Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | FLEXPOINT SENSOR SYSTEMS INC | |
Entity Central Index Key | 925,660 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 92,863,464 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 3,062 | $ 12,832 |
Accounts receivable, net of allowance for bad debts of $145,179 and $145,194 | 18,937 | 47,254 |
Deposits and prepaid expenses | 18,184 | 10,144 |
Total Current Assets | 40,183 | 70,230 |
Long-Term Deposits | 6,550 | 6,550 |
Property and Equipment, net of accumulated depreciation of $590,685 and $589,006 | 6,905 | 8,584 |
Patents and Proprietary Technology, net of accumulated amortization of $949,958 and $925,790 | 24,087 | 48,295 |
Goodwill | 4,896,917 | 4,896,917 |
Total Assets | 4,974,642 | 5,030,576 |
Current Liabilities | ||
Accounts payable | 365,864 | 227,680 |
Accounts payable - related party | 12,127 | |
Accrued liabilities | 1,079,200 | 958,810 |
Due to related parties | 20,000 | |
Convertible notes payable, net of discount of $18,275 and $72,986 | 1,036,725 | 807,014 |
Convertible notes payable to related party, net of discount of $17,497 and $33,099 | 162,016 | 81,414 |
Derivative liabilities | 131,190 | 363,680 |
Total liabilities | 2,787,122 | 2,458,598 |
Stockholders' Equity | ||
Preferred stock - $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding | ||
Common stock - $0.001 par value; 100,000,000 shares authorized; 92,863,464 shares and 92,863,464 shares issued and outstanding, | 92,863 | 92,863 |
Additional paid-in capital | 29,785,568 | 29,785,568 |
Accumulated deficit | (27,690,911) | (27,306,453) |
Total Stockholders' Equity | 2,187,520 | 2,571,978 |
Total Liabilities and Stockholders' Equity | $ 4,974,642 | $ 5,030,576 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for bad debts | $ 145,179 | $ 145,194 |
Property and Equipment, accumulated depreciation | 590,685 | 589,006 |
Patents and Proprietary Technology, accumulated amortization | 949,958 | 925,790 |
Convertible notes payable, net of discount | 18,275 | 72,986 |
Convertible notes payable to related party, discount | $ 17,497 | $ 33,099 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 92,863,464 | 92,863,464 |
Common stock, shares outstanding | 92,863,464 | 92,863,464 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Statement [Abstract] | ||||
Design, Contract and Testing Revenue | $ 72,208 | $ 40,622 | $ 202,630 | $ 256,323 |
Operating Costs and Expenses | ||||
Amortization of patents and proprietary technology | 7,930 | 9,154 | 24,208 | 39,687 |
Cost of revenue | 11,102 | 8,503 | 35,015 | 43,144 |
Administrative and marketing expense | 112,141 | 160,769 | 345,777 | 515,620 |
Research and development expense | 73,873 | 79,975 | 237,678 | 244,484 |
Total Operating Costs and Expenses | 205,046 | 258,401 | 642,678 | 842,935 |
Net Operating Loss | (132,838) | (217,779) | (440,048) | (586,612) |
Other Income and Expenses | ||||
Interest expense | (78,383) | (73,197) | (235,891) | (238,537) |
Interest income | 12 | 12 | 35 | 35 |
Gain(Loss) on derivative | 88,606 | 63,006 | 291,446 | 112,185 |
Net Other Income (Expense) | 10,235 | (10,179) | 55,590 | (126,317) |
Net Loss | $ (122,603) | $ (227,958) | $ (384,458) | $ (712,929) |
Basic and Diluted Loss per Common Share | $ 0 | $ 0 | $ 0 | $ (0.01) |
Basic and Diluted Weighted-Average Common Shares Outstanding | 92,863,464 | 78,363,464 | 92,863,464 | 78,363,464 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (384,458) | $ (712,929) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock-based compensation expense | 14,916 | |
Amortization of patents and proprietary technology | 24,208 | 39,687 |
Amortization of discount on note payable | 129,269 | 22,049 |
Depreciation | 1,679 | 1,679 |
Change in fair value of derivative liabilities | (291,446) | (112,185) |
Interest expense recognized for derivative liabilities | 63,298 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 28,332 | (2,415) |
Deposits and prepaid expenses | (8,055) | (2,034) |
Accounts payable | 138,184 | 40,344 |
Accounts payable - related parties | 12,127 | (1,420) |
Accrued liabilities | 120,390 | 336,342 |
Net Cash Used in Operating Activities | (229,770) | (312,668) |
Cash Flows from Investing Activities: | ||
Purchase of proprietary technology | (1,650) | |
Net Cash Used in Investing Activities | (1,650) | |
Cash Flows from Financing Activities: | ||
Repayment of bank overdrafts | (14,621) | |
Proceeds from borrowings under convertible note payable - related party | 45,000 | 47,000 |
Repayment of borrowings under convertible note payable - related party | (7,000) | |
Proceeds from borrowings under convertible note payable | 175,000 | 300,000 |
Net Cash Provided by Financing Activities | 220,000 | 325,379 |
Net Change in Cash and Cash Equivalents | (9,770) | 11,061 |
Cash and Cash Equivalents at Beginning of Period | 12,832 | |
Cash and Cash Equivalents at End of Period | 3,062 | 11,061 |
Supplemental Cash Flow Information: | ||
Cash paid for income taxes | ||
Cash paid for interest | ||
Supplemental Disclosure on Noncash Investing and Financing Activities | ||
Recognition of discounts on convertible notes payable | 58,956 | 99,221 |
Assumption of liabilities by related parties | 54,513 | |
Conversion of due to related party to convertible note | $ 20,000 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 Condensed Consolidated Interim Financial Statements Revenue Recognition Step 1. Identify the contract with the customer Step 2. Identify the performance obligations in the contract Step 3. Determine the transaction price Step 4. Allocate the transaction price to the performance obligations in the contract Step 5. Recognize revenue when the Company satisfied a performance obligation Stock-Based Compensation Basic and Diluted Loss Per Share Recent Accounting Pronouncements In February 2018, the Financial Standards Accounting Board (FASB) issued Accounting Statement Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In June 2018, the FASB issued ASU No. 2018-07, Compensation Stock Compensation (Topic 718), (ASU 2018-07). ASU 2018-07 is intended to reduce cost and complexity of financial reporting for non-employee share-based payments. Currently, the accounting requirements for non-employee and employee share-based payments are significantly different. ASU 2018-07 expands the scope of Topic 718, which currently only includes share-based payments to employees, to include share-based payments to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity Equity-Based Payments to Nonemployees. The amendments to ASU 2018 - 07 are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a companys adoption date of ASU No. 2014-09, (Topic 606), Revenue from Contracts with Customers. The Company is currently evaluating ASU 2018-07 and its impact on its condensed consolidated financial statements or disclosures. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations. |
GOING CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2018 | |
GOING CONCERN[Abstract] | |
GOING CONCERN | NOTE 2 GOING CONCERN The Company continues to accumulate significant operating losses and has an accumulated deficit of $27,690,911 at September 30, 2018. These factors raise substantial doubt about the Companys ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. Management is seeking additional funding to provide operating capital for its operations until such time as revenues are sufficient to sustain our level of operations. However, there is no assurance that additional funding will be available on acceptable terms, if at all. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2018 | |
DERIVATIVE INSTRUMENTS [Abstract] | |
DERIVATIVE INSTRUMENTS | NOTE 3 DERIVATIVE INSTRUMENTS The derivative liability as of September 30, 2018, in the amount of $131,190 has a Level 3 fair value classification. The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of September 30, 2018 and December 31, 2017: Total Balance, December 31, 2016 76,295 Recognition of derivative liabilities upon initial valuation 226,651 Change in fair value of derivative liabilities 60,734 Conversions of derivative liabilities into equity instruments - Balance, December 31, 2017 363,680 Recognition of derivative liabilities upon initial valuation 58,956 Change in fair value of derivative liabilities (291,446) Conversions of derivative liabilities into equity instruments - Balance, September 30, 2018 131,190 During the year ended December 31, 2017 and the period ended September 30, 2018, the Company issued convertible promissory notes which are convertible into common stock. Due to the Companys lack of authorized shares necessary to settle all convertible instruments, in accordance with ASC 815-40-25, the Company determined that the conversion features related to these notes are derivative instruments since we do not have control to increase the number of authorized shares to settle all convertible instruments. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date. At September 30, 2018, the Company marked to market the fair value of the derivatives and determined a fair value of $131,190. The Company recorded a gain from change in fair value of derivatives of $291,446 for the nine month period ended September 30, 2018. The fair value of the embedded derivatives was determined using binomial lattice model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 100.37% to 115.15%, (3) weighted average risk-free interest rate of 2.19% to 2.36% (4) expected life of 0.25 to 1.25 years, and (5) the quoted market price of the Companys common stock at each valuation date. In accordance ASC 840-15-25, the Company has implemented a sequencing policy with respect to all outstanding convertible instruments. The Company evaluates its contracts based upon earliest issuance date. As of September 30, 2018, liabilities measured at fair value on a recurring basis are summarized as follows: Level 1 Level 2 Level 3 Total Derivative Liabilities - - 131,190 131,190 Total $ - $ - $ 131,190 $ 131,190 Convertible Notes Payable At December 31, 2017 there were notes outstanding with principal balances which total $880,000. Of the notes, $840,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate) and are convertible into shares of common stock at the rate of $0.06 to $0.07 per share. The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director. That note was due on December 31, 2015, is currently in default, and therefore bears a default interest rate of 10%. On January 31, 2018, the Company entered into a convertible note for up to $100,000 from a third party. The note was due on July 31, 2018, is currently in default, and therefore bears a default interest rate of 15%. On February 23, April 13, and May 17, 2018 the Company drew $40,000, $30,000, and $30,000 against this note. On June 15, 2018, the Company entered into a convertible note for up to $150,000 from a third party. The note has an annual interest rate of 10% and is secured by the Companys equipment. The note has a conversion feature for restricted common shares at $0.06 per share and a maturity date of March 31, 2019. On July 2, August 1, September 5, 2018, the Company drew $25,000, $25,000 and $25,000 against this note. During the year ended December 31, 2017 and the period ended June 30, 2018, the Company issued convertible promissory notes which are convertible into common stock. Due to the Companys lack of authorized shares necessary to settle all convertible instruments, in accordance with ASC 815-40-25, the Company determined that the conversion features related to these notes are derivative instruments since we do not have control to increase the number of authorized shares to settle all convertible instruments. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date. The Company recognizes a debt discount for the initial value of the derivative liability. The resultant debt discount is amortized over the term of the note. At September 30, 2018 there was $18,275 in unamortized debt discounts related to the above notes which will be expensed over future periods. Convertible Note Payable Related Party At December 31, 2017 there were notes outstanding with two directors of the Company with balances of $87,257 and $27,256, respectively. The notes bear an 8% annual rate of interest with a 12% default rate. These notes were due as follows: $10,000 was due November 30, 2016, $10,000 was due December 31, 2016, $30,000 was due December 31, 2017, and $64,513 is due December 31, 2018. These notes are convertible into shares of common stock at the rate of $0.07 per share. On August 28, 2018, the Company entered into two convertible notes with directors of the Company for $60,000 and $5,000. These notes are due December 31, 2019 and are convertible into shares of common stock at the rate of $0.06 per share. During the year ended 2017 and the period ended June 30, 2018, the Company issued convertible promissory notes which are convertible into common stock. Due to the Companys lack of authorized shares necessary to settle all convertible instruments, in accordance with ASC 815-40-25, the Company determined that the conversion features related to these notes are derivative instruments since we do not have control to increase the number of authorized shares to settle all convertible instruments. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date. The Company recognizes a debt discount for the initial value of the derivative liability. The resultant debt discount is amortized over the term of the note. At September 30, 2018 there was $17,497 in unamortized debt discounts related to the above notes which will be expensed over future periods. |
STOCK OPTION PLANS
STOCK OPTION PLANS | 9 Months Ended |
Sep. 30, 2018 | |
STOCK OPTION PLANS [Abstract] | |
STOCK OPTION PLANS | NOTE 4 On August 25, 2005, the Board of Directors of the Company approved and adopted the 2005 Stock Incentive Plan (the Plan). The Plan became effective upon its adoption by the Board and will continue in effect for ten years, unless terminated. This plan was approved by the stockholders of the Company at their annual meeting of shareholders on November 22, 2005. Under the Plan, the exercise price for all options issued will not be less than the average quoted losing market price of the Companys trading common stock for the thirty day period immediately preceding the grant date plus a premium of ten percent. The maximum aggregate number of shares that may be awarded under the lan is 2,500,000 shares. On August 24, 2015, the Board of Directors approved the issuance of options to purchase 2,185,000 shares of the Companys common stock. Of the total issued, 1,960,000 options were issued to replace options held by directors and employees which were to expire and 225,000 options were issued to new employees. Of the options issued, 640,000 have an option price of $0.14 per share, 500,000 have an option price of $0.15 per share, 995,000 have an option price of $0.20 per share, and 50,000 have an option price of $0.25 per share. Options issued as replacement shall have immediate vesting terms. Options which are not replacements shall vest over a two year four month period in equal installments on the last day of 2015, 2016 and 2017, respectively. We relied on an exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act. Projected data related to the expected volatility and expected life of stock options is based upon historical and other information, and notably, the Company's common stock has limited trading history. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of the Company's employee stock options. Between August 25, 2005 and December 31, 2015, the Company granted options to employees to purchase an aggregate 3,096,000 shares of common stock at exercise prices ranging from $0.14 to $2.07 per share. The options vest over three years and expire 10 years from the date of grant. The Company used the following assumptions in estimating the fair value of the options granted: · Market value at the time of issuance Range of $0.14 to 2.07 · Expected term Range of 3.7 years to 10.0 years · Risk-free interest rate Range of 1.60% to 4.93% · Dividend yield 0% · Expected volatility 200% to 424% · Weighted-average fair value - $0.16 to $2.07 All of the options were fully vested at December 31, 2017. As a result there was no stock-based compensation expenses recorded for the three and nine months ended September 30, 2018. The Company recognized $0 and $9,890 in stock-based compensation expense for the three and nine months period ended September 30, 2017. There were 2,185,000 and 2,185,000 employee stock options outstanding at September 30, 2018 and December 31, 2017, respectively. A summary of all employee options outstanding and exercisable under the plan as of September 30, 2018, and changes during the nine months then ended is set forth below: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at the beginning of period 2,185,000 $ 0.17 7.65 $ -- Granted -- -- -- -- Expired -- -- -- -- Forfeited -- -- -- -- Outstanding at the end of Period 2,185,000 $ 0.17 6.91 $ -- Exercisable at the end of Period 2,185,000 $ 0.17 6.91 $ -- |
CAPITAL STOCK
CAPITAL STOCK | 9 Months Ended |
Sep. 30, 2018 | |
CAPITAL STOCK [Abstract] | |
CAPITAL STOCK | NOTE 5 CAPITAL STOCK Preferred Stock There are 1,000,000 shares of preferred stock with a par value of $0.001 per share authorized. At September 30, 2018 and December 31, 2017, there were no shares of preferred stock issued or outstanding. Common Stock There are 100,000,000 shares of common stock with a par value of $0.001 per share authorized. No shares of stock were issued during the nine months ended September 30, 2018. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2018 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 COMMITMENTS AND CONTINGENCIES The Company currently occupies approximately 11,639 square feet of office and manufacturing space from American Covers, Inc., dba Handstands. In 2014 the Company extended the operating lease agreement for its manufacturing facility in Draper, Utah. Under the terms of a three year lease extension effective January 1, 2015, the monthly rent remained at $8,950 per month for 2015, increased to $9,300 per month for 2016 and to $9,600 per month for 2017. The lease further provides that on the expiration of the lease on December 31, 2017, the lease becomes a month-to-month lease at a rate of the current monthly lease rate ($9,600), plus an increase of 10%, (now $10,560), with a 10% increase on the anniversary date of each succeeding year. The building is located in a business park in Draper, Utah which consists primarily of high tech manufacturing firms and it is located adjacent to Utahs main interstate highway. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2018 | |
RELATED PARTY TRANSACTIONS [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 7 RELATED PARTY TRANSACTIONS At December 31, 2017, the Company had $20,000 due to its Chief Executive Officer for funds loaned to the Company to pay off various operating expenses of the business. The amount owed at December 31, 2017, was converted to notes payable, bearing interest at the rate of 8% per annum with a due date of December 31, 2019. At December 31, 2017, the Company had outstanding notes payable to an officer in the amount of $87,257 and an outstanding note payable to a director in the amount of $27,256. On August 28, 2018, additional notes payable in the amounts of $60,000 and $5,000, respectively, were issued to directors of the Company. See note 3. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2018 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | NOTE 8 SUBSEQUENT EVENTS On October 2, 2018 the Company drew an additional $25,000 against the $150,000 line of credit dated June 15, 2018 provided by a third party. On October 18, 2018, the Company announced it had signed a five year manufacturing and supply agreement with a medical device company for a medicine dispensing product. It is anticipated that full production under this agreement will commence during the first quarter of 2019. In accordance with ASC 855-10 management reviewed all material events through the date of this report. There are no material subsequent events to report other than those disclosed above. In this quarterly report references to Flexpoint", "the Company," we, us, and our refer to Flexpoint Sensor Systems, Inc. and its subsidiaries. FORWARD LOOKING STATEMENTS The U.S. Securities and Exchange Commission (SEC) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as may, expect, believe, anticipate, estimate, project, or continue or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Condensed Consolidated Interim Financial Statements | Condensed Consolidated Interim Financial Statements |
Revenue Recognition | Revenue Recognition Step 1. Identify the contract with the customer Step 2. Identify the performance obligations in the contract Step 3. Determine the transaction price Step 4. Allocate the transaction price to the performance obligations in the contract Step 5. Recognize revenue when the Company satisfied a performance obligation |
Stock-Based Compensation | Stock-Based Compensation |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2018, the Financial Standards Accounting Board (FASB) issued Accounting Statement Update No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In June 2018, the FASB issued ASU No. 2018-07, Compensation Stock Compensation (Topic 718), (ASU 2018-07). ASU 2018-07 is intended to reduce cost and complexity of financial reporting for non-employee share-based payments. Currently, the accounting requirements for non-employee and employee share-based payments are significantly different. ASU 2018-07 expands the scope of Topic 718, which currently only includes share-based payments to employees, to include share-based payments to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity Equity-Based Payments to Nonemployees. The amendments to ASU 2018 - 07 are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than a companys adoption date of ASU No. 2014-09, (Topic 606), Revenue from Contracts with Customers. The Company is currently evaluating ASU 2018-07 and its impact on its condensed consolidated financial statements or disclosures. In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations. |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments | |
Schedule of Changes in Level 3 Financial Liabilities | The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of September 30, 2018 and December 31, 2017: Total Balance, December 31, 2016 76,295 Recognition of derivative liabilities upon initial valuation 226,651 Change in fair value of derivative liabilities 60,734 Conversions of derivative liabilities into equity instruments - Balance, December 31, 2017 363,680 Recognition of derivative liabilities upon initial valuation 58,956 Change in fair value of derivative liabilities (291,446) Conversions of derivative liabilities into equity instruments - Balance, September 30, 2018 131,190 |
Schedule of Liabilities Measured at Fair Value on Recurring Basis | As of September 30, 2018, liabilities measured at fair value on a recurring basis are summarized as follows: Level 1 Level 2 Level 3 Total Derivative Liabilities - - 131,190 131,190 Total $ - $ - $ 131,190 $ 131,190 |
STOCK OPTION PLANS (Tables)
STOCK OPTION PLANS (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
STOCK OPTION PLANS [Abstract] | |
Schedule of Stock Option Activity | A summary of all employee options outstanding and exercisable under the plan as of September 30, 2018, and changes during the nine months then ended is set forth below: Options Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at the beginning of period 2,185,000 $ 0.17 7.65 $ -- Granted -- -- -- -- Expired -- -- -- -- Forfeited -- -- -- -- Outstanding at the end of Period 2,185,000 $ 0.17 6.91 $ -- Exercisable at the end of Period 2,185,000 $ 0.17 6.91 $ -- |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Nature Of Business [Line Items] | ||
Stock-based compensation expense | $ 14,916 | |
Anti-dilutive securities excluded from computation of earnings per share amount | 24,162,571 |
GOING CONCERN (Details)
GOING CONCERN (Details) - USD ($) | Sep. 30, 2018 | Dec. 31, 2017 |
Going Concern | ||
Accumulated deficit | $ 27,690,911 | $ 27,306,453 |
DERIVATIVE INSTRUMENTS (Narrati
DERIVATIVE INSTRUMENTS (Narrative) (Details) - USD ($) | Jun. 15, 2018 | Aug. 28, 2018 | Jan. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Sep. 05, 2018 | Aug. 02, 2018 | Jul. 02, 2018 | May 17, 2018 | Apr. 13, 2018 | Feb. 23, 2018 | Dec. 31, 2016 | Nov. 30, 2016 | Aug. 08, 2011 |
Derivative liabilities | $ 131,190 | $ 131,190 | ||||||||||||||||
Change in fair value of derivative liabilities | 88,606 | $ 63,006 | 291,446 | $ 112,185 | ||||||||||||||
Interest expense in connection with recognition of derivative liabilities | ||||||||||||||||||
Convertible notes payable, principal amount outstanding | $ 880,000 | |||||||||||||||||
Convertible Debt [Member] | ||||||||||||||||||
Debt instrument, interest rate | 10.00% | |||||||||||||||||
Debt instrument, default rate | 15.00% | |||||||||||||||||
Convertible notes payable, principal amount outstanding | $ 840,000 | |||||||||||||||||
Unamortized debt discounts | 18,275 | $ 18,275 | ||||||||||||||||
Derivative Classification [Member] | ||||||||||||||||||
Dividend yield | 0.00% | |||||||||||||||||
Derivative Classification [Member] | Minimum [Member] | ||||||||||||||||||
Expected volatility | 100.37% | |||||||||||||||||
Risk-free interest rate | 2.19% | |||||||||||||||||
Expected life | 2 months 30 days | |||||||||||||||||
Derivative Classification [Member] | Maximum [Member] | ||||||||||||||||||
Expected volatility | 115.15% | |||||||||||||||||
Risk-free interest rate | 2.36% | |||||||||||||||||
Expected life | 1 year 2 months 30 days | |||||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||||
Debt instrument, maturity date | Mar. 31, 2019 | Dec. 31, 2015 | ||||||||||||||||
Debt instrument, interest rate | 10.00% | |||||||||||||||||
Convertible notes payable, principal amount outstanding | $ 150,000 | |||||||||||||||||
Debt instrument, conversion price | $ 0.06 | |||||||||||||||||
Drew amount of note | $ 25,000 | $ 25,000 | $ 25,000 | $ 30,000 | $ 30,000 | $ 40,000 | ||||||||||||
Convertible Notes Payable [Member] | Director [Member] | ||||||||||||||||||
Debt instrument, interest rate | 10.00% | |||||||||||||||||
Convertible notes payable, balance | $ 40,000 | |||||||||||||||||
Convertible Notes Payable [Member] | Minimum [Member] | ||||||||||||||||||
Debt instrument, conversion price | $ 0.06 | |||||||||||||||||
Convertible Notes Payable [Member] | Maximum [Member] | ||||||||||||||||||
Debt instrument, conversion price | $ 0.07 | |||||||||||||||||
Convertible Notes Payable to Related Party [Member] | ||||||||||||||||||
Unamortized debt discounts | $ 17,497 | $ 17,497 | ||||||||||||||||
Convertible Notes Payable to Related Party [Member] | Director [Member] | ||||||||||||||||||
Debt instrument, interest rate | 8.00% | |||||||||||||||||
Debt instrument, default rate | 12.00% | |||||||||||||||||
Debt instrument, conversion price | $ 0.07 | |||||||||||||||||
Convertible Notes Payable to Related Party [Member] | One Director [Member] | ||||||||||||||||||
Debt instrument, maturity date | Dec. 31, 2019 | |||||||||||||||||
Convertible notes payable, principal amount outstanding | $ 87,257 | |||||||||||||||||
Convertible notes payable, balance | $ 60,000 | |||||||||||||||||
Debt instrument, conversion price | $ 0.06 | |||||||||||||||||
Convertible Notes Payable to Related Party [Member] | Two Director [Member] | ||||||||||||||||||
Debt instrument, maturity date | Dec. 31, 2019 | |||||||||||||||||
Convertible notes payable, principal amount outstanding | 27,256 | |||||||||||||||||
Convertible notes payable, balance | $ 5,000 | |||||||||||||||||
Debt instrument, conversion price | $ 0.06 | |||||||||||||||||
Convertible Notes Payable to Related Party [Member] | Officer [Member] | ||||||||||||||||||
Convertible notes payable, balance | $ 30,000 | $ 10,000 | $ 10,000 | |||||||||||||||
Convertible Notes Payable to Related Party [Member] | Officer [Member] | Subsequent Event [Member] | ||||||||||||||||||
Convertible notes payable, balance | $ 64,513 | |||||||||||||||||
New Convertible Notes Payable [Member] | ||||||||||||||||||
Debt instrument, face amount | $ 100,000 | |||||||||||||||||
Debt instrument, maturity date | Jul. 31, 2018 | |||||||||||||||||
Debt instrument, default rate | 15.00% |
DERIVATIVE INSTRUMENTS (Schedul
DERIVATIVE INSTRUMENTS (Schedule of Changes in Level 3 Financial Liabilities) (Details) - Derivative Financial Instruments, Liabilities [Member] - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Balance | $ 363,680 | $ 76,295 |
Recognition of derivative liabilities upon initial valuation | 58,956 | 226,651 |
Change in fair value of derivative liabilities | (291,446) | 60,734 |
Conversions of derivative liabilities into equity instruments | ||
Balance | $ 131,190 | $ 363,680 |
DERIVATIVE INSTRUMENTS (Sched_2
DERIVATIVE INSTRUMENTS (Schedule of Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member] | Sep. 30, 2018USD ($) |
Liabilities, fair value | $ 131,190 |
Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | 131,190 |
Level 1 [Member] | |
Liabilities, fair value | |
Level 1 [Member] | Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | |
Level 2 [Member] | |
Liabilities, fair value | |
Level 2 [Member] | Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | |
Level 3 [Member] | |
Liabilities, fair value | 131,190 |
Level 3 [Member] | Derivative Financial Instruments, Liabilities [Member] | |
Liabilities, fair value | $ 131,190 |
STOCK OPTION PLANS (Narrative)
STOCK OPTION PLANS (Narrative) (Details) - USD ($) | Aug. 24, 2015 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2015 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options granted during period | |||||||
Option pricing assumptions | |||||||
Weighted-average fair value of options granted | |||||||
Stock-based compensation expense | $ 0 | $ 0 | $ 0 | $ 9,890 | |||
Options outstanding | 2,185,000 | 2,185,000 | 2,185,000 | ||||
2005 Stock Incentive Plan [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares authorized | 2,500,000 | 2,500,000 | |||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 2,185,000 | ||||||
Options granted during period | 3,096,000 | ||||||
Exercise price of stock options granted, minimum | $ 0.14 | ||||||
Exercise price of stock options granted, maximum | $ 2.07 | ||||||
Option vesting period | 2 years 4 months | 3 years | |||||
Option expiration period | 10 years | ||||||
Option pricing assumptions | |||||||
Dividend yield | 0.00% | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Minimum [Member] | |||||||
Option pricing assumptions | |||||||
Market value per share at time of issuance | $ 0.14 | ||||||
Expected term | 3 years 8 months 12 days | ||||||
Risk-free interest rate | 1.60% | ||||||
Expected volatility | 200.00% | ||||||
Weighted-average fair value of options granted | $ 0.16 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Maximum [Member] | |||||||
Option pricing assumptions | |||||||
Market value per share at time of issuance | $ 2.07 | ||||||
Expected term | 10 years | ||||||
Risk-free interest rate | 4.93% | ||||||
Expected volatility | 424.00% | ||||||
Weighted-average fair value of options granted | $ 2.07 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range One [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 640,000 | ||||||
Exercise price of stock options granted | $ 0.14 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Two [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 500,000 | ||||||
Exercise price of stock options granted | $ 0.15 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Three [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 995,000 | ||||||
Exercise price of stock options granted | $ 0.20 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Four [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 50,000 | ||||||
Exercise price of stock options granted | $ 0.25 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Employee [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 225,000 | ||||||
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Director [Member] | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Issuance of options for purchase of common shares | 1,960,000 |
STOCK OPTION PLANS (Schedule of
STOCK OPTION PLANS (Schedule of Stock Option Activity) (Details) | 9 Months Ended |
Sep. 30, 2018USD ($)$ / sharesshares | |
Shares | |
Outstanding at the beginning of period | shares | 2,185,000 |
Granted | shares | |
Expired | shares | |
Forfeited | shares | |
Outstanding at the end of Period | shares | 2,185,000 |
Exercisable at the end of the Period | shares | 2,185,000 |
Weighted Average Exercise Price | |
Outstanding at the beginning of period | $ / shares | $ 0.17 |
Granted | $ / shares | |
Expired | $ / shares | |
Forfeited | $ / shares | |
Outstanding at the end of Period | $ / shares | 0.17 |
Exercisable at the end of Period | $ / shares | $ 0.17 |
Weighted Average Remaining Contractual Life (Years) | |
Outstanding at the beginning of period | 7 years 7 months 24 days |
Outstanding at the end of Period | 6 years 10 months 28 days |
Exercisable at the end of Period | 6 years 10 months 28 days |
Outstanding at the beginning of period | $ | |
Granted | $ | |
Expired | $ | |
Forfeited | $ | |
Outstanding at the end of Period | $ | |
Exercisable at the end of the Period | $ |
CAPITAL STOCK (Details)
CAPITAL STOCK (Details) - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
CAPITAL STOCK [Abstract] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Stock issued | 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 9 Months Ended |
Sep. 30, 2018USD ($) | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Operating lease expiration period | Dec. 31, 2017 |
Lease, monthly payment in 2015 | $ 8,950 |
Lease, monthly payment in 2016 | 9,300 |
Lease, monthly payment in 2017 | 9,600 |
Lease, monthly payment in 2018 | $ 10,560 |
Increase lease rate percentage | 10.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Aug. 28, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||||
Accounts payable - related party | $ 12,127 | |||
Assumption of liabilities by related parties | $ 54,513 | |||
Convertible Notes Payable to Related Party [Member] | One Director [Member] | ||||
Related Party Transaction [Line Items] | ||||
Notes payable, balance | $ 60,000 | |||
Debt instrument, maturity date | Dec. 31, 2019 | |||
Convertible Notes Payable to Related Party [Member] | Two Director [Member] | ||||
Related Party Transaction [Line Items] | ||||
Notes payable, balance | $ 5,000 | |||
Debt instrument, maturity date | Dec. 31, 2019 | |||
Chief Executive Officer [Member] | ||||
Related Party Transaction [Line Items] | ||||
Accounts payable - related party | $ 20,000 | |||
Debt instrument, interest rate | 8.00% | |||
Debt instrument, maturity date | Dec. 31, 2019 | |||
Officer [Member] | ||||
Related Party Transaction [Line Items] | ||||
Outstanding notes payable amount | $ 87,257 | |||
Director [Member] | ||||
Related Party Transaction [Line Items] | ||||
Outstanding notes payable amount | $ 27,256 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - Third-Party [Member] | Oct. 02, 2018USD ($) |
Subsequent Event [Line Items] | |
Maximum borrowing capacity | $ 150,000 |
Amount drawn against note | $ 25,000 |