors, none were deemed suitable to satisfy the financial requirements of the Company moving forward. The Company has significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensees, warehouse inventory and look for potential merger candidates. It is the CompanyÂ’s intention to move forward as a public entity and to seek other potential merger candidates. If the Company fails to merge or be acquired by another company, we will be required to terminate all our operations. As of September 30, 2015, the Company had approximately $15,000 cash on hand and is spending approximately $10,000 per month as a result of the significant reduction in employees and overhead, of which only a minor amount was satisfied by gross proceeds from operations or sale of assets. Hence, the amount of cash on hand is not adequate to meet our ongoing expenses. During the nine months ended September 30, 2015, the Company received cash in the aggregate of $753,000 and converted a $160,000 secured note plus accrued interest and a $20,000 unsecured note into the $2,000,000 senior secured debt offering commenced in February 2015. Based upon the CompanyÂ’s current financial position and inability to obtain additional financing, the Company will not be able to satisfy the mandatory principal payments in 2015 under the $2,000,000 senior secured debt. The Company will continue to work with the lenders to explore extension or conversion options, but there is no guarantee the lenders will agree to modify the repayment terms of the notes under conditions that will allow the Company to continue to repay the notes, if at all. As these notes are secured by all of the assets of the Company, including intellectual property rights, the Company is in default in regards to interest payments on the notes, and the lenders may call the notes and foreclose on the CompanyÂ’s assets. The issues described above raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. Although the Company commenced a $2,000,000 secured debt offering, the Company does not believe it will be able to raise additional amounts under the offering. The Company has been solely reliant on raising debt and capital in order to maintain its operations. Previously the Company was able to raise debt and equity financing through the assistance of a small number of investors who have been substantial participants in its debt and equity offerings since the CompanyÂ’s formation. These investors have chosen not to further assist the Company with its capital raising initiatives and, at this time, the Company is not able to obtain any alternative forms of financing and the Company will not be able to continue to satisfy its current or long term obligations. The Company needs to merge with or be acquired by another company. If a candidate is not identified, the Company will be forced to cease operations all together. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be different should the Company be unable to continue as a going concern. |
Basis of Presentation and Sum21
Basis of Presentation and Summary of Significant Accounting Policies: Revenue Recognition, Policy (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Policies | |
Revenue Recognition, Policy | Revenue Recognition Other revenue represents revenue on consumables, license fees and franchise fees. |
Basis of Presentation and Sum22
Basis of Presentation and Summary of Significant Accounting Policies: Assets held for sale, Policy (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Policies | |
Assets held for sale, Policy | Assets held for sale - Measured at Fair Value |
Basis of Presentation and Sum23
Basis of Presentation and Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory The Financial Accounting Standards Board recently issued Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an EntityÂ’s Ability to Continue as a Going Concern substantial doubt, The Financial Accounting Standards Board recently issued ASU 2014-09 and ASU 2015-14, Revenue from Contracts with Customers (Topic 606) , was issued in three parts: (a) "Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs - Contracts with Customers (Subtopic 340-40)," (b) "Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables," and (c) "Background Information and Basis for Conclusions." |
Assets Held For Sale Disclosu24
Assets Held For Sale Disclosure: Schedule of Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Fair Value Measurements | Assets held for sale Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Equipment Inventory Total Beginning balance $ - $ - $ - Additions 118,049 46,000 164,049 Settlements (54,549) - (54,549) Ending balance $ 63,500 $ 46,000 $ 109,500 Impairment losses recognized $ 67,514 $ 17,485 $ 84,999 |
Property and Equipment Disclo25
Property and Equipment Disclosure: Summary of the cost of property and equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Summary of the cost of property and equipment | September 30, 2015 December 31, 2014 Computer equipment & software $ 23,517 $ 30,152 Demo equipment 301,706 599,432 Leasehold improvements 22,580 22,580 347,803 652,164 Accumulated depreciation (172,286) (185,751) $ 175,517 $ 466,413 |
Notes Payable Disclosure_ Sched
Notes Payable Disclosure: Schedule of Loan Payable (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Loan Payable | Year Payments 2015 $ 296,323 2016 1,396,816 2017 20,071 2018 -- 2019 -- Total principal payments $ 1,713,210 Less: unamortized debt discount 15,788 Less: current portion 1,669,915 Total long-term debt 27,507 |
Stockholders' Equity Disclosu27
Stockholders' Equity Disclosure: Schedule of Stock Option Activity (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Stock Option Activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2013 1,320,000 $ 2.23 3.44 Granted 298,000 $ 3.00 Exercised - - Cancelled (371,500) $ 2.46 Balance, December 31, 2014 1,246,500 $ 2.35 2.83 Granted 425,000 $ 1.50 Exercised - - Cancelled (900,333) $ 2.36 Balance, September 30, 2015 771,167 $ 1.87 3.10 Exercisable, December 31, 2014 882,583 $ 2.20 Exercisable, September 30, 2015 643,000 $ 1.88 |
Stockholders' Equity Disclosu28
Stockholders' Equity Disclosure: Schedule of Stock Option Valuation Assumptions (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Stock Option Valuation Assumptions | September 30, 2015 Risk-free interest rate range 1.43% Expected life 5.0 Years Vesting period 0 - 1 Year Expected volatility 42% Expected dividend - Estimated forfeiture rate 25% Fair value range of options at grant date $0.259 |
Stockholders' Equity Disclosu29
Stockholders' Equity Disclosure: Schedule of Performance Stock Options (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Performance Stock Options | Number of Options Weighted Average Exercise Price Balance, December 31, 2013 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled - - Balance, December 31, 2014 1,440,000 $ 0.11 Granted - - Exercised - - Cancelled (1,400,000) $ 0.06 Balance, September 30, 2015 40,000 $ 2.00 Exercisable, December 31, 2014 and September 30, 2015 40,000 $ 2.00 |
Stockholders' Equity Disclosu30
Stockholders' Equity Disclosure: Schedule of Stockholders' Equity Note, Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2013 363,824 $ 3.00 1.88 Granted 2,061,156 $ 2.39 Exercised - - Cancelled - - Balance, December 31, 2014 2,424,980 $ 2.48 2.28 Granted 25,141 $ 2.00 Exercised - - Cancelled - - Balance, September 30, 2015 2,450,121 $ 2.48 1.54 |
Net Loss Per Common Share Dis31
Net Loss Per Common Share Disclosure: Schedule of Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Earnings Per Share | For the three months ended September 30, For the nine months ended September 30, 2015 2014 2015 2014 Net Loss $ (295,743) $ (791,954) $ (2,991,461) $ (2,987,448) Basic and diluted: Preferred stock cumulative dividend - Series B (1) -- -- -- (62,227) Preferred stock cumulative dividend - Series C -- -- -- 2,200 Preferred stock cumulative dividend - Series D 10,824 53,054 32,119 172,235 Income applicable to preferred stockholders 10,824 53,054 32,119 112,208 Deemed dividend -- 26,832 -- 26,832 Net loss applicable to common stockholders $ (306,567) $ (871,840) $ (3,023,580) $ (3,126,488) |
Supplemental Cash Flow Inform32
Supplemental Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Tables/Schedules | |
Schedule of Cash Flow, Supplemental Disclosures | Nine months ended September 30, 2015 2014 Cash paid for interest $ 25,356 $ 229,571 Series C Dividend payable in accrued expenses $ -- $ -- Series D Dividend payable in accrued expenses $ 40,084 $ 53,054 Non-Cash investing and financing transactions Shares issued for consulting services $ 25,500 $ -- Conversion of unsecured debt to secured note payable $ 20,000 $ -- Financing the purchase of equipment under a 4 year loan agreement $ -- $ 49,204 Beneficial conversion feature on warrants issued in conjunction with Series D preferred shares $ -- $ 24,279 Shares issued in acquisition of Dr. Pave $ -- $ 175,000 Deemed dividend related to warrant extension $ -- $ 26,832 |
Basis of Presentation and Sum33
Basis of Presentation and Summary of Significant Accounting Policies: Basis of Presentation (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||||
Net loss during period | $ 295,743 | $ 791,954 | $ 2,991,461 | $ 2,987,448 |
Cash flows utilized in operating activities | 826,000 | |||
Cash on hand | $ 15,000 | $ 15,000 |
Assets Held For Sale Disclosu34
Assets Held For Sale Disclosure: Schedule of Fair Value Measurements (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | |
Assets held for sale | $ 109,500 | $ 109,500 |
Impairment of assets held for sale | 84,999 | 84,999 |
-Equipment- | ||
Assets held for sale | 63,500 | 63,500 |
Impairment of assets held for sale | 67,514 | |
-Inventory- | ||
Assets held for sale | $ 46,000 | 46,000 |
Impairment of assets held for sale | $ 17,485 |
Property and Equipment Disclo35
Property and Equipment Disclosure: Summary of the cost of property and equipment (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment, Gross | $ 347,803 | $ 652,164 |
Accumulated depreciation | (172,286) | (185,751) |
Equipment, net of depreciation | 175,517 | 466,413 |
Computer Equipment | ||
Property, Plant and Equipment, Gross | 23,517 | 30,152 |
Demo equipment | ||
Property, Plant and Equipment, Gross | 301,706 | 599,432 |
Leasehold Improvements | ||
Property, Plant and Equipment, Gross | $ 22,580 | $ 22,580 |
Property and Equipment Disclo36
Property and Equipment Disclosure (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
Details | |||||
Depreciation expense | $ 23,635 | $ 22,427 | $ 81,352 | $ 81,352 | $ 67,560 |
Gain (loss) on disposal of assets | $ 44,128 | $ 51,505 |
Asset Purchase Agreement Disc37
Asset Purchase Agreement Disclosure (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Feb. 10, 2015 | Apr. 15, 2011 | |
Impairment of intangible asset | $ 1,517,859 | |||
Amortization of intangible asset | $ 178,571 | $ 267,856 | ||
Asset Purchase Agreement | ||||
Total purchase price | $ 2,500,000 | |||
Performance stock options granted | 1,400,000 | |||
Performance stock options, exercise price | $ 0.057 | |||
Performance stock options granted cancelled | 1,400,000 |
Notes Payable Disclosure (Detai
Notes Payable Disclosure (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 11, 2014 | Mar. 01, 2014 | Jan. 06, 2014 | |
Unsecured notes outstanding, current | $ 404,212 | $ 404,212 | $ 20,000 | |||||
Interest payable | 104,150 | 104,150 | 19,541 | |||||
Revolving line of credit | 229,980 | 229,980 | 229,980 | |||||
Senior secured notes payable | 947,361 | 947,361 | 160,000 | |||||
Purchase of equipment | ||||||||
Loans payable | 142,290 | 142,290 | ||||||
Payments payable | 15,552 | 15,552 | ||||||
Purchase of equipment 2 | ||||||||
Loans payable | 43,549 | 43,549 | ||||||
Payments payable | 5,169 | 5,169 | ||||||
Purchase of a truck | ||||||||
Loans payable | 83,507 | 83,507 | ||||||
Notes and warrants | ||||||||
Total amount of notes outstanding | 350,000 | 350,000 | ||||||
Amortization of discount on notes payable | 15,788 | $ 32,439 | 43,980 | $ 84,875 | ||||
Offering amount of notes and warrants | $ 1,000,000 | |||||||
Unsecured Notes Payable | ||||||||
Total amount of notes outstanding | $ 20,000 | $ 20,000 | ||||||
Unsecured notes outstanding, current | 336,210 | 336,210 | ||||||
Debt discount | 13,790 | 13,790 | ||||||
Notes and warrants(2) | ||||||||
Total amount of notes outstanding | 70,000 | 70,000 | ||||||
Amortization of discount on notes payable | 1,875 | 1,875 | 5,565 | 3,363 | ||||
Offering amount of notes and warrants | $ 3,000,000 | |||||||
Unsecured Notes Payable (2) | ||||||||
Unsecured notes outstanding, current | 68,002 | 68,002 | ||||||
Debt discount | $ 1,998 | $ 1,998 | ||||||
Unsecured Notes | ||||||||
Interest payable | 24,536 | 24,536 | ||||||
Revolving line of credit | ||||||||
Interest payable | 29,286 | 29,286 | ||||||
Revolving line of credit | 229,980 | 229,980 | ||||||
Secured Notes Payable | ||||||||
Total amount of notes outstanding | 947,361 | 947,361 | ||||||
Interest payable | 49,534 | 49,534 | ||||||
Senior secured notes payable | $ 947,361 | $ 947,361 |
Notes Payable Disclosure_ Sch39
Notes Payable Disclosure: Schedule of Loan Payable (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Unamortized debt discount | $ 15,788 | $ 59,768 |
Current portion of loans | 1,669,915 | |
Total long-term debt | 27,507 | |
Loan Payable Due | ||
Mandatory principal loan payments (2015) | 296,323 | |
Mandatory principal loan payments (2016) | 1,396,816 | |
Mandatory principal loan payments (2017) | 20,071 | |
Total principal payments | $ 1,713,210 |
Stockholders' Equity Disclosu40
Stockholders' Equity Disclosure (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Common stock authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||
Common shares issued | 11,061,414 | 11,061,414 | 9,495,045 | ||
Common shares outstanding | 11,017,641 | 11,017,641 | 10,952,356 | ||
Common stock issued | 50,285 | ||||
Proceeds from common stock issuance | $ 88,000 | ||||
Common stock issued for services | 15,000 | ||||
Value of stock issued for services | $ 25,500 | ||||
Preferred stock authorized | 4,500,000 | 4,500,000 | 4,500,000 | ||
Preferred stock outstanding | 178,924 | 178,924 | |||
Number of options granted | 425,000 | 298,000 | |||
Stock-based compensation expense | $ 9,101 | $ 46,133 | $ 84,178 | $ 209,854 | |
Unrecognized compensation expense | $ 19,441 | $ 19,441 | |||
Former CEO | |||||
Number of options granted | 125,000 | ||||
Employee for continued consulting services | |||||
Number of options granted | 100,000 | ||||
Employees of the Company | |||||
Number of options granted | 200,000 | ||||
Series D Preferred Stock | |||||
Shares outstanding | 178,924 | 178,924 | |||
Dividends paid | $ 49,254 | $ 31,475 | $ 138,937 | ||
Dividends payable | $ 40,084 | $ 40,084 | |||
Original issue price per share | $ 3 | $ 3 |
Stockholders' Equity Disclosu41
Stockholders' Equity Disclosure: Schedule of Stock Option Activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | |||
Number of options outstanding | 771,167 | 1,246,500 | 1,320,000 |
Weighted average exercise price, options outstanding | $ 1.87 | $ 2.35 | $ 2.23 |
Number of options granted | 425,000 | 298,000 | |
Weighted average exercise price, options granted | $ 1.50 | $ 3 | |
Number of options cancelled | (900,333) | (371,500) | |
Weighted average exercise price, options cancelled | $ 2.36 | $ 2.46 | |
Number of options exercisable | 643,000 | 882,583 | |
Weighted average exercise price, options exercisable | $ 1.88 | $ 2.20 |
Stockholders' Equity Disclosu42
Stockholders' Equity Disclosure: Schedule of Performance Stock Options (Details) - $ / shares | 9 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | |||
Performance Stock options outstanding | 40,000 | 1,440,000 | 1,440,000 |
Weighted average exercise price, performance stock options outstanding | $ 2 | $ 0.11 | $ 0.11 |
Performance Stock options cancelled | (1,400,000) | ||
Performance Stock options exercisable | 40,000 | ||
Weighted average exercise price, performance stock options exercisable | $ 2 |
Stockholders' Equity Disclosu43
Stockholders' Equity Disclosure: Schedule of Stockholders' Equity Note, Warrants (Details) - $ / shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Details | |||
Warrants outstanding | 2,450,121 | 2,424,980 | 363,824 |
Weighted average exercise price, warrants | $ 2.48 | $ 2.48 | $ 3 |
Warrants granted | 25,141 | 2,061,156 |
Net Loss Per Common Share Dis44
Net Loss Per Common Share Disclosure: Schedule of Earnings Per Share (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net income (loss) | $ (295,743) | $ (791,954) | $ (2,991,461) | $ (2,987,448) |
Net income (loss) available to preferred stockholders | 10,824 | 53,054 | 32,119 | 112,208 |
Deemed dividends | 26,832 | 26,832 | ||
Net income (loss) applicable to common stockholders | (306,567) | (871,840) | (3,023,580) | (3,126,488) |
Series B Dividend | ||||
Cumulative dividend | (62,227) | |||
Series C Dividend | ||||
Cumulative dividend | 2,200 | |||
Series D Dividend | ||||
Cumulative dividend | $ 10,824 | $ 53,054 | $ 32,119 | $ 172,235 |
Commitments and Contingencies45
Commitments and Contingencies Disclosure (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Details | ||||
Total rent expense | $ 11,019 | $ 5,280 | $ 41,133 | $ 43,684 |
Related Party Transactions (Det
Related Party Transactions (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | |
Heather Kearns | ||
Related party consulting fees | $ 18,000 | $ 45,000 |
Due to related party | 19,600 | 19,600 |
Secured Note - Mr. Yorke | ||
Due to related party | 947,361 | 947,361 |
Revolving line of credit - Mr. Yorke | ||
Due to related party | 138,000 | 138,000 |
Mr. Yorke | ||
Paid or accrued interest | 64,904 | |
Mr. Gus Blass III | ||
Due to related party | 250,000 | 250,000 |
Paid or accrued interest | 22,438 | |
Paid or accrued dividends | $ 1,008 | $ 6,926 |
Supplemental Cash Flow Inform47
Supplemental Cash Flow Information: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash paid for interest | $ 25,356 | $ 229,571 |
Shares issued for consulting services | ||
Non-Cash investing and financing transactions | 25,500 | |
Conversion of unsecured debt to secured note payable | ||
Non-Cash investing and financing transactions | $ 20,000 | |
Financing the purchase of equipment | ||
Non-Cash investing and financing transactions | 49,204 | |
Beneficial conversion feature on warrants issued | ||
Non-Cash investing and financing transactions | 24,279 | |
Shares issued in acquisition | ||
Non-Cash investing and financing transactions | 175,000 | |
Deemed dividend related to warrant extension | ||
Non-Cash investing and financing transactions | $ 26,832 |
Subsequent Events (Details)
Subsequent Events (Details) | 2 Months Ended |
Nov. 24, 2015USD ($) | |
Details | |
Proceeds from sell of equipment included in assets held for sale | $ 3,500 |