Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2016shares | |
Document and Entity Information | |
Entity Registrant Name | Heatwurx, Inc. |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2016 |
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 | No |
Entity Voluntary Filers | No |
Entity Well-known Seasoned Issuer | No |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Trading Symbol | hwx |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 2,439 | $ 2,090 |
Other receivables | 25,000 | |
Prepaid expenses and other current assets | 1,269 | 47,722 |
Assets held for sale | 15,000 | 42,000 |
Current assets from discontinued operations | 3,632 | 12,350 |
Total current assets | 47,340 | 104,162 |
Other assets: | ||
Equipment, net of depreciation | 159 | |
Total other assets | 159 | |
Total assets | 47,340 | 104,321 |
Current liabilities: | ||
Accounts payable | 169,270 | 159,249 |
Accrued liabilities | 93,859 | 95,339 |
Interest payable | 212,506 | 161,608 |
Income taxes payable | 200 | 200 |
Senior secured notes payable | 962,361 | 947,361 |
Current portion of unsecured notes payable | 420,000 | 419,033 |
Current liabilities from discontinued operations | 307,219 | 300,338 |
Total current liabilities | 2,165,415 | 2,083,128 |
Long-term liabilities: | ||
Total liabilities | 2,165,415 | 2,083,128 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock value | 18 | 18 |
Common stock value | 1,102 | 1,102 |
Additional paid-in capital | 14,327,428 | 14,322,366 |
Accumulated deficit | (15,017,006) | (14,874,680) |
Stockholders' equity from discontinued operations | (1,429,617) | (1,427,613) |
Total stockholders' equity | (2,118,075) | (1,978,807) |
Total liabilities and stockholders' equity | $ 47,340 | $ 104,321 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Debt discount, unsecured notes payable | $ 967 | |
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 | 11,017,388 | 11,017,388 |
Common Stock, Outstanding | 11,061,414 | 11,061,414 |
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 | $ 832,389 | $ 821,683 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement | ||
Equipment sales | $ 5,000 | $ 32,760 |
Other revenue | 5,000 | |
Total revenue | 5,000 | 37,760 |
Costs of goods sold | 24,966 | |
Gross profit | 5,000 | 12,794 |
Expenses: | ||
Selling, general and administrative | 80,515 | 459,438 |
Research and development | 11,738 | |
Total expenses | 80,515 | 471,176 |
Loss from continuing operations, before taxes | (75,515) | (458,382) |
Other Income and Expense: | ||
Interest income | 1,252 | |
Interest expense | 56,106 | 35,271 |
Total other income and expense | 56,106 | (34,019) |
Loss before income taxes | (131,621) | (482,401) |
Income taxes | (25) | |
Net loss from continuing operations | (131,621) | (492,426) |
Net loss from discontinued operations | (2,004) | (152,180) |
Net loss | (133,625) | (644,606) |
Preferred stock cumulative dividend and deemed dividend | (10,705) | (10,589) |
Net loss available to common stockholders | $ (144,330) | $ (655,195) |
Net loss per common share basic and diluted from continuing operations | $ (0.01) | $ (0.05) |
Net loss per common share basic and diluted from discontinued operations | 0 | (0.01) |
Net loss per common share basic and diluted | $ (0.01) | $ (0.06) |
Weighted average shares outstanding basic and diluted | 11,017,640 | 10,997,056 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (133,625) | $ (644,606) |
Net loss from discontinued operations | (2,004) | (152,180) |
Net loss from continuing operations | (131,621) | (492,426) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 159 | 19,145 |
Amortization of intangible asset | 89,285 | |
Amortization of debt discount | 967 | 14,499 |
Non-cash expenses exchanged for services | 25,500 | |
Stock-based compensation | 5,062 | 35,552 |
Changes in operating assets and liabilities | ||
(Increase) decrease in receivables | (25,000) | (86,214) |
(Increase) decrease in prepaid and other current assets | 46,453 | 83,900 |
(Increase) decrease in inventory | 24,243 | |
Increase (decrease) in consigned inventory | (124,448) | |
Increase (decrease) in income taxes payable | 25 | |
Increase (decrease) in accounts payable | 10,021 | (4,656) |
Increase (decrease) in accrued liabilities | (840) | (24,091) |
Increase (decrease) in deferred revenue | 84,964 | |
Increase (decrease) in interest payable | 50,899 | 1,874 |
Cash used in operating activities from continuing operations | (43,900) | (352,848) |
Cash used in operating activities from discontinued operations | (6,469) | (149,240) |
Cash used in operating activities | (50,369) | (502,088) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | 1,399 | |
Proceeds from sale of property and equipment | 27,000 | |
Cash used in investing activities from continuing operations | 27,000 | 1,399 |
Cash used in investing activities | 27,000 | 1,399 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of senior secured notes payable | 15,000 | 450,000 |
Proceeds from issuance of common shares with warrants, net | 88,000 | |
Repayment of loan payable | 13,964 | |
Cash provided by (used in) financing activities | 15,000 | 524,036 |
Net change in cash and cash equivalents | (8,369) | 20,549 |
Cash and cash equivalents, beginning of period, including discontinued operations | 14,440 | 21,234 |
Cash and cash equivalents, end of period | $ 6,071 | $ 41,783 |
Principal Business Activities
Principal Business Activities | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Principal Business Activities | 1. PRINCIPAL BUSINESS ACTIVITIES Organization and Business |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The Companys consolidated financial statements include Dr. Pave, LLC and Dr. Pave Worldwide, LLC; both wholly-owned subsidiaries of the Company, which are represented in the Companys discontinued operations (Note 5). All intercompany balances and transactions have been eliminated in the consolidated financial statements. Interim Financial Statements Use of estimates Going Concern and Managements Plan 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 three months ended March 31, 2016, the Company incurred a net loss from continuing operations of approximately $131,621 and used approximately $43,900 in net cash from operating activities from continuing operations and used approximately $6,469 in net cash from operating activities from discontinued operations. The Company had total cash on hand including cash from discontinued operations of approximately $6,000 as of March 31, 2016. 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 Companys cost structure. The Company does not currently have any revenue under contract nor does it have any immediate sales prospects. The Company has significantly reduced employees and overhead. The decision to cease operations of Dr. Pave, LLC and Dr. Pave Worldwide, LLC was made on December 31, 2015. These business components are captured within discontinued operations as of March 31, 2016 (Note 5). The Company has significantly scaled back operations to maintain only a minimal level of operations necessary to support our licensee, warehouse the equipment held for the licensee and look for potential merger candidates. It is the Companys intention to move forward as a public entity and to seek potential merger candidates. If the Company fails to merge or be acquired by another company, we will be required to terminate all operations. During the three months ended March 31, 2016, the Company received cash of $15,000 as part of the $2,000,000 senior secured debt offering commenced in February 2015. Based upon the Companys current financial position and inability to obtain additional financing, the Company was 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 Companys assets. The issues described above raise substantial doubt about the Companys ability to continue as a going concern. 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 Companys 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. Cash and cash equivalents Assets held for sale Revenue Recognition Other revenue represents license fees and franchise fees. Stock-Based Compensation Net income (loss) per share Subsequent events Recent Accounting Pronouncements 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 Entitys Ability to Continue as a Going Concern. The amendments require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Financial Accounting Standards Board recently issued ASU 2014-09, 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." The new presentation guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is considering the impact of the adoption of ASU 2014-09 on its results of operations, financial condition and cash flows. |
Assets Held For Sale, Disclosur
Assets Held For Sale, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
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: · · · 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 Companys 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 $ 25,875 $ 16,125 $ 42,000 Transfers in -- -- -- Disposals (10,875) (16,125) (27,000) Ending balance $ 15,000 $ -- $ 15,000 During the three months ended March 31, 2016 the Company sold assets consisting of equipment and inventory in the amount of $25,000 to its licensee. |
Property and Equipment, Disclos
Property and Equipment, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Property and Equipment, Disclosure | 4. PROPERTY AND EQUIPMENT A summary of the cost of property and equipment, by component, and the related accumulated depreciation is as follows: March 31, 2016 December 31, 2015 Computer equipment & software $ 19,150 $ 19,150 Accumulated depreciation (19,150) (18,991) $ -- $ 159 Depreciation expense was $159 and $19,145 for the three months ended March 31, 2016 and 2015, respectively. |
Discontinued Operations, Disclo
Discontinued Operations, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Discontinued Operations, Disclosure | 5. DISCONTINUED OPERATIONS In efforts to streamline operations and expenses the Company elected to discontinue the Dr. Pave and Dr. Pave Worldwide entities during 2015. The financial results of these events are represented in the discontinued operations included in the March 31, 2016 and 2015 financial statements. The operating results of the discontinued operations of Dr. Pave and Dr. Pave Worldwide for the three months ended March 31, 2016 and 2015 are summarized below: 2016 2015 Revenue $ -- $ 8,830 Expense 2,004 161,010 Net Loss, before taxes (2,004) (152,180) Income tax benefit -- -- Net Loss, net of tax $ (2,004) $ (152,180) The balance sheet items for discontinued operations as of March 31, 2016 and December 31, 2015 are summarized below: 2016 2015 Cash and cash equivalents $ 3,632 $ 12,350 Total assets $ 3,632 $ 12,350 Payables and accrued liabilities 77,239 70,358 Short-term debt 229,980 229,980 Total liabilities $ 307,219 $ 300,338 Revolving line of credit Accrued interest on the revolving line of credit totaling $32,211 was outstanding at March 31, 2016. |
Notes Payable, Disclosure
Notes Payable, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Notes Payable, Disclosure | 6. NOTES PAYABLE Unsecured Notes Payable Secured Notes Payable Principal Balance Interest Rate Accrued Interest Warrants issued Warrant Fair Value - Discount Unamortized Discount Unsecured notes payable $ 420,000 12% $ 50,764 139,997 $ 115,159 $ -- Secured notes payable $ 962,361 12% - 18% $ 161,742 -- $ -- $ -- $ 1,382,361 $ 212,506 139,997 $ 115,159 $ -- As of March 31, 2016, the loans are subject to mandatory principal payments as follows: Year Payments 2016 $ 1,382,361 2017 -- 2018 -- 2019 -- 2020 -- Total principal payments $ 1,382,361 Less: unamortized debt discount -- Total current portion $ 1,382,361 Based upon the Companys financial position, the Company does not believe it will be able to satisfy the mandatory principal payments in 2016. The Company will work with the lenders to explore extension or conversion options. There is no guarantee the lenders will accommodate our requests. The Company is in default in regards to interest payments on the notes, the Companys assets may be foreclosed upon. |
Stockholders' Equity, Disclosur
Stockholders' Equity, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Stockholders' Equity, Disclosure | 7. STOCKHOLDERS EQUITY Common Stock 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 did not pay dividends in the first quarter of 2016. The Company paid dividends of $31,475 during the first quarter of 2015. As of March 31, 2016 the Company included dividends payable in accrued expenses of $53,648. 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 Companys 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 Companys 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 Companys common stock on all action to be taken by the Companys 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, 2015 591,167 $ 1.78 3.75 Granted -- $ -- -- Exercised -- $ -- -- Cancelled (234,167) $ 1.53 -- Balance, March 31, 2016 357,000 $ 1.94 2.22 Exercisable, March 31, 2016 259,500 $ 2.11 1.99 For the three months ended March 31, 2016 and 2015, the Company recorded stock-based compensation expense of $5,062 and $35,552, respectively. As of March 31, 2016 and 2015 there was $1,629 and $272,490, respectively, 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 months ended March 31, 2016 and 2015. Number of Options Weighted Average Exercise Price Balance, December 31, 2015 40,000 $2.00 Granted -- -- Exercised -- -- Cancelled -- -- Balance, March 31, 2016 40,000 $2.00 Exercisable, March 31, 2016 and December 31, 2015 40,000 $2.00 Warrants There were no warrants issued during the three months ended March 31, 2016. Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2015 2,000,304 $2.36 1.64 Granted -- -- -- Exercised -- -- -- Cancelled -- -- -- Balance, March 31, 2016 2,000,304 $2.36 1.39 |
Net Loss Per Common Share, Disc
Net Loss Per Common Share, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Net Loss Per Common Share, Disclosure | 8. NET LOSS PER COMMON SHARE The Company computes loss per share of common stock using the two-class method required for participating securities. The Companys 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 2,357,304 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 March 31, 2016 2015 Net loss from continuing operations $ (131,621) $ (492,426) Net loss from discontinued operations (2,004) (152,180) Net Loss (133,625) (644,606) Basic and diluted: Preferred stock cumulative dividend - Series D 10,705 10,589 Income applicable to preferred stockholders 10,705 10,589 Net loss applicable to common stockholders $ (144,330) $ (655,195) |
Commitments and Contingencies,
Commitments and Contingencies, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Commitments and Contingencies, Disclosure | 9. COMMITMENTS AND CONTINGENCIES Lease Commitments Total rent expense for the three months ended March 31, 2016 and 2015 was $2,250 and $15,057, respectively. Vendors and Debt |
Related Party Transactions, Dis
Related Party Transactions, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Related Party Transactions, Disclosure | 10. RELATED PARTY TRANSACTIONS Dividend and Interest activity As of March 31, 2016 the Company has secured notes payable with Mr. Yorke, as the manager of, JMW Fund, LLC, The Richland Fund, LLC, The San Gabriel Fund, LLC, and the Arroyo Fund, LLC in the aggregate amount of $962,361; an outstanding balance of $138,000 on the revolving line of credit. Mr. Yorke, as the manager, has accrued interest from loans payable in the three months ended 2016 totaling $46,701. |
Supplemental Cash Flow Informat
Supplemental Cash Flow Information, Disclosure | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Supplemental Cash Flow Information, Disclosure | 11. SUPPLEMENTAL CASH FLOW INFORMATION Three Months ended March 31, 2016 2015 Cash paid for interest $ 5,211 $ 12,557 Cash paid for income taxes $ -- $ -- Non-Cash investing and financing transactions Shares issued for consulting services $ -- $ 25,500 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Notes | |
Subsequent Events | 12. SUBSEQUENT EVENTS Debt offerings On June 9, 2017 the Company entered into Secured notes under the senior secured loan agreement in the aggregate amount of $75,000. Other On July 17, 2017, the Company issued a press release entitled Heatwurx Announces Letter of Intent with Promet Therapeutics, LLC Relating to a Reverse Merger in which the Company disclosed that it has entered into a non-binding letter of intent to engage in a reverse merger with Promet Therapeutics, LLC. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies: Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Basis of Presentation | Basis of Presentation The Companys consolidated financial statements include Dr. Pave, LLC and Dr. Pave Worldwide, LLC; both wholly-owned subsidiaries of the Company, which are represented in the Companys discontinued operations (Note 5). All intercompany balances and transactions have been eliminated in the consolidated financial statements. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies: Use of Estimates, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Use of Estimates, Policy | Use of estimates |
Summary of Significant Accoun20
Summary of Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and cash equivalents |
Summary of Significant Accoun21
Summary of Significant Accounting Policies: Assets held for sale, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Assets held for sale, Policy | Assets held for sale |
Summary of Significant Accoun22
Summary of Significant Accounting Policies: Revenue Recognition, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Revenue Recognition, Policy | Revenue Recognition Other revenue represents license fees and franchise fees. |
Summary of Significant Accoun23
Summary of Significant Accounting Policies: Stock-based Compensation, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Stock-based Compensation, Policy | Stock-Based Compensation |
Summary of Significant Accoun24
Summary of Significant Accounting Policies: Earnings Per Share, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Earnings Per Share, Policy | Net income (loss) per share |
Summary of Significant Accoun25
Summary of Significant Accounting Policies: Subsequent Events, Policy (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Subsequent Events, Policy | Subsequent events |
Summary of Significant Accoun26
Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Policies | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 Entitys Ability to Continue as a Going Concern. The amendments require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Financial Accounting Standards Board recently issued ASU 2014-09, 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." The new presentation guidance is effective for interim and annual periods beginning after December 15, 2016. The Company is considering the impact of the adoption of ASU 2014-09 on its results of operations, financial condition and cash flows. |
Assets Held For Sale, Disclos27
Assets Held For Sale, Disclosure: Schedule of Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 $ 25,875 $ 16,125 $ 42,000 Transfers in -- -- -- Disposals (10,875) (16,125) (27,000) Ending balance $ 15,000 $ -- $ 15,000 |
Property and Equipment, Discl28
Property and Equipment, Disclosure: Summary of the cost of property and equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Summary of the cost of property and equipment | March 31, 2016 December 31, 2015 Computer equipment & software $ 19,150 $ 19,150 Accumulated depreciation (19,150) (18,991) $ -- $ 159 |
Discontinued Operations, Disc29
Discontinued Operations, Disclosure: Schedules of Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedules of Discontinued Operations | 2016 2015 Revenue $ -- $ 8,830 Expense 2,004 161,010 Net Loss, before taxes (2,004) (152,180) Income tax benefit -- -- Net Loss, net of tax $ (2,004) $ (152,180) The balance sheet items for discontinued operations as of March 31, 2016 and December 31, 2015 are summarized below: 2016 2015 Cash and cash equivalents $ 3,632 $ 12,350 Total assets $ 3,632 $ 12,350 Payables and accrued liabilities 77,239 70,358 Short-term debt 229,980 229,980 Total liabilities $ 307,219 $ 300,338 |
Notes Payable, Disclosure_ Sche
Notes Payable, Disclosure: Schedule of Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Notes Payable | Principal Balance Interest Rate Accrued Interest Warrants issued Warrant Fair Value - Discount Unamortized Discount Unsecured notes payable $ 420,000 12% $ 50,764 139,997 $ 115,159 $ -- Secured notes payable $ 962,361 12% - 18% $ 161,742 -- $ -- $ -- $ 1,382,361 $ 212,506 139,997 $ 115,159 $ -- |
Notes Payable, Disclosure_ Sc31
Notes Payable, Disclosure: Schedule of Loan Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Loan Payable | Year Payments 2016 $ 1,382,361 2017 -- 2018 -- 2019 -- 2020 -- Total principal payments $ 1,382,361 Less: unamortized debt discount -- Total current portion $ 1,382,361 |
Stockholders' Equity, Disclos32
Stockholders' Equity, Disclosure: Schedule of Stock Option Activity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Stock Option Activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2015 591,167 $ 1.78 3.75 Granted -- $ -- -- Exercised -- $ -- -- Cancelled (234,167) $ 1.53 -- Balance, March 31, 2016 357,000 $ 1.94 2.22 Exercisable, March 31, 2016 259,500 $ 2.11 1.99 |
Stockholders' Equity, Disclos33
Stockholders' Equity, Disclosure: Schedule of Performance Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Performance Stock Options | Number of Options Weighted Average Exercise Price Balance, December 31, 2015 40,000 $2.00 Granted -- -- Exercised -- -- Cancelled -- -- Balance, March 31, 2016 40,000 $2.00 Exercisable, March 31, 2016 and December 31, 2015 40,000 $2.00 |
Stockholders' Equity, Disclos34
Stockholders' Equity, Disclosure: Schedule of Stockholders' Equity Note, Warrants (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Stockholders' Equity Note, Warrants | Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Life (Years) Balance, December 31, 2015 2,000,304 $2.36 1.64 Granted -- -- -- Exercised -- -- -- Cancelled -- -- -- Balance, March 31, 2016 2,000,304 $2.36 1.39 |
Net Loss Per Common Share, Di35
Net Loss Per Common Share, Disclosure: Schedule of Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Earnings Per Share | For the three months ended March 31, 2016 2015 Net loss from continuing operations $ (131,621) $ (492,426) Net loss from discontinued operations (2,004) (152,180) Net Loss (133,625) (644,606) Basic and diluted: Preferred stock cumulative dividend - Series D 10,705 10,589 Income applicable to preferred stockholders 10,705 10,589 Net loss applicable to common stockholders $ (144,330) $ (655,195) |
Supplemental Cash Flow Inform36
Supplemental Cash Flow Information, Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Tables/Schedules | |
Schedule of Cash Flow, Supplemental Disclosures | Three Months ended March 31, 2016 2015 Cash paid for interest $ 5,211 $ 12,557 Cash paid for income taxes $ -- $ -- Non-Cash investing and financing transactions Shares issued for consulting services $ -- $ 25,500 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Details | ||
Net loss from continuing operations | $ 131,621 | $ 492,426 |
Net cash used in operating activities from continuing operations | 43,900 | $ 352,848 |
Net cash used from operating activities from discontinued operations | $ 6,469 |
Assets Held For Sale, Disclos38
Assets Held For Sale, Disclosure: Schedule of Fair Value Measurements (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Assets held for sale | $ 15,000 | $ 42,000 |
-Equipment- | ||
Assets held for sale | $ 15,000 |
Assets Held For Sale, Disclos39
Assets Held For Sale, Disclosure (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Proceeds from sale of property and equipment | $ 27,000 |
Equipment and inventory sold | |
Proceeds from sale of property and equipment | $ 25,000 |
Property and Equipment, Discl40
Property and Equipment, Disclosure: Summary of the cost of property and equipment (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Accumulated depreciation | $ (19,150) | $ (18,991) |
Equipment, net of depreciation | 159 | |
Computer Equipment | ||
Property, Plant and Equipment, Gross | $ 19,150 | $ 19,150 |
Property and Equipment, Discl41
Property and Equipment, Disclosure (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Details | ||
Depreciation expense | $ 159 | $ 19,145 |
Discontinued Operations, Disc42
Discontinued Operations, Disclosure: Schedules of Discontinued Operations (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Details | |||
Revenue related to discontinued operations | $ 8,830 | ||
Expense related to discontinued operations | $ 2,004 | 161,010 | |
Net income (loss) from discontinued operations | (2,004) | $ (152,180) | |
Cash and cash equivalents, discontinued opertions | 3,632 | $ 12,350 | |
Total assets, discontinued operations | 3,632 | 12,350 | |
Payables and accrued liabilities, discontinued operations | 77,239 | 70,358 | |
Short-term debt, discontinued operations | 229,980 | 229,980 | |
Total liabilities, discontinued operations | $ 307,219 | $ 300,338 |
Discontinued Operations, Disc43
Discontinued Operations, Disclosure (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Interest payable | $ 212,506 | $ 161,608 |
Revolving line of credit | ||
Revolving line of credit | 229,980 | |
Interest payable | $ 32,211 |
Notes Payable, Disclosure (Deta
Notes Payable, Disclosure (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Notes and warrants | ||
Amortization of discount on notes payable | $ 967 | $ 12,644 |
Notes Payable, Disclosure_ Sc45
Notes Payable, Disclosure: Schedule of Notes Payable (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Mar. 31, 2016 | |
Notes payable, principal balance | $ 1,382,361 | |
Accrued interest | $ 161,608 | 212,506 |
Warrants issued | 139,997 | |
Warrants fair value - discount | $ 115,159 | |
Unsecured Notes Payable | ||
Notes payable, principal balance | 420,000 | |
Accrued interest | 50,764 | |
Warrants issued | 139,997 | |
Warrants fair value - discount | $ 115,159 | |
Secured Notes Payable | ||
Notes payable, principal balance | 962,361 | |
Accrued interest | $ 161,742 |
Notes Payable, Disclosure_ Sc46
Notes Payable, Disclosure: Schedule of Loan Payable (Details) | Mar. 31, 2016USD ($) |
Total current portion of loans | $ 1,382,361 |
Loans Payable Due | |
Mandatory principal loan payments (2016) | 1,382,361 |
Total principal payments | $ 1,382,361 |
Stockholders' Equity, Disclos47
Stockholders' Equity, Disclosure (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Common stock authorized | 20,000,000 | 20,000,000 | |
Common shares issued | 11,017,388 | 11,017,388 | |
Common shares outstanding | 11,061,414 | 11,061,414 | |
Preferred stock authorized | 4,500,000 | 4,500,000 | |
Preferred stock outstanding | 178,924 | ||
Stock-based compensation expense | $ 5,062 | $ 35,552 | |
Unrecognized compensation expense | $ 1,629 | 272,490 | |
Series D Preferred Stock | |||
Shares outstanding | 178,924 | ||
Dividends paid | $ 31,475 | ||
Dividends payable | $ 53,648 | ||
Original issue price per share | $ 3 |
Stockholders' Equity, Disclos48
Stockholders' Equity, Disclosure: Schedule of Stock Option Activity (Details) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Details | ||
Number of options outstanding | 357,000 | 591,167 |
Weighted average exercise price, options outstanding | $ 1.94 | $ 1.78 |
Number of options cancelled | (234,167) | |
Weighted average exercise price, options cancelled | $ 1.53 | |
Number of options exercisable | 259,500 | |
Weighted average exercise price, options exercisable | $ 2.11 |
Stockholders' Equity, Disclos49
Stockholders' Equity, Disclosure: Schedule of Performance Stock Options (Details) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Details | ||
Performance Stock options outstanding | 40,000 | 40,000 |
Weighted average exercise price, performance stock options outstanding | $ 2 | $ 2 |
Performance Stock options exercisable | 40,000 | |
Weighted average exercise price, performance stock options exercisable | $ 2 |
Stockholders' Equity, Disclos50
Stockholders' Equity, Disclosure: Schedule of Stockholders' Equity Note, Warrants (Details) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Details | ||
Warrants outstanding | 2,000,304 | 2,000,304 |
Weighted average exercise price, warrants | $ 2.36 | $ 2.36 |
Net Loss Per Common Share, Di51
Net Loss Per Common Share, Disclosure: Schedule of Earnings Per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net loss from continuing operations | $ (131,621) | $ (492,426) |
Net income (loss) from discontinued operations | (2,004) | (152,180) |
Net loss | (133,625) | (644,606) |
Net income (loss) available to preferred stockholders | 10,705 | 10,589 |
Net loss applicable to common stockholders | (144,330) | (655,195) |
Series D Dividend | ||
Dividends paid or accrued on preferred stock | $ 10,705 | $ 10,589 |
Commitments and Contingencies52
Commitments and Contingencies, Disclosure (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Details | ||
Total rent expense | $ 2,250 | $ 15,057 |
Accounts payable and accrued expenses from continuing operations | 263,129 | |
Accounts payable and accrued expenses from discontinued operations | 45,028 | |
Debt and accrued interest from continuing operations | 1,594,867 | |
Debt and accrued interest from discontinued operations | $ 262,191 |
Related Party Transactions, D53
Related Party Transactions, Disclosure (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Secured notes payable - Mr. Yorke | |
Due to related party | $ 962,361 |
Revolving line of credit - Mr. Yorke | |
Due to related party | 138,000 |
Mr. Yorke | |
Paid or accrued interest | $ 46,701 |
Supplemental Cash Flow Inform54
Supplemental Cash Flow Information, Disclosure: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Details | ||
Cash paid for interest | $ 5,211 | $ 12,557 |
Common stock issued for services | 25,500 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Jun. 09, 2017 | Mar. 31, 2016 | Mar. 31, 2015 |
Details | |||
Secured note entered into | $ 75,000 | $ 15,000 | $ 450,000 |