JERRICK MEDIA HOLDINGS, INC., S-1/A filed on 11/30/2018
Securities Registration Statement
v3.10.0.1
Document and Entity Information
9 Months Ended
Sep. 30, 2018
Document and Entity Information [Abstract]  
Entity Registrant Name Jerrick Media Holdings, Inc.
Entity Central Index Key 0001357671
Trading Symbol JMDA
Amendment Flag true
Amendment Description Amendment No. 1
Document Type S-1
Document Period End Date Sep. 30, 2018
Entity Filer Category Non-accelerated Filer
Entity Small Business true
Entity Emerging Growth Company false
Entity Ex Transition Period false
v3.10.0.1
Condensed Consolidated Balance Sheet - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Current Assets      
Cash $ 186,278 $ 111,051 $ 174,494
Prepaid expenses 39,644 10,000
Accounts receivable 6,957 1,325
Total Current Assets 232,879 112,376 184,494
Property and equipment, net 48,031 48,056 71,829
Security deposit 16,836 17,000 38,445
Minority investment in business     83,333
Total Assets 297,746 177,432 378,101
Current Liabilities      
Accounts payable and accrued liabilities 1,121,056 1,462,106 1,387,068
Demand loan 10,366 10,366
Convertible Notes, net of debt discount and issuance costs 40,401 96,500 268,823
Current portion of capital lease payable 4,732 4,732 3,524
Note payable - related party, net of debt discount 1,112,295 1,249,000 1,365,325
Note payable, net of debt discount and issuance costs 105,128 689,500 15,579
Line of credit - related party 130,000
Line of credit 44,996 235,141
Deferred rent 11,829  
Investor Deposit 208,428  
Total Current Liabilities 2,603,869 3,687,200 3,285,826
Non-current Liabilities:      
Capital lease payables 1,208
Convertible Notes - related party, net of debt discount 314 1,345,246
Convertible Notes, net of debt discount and issuance costs 186,103 2,512,293
Total Non-current Liabilities 186,417 3,857,539 1,208
Total Liabilities 2,790,286 7,544,739 3,287,034
Commitments and contingencies  
Stockholders' Deficit      
Common stock par value $0.001: 300,000,000 shares authorized; 40,524,432 and 33,894,582 issued and outstanding as of June 30, 2018 and December 31,2017 respectively 119,321 39,521 33,895
Additional paid in capital 31,990,831 14,387,247 10,075,941
Accumulated deficit (34,583,684) (21,775,107) (13,018,811)
Less: Treasury stock, 220,000 and 220,000 shares, respectively (19,007) (19,007)
Total stockholders' deficit (2,492,539) (7,367,307) (2,908,933)
Total Liabilities and Stockholders' Deficit 297,747 177,432 378,101
Series A Preferred stock      
Stockholders' Deficit      
Preferred stock value 31 31 33
Total stockholders' deficit   31 33
Series B Preferred stock      
Stockholders' Deficit      
Preferred stock value 8 8 8
Total stockholders' deficit   8 8
Series D Preferred stock      
Stockholders' Deficit      
Preferred stock value 1
Total stockholders' deficit   $ 1
v3.10.0.1
Condensed Consolidated Balance Sheet (Parenthetical) - $ / shares
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Common stock, par value $ 0.001 $ 0.001 $ 0.001
Common stock, shares authorized 300,000,000 300,000,000 300,000,000
Common stock, shares issued 40,524,432 33,894,582 33,894,592
Common stock, shares outstanding 40,524,432 33,894,582 33,894,592
Treasury stock, shares 220,000 220,000 0
Series A Preferred stock      
Preferred stock, par value $ 0.001 $ 0.001 $ 0.001
Preferred stock, shares designated   100,000 100,000
Preferred stock, shares issued 31,581 33,314 33,314
Preferred stock, shares outstanding 31,581 33,314 33,314
Series B Preferred stock      
Preferred stock, par value $ 0.001 $ 0.001 $ 0.001
Preferred stock, shares designated   20,000 20,000
Preferred stock, shares issued 8,063 8,063 8,063
Preferred stock, shares outstanding 8,063 8,063 8,063
Series D Preferred stock      
Preferred stock, par value $ 0.001 $ 0.001 $ 0.001
Preferred stock, shares designated   2,100,000 2,100,000
Preferred stock, shares issued 0 0 914
Preferred stock, shares outstanding 0 0 914
v3.10.0.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Income Statement [Abstract]            
Net revenue $ 25,119 $ 11,244 $ 65,391 $ 105,345 $ 95,653 $ 223,927
Cost of revenue         43,321
Gross margin         95,653 180,606
Operating expenses            
Compensation 446,094 280,674 1,548,923 1,536,082 1,480,082 1,134,170
Consulting fees 73,603 725,486 520,206 903,056 1,216,189 1,350,917
Share based payments         1,262,377 332,711
General and administrative 388,010 412,226 1,768,130 1,048,979 1,699,333 1,054,564
Total operating expenses 907,707 1,418,386 3,837,259 3,488,117 5,657,981 3,872,362
Loss from operations (882,588) (1,407,142) (3,771,868) (3,382,772) (5,562,328) (3,691,756)
Other income (expenses)            
Interest expense (279,163) (228,120) (888,359) (372,825) (477,005) (3,474,529)
Accretion of debt discount and issuance cost (1,449,656) (800,614) (2,039,589) (1,525,514) (1,828,027) (235,622)
Change In derivative liability (64,346) (64,346) (64,346)
Settlement of vendor liabilities 1,011 2,886 (110,674) 167,905
Loss on extinguishment of debt (2,938,719) (923,822) (3,370,505) (923,822) (906,531)
(Loss) gain on settlement of debt 1,823 2,079 15,275 2,079 2,079  
Impairment of minority investment         (83,333)
Gain on the sale of assets         10,000
Other income (expenses) (4,664,704) (2,014,823) (6,280,292) (2,995,102) (3,189,258) (3,700,151)
Loss before income tax provision (5,547,292) (3,421,965) (10,052,160) (6,377,874) (8,751,586) (7,391,907)
Income tax provision
Net loss (5,547,292) (3,421,965) (10,052,160) (6,377,874) (8,751,586) (7,391,907)
Deemed dividend 45,367 74,014 174,232 203,365 297,323 247,128
Inducement to convert convertible preferred stock 2,016,634   2,016,634    
Net loss attributable to common shareholders $ (7,609,293) $ (3,495,979) $ (12,243,026) $ (6,581,239) $ (9,048,909) $ (7,639,035)
Per-share data            
Basic and diluted loss per share $ (0.11) $ (0.09) $ (0.25) $ (0.17) $ (0.23) $ (0.24)
Weighted average number of common shares outstanding 66,608,083 39,469,670 49,046,551 38,343,241 38,601,987 32,046,149
v3.10.0.1
Consolidated Statement of Stockholders' Equity - USD ($)
Total
Series A Preferred Stock
Series B Preferred Stock
Series D Preferred Stock
Common Stock
Treasury stock
Additional Paid In Capital
Accumulated Deficit
Beginning balance at Dec. 31, 2015 $ (360,464) $ 33 $ 7 $ 28,500   $ 5,319,835 $ (5,708,839)
Beginning balance, shares at Dec. 31, 2015   33,314 7,000 28,500,000      
Net proceeds from issuance of common stock and warrants 344,248 $ 667   343,581
Net proceeds from issuance of common stock and warrants, shares   666,666      
Issuance of common stock for cashless exercise of warrants $ 393   (393)
Issuance of common stock for cashless exercise of warrants, shares   392,764      
Conversion of series D preferred stock to common stock $ (1) $ 1,099   (1,098)
Conversion of series D preferred stock to common stock, shares   (1,099) 1,098,933      
Conversion of interest to series B preferred stock 108,844 $ 1   108,843
Conversion of interest to series B preferred stock, shares   1,063      
Conversion of common stock to Series D preferred stock 2 $ 2  
Conversion of common stock to Series D preferred stock, shares   2,013      
Common stock issued commissions and placement agreement 322 $ 322  
Common stock issued commissions and placement agreement, shares   322,015      
Issuance of common stock for cash 2,626 $ 2,626  
Issuance of common stock for cash, shares   2,626,308      
Recapitalization 288 $ 288  
Recapitalization, shares   287,896      
Liquidated damages on preferred stock and warrants 3,329,993   3,329,993
Stock warrants issued with convertible notes 255,203   255,203
Stock warrants issued with promissory note 41,633   41,633
Stock based compensation 484,692   484,692
Stock warrants issued with note payable - related party 193,652       193,652  
Dividends 81,935             81,935
Net loss for the year ended (7,391,907)   (7,391,907)
Ending balance at Dec. 31, 2016 (2,908,933) $ 33 $ 8 $ 1 $ 33,895   10,075,941 (13,018,811)
Ending balance, shares at Dec. 31, 2016   33,314 8,063 914 33,894,582      
Conversion of series A to common stock 4,710 $ (2) $ 1,146   3,566
Conversion of series A to common stock, shares   (1,733) 1,146,307      
Conversion of series D to common stock $ (1) $ 266   (265)
Conversion of series D to common stock, shares   (914) 266,325      
Common stock issued to settle vendor liabilities 185,827 $ 1,179   184,648
Common stock issued to settle vendor liabilities, shares         1,179,107      
Stock based compensation 1,248,379 $ 789   1,247,590
Stock based compensation, shares         788,395      
Stock warrants issued with note payable 2,487,904   2,487,904
Common stock issued for services 307,427 $ 1,868   305,559
Common stock issued for services, shares   1,867,633      
Common stock issued with note payable 82,682 $ 378 82,304
Common stock issued with note payable, shares   378,333      
Purchase of treasury stock (19,007)         $ (19,007)    
Purchase of treasury stock, shares           (220,000)    
Dividends (4,710)       (4,710)
Net loss for the year ended (8,751,586)   (8,751,586)
Ending balance at Dec. 31, 2017 (7,367,307) $ 31 $ 8 $ 39,521 $ (19,007) $ 14,387,247 $ (21,775,107)
Ending balance, shares at Dec. 31, 2017   31,581 8,063 39,520,682 (220,000)    
Net loss for the year ended (10,052,160)              
Ending balance at Sep. 30, 2018 $ (2,492,539)              
v3.10.0.1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $ (10,052,160) $ (6,377,874) $ (8,751,586) $ (7,391,907)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation 33,109 28,211 38,435 42,634
Accretion of debt issuance costs     303,799
Accretion of debt discount and issuance cost 2,039,589 1,560,239 1,524,228 235,622
Share-based compensation 329,857 751,215 1,262,377 463,503
Loss on settlement of vendor liabilities (2,886) 110,674 (167,905)
Gain on settlement of debt (15,275) (2,079) (2,079)
Impairment of minority investment     83,333
Change in fair value of derivative liability 64,347 64,346
Loss on extinguishment of debt 3,370,505 923,822 906,531
Changes in operating assets and liabilities:        
Prepaid expenses 3,366 10,000 10,000 (10,000)
Accounts receivable (5,632) (1,325)
Security deposit 164 21,445 (21,445)
Accounts payable and accrued expenses 848,171 489,326 855,849 834,487
Deferred rent 3,429    
Accrued liquidating damages     3,329,993
Net Cash Used In Operating Activities (3,447,763) (2,476,844) (3,852,552) (2,517,113)
CASH FLOWS FROM INVESTING ACTIVITIES:        
Cash paid for property and equipment (24,084) (14,662) (43,957)
Net Cash Used In Investing Activities (24,084) (14,662) (43,957)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Repayment of loans     (107,887)
Net proceeds from issuance of notes 791,833 1,141,585 1,441,585 146,000
Repayment of notes (214,939) (100,000) (100,000)
Net proceeds from issuance of preferred stock     344,250
Proceeds from issuance of demand loan 50,000 10,366
Proceeds from issuance of convertible note 1,525,154 1,066,500 2,201,500 550,000
Repayment of convertible notes (86,798) (477,777) (477,777) (50,000)
Proceeds from issuance of convertible notes - related party 299,852 555,000 655,000
Proceeds from issuance of note payable - related party 315,000 479,000 529,000 1,446,500
Repayment of note payable - related party (163,305) (120,000) (145,000) (1,500)
Investor Deposit 208,428    
Proceeds from issuance of common stock 1,155,832    
Proceeds from issuance of line of credit     39,195
Proceeds from issuance of line of credit - related party 130,000 130,000
Repayment of line of credit (44,996) (125,324) (199,574) (24,007)
Cash paid to preferred holder (87,111)    
Cash paid for debt issuance costs (166,761) (151,956) (211,956) (55,982)
Cash paid for stock issuance costs (35,115)      
Purchase of treasury stock     (19,007)
Net Cash Provided By Financing Activities 3,547,074 2,397,028 3,803,771 2,296,935
Net Change in Cash 75,227 (79,816) (63,443) (264,135)
Cash - Beginning of Year 111,051 174,494 174,494 438,629
Cash - End of Year 186,278 94,678 111,051 174,494
Cash Paid During the Year for:        
Income taxes
Interest 64,892 3,534 3,534 5,738
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Settlement of vendor liabilities 3,750 353,732 353,732
Beneficial conversion feature on convertible notes 38,413    
Deemed dividends 174,232 203,365 297,323 247,128
Warrants issued with debt 1,122,292 1,542,523 490,488
Issuance of common stock for prepaid services 116,300    
Conversion of note payable and interest into convertible notes 341,442 765,656
Warrants issued with amendment to notes payable 135,596    
Inducement to convert convertible preferred stock $ 2,016,634    
Conversion of interest     108,843
Debt discount on convertible note     1,006,753 24,425
Debt discount on related party note payable     198,702 218,800
Debt discount on note payable     483,745
Accrued dividends     217,985 177,234
Liquidated damages     3,329,993
Derivative liability ceases to exist     383,993
Conversion of note payable - related party and interest into convertible notes - related party     $ 801,026
v3.10.0.1
Organization and Operations
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Organization and Operations [Abstract]    
Organization and Operations

Note 1 – Organization and Operations

 

Jerrick Media Holdings, Inc. (“we,” “us,” the “Company,” or “Jerrick Media” or “Jerrick”) (formerly Great Plains Holdings, Inc. or “GTPH”) was incorporated under the laws of the state of Nevada on December 30, 1999 under the name LILM, Inc. The Company changed its name on December 3, 2013 to Great Plains Holdings, Inc. as part of its plan to diversify its business through the acquisition and operation of commercial real estate, including, but not limited to, self-storage facilities, apartment buildings, 55+ senior manufactured home communities, and other income producing properties. Historically, the Company has principally engaged in the manufacture and marketing of the LiL Marc, a plastic boys’ toilet-training device, which we discontinued as of December 31, 2014.

 

On February 5, 2016 (the “Closing Date”), GTPH, GPH Merger Sub, Inc., a Nevada corporation and wholly-owned subsidiary of GTPH (“Merger Sub”), and Jerrick Ventures, Inc., a privately-held Nevada corporation headquartered in New Jersey (“Jerrick”), entered into an Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into Jerrick, with Jerrick surviving as a wholly-owned subsidiary of GTPH (the “Merger”). GTPH acquired, through a reverse triangular merger, all of the outstanding capital stock of Jerrick in exchange for issuing Jerrick’s shareholders (the “Jerrick Shareholders”), pro-rata, a total of 28,500,000 shares of GTPH’s common stock. GTPH assumed 33,415 shares of Jerrick’s Series A Convertible Preferred Stock (the “Jerrick Series A Preferred”) and 8,064 shares of Series B Convertible Preferred Stock (the “Jerrick Series B Preferred”).

   

In connection with the Merger, on the Closing Date, GTPH and Kent Campbell entered into a Spin-Off Agreement (the “Spin-Off Agreement”), pursuant to which Mr. Campbell purchased from GTPH (i) all of GTPH’s interest in Ashland Holdings, LLC, a Florida limited liability company, and (ii) all of GTPH’s interest in Lil Marc, Inc., a Utah corporation, in exchange for the cancellation of 781,818 shares of GTPH’s Common Stock held by Mr. Campbell. In addition, Mr. Campbell assumed all debts, obligations and liabilities of GTPH, including any existing prior to the Merger, pursuant to the terms and conditions of the Spin-Off Agreement.

 

Upon closing of the Merger on February 5, 2016, the Company changed its business plan to that of Jerrick Media.

 

Effective February 28, 2016, GTPH entered into an Agreement and Plan of Merger (the “Statutory Merger Agreement”) with Jerrick, pursuant to which GTPH became the parent company of Jerrick Ventures, LLC, a wholly-owned operating subsidiary of Jerrick (the “Statutory Merger”) and GTPH changed its name to Jerrick Media Holdings, Inc. to better reflect its new business strategy.

 

Jerrick Media is a technology company focused on the development of digital communities, marketing branded digital content, and e-commerce opportunities. Jerrick’s content distribution platform, Vocal, delivers a robust long-form, digital publishing platform organized into highly engaged niche-communities capable of hosting all forms of rich media content. Through Jerrick’s proprietary algorithm dynamics, Vocal enhances the visibility of content and maximizes viewership, providing advertisers access to target markets that most closely match their interests.

Note 1 - Organization and Operations

 

Jerrick Media Holdings, Inc. (“we,” “us,” the “Company,” or “Jerrick Media” or “Jerrick”) (formerly Great Plains Holdings, Inc. or “GTPH”) was incorporated under the laws of the state of Nevada on December 30, 1999 under the name LILM, Inc. The Company changed its name on December 3, 2013 to Great Plains Holdings, Inc. as part of its plan to diversify its business through the acquisition and operation of commercial real estate, including, but not limited to, self-storage facilities, apartment buildings, 55+ senior manufactured home communities, and other income producing properties. Historically, the Company has principally engaged in the manufacture and marketing of the LiL Marc, a plastic boys’ toilet-training device, which we discontinued as of December 31, 2014.

 

On February 5, 2016 (the “Closing Date”), GTPH, GPH Merger Sub, Inc., a Nevada corporation and wholly-owned subsidiary of GTPH (“Merger Sub”), and Jerrick Ventures, Inc., a privately-held Nevada corporation headquartered in New Jersey (“Jerrick”), entered into an Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into Jerrick, with Jerrick surviving as a wholly-owned subsidiary of GTPH (the “Merger”). GTPH acquired, through a reverse triangular merger, all of the outstanding capital stock of Jerrick in exchange for issuing Jerrick’s shareholders (the “Jerrick Shareholders”), pro-rata, a total of 28,500,000 shares of GTPH’s common stock. GTPH assumed 33,415 shares of Jerrick’s Series A Convertible Preferred Stock (the “Jerrick Series A Preferred”) and 8,064 shares of Series B Convertible Preferred Stock (the “Jerrick Series B Preferred”).

   

In connection with the Merger, on the Closing Date, GTPH and Kent Campbell entered into a Spin-Off Agreement (the “Spin-Off Agreement”), pursuant to which Mr. Campbell purchased from GTPH (i) all of GTPH’s interest in Ashland Holdings, LLC, a Florida limited liability company, and (ii) all of GTPH’s interest in Lil Marc, Inc., a Utah corporation, in exchange for the cancellation of 781,818 shares of GTPH’s Common Stock held by Mr. Campbell. In addition, Mr. Campbell assumed all debts, obligations and liabilities of GTPH, including any existing prior to the Merger, pursuant to the terms and conditions of the Spin-Off Agreement.

 

Upon closing of the Merger on February 5, 2016, the Company changed its business plan to that of Jerrick Media.

 

Effective February 28, 2016, GTPH entered into an Agreement and Plan of Merger (the “Statutory Merger Agreement”) with Jerrick, pursuant to which GTPH became the parent company of Jerrick Ventures, LLC, a wholly-owned operating subsidiary of Jerrick (the “Statutory Merger”) and GTPH changed its name to Jerrick Media Holdings, Inc. to better reflect its new business strategy.

 

Jerrick Media is a technology company focused on the development of digital communities, marketing branded digital content, and e-commerce opportunities. Jerrick’s content distribution platform, Vocal, delivers a robust long-form, digital publishing platform organized into highly engaged niche-communities capable of hosting all forms of rich media content. Through Jerrick’s proprietary algorithm dynamics, Vocal enhances the visibility of content and maximizes viewership, providing advertisers access to target markets that most closely match their interests.

v3.10.0.1
Significant and Critical Accounting Policies and Practices
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Significant and Critical Accounting Policies and Practices [Abstract]    
Significant and Critical Accounting Policies and Practices

Note 2 – Significant and Critical Accounting Policies and Practices

 

Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation - Unaudited Interim Financial Information

 

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

   

(i) Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
   
(ii) Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
   
(iii)   Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.
   
(iv) Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk-free rate(s) to value share options and similar instruments.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Principles of consolidation

 

The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to control exists.

 

As of September 30, 2018, the Company’s consolidated subsidiaries and/or entities are as follows:

 

Name of combined affiliate   State or other jurisdiction of
incorporation or organization
  Company interest  
             
Jerrick Ventures LLC   The State of Delaware     100%  
Jerrick Australia Pty Ltd   Australia     100%  

 

All inter-company balances and transactions have been eliminated.

 

Jerrick Australia Pty Ltd does not have any operations.

  

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities and accrued liquidating damages approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 

Cash Equivalents


The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.


The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

    Estimated Useful
Life
(Years)
     
Computer equipment and software   3
Furniture and fixture   5
Leasehold improvement   5

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

 

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

  

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. 

 

Derivative Liability

 

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 during the year ended December 31, 2017 on a retrospective basis.

 

Revenue Recognition

 

The Company adopted ASC 606, “Revenue from Contracts with Customers” (“ASC 606”), effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods.

 

Based on the Company’s analysis the Company did not identify a cumulative effect adjustment for initially applying the new revenue standards. During the nine months ended September 30, 2018 the Company recorded revenue from the following sources: products at auction, sponsored content and affiliate sites.

 

The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of September 30, 2018 contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below. 

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Product revenue

 

Revenue from multiple-element arrangements is allocated among separate elements based on their estimated sales prices, provided the elements have value on a stand-alone basis.

 

Stock-Based Compensation

 

The Company recognizes compensation expense for all equity–based payments granted to employees in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award. 

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a five-year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date. 

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is benchmarked against similar companies in a similar industry over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best estimate.  

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period. 

 

Income Taxes

 

Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. 

 

Loss Per Share

 

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the nine months ended September 30, 2018 and 2017 presented in these consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

The Company had the following common stock equivalents at September 30, 2018 and 2017:

 

    September 30,
2018
    September 30,
2017
 
Series A Preferred stock     -       21,654,614  
Series B Preferred stock     -       4,431,987  
Options     17,649,990       17,749,990  
Warrants     103,341,735       34,457,024  
Convertible notes - related party     2,000       -  
Convertible notes     1,620,505       13,681,425  
Totals     122,614,230       91,975,040  

 

Reclassifications

 

Interest expense has been allocated to accretion of debt discount and issuance cost to conform to current period presentation.

 

Recently Adopted Accounting Guidance

 

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net)” (topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we adopted for interim and annual reporting periods beginning after December 15, 2017. The adoption of ASU 2016-10 did not have a material effect on its financial position or results of operations or cash flows.

 

Revenue Recognition

 

The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods.

 

Based on the Company’s analysis the Company did not identify a cumulative effect adjustment for initially applying the new revenue standards. During the six months ended June 30, 2018 the Company recorded revenue from the following sources: products at auction, sponsored content and affiliate sites.

 

The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company's services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company's contracts as of June 30, 2018 contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below.

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Product revenue

 

Revenue from multiple-element arrangements is allocated among separate elements based on their estimated sales prices, provided the elements have value on a stand-alone basis.

 

Adoption of ASU 2017-11

 

As noted above, in connection with the securities purchase agreement and debt transactions during the year ended December 31, 2017, the Company issued warrants and convertible notes, to purchase common stock with an exercise price of $0.20 and a five-year term. Upon issuance of the warrants and convertible notes, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the warrants and convertible notes that potentially could result in a net cash settlement in the event of a fundamental transaction, requiring the Company to classify the warrants and convertible notes as a derivative liability. The Company changed its method of accounting for the convertible notes and warrants through the early adoption of ASU 2017-11 during the three months ended December 31, 2017 on a retrospective basis. Accordingly, the Company recorded the warrant derivative and conversion option derivative liabilities to additional paid in capital upon issuance.

 

Tabular summaries of the revisions and the corresponding effects on the statement of earnings for the nine months ended September 30, 2017 are presented below:

 

Consolidated Statement of Operations Nine Months Ended September 30, 2017
    Previously 
Reported
    Revisions     Revised 
Reported
 
Accretion of debt discount and issuance cost   $ (2,025,486 )   $ 499,972     $ (1,525,514 )
                         
Derivative expense     (254,470 )     254,470       -  
                         
Change in fair value of derivative liabilities     1,257,716       (1,322,062 )     (64,346 )
                         
Loss on extinguishment of debt     (876,038 )     (47,784 )     (923,822 )
                         
Net loss   $ (5,762,470 )   $ (615,404 )   $ (6,377,874 )
                         
Net loss per ordinary share:                        
Basic and diluted loss per share   $ (0.15 )   $ (0.02 )   $ (0.17 )

 

Tabular summaries of the revisions and the corresponding effects on the statement of earnings for the three months ended September 30, 2017 are presented below:

 

Consolidated Statement of Operations Three Months Ended September 30, 2017
    Previously 
Reported
    Revisions     Revised 
Reported
 
Accretion of debt discount and issuance cost   $ (1,074,002 )   $ 273,388     $ (800,614 )
                         
Change in fair value of derivative liabilities     673,705       (738,051 )     (64,346 )
                         
Loss on extinguishment of debt     (876,038 )     (47,784 )     (923,822 )
                         
Net loss   $ (2,909,519 )   $ (512,446 )   $ (3,421,965 )
                         
Net loss per ordinary share:                        
Basic and diluted loss per share   $ (0.07 )   $ (0.02 )   $ (0.09 )

 

Recent Accounting Guidance Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under ASU 2016-02, lessees will be required to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach. The Company is in the process of evaluating the effect of the new guidance on its condensed consolidated financial statements and disclosures.

 

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard.

  

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

Note 2 - Significant and Critical Accounting Policies and Practices

 

Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Basis of Presentation

 

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). 

 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

   

(i)Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
  
(ii)Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
  
(iii)  Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.  
  
(iv)Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

 

Principles of consolidation

 

The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to control exists.

 

As of December 31, 2017, the Company’s consolidated subsidiaries and/or entities are as follows:

 

Name of combined affiliate State or other jurisdiction of
incorporation or organization
 Company interest 
      
Jerrick Ventures LLC The State of Delaware 100%

 

All inter-company balances and transactions have been eliminated.

 

On May 12, 2017, the Company assigned the right, title and interest to all of the membership interests of certain of it’s inactive business subsidiaries, with the exception of Jerrick Ventures LLC, to the Company’s Chief Executive Officer, Jeremy Frommer, in consideration for Mr. Frommer’s assumption of all liabilities of such subsidiaries, if any, with such assignment and assumption effected entirely in the interest of corporate efficiency. The Board reviewed the transaction and believes it to be fair in all respects, deeming it to advance the Company’s business interests by allowing the Company to divest non-producing and non-operating subsidiaries at no cost to the Company. All of the Company’s operations have been, and will continue to be, run through its operating subsidiary, Jerrick Ventures LLC.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
   
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
   
Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities and accrued liquidating damages approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

   

Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

 

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

  Estimated Useful
Life
(Years)
 
    
Computer equipment and software 3 
Furniture and fixture 5 

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

 

Investments - Cost Method, Equity Method and Joint Venture

 

In accordance with sub-topic 323-10 of the FASB ASC (“Sub-topic 323-10”), the Company accounts for investments in common stock of an investee for which the Company has significant influence in the operating or financial policies even though the Company holds 50% or less of the common stock or in-substance common stock.

 

On January 2, 2013, the Company purchased a minority interest in a business for proceeds of $83,333. The interest is accounted for under the cost method. The Company tests the carrying value annually for impairment. The company recorded an impairment of minority investment of $83,333.

 

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

 

Derivative Liability

 

The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity.

   

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. 

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

 

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.  The Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 during the three months ended December 31, 2017 on a retrospective basis.

 

The Company utilizes an option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The Company records the change in the fair value of the derivative as other income or expense in the condensed consolidated statements of operations.

 

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes gross revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. During the year ended the recorded revenue from the following sources products at auction, sponsored content and affiliate sites.

 

Stock-Based Compensation

 

The Company recognizes compensation expense for all equity–based payments granted to employees in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a five year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date. 

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is benchmarked against similar companies in a similar industry over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best estimate.  

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period.

  

Income Taxes

 

Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. 

 

Loss Per Share

 

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the year ended December 31, 2017 and 2016 presented in these consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

The Company had the following common stock equivalents at December 31, 2017:

 

  December 31,
2017
 
Series A Preferred stock  19,256,707 
Series B Preferred stock  4,092,893 
Options  17,749,990 
Warrants  46,193,779 
Convertible notes - related party  7,080,128 
Convertible notes  17,749,990 
Totals  112,123,487 

 

Reclassifications

 

Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation. These reclassifications did not affect the prior period total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities.

 

Recently Adopted Accounting Guidance

 

In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The adoption of ASU 2016-09 will not have a material effect on its financial position or results of operations or cash flows.

  

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net)” (topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after December 15, 2017. The adoption of ASU 2016-10 will not have a material effect on its financial position or results of operations or cash flows.

 

In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition and is effective during the same period as ASU 2014-09. The adoption of ASU 2016-12 won’t have a material effect on its financial position or results of operations or cash flows.

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The adoption of ASU 2016-15 won’t have a material effect on its financial position or results of operations or cash flows.

 

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company early adopted the ASU 2017-11 in the year ending December 31, 2017.

 

Recent Accounting Guidance Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under ASU 2016-02, lessees will be required to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach. The Company is in the process of evaluating the effect of the new guidance on its consolidated financial statements and disclosures.

 

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard.

 

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted. The provisions of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of the new standard.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This standard is required to be adopted in the first quarter of 2018. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

v3.10.0.1
Going Concern
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Going Concern [Abstract]    
Going Concern

Note 3 – Going Concern

 

The Company’s condensed consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. 

 

As reflected in the condensed consolidated financial statements, the Company had an accumulated deficit at September 30, 2018, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements.

 

The Company is attempting to further implement its business plan and generate sufficient revenues; however, its cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can be no assurance to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and its ability to raise additional funds by way of a public or private offering.

 

The condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. 

Note 3 – Going Concern

 

The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

As reflected in the consolidated financial statements, the Company had an accumulated deficit at December 31, 2017, a net loss and net cash used in operating activities for the reporting period then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company is attempting to further implement its business plan and generate sufficient revenues; however, its cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to further implement its business plan and generate sufficient revenues and in its ability to raise additional funds by way of a public or private offering of its debt or equity securities, there can be no assurance to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenues and its ability to raise additional funds by way of a public or private offering.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

v3.10.0.1
Property and Equipment
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Property and Equipment [Abstract]    
Property and Equipment

Note 4 – Property and Equipment

 

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

 

   

September 30,

2018

    December 31,
2017
 
Computer Equipment   $ 220,054     $ 234,315  
Furniture and Fixtures     61,803       61,803  
Leasehold Improvements     25,446       -  
      307,303       296,118  
Less: Accumulated Depreciation     (259,272 )     (248,062 )
    $ 48,031     $ 48,056  

 

Depreciation expense was $11,670 and $9,507 for the three months ended September 30, 2018 and 2017, respectively. Depreciation expense was $33,109 and $28,211 for the nine months ended September 30, 2018 and 2017, respectively.

Note 4 – Property and Equipment

 

Property and equipment stated at cost, less accumulated depreciation and amortization, consisted of the following:

 

  

December 31,

2017

  

December 31,

2016

 
Computer Equipment $234,315  $219,653 
Furniture and Fixtures  61,803   61,803 
   296,118   281,456 
Less: Accumulated Depreciation  (248,062)  (209,627)
  $48,056  $71,829 

 

Depreciation expense was $38,435 and $42,634 for the year ended December 31, 2017 and 2016, respectively.

v3.10.0.1
Line of Credit
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Line of Credit/Notes Payable/Convertible Note Payable [Abstract]    
Line of Credit

Note 5 – Line of Credit

 

Line of credit as of September 30, 2018 and December 31, 2017 is as follows:

 

    Outstanding Balances as of  
   

September 30,

2018

   

December 31,

2017

 
Revolving Note               -       44,996  
    $ -     $ 44,996  

 

On March 19, 2009, Astoria Surgical Supplies North LLC signed a revolving note (the “Revolving Note”) at PNC Bank (the “Bank”). The outstanding balance of this Revolving Note is limited to $200,000 and expired March 19, 2010. The outstanding balance accrues interest at a variable rate. The interest rate is subject to change based on changes in an independent index which is the highest Prime Rate as published in the “Money Rates” section of the Wall Street Journal. The Company had been in payment default since March 19, 2010; however, on May 3, 2017, the Company agreed to pay back the line of credit by December 1, 2017. On March 23, 2018 the Company sent the final payment for the Revolving Note and the Revolving Note was fully satisfied.

 

The balance outstanding on the Revolving Note at September 30, 2018 and December 31, 2017 was $0 and $44,996, respectively.

Note 5 – Line of Credit

 

Line of credit as of December 31, 2017 and 2016 is as follows:

 

  Outstanding Balances as of 
  

December 31,

2017

  

December 31,

2016

 
Revolving Note  44,996   203,988 
Factoring Agreement  -   31,153 
  $44,996  $235,141 

  

On March 19, 2009, Astoria Surgical Supplies North LLC signed a revolving note (the “Revolving Note”) at PNC Bank (the “Bank”). The outstanding balance of this Note is limited to $200,000 and expired March 19, 2010. The outstanding balance accrues interest at a variable rate. The interest rate is subject to change based on changes in an independent index which is the highest Prime Rate as published in the “Money Rates” section of the Wall Street Journal. Interest is payable monthly and the rate as of December 31, 2017 and 2016 was 3.75% and 3.75%, respectively. The Company had been in payment default since March 19, 2010; however, on May 3, 2017, the Company agreed to pay back the line of credit by December 1, 2017. As of the date of this filing the Revolving Note has been paid off.

 

The balance outstanding on the Revolving Note at December 31, 2017 and 2016 was $44,996 and $203,988, respectively.

 

On October 4, 2016, the Company signed a revenue based factoring agreement (the “Factoring Agreement”) with Imperial Advance, LLC. The company received proceeds of $40,000 and agreed to pay $52,400 of future receivables. The note issued in connection with the Factoring Agreement is secured by an officer of the Company. On August 21, 2017, the Company and Imperial Advance, LLC entered into a Settlement Agreement pursuant to which the Company agreed to pay Imperial Advance, LLC $9,368 by August 23, 2017. The company recorded a gain on settlement of debt of $2,079.

 

The balance outstanding on the revenue based factoring agreement at December 31, 2017 and 2016 was $0 and $31,153, respectively.

v3.10.0.1
Notes Payable
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Line of Credit/Notes Payable/Convertible Note Payable [Abstract]    
Notes Payable

Note 6 – Notes Payable

 

Notes payable as of September 30, 2018 and December 31, 2017 is as follows:

 

    Outstanding Principal as of               Warrants  
    September 30,
2018
    December 31,
2017
    Interest Rate     Maturity Date   Quantity     Exercise
Price
 
The February 2017 Offering   $ 5,369     $ 400,000       12 %   September 1, 2017     2,450,000     $ 0.20  
The June 2017 Loan Agreement     -       50,000       12 %   September 1, 2017     35,000       0.20  
The First November 2017 Loan Agreement     -       100,000       15 %   January 12, 2018     -       -  
The Second November 2017 Loan Agreement     -       50,000       15 %   January 13, 2018     -       -  
The Third November 2017 Loan Agreement     -       100,000       15 %   January 13, 2018     -       -  
July 2018 Loan Agreement     100,000               6 %    August 2018     300,000       -  
      105,369       700,000                              
Less: Debt Discount     -       (10,500 )                            
Less: Debt Issuance Costs     (241 )     -                              
    $ 105,128     $ 689,500                              

 

Private Placement Offerings:

 

The February 2017 Offering

 

From February 24, 2017 through March 17, 2017, the Company conducted multiple closings of a private placement offering (the “February 2017 Offering”) of the Company’s securities by entering into subscription agreements (the “Subscription Agreements”) with accredited investors (the “Accredited Investors”) for aggregate gross proceeds of $916,585 for which the Accredited Investors received $975,511 in principal value of secured promissory notes with an original issue discount of six percent (6%) (the “February 2017 Offering Notes”) and warrants to purchase the Company’s common stock (the “February 2017 Offering Warrants”).  

 

The February 2017 Offering Notes are convertible into shares of the Company’s common stock at the time of Company’s next round of financing (the “Subsequent Offering”) at a price equal to eighty-five percent (85%) of the price per share offered in the Subsequent Offering (the “Conversion Price”). The February 2017 Offering Warrants have a five-year term. Investors received the February 2017 Offering Warrants in the following amounts: (i) Investors purchasing $150,000 or more of the Offering received a February 2017 Offering Warrant equal to one hundred thirty percent (130%) of the dollar amount invested in the Offering; (ii) investors purchasing at least $100,000 but less than $150,000 of the February 2017 Offering received a February 2017 Offering Warrant equal to one hundred percent (100%) of the dollar amount invested in the Offering; and (iii) investors purchasing less than $100,000 of the Offering received to a February 2017 Offering Warrant equal to seventy percent (70%) of the dollar amount invested in the Offering. The February 2017 Offering Warrants entitle the holder to purchase shares of the Company’s common stock at $0.20 per share (the “Exercise Price”).

 

The Conversion Price and the Exercise Price are subject to adjustments for issuances of (i) the Company’s common stock, (ii) any equity linked instruments or (iii) securities convertible into the Company’s common stock, at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustments shall result in the Conversion Price or Exercise Price being reduced to such lower purchase price, as described in the February 2017 Offering Notes and the February 2017 Offering Warrants.

  

Pursuant to the Subscription Agreements, the February 2017 Offering Notes matured on September 1, 2017 (the “February 2017 Offering Maturity Date”). Prior to the February 2017 Offering Maturity Date, investors representing $575,511 in principal value converted their February 2017 Offering Notes into two year, 15% secured convertible promissory notes offered by the Company (the “August 2017 Convertible Note Offering”). The remaining investors representing an aggregate $400,000 in principal of the February 2017 Offering Notes agreed to forbear their right to declare an event of default until December 15, 2017 during which time they retain the right to convert their principal and any accrued but unpaid interest into the August 2017 Convertible Note Offering. In consideration of the forbearance for which the investors will receive a warrant to purchase up to fifteen percent (15%) of the shares of common stock underlying the warrant acquired with the purchase of the February 2017 Offering Notes at a purchase price of $0.20 per share, and the interest on their note would be increased to eighteen percent (18%) from September 1, 2017 through December 15, 2017 or the conversion date, whichever is sooner.

 

During the nine months ended September 30, 2018 the Company has repaid $131,606 of principal and $45,931 of unpaid interest. In addition, during the nine months ended September 30, 2018, the Company converted $263,025 of principal and $21,502 of unpaid interest into 1,422,639 shares of common stock. Upon conversion of the notes, the Company also issued 711,320 warrants with a grant date fair value of $102,954 which is recorded in Other income (expense) on the accompanying condensed consolidated statement of operations.

 

The June 2017 Loan Agreement

 

On June 12, 2017, the Company entered into a loan agreement (the “June 2017 Loan Agreement”) with an individual (the “June 2017 Lender”) whereby the June 2017 Lender issued the Company a promissory note of $50,000 (the “June 2017 Note”). Pursuant to the June 2017 Loan Agreement, the June 2017 Note bears interest at a rate of 10% per annum. As additional consideration for entering in the June 2017 Loan Agreement, the Company issued the June 2017 Lender a five-year warrant to purchase 35,000 shares of the Company’s common stock with an exercise price of $0.20 per share. The maturity date of the June 2017 Note was September 1, 2017 (the “June 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the June 2017 Note were due.

 

During the nine months ended September 30, 2018 the Company has repaid $50,000 principal and the debtor has forgiven the interest of $4,424 this was recorded as a gain on forgiveness of debt on the accompanying condensed consolidated statement of operations.

 

The First November 2017 Loan Agreement

 

On November 28, 2017, the Company entered into a loan agreement (the “First November 2017 Loan Agreement”) with an individual (the “First November 2017 Lender”), the First November 2017 Lender issued the Company a promissory note of $100,000 (the “First November 2017 Note”). Pursuant to the First November 2017 Loan Agreement, the First November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $5,000) shall be payable in cash or convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $10,000) shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company’s common stock ). The maturity date of the First November 2017 Note was January 12, 2018 (the “First November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First November 2017 Note are due. On January 12, 2018, the First November 2017 Note and accrued but unpaid interest was converted into the Company’s August 2017 Convertible Note Offering.

 

The Second November 2017 Loan Agreement

 

On November 29, 2017, the Company entered into a loan agreement (the “Second November 2017 Loan Agreement”) with an individual (the “Second November 2017 Lender”), the Second November 2017 Lender issued the Company a promissory note of $50,000 (the “Second November 2017 Note”). Pursuant to the Second November 2017 Loan Agreement, the Second November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $2,500) shall be payable in cash or convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $5,000) shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 25,000 shares of the Company’s common stock ). The maturity date of the Second November 2017 Note was January 13, 2018 (the “Second November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Second November 2017 Note are due. On January 12, 2018, the Second November 2017 Note and accrued but unpaid interest was converted into the Company’s August 2017 Convertible Note Offering. 

 

The Third November 2017 Loan Agreement

 

On November 29, 2017, the Company entered into a loan agreement (the “Third November 2017 Loan Agreement”) with an individual (the “Third November 2017 Lender”), the Third November 2017 Lender issued the Company a promissory note of $100,000 (the “Third November 2017 Note”). Pursuant to the Third November 2017 Loan Agreement, the Third November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $5,000) shall be payable in cash or convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $10,000) shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company’s common stock). The maturity date of the Third November 2017 Note was January 13, 2018 (the “Third November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Third November 2017 Note are due. On January 12, 2018, the Third November 2017 Note and accrued but unpaid interest was converted into the Company’s August 2017 Convertible Note Offering.

 

On March 14, 2018, the Company entered into a loan agreement (the “March 2018 Loan Agreement”) with an individual (the “March 2018 Lender”), the March 2018 Lender issued the Company a promissory note of $50,000 (the “March 2018 Note”). Pursuant to the March 2018 Loan Agreement, the March 2018 Note bears interest at a rate of 12% per annum. As additional consideration for entering in the March 2018 Loan Agreement, the Company issued the March 2018 Lender a five-year warrant to purchase 100,000 shares of the Company’s common stock with an exercise price of $0.20 per share. The maturity date of the March 2018 Note was March 29, 2018 (the “March 2018 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the March 2018 Note were due. On March 29, 2018, the March 2018 Note and accrued but unpaid interest was converted into the Company’s March 2018 Convertible Note Offering.

 

The May 2018 Offering

 

During the months of May and June 2018, the Company conducted multiple closings with accredited investors (the “May 2018 Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $658,500.

 

The May 2018 Offering consisted of a maximum of $1,200,000 of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (i) a 13% promissory note (each, a ” May 2018 Offering Note” and, together, the “May 2018 Offering Notes”), and (ii) a four-year warrant (“May 2018 Offering Warrant”) to purchase the number of shares of the Company’s common stock equal to three times the principal amount in dollars invested by such investor in each May 2018 Offering Note (the “May 2018 Warrant Shares”) at an exercise price of $0.20 per share (the “May Offering Warrant Exercise Price”), subject to adjustment upon the terms thereof. The May 2018 Offering Notes mature on the nine-month anniversary of their issuance dates.

 

The Company recorded a $215,032 debt discount relating to 1,825,500 May 2018 Offering Warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

The May Offering Warrant Exercise Price of the May 2018 Offering Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing May 2018 Offering Warrant Exercise Price. Such adjustment shall result in the May 2018 Offering Warrant Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

During the nine months ended September 30, 2018, the Company converted $608,500 of principal and $723,780 of unpaid interest into the August 2018 equity raise (as defined below).

 

July 2018 Loan Agreements

 

In July 2018, the Company received gross proceeds of $100,000 from the issuance of notes payable. As additional consideration for entering into the debentures, the Company issued the investor a 4-year warrant to purchase 300,000 shares of the Company’s common stock at a purchase price of $0.20 per share. The Company recorded a $34,569 debt discount relating to these warrants issued to these investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of this note to accretion of debt discount and issuance cost.

 

Subsequent to the balance sheet date, on November 8, 2018 the Company executed upon agreements that extended the maturity dates of these loans to March 7, 2019. As part of the extension agreements, the Company issued 204,051 warrants to purchase common stock of the Company at an exercise price of $0.30.

 

August 2018 Loan Agreements

 

On August 30, 2018, the Company received gross proceeds of $33,333 from the issuance of a note payable. As additional consideration for entering into the debenture, the Company issued the investor a 4-year warrant to purchase 33,333 shares of the Company’s common stock at a purchase price of $0.20 per share. The Company recorded a $4,178 debt discount relating to these warrants issued to this investor based on the relative fair value of each equity instrument on the dates of issuance. The debt discount was fully accreted during the nine months ended September 30, 2018. On September 7, 2018 the Company has repaid $33,333 in principal.

Note 6 – Notes Payable

 

Notes payable as of December 31, 2017 and 2016 is as follows:

 

  Outstanding Principal as of       Warrants 
  December 31,
2017
  December 31,
2016
  Interest Rate  Maturity Date Quantity  Exercise
Price
 
October 25, 2016  -   25,000   9% July 1, 2017  50,000  $0.30 
February 22, 2017  400,000   -   12% September 1, 2017  2,450,000  $0.20 
June 12, 2017  50,000   -   12% September 1, 2017  35,000  $0.20 
November 28, 2017  100,000   -   15% January 12, 2018  -   - 
November 29, 2017  50,000   -   15% January 13, 2018  -   - 
November 29, 2017  100,000   -   15% January 13, 2018  -   - 
   700,000   25,000               
Less: Debt Discount  (10,500)  (9,421)              
Less: Debt Issuance Costs  -   -               
  $689,500  $15,579               

   

Private Placement Offering:

 

From February 24, 2017 through March 17, 2017, the Company conducted multiple closings of a private placement offering (the “February 2017 Offering”) of the Company’s securities by entering into subscription agreements (the “Subscription Agreements”) with accredited investors (the “Accredited Investors”) for aggregate gross proceeds of $916,585 for which the Accredited Investors received $975,511 in principal value of secured promissory notes with an original issue discount of six percent (6%) (the “February 2017 Offering Notes”) and warrants to purchase the Company’s common stock (the “February 2017 Offering Warrants”). 

 

The February 2017 Offering Notes are convertible into shares of the Company’s common stock at the time of Company’s next round of financing (the “Subsequent Offering”) at a price equal to eighty-five percent (85%) of the price per share offered in the Subsequent Offering (the “Conversion Price”). The February 2017 Offering Warrants have a five-year term. Investors received the February 2017 Offering Warrants in the following amounts: (i) Investors purchasing $150,000 or more of the Offering received a February 2017 Offering Warrant equal to one hundred thirty percent (130%) of the dollar amount invested in the Offering; (ii) investors purchasing at least $100,000 but less than $150,000 of the February 2017 Offering received a February 2017 Offering Warrant equal to one hundred percent (100%) of the dollar amount invested in the Offering; and (iii) investors purchasing less than $100,000 of the Offering received to a February 2017 Offering Warrant equal to seventy percent (70%) of the dollar amount invested in the Offering. The Warrants entitle the holder to purchase shares of the Company’s common stock at $0.20 per share (the “Exercise Price”).

 

The Conversion Price and the Exercise Price are subject to adjustments for issuances of (i) the Company’s common stock, (ii) any equity linked instruments or (iii) securities convertible into the Company’s common stock, at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustments shall result in the Conversion Price or Exercise Price being reduced to such lower purchase price, as described in the February 2017 Offering Notes and the February 2017 Offering Warrants.

 

Pursuant to the Subscription Agreements, the February 2017 Offering Notes matured on September 1, 2017 (the “February 2017 Offering Maturity Date”). Prior to the February 2017 Offering Maturity Date, investors representing $575,511 in principal value converted their February 2017 Offering Notes into two year, 15% secured convertible promissory notes offered by the Company (the “August 2017 Convertible Note Offering”). The remaining investors representing an aggregate $400,000 in principal of the February 2017 Offering Notes agreed to forbear their right to declare an event of default until December 15, 2017 during which time they retain the right to convert their principal and any accrued but unpaid interest into the August 2017 Convertible Note Offering. In consideration of the forbearance for which the investors will receive a warrant to purchase up to fifteen percent (15%) of the shares of common stock underlying the warrant acquired with the purchase of the February 2017 Offering Notes at a purchase price of $0.20 per share, and the interest on their note would be increased to eighteen percent (18%) from September 1, 2017 through December 15, 2017 or the conversion date, whichever is sooner.

 

On June 12, 2017, the Company entered into a loan agreement (the “June 2017 Loan Agreement”) with an individual (the “June 2017 Lender”), the June 2017 Lender issued the Company a promissory note of $50,000 (the “June 2017 Note”). Pursuant to the June 2017 Loan Agreement, the June 2017 Note bears interest at a rate of 10% per annum. As additional consideration for entering in the June 2017 Loan Agreement, the Company issued the June 2017 Lender a five-year warrant to purchase 35,000 shares of the Company’s common stock with an exercise price of $0.20 per share. The maturity date of the June 2017 Note was September 1, 2017 (the “June 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the June 2017 Note were due. As of the date of the filing the note is in default.

 

On July 21, 2017, the Company entered into a loan agreement (the “July 2017 Loan Agreement”) with an individual (the “July 2017 Lender”), the July 2017 Lender issued the Company a promissory note of $100,000 (the “July 2017 Note”). Pursuant to the July 2017 Loan Agreement, the July 2017 Note bears interest at a rate of 10% per annum. As additional consideration for entering in the July 2017 Loan Agreement, the Company issued the July 2017 Lender a five-year warrant to purchase 100,000 shares of the Company’s common stock with an exercise price of $0.20 per share. The maturity date of the July 2017 Note was April 21, 2017 (the “July 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the July 2017 Note were due. On September 28, 2017, the July 2017 Note and accrued but unpaid interest was converted into the Company’s August 2017 Convertible Note Offering.

 

On August 18, 2017, the Company entered into a loan agreement (the “August 2017 Loan Agreement”) with an individual (the “August 2017 Lender”), the August 2017 the Company issued the Lender a promissory note of $50,000 (the “August 2017 Note”). Pursuant to the August 2017 Loan Agreement, the August 2017 Note bears interest at a rate of 15% per annum. The maturity date of the August 2017 Note was October 2, 2017 at which time all outstanding principal, accrued and unpaid interest and other amounts due under the August 2017 Note were due. During September 2017, the August 2017 Note and accrued but unpaid interest was converted into the Company’s August Convertible Note Offering. 

 

On November 28, 2017, the Company entered into a loan agreement (the “First November 2017 Loan Agreement”) with an individual (the “First November 2017 Lender”), the First November 2017 Lender issued the Company a promissory note of $100,000 (the “First November 2017 Note”). Pursuant to the First November 2017 Loan Agreement, the First November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $5,000) shall be payable in cash or convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $10,000) shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company’s common stock issued at $0.20 per share). The maturity date of the First November 2017 Note was January 12, 2018 (the “First November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First November 2017 Note are due.

 

On November 29, 2017, the Company entered into a loan agreement (the “Second November 2017 Loan Agreement”) with an individual (the “Second November 2017 Lender”), the Second November 2017 Lender issued the Company a promissory note of $50,000 (the “Second November 2017 Note”). Pursuant to the Second November 2017 Loan Agreement, the Second November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $2,500) shall be payable in cash or convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $5,000) shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 25,000 shares of the Company’s common stock issued at $0.20 per share). The maturity date of the Second November 2017 Note was January 13, 2018 (the “Second November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Second November 2017 Note are due.

 

On November 29, 2017, the Company entered into a loan agreement (the “Third November 2017 Loan Agreement”) with an individual (the “Third November 2017 Lender”), the Third November 2017 Lender issued the Company a promissory note of $100,000 (the “Third November 2017 Note”). Pursuant to the Third November 2017 Loan Agreement, the Third November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $5,000) shall be payable in cash or convertible into shares of the Company’s restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $10,000) shall be paid in the form of the Company’s restricted common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company’s common stock issued at $0.20 per share). The maturity date of the Third November 2017 Note was January 13, 2018 (the “Third November 2017 Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Third November 2017 Note are due.

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Convertible Note Payable

Note 7 – Convertible Note Payable

 

Convertible notes payable as of September 30, 2018 and December 31, 2017 is as follows: 

 

    Outstanding Principal as of                     Warrants  
    September 30,
2018
    December 31, 
2017
    Interest
Rate
    Conversion
Price
    Maturity Date   Quantity     Exercise
Price
 
The November 2016 Convertible Note Offering   $ -     $ 25,000       10 %     0.30     November 1, 2017     400,000     $ 0.30  
The June 2017 Convertible Note Offering     -       71,500       12 %     Not Applicable     September 1, 2017     114,700       0.20  
The August 2017 Convertible Note Offering     114,100       2,943,884       15 %     0.20 (*)   August – November 2019     14,716,419       0.20  
The First December 2017 Note     -       100,000       15 %     0.20 (*)   December 21, 2019     500,000       0.20  
The February 2018 Convertible Note Offering     75,000       -       15 %     0.20 (*)   January – February 2020     5,078,375       0.20  
The January 2018 
Note
    -       -               0.20 (*)   January 12, 2020     343,806       0.20  
The February 2018 Note     25,452       -       18 %     0.20 (*)   February 8, 2020     81,500       0.20  
The March 2018 Convertible Note Offering     75,000       -       14 %     0.20 (*)   March – April 2020     4,806,833       0.20  
      289,552       3,140,384                                      
Less: Debt Discount     (46,367 )     (452,022 )                                    
Less: Debt Issuance Costs     (16,681 )     (79,569 )                                    
      226,504       2,608,793                                      
Less: Current Debt     (40,401 )     (96,500 )                                    
Total Long-Term Debt   $ 186,103     $ 2,512,293                                      

 

(*) As subject to adjustment as further outlined in the notes

 

The November 2016 Convertible Note Offering

 

During the months of November and December 2016, the Company issued convertible notes to third party lenders totaling $400,000 (the “November 2016 Convertible Note Offering”). These notes accrue interest at a rate of 10% per annum and mature with interest and principal both due between November 1, 2017 through December 29, 2017. The notes and accrued interest are convertible at a conversion price as defined therein. In addition, in connection with these notes the Company issued five-year warrants to purchase an aggregate of 400,000 shares of Company common stock at a purchase price of $0.30 per share. These investors converted $375,000 of principal and $30,719 of interest into the August 2017 Convertible Note Offering. 

 

During the nine months September 2018, the Company converted $25,000 of principal and $4,417 of unpaid interest into the August 2018 Equity Raise (as defined below).

 

The June 2017 Convertible Note Offering

 

During the month of June 2017 the Company issued convertible notes to third party lenders totaling $71,500. These notes accrue interest at 12% per annum and mature with interest and principal both due on September 1, 2017. These notes and accrued interest may be converted into a subsequent offering at a 15% discount to the offering price are convertible at a conversion price as defined therein. In addition, the Company issued warrants to purchase 67,550 shares of Company common stock. These warrants entitle the holders to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. As of December 31, 2017, the Company was currently in default on $71,500 in principal due on these notes. On February 8, 2018, the Company repurchased these notes and is no longer in default.

 

The August 2017 Convertible Note Offering

 

From August through November of 2017, the Company conducted multiple closings of a private placement offering to accredited investors (the “August 2017 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $1,585,000. In addition, $1,217,177 of the Company’s short-term debt along with accrued but unpaid interest of $40,146 was converted into the August 2017 Convertible Note Offering. These conversions resulted in the issuance of 6,791,419 warrants with a fair value of $583,681 and an original issue discount of $101,561. These were recorded as a loss on extinguishment of debt. 

 

The August 2017 Convertible Note Offering consisted of a maximum of $6,000,000 of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “August 2017 Offering Note”, and together the “August 2017 Offering Notes”), convertible into shares of the Company’s common stock (“August 2017 Offering Conversion Shares”) at a conversion price of $0.20 per share (the “August 2017 Note Conversion Price”), and (b) a five-year warrant (each a “August 2017 Offering Warrant and together the “August 2017 Offering Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the August 2017 Offering Notes can be converted into (“August 2017 Offering Warrant Shares”) at an exercise price of $0.20 per share (“August 2017 Offering Warrant Exercise Price”). The August 2017 Offering Notes mature on the second (2nd) anniversary of their issuance dates.

 

The August 2017 Note Conversion Price and the August 2017 Offering Warrant Exercise Price are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing August 2017 Note Conversion Price or August 2017 Offering Warrant Exercise Price. Such adjustment shall result in the August 2017 Note Conversion Price and August 2017 Offering Warrant Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

The Company recorded a $472,675 debt discount relating to 7,925,000 August 2017 Offering Warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

In connection with the August 2017 Convertible Note Offering, the Company paid a placement agent a cash fee of $90,508 to for services rendered in connection therewith on a “best-efforts” basis, which was recorded as issuance cost and is being accreted over the life of the note to accretion of debt discount and issuance cost. 

  

During the nine months ended September 30, 2018, the Company converted $2,830,764 of principal and $409,287 of unpaid interest into the August 2018 Equity Raise (as defined below).

  

The First December 2017 Note

 

On December 27, 2017, the Company issued a convertible note to a third-party lender totaling $100,000 (the “First December 2017 Note”). The First December 2017 Note accrues interest at 15% per annum and matures with interest and principal both due on December 27, 2019. In addition, the Company issued a warrant to purchase 500,000 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The Company recorded a $35,525 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note The First December 2017 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The First December 2017 Note is secured by a second priority lien on the assets of the Company.

 

During the nine months ended September 30, 2018, the Company converted $100,000 of principal and $10,292 of unpaid interest into the August 2018 Equity Raise (as defined below).

  

The February 2018 Convertible Note Offering

 

During the nine months ended September 30, 2018, the Company conducted multiple closings of a private placement offering to accredited investors (the “February 2018 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $725,000. In addition, $250,000 of the Company’s short-term debt along with accrued but unpaid interest of $40,675 was converted into the February 2018 Offering. These conversions resulted in the issuance of 1,453,375 warrants with a fair value of $181,139. These were recorded as a loss on extinguishment of debt.

 

The February 2018 Convertible Note Offering consisted of a maximum of $750,000 of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “February 2018 Convertible Note” and together the “February 2018 Convertible Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“February 2018 Conversion Shares”) at a conversion price of $0.20 per share (the “February 2018 Note Conversion Price”), and (b) a five-year warrant (each a “February 2018 Offering Warrant and together the “February 2018 Offering Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the February 2018 Convertible Notes can be converted into (“February 2018 Warrant Shares”) at an exercise price of $0.20 per share (“February 2018 Warrant Exercise Price”). The February 2018 Offering Notes mature on the second (2nd) anniversary of their issuance dates. The February 2018 Offering Notes are secured by a second priority security interest in the Company’s assets up to $1,000,000.

 

The February 2018 Note Conversion Price and the February 2018 Offering Warrant Exercise Price are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

The conversion feature of the February 2018 Convertible Note Offering provides for an effective conversion price that is below market value on the date of issuance. Such feature is normally characterized as a beneficial conversion feature (“BCF”). When the Company records a BCF the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The Company recorded a BCF and related debt discount of $37,350, the discount is being accreted over the life of the first Debenture to accretion of debt discount and issuance cost.

 

The Company recorded a $316,875 debt discount relating to 3,625,000 February 2018 Offering Warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost.

 

In connection with the February 2018 Convertible Note Offering, the Company retained a placement agent (the “Placement Agent”), to carry out the Offering on a “best-efforts” basis. For services in its capacity as Placement Agent, the Company has paid the Placement Agent a cash fee of $94,250 and issued to the Placement Agent shares of the Company’s common stock equal to ten percent (10%) of the Conversion Shares underlying the February 2018 Convertible Notes or 362,500 shares that had a fair value of $74,881, which was recorded as issuance cost and is being accreted over the life of these notes to accretion of debt discount and issuance cost.

 

During the nine months ended September 30, 2018, the Company converted $940,675 of principal and $86,544 of unpaid interest into the August 2018 Equity Raise (as defined below).

 

The January 2018 Note

 

On January 12, 2018, the Company issued a convertible note to a third-party lender totaling $68,761 to settle an outstanding vendor liability (the “January 2018 Note”). The January 2018 Note accrues interest at 15% per annum and matures with interest and principal both due on January 12, 2020. The conversions resulted in the issuance of 343,806 warrants with a fair value of $42,850. These were recorded as a loss on extinguishment of debt. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The January 2018 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The January 2018 Note is secured by a second priority lien on the assets of the Company.

 

During the nine months ended September 30, 2018, the Company converted $68,761 of principal and $7,212 of unpaid interest into the August 2018 Equity Raise (as defined below).

 

The February 2018 Note

 

On February 8, 2018, the Company issued a convertible note to a third-party lender totaling $40,750 (the “February 2018 Note”). The February 2018 Note accrues interest at 18% per annum and matures with interest and principal both due on February 8, 2020. In addition, the Company issued a warrant to purchase 81,500 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The Company recorded a $7,963 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity instrument on the dates of issuance and an original issue discount of $5,298. The debt discount is being accreted over the life of the note. The February 2018 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The February 2018 Note is secured by a second priority lien on the assets of the Company. During the nine months ended September 30, 2018, the Company has repaid $15,298 in principal.

 

The March 2018 Convertible Note Offering

 

During the nine months ended September 30, 2018, the Company conducted multiple closings of a private placement offering to accredited investors (the “March 2018 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $770,000. In addition, $50,000 of the Company’s short-term debt, $767 accrued but unpaid interest and $140,600 of the Company’s vendor liabilities was converted into the March 2018 Convertible Note Offering. These conversions resulted in the issuance of 956,833 warrants with a fair value of $84,087. These were recorded as a loss on extinguishment of debt.

 

The March 2018 Convertible Note Offering consisted of a maximum of $900,000, with an over-allotment option of an additional $300,000 of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 14% Convertible Secured Promissory Note (each a “Note” and together the “Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion price of $0.20 per share (the “Conversion Price”), and (b) a four-year warrant (each a “Warrant and together the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”). The Notes mature on the second (2nd) anniversary of their issuance dates. 

 

The Conversion Price of the Note and the Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

The Company recorded a $254,788 debt discount relating to 4,806,833 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

During the nine months ended September 30, 2018, the Company converted $886,367 of principal and $51,293 of unpaid interest into the August 2018 Equity Raise (as defined below).

Note 7 – Convertible Note Payable

 

Convertible notes payable as of December 31, 2017 and 2016 is as follows: 

 

  Outstanding Principal as of          Warrants 
  December 31, 2017  December 31, 2016  Interest
Rate
  Conversion
Price
  Maturity Date Quantity  Exercise
Price
 
November – December, 2016  25,000   400,000   10%  0.30  November 1, 2017  400,000   0.30 
December 27, 2016  -   100,000   10%  0.30  December 27, 2017  100,000   0.30 
June, 2017  71,500   -   12%  Not Applicable  September 1, 2017  114,700   0.20 
July, 2017  -   -   8.5%  0.20(*) April 11, 2018  350,000   0.20 
August – November 2017  2,943,884   -   15%  0.20(*) August – November 2019  14,716,419   0.20 
December 21, 2017  100,000                       
   3,140,384   500,000                   
Less: Debt Discount  (452,022)  (184,398)                  
Less: Debt Issuance Costs  (79,569)  (46,779)                  
   2,672,574   268,823                   
Less: Current Debt  (96,500)  (268,823)                  
Total Long-Term Debt $2,512,293  $-                   

  

(*) As subject to adjustment as further outlined in the notes

 

During the months of November and December 2016, the Company issued convertible notes to third party lenders totaling $400,000. These notes accrue interest at a rate of 10% per annum and mature with interest and principal both due on November 1, 2017 through December 29, 2017. The notes and accrued interest are convertible at a conversion price as defined therein. In addition, in connection with the notes the Company issued five-year warrants to purchase an aggregate of 400,000 shares of Company common stock at a purchase price of $0.30 per share. The investors converted $375,000 of principal and $30,719 of interest into the August 2017 Convertible Note Offering. 

 

On December 27, 2016, the Company issued a convertible note to a third party lender totaling $100,000 (the “December 2016 Note”). The December 2016 Note accrues interest at 10% per annum and matures with interest and principal both due on December 27, 2017. In addition, the Company issued a warrant to purchase 100,000 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.40 per share for a period of five years from the issue date. The December 2016 Note and accrued interest is convertible at a conversion price of $0.30 per share, subject to adjustment. On August 31, 2017 the investor converted $100,000 of principal and $6,767 of interest into the August 2017 Convertible Note Offering. 

 

During the month of June 2017 the Company issued convertible notes to third party lenders totaling $71,500. The notes accrue interest at 12% per annum and mature with interest and principal both due on September 1, 2017. The notes and accrued interest may be converted into a subsequent offering at a 15% discount to the offering price are convertible at a conversion price as defined therein. In addition, the Company issued warrants to purchase 67,550 shares of Company common stock. The warrants entitle the holders to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. As of December 31, 2018, the Company was currently in default on $71,500 in principal due on the notes.  On February 8, 2018, the Company repurchased these notes and is no longer in default.

 

The July 2017 Convertible Offering

 

During the month of July 2017, the Company entered into Securities Purchase Agreements and conducted closings of a private placement offering (the “July 2017 Convertible Note Offering”) of the Company’s securities for aggregate gross proceeds of $445,000. In aggregate, the Company entered into Securities Purchase Agreements with three accredited investors for (i) the issuance and sale of 8.5% Convertible Redeemable Debentures, containing a ten percent (10%) original issuance discount, due April 18, 2018 (the “Debentures”) and (ii) the issuance and sale of five-year Common Stock Purchase Warrants to purchase up to 778,750 shares of the Company’s common stock, par value $0.001 per share. The Warrants were immediately exercisable upon issuance at an exercise price of $0.20 per share, subject to adjustment, and expire five years from the date of issuance. The accredited investors also received a total of 245,000 shares of the Company’s common stock as inducement for participating in the July 2017 Convertible Note Offering (the “Consideration Shares”).

 

During September 8, 2017 through September 13, 2017, the Company redeemed the 8.5% Convertible Redeemable Debentures by paying the three accredited investors an aggregate $606,812 representing 117.5% of the principal along with interest. Pursuant to such redemption, the Debentures are no longer in full force and effect.

 

The Company also repurchased 220,000 consideration shares of one of the accredited investors for $19,007, cancelling the accredited investor’s Consideration Shares.

 

Due to the fact that these convertible notes have an option to convert at a variable amount, they are subject to derivative liability treatment. The Company has applied ASC 815, due to the potential for settlement in a variable quantity of shares. The conversion feature has been measured at fair value using a Black Scholes model at the issuance date and the period end. The conversion feature of The July 2017 Convertible Offering issued during the year ended December 31, 2017, gave rise to a derivative liability of $332,942 which was recorded as a debt discount. The debt discount is charged to accretion of debt discount and issuance cost ratably over the term of the convertible note.

 

The Company recorded an $78,823 debt discount relating to 778,750 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

The August 2017 Convertible Note Offering

 

During the year ended December 31, 2017, the Company conducted multiple closings of a private placement offering to accredited investors (the “August 2017 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $1,585,000. In addition, $1,217,177 of the Company’s short term debt along with accrued but unpaid interest of $40,146 was converted into the August Offering. The conversions resulted in the issuance of 6,791,419 warrants with a fair value of $583,681 and an original issue discount of $101,561. These were recorded as a loss on extinguishment of debt.

 

The August Offering consisted of a maximum of $6,000,000 of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “Note” and together the “Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion price of $0.20 per share (the “Conversion Price”), and (b) a five-year warrant (each a “Warrant and together the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”). The Notes mature on the second (2nd) anniversary of their issuance dates.

 

The Conversion Price of the Note and the Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

The Company recorded a $472,675 debt discount relating to 7,925,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

In connection with the Offering, the Company paid a placement agent a cash fee of $90,508 to carry out the Offering on a “best-efforts” basis, which was recorded as issuance cost and is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

On December 27, 2017, the Company issued a convertible note to a third party lender totaling $100,000 (the “First December 2017 Note”). The First December 2017 Note accrues interest at 15% per annum and matures with interest and principal both due on December 27, 2019. In addition, the Company issued a warrant to purchase 500,000 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The Company recorded a $35,525 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note The First December 2017 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The First December 2017 Note is secured by a second priority lien on the assets of the Company.

v3.10.0.1
Related Party Loans
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Related Party Loans [Abstract]    
Related Party Loans

Note 8 – Related Party Loans

 

Convertible notes

 

Convertible notes payable – related party as of September 30, 2018 and December 31, 2017 is as follows:

 

    Outstanding Principal as of               Warrants  
    September 30,
2018
    December 31,
2017
    Interest
Rate
    Maturity Date   Quantity     Exercise
Price
 
The August 2017 Convertible Note Offering   $ -     $ 1,416,026       15 %   August – October 2019     4,589,466     $ 0.20  
The Second December 2017 Note     -       100,000       15 %   December 21, 
2019
    500,000       0.20  
The February 2018 Convertible Note Offering     -       -       15 %   January – February 2020     125,000       0.20  
The Second February 2018 Note     -       -       20 %   September 30, 
2018
    81,500       0.20  
The March 2018 Convertible Note Offering     400       -       14 %   March 2020     1,197,000       0.20  
      400       1,516,026                              
Less: Debt Discount     (86 )     (170,780 )                            
Less: Debt Issuance Costs     -       -                              
      314       1,345,246                              
Less: Current Debt     -       -                              
Total Long-Term Debt   $ 314     $ 1,345,246                              

 

The August 2017 Convertible Note Offering 

 

During the year ended December 31, 2017, the Company conducted multiple closings of a private placement offering to accredited investors (the “The August 2017 Convertible Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $505,000. In addition, $645,000 of the Company’s short-term debt along with accrued but unpaid interest of $206,026 was converted into the August 2017 Convertible Offering. These conversions resulted in the issuance of 4,555,129 warrants with a fair value of $440,157 and the increase of principal of $60,000. These resulted in a loss on extinguishment of debt of $500,157.

 

The Company offered, through a placement agent, $6,000,000 of units of its securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “Note” and together the “Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion price of $0.20 per share (the “Conversion Price”), and (b) a five-year warrant (each a “Warrant and together the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”). The Notes mature on the second (2nd) anniversary of their issuance dates. 

 

The Conversion Price of the Note and the Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

  

The Company recorded a $160,700 debt discount relating to 2,525,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost.

 

During the nine months ended September 30, 2018, the Company converted $1,416,026 of principal and $202,362 of unpaid interest into the August 2018 Equity Raise (as defined below).

 

The Second December 2017 Note

 

On December 21, 2017, the Company issued a convertible note to a third-party lender totaling $100,000 (the “Second December 2017 Note”). The Second December 2017 Note accrues interest at 15% per annum and matures with interest and principal both due on December 27, 2019. In addition, the Company issued a warrant to purchase 500,000 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The Company recorded a $36,722 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note The Second December 2017 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The Second December 2017 Note is secured as a second priority lien on the assets of the Company.

 

During the nine months ended September 30, 2018, the Company converted $100,000 of principal and $10,542 of unpaid interest into the August 2018 Equity Raise (as defined below). 

 

The February 2018 Convertible Note Offering

 

During the nine months ended September 30, 2018, the Company conducted multiple closings of a private placement offering to accredited investors (the “February 2018 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $25,000.

 

The February 2018 Convertible Note Offering consisted of a maximum of $750,000 of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “Note” and together the “Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion price of $0.20 per share (the “Conversion Price”), and (b) a five-year warrant (each a “Warrant and together the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”). The Notes mature on the second (2nd) anniversary of their issuance dates. The Notes are secured by a second priority security interest in the Company’s assets up to $1,000,000.

 

The Conversion Price of the Note and the Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

The conversion feature of the February 2018 Convertible Note Offering provides for an effective conversion price that is below market value on the date of issuance. Such feature is normally characterized as a beneficial conversion feature (“BCF”). When the Company records a BCF the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The Company recorded a BCF and related debt discount of $1,063, the discount is being accreted over the life of the first Debenture to accretion of debt discount and issuance cost.

 

The Company recorded a $11,054 debt discount relating to 125,000 warrants issued to Investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

In connection with the Offering, the Company retained Network 1 Financial Securities, Inc. (the “Placement Agent”), to carry out the Offering on a “best-efforts” basis. For services in its capacity as Placement Agent, the Company has paid the Placement Agent a cash fee of $3,250 and issued to the Placement Agent shares of the Company’s common stock equal to ten percent (10%) of the Conversion Shares underlying the Notes or 12,500 shares that had a fair value of $2,606, which was recorded as issuance cost and is being accreted over the life of these notes to accretion of debt discount and issuance cost.

 

During the nine months ended September 30, 2018, the Company converted $25,000 of principal and $2,219 of unpaid interest into the August 2018 Equity Raise (as defined below).

 

The Second February 2018 Note

 

On February 8, 2018, the Company issued a convertible note to a third-party lender totaling $40,750 (the “Second February 2018 Note”). The Second February 2018 Note accrues interest at 18% per annum and matures with interest and principal both due on September 30, 2018. In addition, the Company issued a warrant to purchase 81,500 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The Company recorded a $7,963 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity instrument on the dates of issuance and an original issue discount of $5,298. The debt discount is being accreted over the life of the note The Second February 2018 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The Second February 2018 Note is secured as a second priority lien on the assets of the Company. 

 

During the nine months ended September 30, 2018, the Company has repaid $5,298 in principal. In addition, the Company converted $35,452 of principal and $4,116 of unpaid interest into the August 2018 Equity Raise (as defined below). 

 

The March 2018 Convertible Note Offering

 

During the nine months ended September 30, 2018, the Company conducted multiple closings of a private placement offering to accredited investors (the “March 2018 Convertible Note Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $239,400.

 

The March 2018 Convertible Note Offering consisted of a maximum of $900,000, with an over-allotment option of an additional $300,000, of units of the Company’s securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 14% Convertible Secured Promissory Note (each a “Note” and together the “Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion price of $0.20 per share (the “Conversion Price”), and (b) a four-year warrant (each a “Warrant and together the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”). The Notes mature on the second (2nd) anniversary of their issuance dates.

 

The Conversion Price of the Note and the Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

 

The Company recorded a $84,854 debt discount relating to 1,197,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of these notes to accretion of debt discount and issuance cost.

 

During the nine months ended September 30, 2018, the Company converted $239,000 of principal and $15,401 of unpaid interest into the August 2018 Equity Raise (as defined below).

  

Notes payable

 

Notes payable – related party as of September 30, 2018 and December 31, 2017 is as follows:

 

    Outstanding Principal as of               Warrants  
    September 30,
2018
    December 31,
2017
    Interest
Rate
    Maturity Date   Quantity     Exercise
Price
 
The May 2016 Rosen Loan Agreement   $ 1,000,000     $ 1,000,000       13 %   November 26, 2017     1,000,000     $ 0.40  
The September 2017 Rosen Loan Agreement     -       224,000       18 %   September 24, 2017     125,000       0.20  
The November 2017 Schiller Loan Agreement     -       25,000       15 %   December 31, 2017     -       -  
The May 2018 Schiller Loan Agreements     -       -       13 %   February 2, 2019     300,000       0.20  
The June 2018 Frommer Loan Agreement     10,000       -       6 %   August 17, 2018     30,000       0.20  
The July 2018 Rosen Loan Agreement     60,000       -       6 %   August 17, 2018     30,000       0.20  
The July 2018 Schiller Loan Agreements     60,000       -       6 %   August 17, 2018     150,000       0.20  
      1,130,000       1,249,000                              
Less: Debt Discount     (14,400 )     -                              
      1,115,600                                      
Less: Current Debt     (1,115,600 )     -                              
    $ -     $ 1,249,000                              

 

The May 2016 Rosen Loan Agreement

 

On May 26, 2016, the Company entered into a loan agreement (the “May 2016 Rosen Loan Agreement”) with Arthur Rosen, an individual (“Rosen”), pursuant to which on May 26, 2016 (the “Closing Date”), Rosen provided the Company a secured term loan in the principal amount of $1,000,000 (the “May 2016 Rosen Loan”). In connection with the May 2016 Rosen Loan Agreement, on May 26, 2016, the Company and Rosen entered into a security agreement (the “Rosen Security Agreement”), pursuant to which the Company granted to Rosen a senior security interest in substantially all of the Company’s assets as security for repayment of the May 2016 Rosen Loan. Pursuant to the May 2016 Rosen Loan Agreement, the May 2016 Rosen Loan bears interest at a rate of 12.5% per annum, compounded annually and payable on the maturity date of May 26, 2017 (the “May 2016 Rosen Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the May 2016 Rosen Loan are due. The Company entered into an amendment to the May 2016 Rosen Loan extending the May 2016 Rosen Maturity Date to November 26, 2017. As additional consideration for entering in the May 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 1,000,000 shares of the Company’s common stock at a purchase price of $0.40 per share (the “May 2016 Rosen Warrant”). The May 2016 Rosen Warrant contains anti-dilution provisions as further described therein. On September 7, 2017 (the “Conversion Date”), Rosen converted all accrued but unpaid interest on the May 2016 Rosen Loan from May 26, 2016 through September 6, 2017 in the amount of $150,128 (the “May 2016 Rosen Loan Interest”) into the Company’s August Convertible Note Offering, after which May 2016 Rosen Loan Interest was deemed paid in full through the Conversion Date. As of the date of this filing this note is in default.

 

The September 2017 Rosen Loan Agreement

 

On September 8, 2017, the Company entered into a loan agreement (the “September 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note in the principal amount of $224,000 (the “September 2017 Rosen Note”). The September 2017 Rosen Note is secured by an officer of the Company. As additional consideration for entering in the September 2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 25,000 shares of the Company’s common stock at a purchase price of $0.20 per share. On November 13, 2017, in consideration for extending the September 2017 Rosen Note, Rosen was issued a warrant to purchase 100,000 shares of the Company’s common stock exercisable within five (5) years and with an exercise price of $0.20 per share.

 

On February 20, 2018, the Company entered into a forbearance agreement whereby the Company issued Rosen a five-year warrant to purchase 448,000 shares of the Company’s common stock at a purchase price of $0.20 per share. These warrants had a fair value of $65,378 which was recorded to Loss on extinguishment of debt. The new maturity date of the September 2017 Rosen Loan Agreement is September 8, 2018.

 

During the nine months ended September 30, 2018, the Company converted $224,000 of principal and $20,496 of unpaid interest into the August 2018 Equity Raise (as defined below).

 

The November 2017 Schiller Loan Agreement

 

On November 20, 2017, the Company entered into a loan agreement (the “November 2017 Schiller Loan Agreement”) with Mr. Len Schiller (“Schiller”), a member of the Company’s Board of Directors, whereby the Company issued Schiller a promissory note in the principal amount of $25,000 (the “November 2017 Schiller Note”). Pursuant to the November 2017 Schiller Loan Agreement, the November 2017 Schiller Note bears interest at a rate of 15% per annum. During the nine months ended September 30, 2018 the Company repaid $25,000 in principal and $637 in interest. 

 

The January 2018 Rosen Loan Agreement

 

On January 16, 2018, the Company entered into a loan agreement (the “January 2018 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note in the principal amount of $60,000 (the “January 2018 Rosen Note”). The January 2018 Rosen Note is secured by an officer of the Company whereas upon default an officer of the Company owes default shares of the Company’s common stock to Rosen equal to the amount of principal outstanding divided by 0.20. Pursuant to the January 2018 Rosen Loan Agreement, the January 2018 Rosen Note bears interest at a rate of 6% per annum and is payable on the maturity date of January 31, 2018 (the “January 2018 Rosen Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the May 2016 Rosen Loan are due. During the nine months ended September 30, 2018, the Company repaid $60,000 in principal and $200 in interest. 

 

The January 2018 Gordon Loan Agreement

 

On January 16, 2018, the Company entered into a loan agreement (the “January 2018 Gordon Loan Agreement”) with Mr. Christopher Gordon (“Gordon”), whereby the Company issued Gordon a promissory note in the principal amount of $40,000 (the “January 2018 Gordon Note”). The January 2018 Gordon Note is secured by an officer of the Company whereas upon default an officer of the Company owes default shares of the Company’s common stock to Gordon equal to the amount of principal outstanding divided by 0.20. Pursuant to the January 2018 Gordon Loan Agreement, the January 2018 Gordon Note bears interest at a rate of 6% per annum and payable on the maturity date of January 31, 2018 (the “January 2018 Gordon Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the January 2018 Gordon Note are due. During the nine months ended September 30, 2018, the Company repaid $40,000 in principal and $105 in interest.

 

The First March 2018 Rosen Loan Agreement

 

On March 4, 2018, the Company entered into a loan agreement (the “First March 2018 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note in the principal amount of $10,000 (the “First March 2018 Rosen Note”). As additional consideration for entering in the First March 2018 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the First March 2018 Rosen Loan Agreement, the First March 2018 Rosen Note bears interest at a rate of 12% per annum and is payable on the maturity date of March 19, 2018 (the “First March 2018 Rosen Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First March 2018 Rosen Note was due. During the nine months ended September 30, 2018, the Company repaid $10,000 in principal and $260 in interest.

 

The Second March 2018 Rosen Loan Agreement

 

On March 9, 2018, the Company entered into a loan agreement (the “Second March 2018 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note in the principal amount of $15,000 (the “Second March 2018 Rosen Note”). As additional consideration for entering in the Second March 2018 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 15,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the Second March 2018 Rosen Loan Agreement, the Second March 2018 Rosen Note bears interest at a rate of 12% per annum and is payable on the maturity date of March 24, 2018 (the “Second March 2018 Rosen Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Second March 2018 Rosen Note was due. During the nine months ended September 30, 2018, the Company repaid $15,000 in principal and $365 in interest.

 

The Third March 2018 Rosen Loan Agreement

 

On March 13, 2018, the Company entered into a loan agreement (the “Third March 2018 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note in the principal amount of $10,000 (the “Third March 2018 Rosen Note”). As additional consideration for entering in the Third March 2018 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the Third March 2018 Rosen Loan Agreement, the Third March 2018 Rosen Note bears interest at a rate of 12% per annum and is payable on the maturity date of March 28, 2018 (the “Third March 2018 Rosen Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Third March 2018 Rosen Note was due. During the nine months ended September 30, 2018, the Company repaid $10,000 in principal and $230 in interest.

 

The May 2018 Schiller Loan Agreement

 

On May 2, 2018, the Company entered into a loan agreement (the “May 2018 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the Company issued Schiller a promissory note in the principal amount of $100,000 (the “May 2018 Schiller Note”). As additional consideration for entering in the May 2018 Schiller Loan Agreement, the Company issued Schiller a four-year warrant to purchase 300,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the May 2018 Schiller Loan Agreement, the May 2018 Schiller Note bears interest at a rate of 13% per annum and is payable on the maturity date of February 02, 2019 (the “May 2018 Schiller Maturity Date”) at which time all outstanding principal, accrued and unpaid interest are due under the May 2018 Schiller Loan.

 

During the nine months ended September 30, 2018, the Company converted $100,000 of principal and $4,369 of unpaid interest into the August 2018 Equity Raise (as defined below). 

 

The June 2018 Frommer Loan Agreement

 

On June 29, 2018, the Company entered into a loan agreement (the “June 2018 Frommer Loan Agreement”) with Jeremy Frommer, an officer of the Company, whereby the Company issued Frommer a promissory note in the principal amount of $10,000 (the “June 2018 Frommer Note”). As additional consideration for entering in the June 2018 Frommer Note Loan Agreement, the Company issued Frommer a four-year warrant to purchase 30,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the June 2018 Frommer Loan Agreement, the June 2018 Frommer Note bears interest at a rate of 6% per annum and payable on the maturity date of August 17, 2018 (the “June 2018 Frommer Maturity Date”) at which time all outstanding principal, accrued and unpaid interest are due under the June 2018 Frommer Loan.  Subsequent to the balance sheet date, on November 8, 2018 the Company executed upon an agreement that extended the maturity date of this loan to March 7, 2019. As part of the extension agreement, the Company issued 40,854 warrants to purchase common stock of the Company at an exercise price of $0.30.

 

The First July 2018 Schiller Loan Agreement

 

On July 3, 2018, the Company entered into a loan agreement (the “First July 2018 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the Company issued Schiller a promissory note of $35,000 (the “First July 2018 Schiller Note”). As additional consideration for entering in the First July 2018 Schiller Loan Agreement, the Company issued Schiller a four-year warrant to purchase 75,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the agreement, the note bears interest at a rate of 6% per annum and payable on the maturity date of August 17, 2018 at which time all outstanding principal, accrued and unpaid interest were due under the First July 2018 Schiller Loan.  Subsequent to the balance sheet date, on November 8, 2018 the Company executed upon an agreement that extended the maturity date of this loan to March 7, 2019. As part of the extension agreement, the Company issued 142,987 warrants to purchase common stock of the Company at an exercise price of $0.30.

 

The Second July 2018 Schiller Loan Agreement

 

On July 17, 2018, the Company entered into a loan agreement (the “Second July 2018 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the Company issued Schiller a promissory note of $25,000 (the “Second July 2018 Schiller Note”). As additional consideration for entering in the Second July 2018 Schiller Loan Agreement, the Company issued Schiller a four-year warrant to purchase 75,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the Second July 2018 Schiller Loan Agreement, the Second July 2018 Schiller Note bears interest at a rate of 6% per annum and payable on the maturity date of August 17, 2018 at which time all outstanding principal, accrued and unpaid interest were due under the Second July 2018 Schiller Loan. Subsequent to the balance sheet date, on November 8, 2018 the Company executed upon an agreement that extended the maturity date of this loan to March 7, 2019. As part of the extension agreement, the Company issued 101,900 warrants to purchase common stock of the Company at an exercise price of $0.30.

 

The First July 2018 Rosen Loan Agreements

 

On July 12, 2018, the Company entered into a loan agreement (the “First July 2018 Rosen Loan Agreement”) with Rosen, an officer of the Company, whereby the Company issued Rosen a promissory note of $10,000 (the “First July 2018 Rosen Note”). Pursuant to the First July 2018 Rosen Loan Agreement, the note bears interest at a rate of 6% per annum and payable on the maturity date of August 17, 2018 at which time all outstanding principal, accrued and unpaid interest are due under the First July 2018 Rosen Note. Subsequent to the balance sheet date, on November 8, 2018 the Company executed upon an agreement that extended the maturity date of this loan to March 7, 2019. As part of the extension agreement, the Company issued 27,534 warrants to purchase common stock of the Company at an exercise price of $0.30.

 

The Second July 2018 Rosen Loan Agreements

 

On July 18, 2018, the Company entered into a loan agreement (the “Second July 2018 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $50,000 (the “Second July 2018 Rosen Note”) resulting from the conversion of a demand note. As additional consideration for entering into the Second July 2018 Rosen Loan Agreement, the Company issued Rosen a four-year warrant to purchase 150,000 shares of the Company’s common stock at a purchase price of $0.20 per share. Pursuant to the Second July 2018 Rosen Loan Agreement, the Second July 2018 Rosen Note bears interest at a rate of 6% per annum and payable on the maturity date of August 17, 2018 at which time all outstanding principal, accrued and unpaid interest are due under the Second July 2018 Rosen Note. Subsequent to the balance sheet date, on November 8, 2018 the Company executed upon an agreement that extended the maturity date of this loan to March 7, 2019. As part of the extension agreement, the Company issued 203,967 warrants to purchase common stock of the Company at an exercise price of $0.30.

 

Line of credit – related party

 

On May 9, 2017, the Company entered into a Revolving Line of Credit (the “Grawin LOC”) with Grawin, LLC, a limited liability company controlled by Rosen, a related party. The Grawin LOC was established for a period of twelve months, with a maturity date of May 2018, in which the Company can borrow principal up to $130,000. The Grawin LOC bears interest at a rate of 18%. On June 8, 2018 the Grawin LOC’s maturity date was extended to June 1, 2019.

 

During the nine months ended September 30, 2018, the Company converted $130,000 of principal and $30,626 of unpaid interest into the August 2018 Equity Raise (as defined below). 

 

Demand loan

 

On June 6, 2018, the Company’s related party made non-interest bearing loans of $50,000 to the Company in the form of cash. The loan is due on demand and unsecured. On July 12, 2018, this note was converted into The Second July 2018 Rosen Loan Agreements.

Note 8 – Related Party Loan

 

Convertible notes

 

Convertible notes payable – related party as of December 31, 2017 and 2016 is as follows:

 

  Outstanding Principal as of       Warrants 
  December 31, 2017  December 31,
2016
  Interest Rate  Maturity Date Quantity  Exercise
Price
 
August – October 2017  1,416,026      -   15% August – October 2019  4,589,466   0.20 
December 21, 2018  100,000       15% December 21, 2019  500,000   0.20 
   1,516,026   -               
Less: Debt Discount  (170,780)  -               
   1,345,246   -               
Less: Current Debt  -   -               
Total Long-Term Debt $1,345,246  $                  -               

 

On April 25, 2017, the Company issued convertible notes to Arthur Rosen, a lender, totaling $25,000 (the “April Rosen Notes”). The April Rosen Notes accrue interest at 12% per annum and mature with interest and principal both due on September 1, 2017. In addition, in connection with the April Rosen Notes, the Company issued a five-year warrant to purchase 17,500 shares of Company common stock at a purchase price of $0.20 per share. On September 7, 2017, the April Rosen Notes and accrued interest was converted into the August 2017 Convertible Note Offering.

  

On April 25, 2017, the Company issued a convertible note to Chris Gordon, a lender totaling $25,000 (the “April Gordon Notes”). The April Gordon Notes accrue interest at 12% per annum and matures with interest and principal both due on September 1, 2017. In addition, the Company issued a five-year warrant to purchase 17,500 shares of Company common stock at a purchase price of $0.20 per share. The April Gordon Notes and accrued interest were converted into the August 2017 Convertible Note Offering.

 

The August 2017 Convertible Note Offering – Related Party 

 

During the year ended December 31, 2017, the Company conducted multiple closings of a private placement offering to accredited investors (the “The August 2017 Convertible Offering”) of units of the Company’s securities by entering into subscription agreements with “accredited investors” (the “Investors”) for aggregate gross proceeds of $505,000. In addition, $645,000 of the Company’s short term debt along with accrued but unpaid interest of $206,026 was converted into the August 2017 Convertible Offering. The conversions resulted in the issuance of 4,555,129 warrants with a fair value of $440,157 and the increase of principal of $60,000. These resulted in a loss on extinguishment of debt of $500,157.

 

The Company offered, through a placement agent, $6,000,000 of units of its securities (each, a “Unit” and collectively, the “Units”), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a “Note” and together the “Notes”), convertible into shares of the Company’s common stock, par value $.001 per share (“Conversion Shares”) at a conversion price of $0.20 per share (the “Conversion Price”), and (b) a five-year warrant ( each a “Warrant and together the “Warrants”) to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into (“Warrant Shares”) at an exercise price of $0.20 per share (“Exercise Price”). The Notes mature on the second (2nd) anniversary of their issuance dates.

 

The Conversion Price of the Note and the Exercise Price of the Warrants are subject to adjustment for issuances of the Company’s common stock or any equity linked instruments or securities convertible into the Company’s common stock at a purchase price of less than the prevailing Conversion Price or Exercise Price. Such adjustment shall result in the Conversion Price and Exercise Price being reduced to such lower purchase price, subject to carve-outs as described therein.

  

The Company recorded a $160,700 debt discount relating to 2,525,000 warrants issued to investors based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note to accretion of debt discount and issuance cost.

 

On December 21, 2017, the Company issued a convertible note to a third party lender totaling $100,000 (the “Second December 2017 Note”). The Second December 2017 Note accrues interest at 15% per annum and matures with interest and principal both due on December 27, 2019. In addition, the Company issued a warrant to purchase 500,000 shares of Company common stock. The warrant entitles the holder to purchase the Company’s common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The Company recorded a $36,722 debt discount relating to the warrants issued to the investor based on the relative fair value of each equity instrument on the dates of issuance. The debt discount is being accreted over the life of the note The Second December 2017 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment. The Second December 2017 Note is secured as a second priority lien on the assets of the Company. 

 

Notes payable

  

Notes payable – related party as of December 31, 2017 and 2016 is as follows:

 

  Outstanding Principal as of       Warrants 
  December 31, 2017  December 31, 2016  Interest
Rate
  Maturity Date Quantity  Exercise
Price
 
May 26, 2016  1,000,000   1,000,000   13% November 26, 2017  1,000,000   0.40 
September 12, 2016  -   100,000   12% November 22, 2017  17,500   0.20 
September 20, 2016  -   10,000   10% March 20, 2017  235,000   0.40 
October 13, 2016  -   50,000   12% November 22, 2017  50,000   0.40 
October 24, 2016  -   15,000   9% January 1, 2018  30,000   0.30 
October 31, 2016  -   10,000   10% November 10, 2016  10,000   0.30 
November 22, 2016  -   225,000   10% November 22, 2017  750,000   0.30 
December 21, 2016  -   50,000   10% November 22, 2017  166,666   0.30 
September 8, 2017  224,000   -   1% September 24, 2017  

125,000

   0.20 
November 20, 2017  25,000   -   15% December 31, 2017  -   - 
   1,249,000   1,460,000               
Less: Debt Discount  (-)   (94,675)              
  $1,249,000  $1,365,325               

 

On May 26, 2016, the Company entered into a loan agreement (the “May 2016 Rosen Loan Agreement”) with Arthur Rosen, an individual (“Rosen”), pursuant to which on May 26, 2016 (the “Closing Date”), Rosen provided the Company a secured term loan of $1,000,000 (the “May 2016 Rosen Loan”). In connection with the May 2016 Rosen Loan Agreement, on May 26, 2016, the Company and Rosen entered into a security agreement (the “Rosen Security Agreement”), pursuant to which the Company granted to Rosen a senior security interest in substantially all of the Company’s assets as security for repayment of the May 2016 Rosen Loan. Pursuant to the May 2016 Rosen Loan Agreement, the May 2016 Rosen Loan bears interest at a rate of 12.5% per annum, compounded annually and payable on the maturity date of May 26, 2017 (the “May 2016 Rosen Maturity Date”) at which time all outstanding principal, accrued and unpaid interest and other amounts due under the May 2016 Rosen Loan are due. The Company entered into an amendment to the May 2016 Rosen Loan extending the May 2016 Rosen Maturity Date to November 26, 2017. As additional consideration for entering in the May 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 1,000,000 shares of the Company’s common stock at a purchase price of $0.40 per share (the “May 2016 Rosen Warrant”). The May 2016 Rosen Warrant contains anti-dilution provisions as further described therein. On September 7, 2017 (the “Conversion Date”), Rosen converted all accrued but unpaid interest on the May 26 Rosen Loan from May 26, 2016 through September 6, 2017 in the amount of $150,128 (the “May 26 Rosen Loan Interest”) into the Company’s August Convertible Note Offering, after which May 26 Rosen Loan Interest was deemed paid in full through the Conversion Date.

 

On September 12, 2016, the Company entered into a loan agreement (the “September 2016 Rosen Loan Agreement”) with Rosen, pursuant to which on September 12, 2016 (the “Closing Date”), the Company issued Rosen a promissory note of $100,000 (the “September 2016 Rosen Note”). Pursuant to the September 2016 Rosen Loan Agreement, the September 2016 Rosen Note bears interest at a rate of 12% per annum. As additional consideration for entering in the September 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 150,000 shares of the Company’s common stock at a purchase price of $0.40 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

  

On October 13, 2016, the Company entered into a loan agreement (the “October 2016 Gordon Loan Agreement”) with Chris Gordon, an individual (the “Gordon”), pursuant to which on October 13, 2016 (the “Closing Date”), the Company issued a promissory note of $50,000 to Gordon (the “October 2016 Gordon Note”). Pursuant to the October 2016 Gordon Loan Agreement, the October 2016 Gordon Note bears interest at a rate of 12% per annum. As additional consideration for entering in the October 2016 Gordon Loan Agreement, the Company issued Gordon a five-year warrant to purchase 50,000 shares of the Company’s common stock at a purchase price of $0.40 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On October 24, 2016, the Company entered into a loan agreement (the “October 2016 Schiller Loan Agreement”) with Leonard Schiller, a Board Member (the “Schiller”), pursuant to which on October 24, 2016 (the “Closing Date”), the Company issued Schiller a promissory note of $15,000 (the “October 2016 Schiller Note”). Pursuant to the October 2016 Schiller Loan Agreement, the October 2016 Schiller Note bears interest at a rate of 9% per annum. As additional consideration for entering in the October 2016 Schiller Loan Agreement, the Company issued Schiller a 5-year warrant to purchase 30,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On October 31, 2016, the Company entered into a loan agreement (the “October 2016 Rosen Loan Agreement”) with Rosen, pursuant to which on October 31, 2016 (the “Closing Date”), Company issued Rosen a promissory note of $10,000 (the “October 2016 Rosen Note”). Pursuant to the October 2016 Rosen Loan Agreement, the October 2016 Rosen Note bears interest at a rate of 10% per annum. As additional consideration for entering in the October 2016 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On December 21, 2016, the Company entered into a loan agreement (the “December 2016 Gordon Loan Agreement”) with Gordon, pursuant to which on December 21, 2016 (the “Closing Date”), the Company issued Gordon a promissory note of $275,000 (the “December 2016 Gordon Note”). Pursuant to the December 2016 Gordon Loan Agreement, the December 2016 Gordon Note bears interest at a rate of 10% per annum. As additional consideration for entering in the December 2016 Gordon Loan Agreement, the Company issued Gordon a five-year warrant to purchase 166,666 shares of the Company’s common stock at a purchase price of $0.40 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

  

On January 25, 2017, the Company entered into a loan agreement (the “January 2017 Rosen Loan Agreement”) with Rosen pursuant to which on January 25, 2017 (the “Closing Date”), the Company issued Rosen a promissory note of $50,000 (the “January 2017 Rosen Note”). The January 2017 Rosen Note is secured by an officer of the Company. Pursuant to the January 2017 Rosen Loan Agreement, the January 2017 Rosen Note bears interest at a rate of 10% per annum. As additional consideration for entering in the January 2017 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 50,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On January 26, 2017, the Company entered into a loan agreement (the “January 2017 Gordon Loan Agreement”) with Gordon pursuant to which on January 26, 2017 (the “Closing Date”), the Company issued Gordon a promissory note of $50,000 (the “January 2017 Gordon Note”). The January 2017 Gordon Note is secured by an officer of the Company. Pursuant to the January 2017 Gordon Loan Agreement, the January 2017 Gordon Note bears interest at a rate of 10% per annum. As additional consideration for entering in the January 2017 Gordon Loan Agreement, the Company issued Gordon a five-year warrant to purchase 50,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were repaid.

 

On February 7, 2017, the Company entered into a loan agreement (the “February 2017 Schiller Loan Agreement”) with Schiller, a member of the Board, pursuant to which on October 24, 2016 (the “Closing Date”), the Company issued Schiller a promissory note of $10,000 (the “February 2017 Schiller Note”). The February 2017 Schiller Note is secured by an officer of the Company. Pursuant to the February 2017 Schiller Loan Agreement, the February 2017 Schiller Note bears interest at a rate of 10% per annum. As additional consideration for entering in the February 2017 Schiller Note Loan Agreement, the Company issued Schiller a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On April 12, 2017, the Company entered into a loan agreement (the “April 2017 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the Company issued Schiller a promissory note of $10,000 (the “April 2017 Schiller Note”). The April 2017 Schiller Note is secured by an officer of the Company. Pursuant to the April 2017 Schiller Loan Agreement, the April 2017 Schiller Note bears interest at a rate of 10% per annum. As additional consideration for entering in the April 2017 Schiller Loan Agreement, the Company issued Schiller a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On April 12, 2017, the Company entered into a loan agreement (the “April 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $10,000 (the “April 2017 Rosen Note”). The April 2017 Rosen Note is secured by an officer of the Company. Pursuant to the April 2017 Rosen Loan Agreement, the April 2017 Rosen Note bears interest at a rate of 10% per annum. As additional consideration for entering in the April 2017 Rosen Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,000 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On May 4, 2017, the Company entered into a loan agreement (the “May 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $15,000 (the “May 2017 Rosen Note”). The May 2017 Rosen Note is secured by an officer of the Company. Pursuant to the May 2017 Rosen Note Loan Agreement, the May 2017 Rosen Note bears interest at a rate of 12% per annum. As additional consideration for entering in the May 2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 10,500 shares of the Company’s common stock at a purchase price of $0.30 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

  

On May 11, 2017, the Company entered into a loan agreement (the “May 2017 Schiller Loan Agreement”) with Schiller, a member of the Board, whereby the Company issued Schiller a promissory note of $20,000 (the “May 2017 Schiller Note”). Pursuant to the May 2017 Schiller Loan Agreement, the May 2017 Schiller Note bears interest at a rate of 10% per annum. As additional consideration for entering in the May 2017 Schiller Note Loan Agreement, the Company issued Schiller a five-year warrant to purchase 20,000 shares of the Company’s common stock at a purchase price of $0.20 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

  

On June 26, 2017, the Company entered into a loan agreement (the “June 2017 Schiller Loan Agreement”) Schiller, a member of the Board, whereby the Company issued Schiller a promissory note of $30,000 (the “June 2017 Schiller Note”). Pursuant to the June 2017 Schiller Loan Agreement, the June 2017 Schiller Note bears interest at a rate of 10% per annum. As additional consideration for entering in the June 2017 Schiller Loan Agreement, the Company issued Schiller a five-year warrant to purchase 22,500 shares of the Company’s common stock at a purchase price of $0.20 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On July 6, 2017, the Company entered into a loan agreement (the “July 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $25,000 (the “July 2017 Rosen Note”). The July 2017 Rosen Note is secured by an officer of the Company. Pursuant to the July 2017 Rosen Note Loan Agreement, the July 2017 Rosen Note bears interest at a rate of 10% per annum. As additional consideration for entering in the July 2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 18,750 shares of the Company’s common stock at a purchase price of $0.20 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On July 6, 2017, the Company entered into a loan agreement (the “July 2017 Gordon Loan Agreement”) with Gordon, whereby the Company issued Gordon a promissory note of $25,000 (the “July 2017 Gordon Note”). The July 2017 Gordon Note is secured by an officer of the Company. Pursuant to the July 2017 Gordon Note Loan Agreement, the July 2017 Gordon Note bears interest at a rate of 10% per annum. As additional consideration for entering in the July 2017 Gordon Note Loan Agreement, the Company issued Gordon a five-year warrant to purchase 18,750 shares of the Company’s common stock at a purchase price of $0.20 per share. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On August 24, 2017, the Company entered into a loan agreement (the “August 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $20,000 (the “August 2017 Rosen Note”). The August 2017 Rosen Note is secured by an officer of the Company. Pursuant to the August 2017 Rosen Note Loan Agreement, the August 2017 Rosen Note bears interest at a rate of 12% per annum. During the year ended December 31, 2017 the principal and interest of this note were converted into the August 2017 Convertible Note Offering.

 

On September 8, 2017, the Company entered into a loan agreement (the “September 2017 Rosen Loan Agreement”) with Rosen, whereby the Company issued Rosen a promissory note of $224,000 (the “September 2017 Rosen Note”). The September 2017 Rosen Note is secured by an officer of the Company. As additional consideration for entering in the September 2017 Rosen Note Loan Agreement, the Company issued Rosen a five-year warrant to purchase 25,000 shares of the Company’s common stock at a purchase price of $0.20 per share. On November 13, 2017, in consideration for extending the Promissory Note, Rosen was issued a warrant to purchase 100,000 shares of the Company’s Common Stock exercisable within five (5) years and with an exercise price of $0.20 per share.

 

On November 20, 2017, the Company entered into a loan agreement (the “November 2017 Schiller Loan Agreement”) Schiller, a member of the Board, whereby the Company issued Schiller a promissory note of $25,000 (the “November 2017 Schiller Note”). Pursuant to the November 2017 Schiller Loan Agreement, the November 2017 Schiller Note bears interest at a rate of 15% per annum.

  

On November 20, 2017, the Company entered into a loan agreement (the “November 2017 Rosen Agreement”) whereby the Company issued Rosen a promissory note of $25,000 (the “November 2017 Rosen Note”). Pursuant to the November 2017 Rosen Loan Agreement, the November 2017 Rosen Note bears interest at a rate of 15% per annum. During the year ended December 31, 2017 the principal and interest of this note were repaid. 

 

Line of credit – related party

 

On May 9, 2017, the Company entered into a Revolving Line of Credit (the “LOC”) with Grawin, LLC, an LLC controlled by Arthur Rosen, a related party. The LOC is was established for a period of twelve months in which the Company can borrow principal up to $130,000. The LOC bears interest at a rate of 18%.

 

As of December 31, 2017, the total outstanding balance of line of credit - related party was $130,000.

v3.10.0.1
Capital Leases Payable
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Capital Leases Payable [Abstract]    
Capital Leases Payable

Note 9 – Capital Leases Payable

 

Capital lease obligation consisted of the following:

 

        September 30,
2018
    December 31,
2017
 
                 
(i)   Capital lease obligation to a financing company for a term of five (5) years, collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly installments of $383.10   $ 4,732     $ 4,732  
                     
    Less current maturities     (4,732 )     (4,732 )
                     
    Capital lease obligation, net of current maturities     -       -  
                     
    Total Capital Lease Obligation   $ 4,732     $ 4,732  
                     
The capital leases mature as follows:
                     
2018:   $ 4,732     $ 4,732

Note 9 – Capital Leases Payable

 

Capital lease obligation consisted of the following:

 

   December 31,
2017
  December 31,
2016
 
        
(i)Capital lease obligation to a financing company for a term of five (5) years, collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly installments of $383.10 $4,732  $4,732 
          
 Less current maturities  (4,732)  (3,524)
          
 Capital lease obligation, net of current maturities  -   1,208 
          
 TOTAL CAPITAL LEASE OBLIGATION $4,732  $4,732 

 

The capital leases mature as follows:

 

2017: $-  $3,524 
2018:  4,732  $1,208
v3.10.0.1
Derivative Liabilities
12 Months Ended
Dec. 31, 2017
Derivative Liabilities [Abstract]  
Derivative Liabilities

Note 10 – Derivative Liabilities

 

The Company has identified derivative instruments arising from embedded conversion features in the Company’s convertible notes payable at December 31, 2017. The Company had no financial assets measured at fair value on a recurring basis as of December 31, 2017.

  

The following summarizes the Black-Scholes assumptions used to estimate the fair value of the derivative liability at the date of issuance and for the convertible notes during the year ended December 31, 2017.

 

  Low  High 
Annual dividend rate  0%  0%
Expected life  0.58   0.75 
Risk-free interest rate  1.11%  1.16%
Expected volatility  90.71%  93.55%

 

Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant.

 

Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

 

Volatility: The Company calculates the expected volatility of the stock price based on the corresponding volatility of the Company’s peer group stock price for a period consistent with the expected term.

 

Expected term: The Company’s remaining term is based on the remaining contractual maturity of the convertible notes.

 

The following are the changes in the derivative liabilities during the year ended December 31, 2017.

 

  Year Ended
December 31, 2017
 
  Level 1  Level 2  Level 3 
Derivative liabilities as January 1, 2017 $       -  $      -  $- 
Addition  -   -   332,942 
Conversion  -   -     
Extinguishment Expense          (397,288)
Gain on changes in fair value  -   -   64,346 
Derivative liabilities as December 31, 2017 $-  $-  $- 
 
v3.10.0.1
Stockholders' Deficit
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Stockholders' Deficit [Abstract]    
Stockholders' Deficit

Note 10 – Stockholders’ Deficit

 

Shares Authorized

 

Upon incorporation, the total number of shares of all classes of stock which the Company is authorized to issue is Three Hundred Twenty Million (320,000,000) shares of which Three Hundred Million (300,000,000) shares shall be Common Stock, par value $0.001 per share and Twenty Million (20,000,000) shall be Preferred Stock, par value $0.001 per share. The designations, rights, and preferences of such preferred stock are to be determined by the Board of Directors. 

 

Preferred Stock

  

Series A Cumulative Convertible Preferred Stock

 

On February 13, 2015, 100,000 shares of preferred stock were designated as Series A Cumulative Convertible Preferred Stock (“Series A”). Each share of Series A shall have a stated value equal to $100 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series A Stated Value”).

 

The holders of the Series A shall be entitled to receive preferential dividends at the rate of 6% per share per annum on the Series A Stated Value, but before any dividend or other distribution will be paid or declared and set apart for payment on any shares of any Junior Stock, as defined. Such dividends shall compound annually and be fully cumulative, and shall accumulate from the date of original issuance of the Series A and shall be payable quarterly, in arrears, commencing on the first day of the calendar quarter following the date on which the Series A is issued. Upon the occurrence of an Event of Default (as defined below) and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series A Stated Value. At the Company’s option, such dividend payments may be made in (i) cash (ii) additional shares of Series A valued at the Series A Stated Value thereof, in an amount equal to 150% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series A, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series A Preferred.

 

The dividends on the Series A shall be cumulative whether or not declared so that, if at any time full cumulative dividends at the rate aforesaid on all shares of the Series A then outstanding from the date from and after which dividends thereon are cumulative to the end of the annual dividend period next preceding such time shall not have been paid or declared and set apart for payment, or if the full dividend on all such outstanding Series A for the then current dividend period shall not have been paid or declared and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment before any sum shall be set apart for or applied by the Corporation or a subsidiary of the Corporation to the purchase, redemption or other acquisition of the Series A or any shares of any other class of stock ranking on a parity with the Series A and before any dividend or other distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for or applied to the purchase, redemption or other acquisition of any Junior Stock.

 

Holder of Series A shall have the right at any time after the issuance, to convert such shares, accrued but unpaid declared dividends on the Series A and any other sum owed by the Corporation arising from the Series A into fully paid and non-assessable shares of Common Stock (the “Conversion Shares”) of the Corporation determined in accordance with the applicable conversion price (the “Conversion Price”). 

 

The number of Conversion Shares issuable upon conversion shall equal (i) the sum of (A) the Series A Stated Value being converted and/or (B) at the Holder’s election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series A shall be $0.25, subject to adjustment.

 

During the year ended December 31, 2016 the conversion price was adjusted to $0.164

 

The Corporation and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this provision is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty-one (61) days’ prior written notice to the Corporation. 

 

The holders of our Series A do vote together with the holders of our Common Stock on an as converted basis on each matter submitted to a vote of holders of Common Stock. The number of votes that may be cast by a holder of Series A shall be equal to the number of shares of Common Stock issuable upon conversion of such Holder’s Series A on the record date for determining those stockholders entitled to vote on the matter. In addition, the affirmative vote of the holders of a majority of our outstanding Series A is required to for the following actions:

 

(a) amending the Corporation’s certificate of incorporation or by-laws if such amendment would adversely affect the Series A

 

(b) purchasing any of the Corporation’s securities other than required redemptions of Series A and repurchase under restricted stock and option agreements authorizing the Corporation’s employees;

 

(c) effecting a Liquidation Event;

 

(d) declaring or paying any dividends other than in respect of the Series A; and

 

(e) issuing any additional securities having rights senior to or on parity with the Series A.

 

As of September 30, 2018, the Company has undeclared Series A dividends of $0.

 

See below for discussion of conversion of Series A in relation to the private placement closing in August 2018.

 

Series B Cumulative Convertible Preferred Stock

 

On December 21, 2015, 20,000 shares of preferred stock were designated as Series B Cumulative Convertible Preferred Stock (“Series B”). Each share of Series B shall have a stated value equal to $100.00 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series B Stated Value”).

 

The holders of outstanding shares of Series B shall be entitled to receive preferential dividends at the rate of 6% per share per annum on the Series B Stated Value, but before any dividend or other distribution will be paid or declared and set apart for payment on any shares of any Junior Stock as defined. Such dividends shall compound annually and be fully cumulative and shall accumulate from the date of original issuance of the Series B, and shall be payable quarterly, in arrears, commencing on the first day of the calendar quarter following the date on which the Series B is issued. Upon the occurrence of an Event of Default as defined below and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series B Stated Value. At the Corporation’s option, such dividend payments may be made in (i) cash (ii) additional shares of Series B valued at the Series B Stated Value thereof, in an amount equal to 100% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series B, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series B Preferred.

 

The dividends on the Series B shall be cumulative whether or not declared so that, if at any time full cumulative dividends at the rate aforesaid on all shares of the Series B then outstanding from the date from and after which dividends thereon are cumulative to the end of the annual dividend period next preceding such time shall not have been paid or declared and set apart for payment, or if the full dividend on all such outstanding Series B for the then current dividend period shall not have been paid or declared and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment before any sum shall be set apart for or applied by the Corporation or a subsidiary of the Corporation to the purchase, redemption or other acquisition of the Series B or any shares of any other class of stock ranking on a parity with the Series B and before any dividend or other distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for or applied to the purchase, redemption or other acquisition of any Junior Stock.

 

Holders of shares of Series B shall have the right at any time commencing after the issuance to convert such shares, accrued but unpaid declared dividends on the Series B into fully paid and non-assessable shares of Common Stock (the “Conversion Shares”) of the Corporation determined in accordance with the applicable conversion price (the “Conversion Price”). All declared or accrued but unpaid dividends may be converted at the election of the Holder together with or independent of the conversion of the Series B Stated Value of the Series B.  

 

The number of Conversion Shares issuable upon conversion of the Conversion Amount shall equal (i) the sum of (A) the Series B Stated Value being converted and/or (B) at the Holder’s election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series B shall be $0.30, subject to adjustment.

 

During the year ended December 31, 2016 the conversion price was adjusted to $0.197.

 

The Corporation and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this proviso is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty-one (61) days’ prior written notice to the Corporation.

 

The holders of our Series B do vote together with the holders of our Common Stock on an as converted basis on each matter submitted to a vote of holders of Common Stock. The number of votes that may be cast by a holder of Series B shall be equal to the number of shares of Common Stock issuable upon conversion of such Holder’s Series B on the record date for determining those stockholders entitled to vote on the matter. In addition, the affirmative vote of the holders of a majority of our outstanding Series B is required to for the following actions:

 

(a) amending the Corporation’s certificate of incorporation or by-laws if such amendment would adversely affect the Series B

 

(b) purchasing any of the Corporation’s securities other than required redemptions of Series B and repurchase under restricted stock and option agreements authorizing the Corporation’s employees;

 

(c) effecting a Liquidation Event;

 

(d) declaring or paying any dividends other than in respect of the Company’s Series A or Series B; and

 

(e) issuing any additional securities having rights senior to the Series B. 

 

As of September 30, 2018, the Company has undeclared Series B dividends of $0.

 

See below for discussion of conversion of Series B in relation to the private placement closing in August 2018.

 

Series D Convertible Preferred Stock

 

On January 29, 2016, 2,100,000 shares of preferred stock were designated as Series D Convertible Preferred Stock (“Series D”). Each share of Series A shall have a stated value equal to $100.00 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series D Stated Value”).

 

Holders of shares of Series D shall have the right at any time commencing after the issuance to convert such shares into fully paid and non-assessable shares of Common Stock (the “Conversion Shares”) of the Corporation determined in accordance with the applicable conversion price (the “Conversion Price”).

 

The number of Conversion Shares issuable upon conversion of the Conversion Amount shall equal (i) the sum of (A) the Series D Stated Value being converted and/or (B) at the Holder’s election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series D is $0.25, subject to adjustment.

 

The Company and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this proviso is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty one (61) days’ prior written notice to the Corporation.

 

The holders of Series D Preferred shall not be entitled to a vote on matters submitted to a vote of the stockholders of the Company. Also, as long as any shares of Series D Preferred are outstanding, the Company shall not, without the affirmative vote of all of the Holders of the then outstanding shares of the Series D Preferred,

 

(a) alter or change adversely the powers, preferences or rights given to the Series D Preferred or alter or amend this Certificate of Designation,

 

(b) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the Holders,

 

(c) increase the number of authorized shares of Series D Preferred, or

 

(d) enter into any agreement with respect to any of the foregoing.

 

Common Stock

 

On January 31, 2018, the Company issued 18,750 shares of its restricted common stock to settle outstanding vendor liabilities of $3,750. In connection with this transaction the Company also recorded a gain on settlement of vendor liabilities of $375.

 

During the nine months ended September 30, 2018, the Company issued 610,000 shares of its restricted common stock to consultants in exchange for services at a fair value of $116,300. These shares were recorded as common stock issued for prepaid services and will be expensed over the life of the consulting contract to share based payments. During the nine months ended September 30, 2018 the Company recorded $72,835 to share based payments.

 

August 2018 Equity Raise

 

Effective August 31, 2018 (the “Effective Date”), the Company consummated the initial closing (the “Initial Closing”) of a private placement offering of its securities of up to $5,000,000 (the “August 2018 Equity Raise”). In connection with the Initial Closing, the Company entered into definitive securities purchase agreements (the “Purchase Agreements”) with 37 accredited investors (the “Purchasers”) for aggregate gross proceeds of $1,155,832. Pursuant to the Purchase Agreement, the Purchasers purchased an aggregate of 4,623,328 shares of common stock at $0.25 per share and received warrants to purchase 4,623,328 shares of common stock at an exercise price of $0.30 per share (the “Purchaser Warrants”, collectively, the “Securities”). Further, pursuant to the Purchase Agreements, the Company expects to have two additional closings within the next 180 days and has already received commitments for an additional $2,022,996 in capital, bringing the total dollar amount committed to the Offering in excess of $3,000,000. Additionally, the Purchasers may participate in a subsequent offering of the Company’s securities in an aggregate amount of up to 50% of the subsequent offering on the twenty-four (24) month anniversary of the close of the Third Closing (as defined in the Securities Purchase Agreement) of the Private Offering. Investors have deposited $208,428 for future closings of the August 2018 Equity Raise. This amount has been recorded as a liability on the balance sheet.

 

The Purchaser Warrants are exercisable for a term of five years from the Initial Exercise Date (as defined in the Purchaser Warrants).

 

In connection with the August 2018 Equity Raise, the Company will issue 2,200,000 shares of Common Stock, will pay fees of $135,825 and will grant warrants to purchase 81,584 shares of common stock at an exercise price of $0.30 per share for services rendered as the Company’s placement agent in the Private Offering. The company has recorded $375,082 to stock issuances costs, and is part of Additional Paid-in Capital.

 

In connection with the August 2018 Equity Raise, the Company entered into those certain letter agreements (the “Debt Conversion Agreements”) with certain holders of its debt securities (the “Debt Holders”), for the conversion of an aggregate amount of $7,992,570 of principal and $1,028,772 of accrued but unpaid interest of the Company’s debt obligations into 45,106,731 shares of Common Stock at a conversion price equal to $0.20 per share. Additionally, as inducement to enter into the Debt Conversion Agreement, the Debt Holders were issued warrants to purchase 22,553,390 shares of Common Stock at an exercise price equal to $0.30 per share, expiring five years from the date of issuance (the “Incentive Debt Warrants”). The Company recorded a Loss on extinguishment of debt of $2,914,917 in connection with of the debt conversions. See Notes 6, 7 and 8.

 

Concurrently with its entrance in the Debt Conversion Agreements, the Company entered into those letter agreements (the “Preferred Stock Conversion Agreements”) with certain holders (the “Preferred Holders”) of its Series A Cumulative Convertible Preferred Stock and Series B Cumulative Convertible Preferred Stock (the “collectively, the Preferred Stock”) whereby the Preferred Holders converted 38,512 shares of the Preferred Stock into an aggregate of 26,866,582.00 shares of Common Stock at conversion prices equal to $0.19683 per share for Series A and $0.164 per share for Series B. As in an inducement to enter into the Preferred Stock Conversion Agreements, the Preferred Holders were issued warrants to purchase 13,433,305 shares of Common Stock at an exercise price equal to $0.30 per share, expiring five years from the date of issuance (the “Incentive Preferred Warrants”, and together with the Incentive Debt Warrants, the “Incentive Warrants”). The Company recorded an inducement of $2,016,634 in connection with of the Preferred conversions and is recorded as an adjustment to net loss attributable to common shareholders,  on the statements of operations.

 

Stock Options

 

The Company applied fair value accounting for all share-based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. 

 

At September 30, 2018 and 2017, the aggregate intrinsic value of options outstanding and exercisable was $1,000 and $1,000, respectively. 

 

Stock-based compensation for stock options has been recorded in the consolidated statements of operations and totaled $ 261,837.99 and $560,794, for the nine months ended September 30, 2018 and 2017, respectively.

The Company did not issue any new options during the nine months ended September 30, 2018.

 

Warrants

 

The Company applied fair value accounting for all share-based payments awards. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model.

 

The assumptions used for warrants granted during the nine months ended September 30, 2018 are as follows:

 

    September 30,
2018
 
Exercise price   $ 0.20-.030  
Expected dividends     0 %
Expected volatility     102% - 107 %
Risk free interest rate     2%-3 %
Expected life of warrant     4 - 5 years  

 

Warrant Activities

 

The following is a summary of the Company’s warrant activity:

 

    Warrants     Weighted
Average
Exercise
Price
 
             
Outstanding – December 31, 2017     46,193,779     $ 0.24  
Granted     57,197,956       0.27  
Exercised     (50,000 )     0.40  
Forfeited/Cancelled     -       -  
Outstanding and Exercisable – September 30, 2018     103,341,735     $ 0.26  

 

Warrants Outstanding     Warrants Exercisable  
Exercise price     Number
Outstanding
    Weighted Average
Remaining Contractual Life
(in years)
    Weighted
Average
Exercise Price
    Number
Exercisable
    Weighted
Average
Exercise Price
 
$ 0.26       103,341,735       4.01       0.26       103,341,735       0.26  

  

During the nine months ended September 30, 2018, a total of 2,758,833 warrants were issued with promissory notes (See Note 6 above). The warrants have a grant date fair value of $478,064 using a Black-Scholes option-pricing model and the above assumptions.

 

During the nine months ended September 30, 2018, a total of 10,481,016 warrants were issued with convertible notes (See Note 7 above). The warrants have a grant date fair value of $1,284,683 using a Black-Scholes option-pricing model and the above assumptions.

 

During the nine months ended September 30, 2018, a total of 1,863,000 warrants were issued with notes payable – related party (See Note 8 above). The warrants have a grant date fair value of $358,030 using a Black-Scholes option-pricing model and the above assumptions.

 

During the nine months ended September 30, 2018, a total of 1,403,500 warrants were issued with convertible notes payable – related party (See Note 8 above). The warrants have a grant date fair value of $162,834 using a Black-Scholes option-pricing model and the above assumptions. 

 

During the nine months ended September 30, 2018, a total of 40,691,607 warrants were issued with the August 2018 Equity Raise (See above). The warrants have a grant date fair value of $5,741,297 using a Black-Scholes option-pricing model and the above assumptions.

Note 11 - Stockholders’ Deficit

 

Shares Authorized

 

Upon incorporation, the total number of shares of all classes of stock which the Company is authorized to issue is Three Hundred Twenty Million (320,000,000) shares of which Three Hundred Million (300,000,000) shares shall be Common Stock, par value $0.001 per share and Twenty Million (20,000,000) shall be Preferred Stock, par value $0.001 per share. The designations, rights, and preferences of such preferred stock are to be determined by the Board of Directors.

 

Preferred Stock

 

Series A Cumulative Convertible Preferred Stock

 

On February 13, 2015, 100,000 shares of preferred stock were designated as Series A Cumulative Convertible Preferred Stock (“Series A”). Each share of Series A shall have a stated value equal to $100 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series A Stated Value”).

 

During the year ended December 31, 2015, the Company sold 24,400 shares of Series A for proceeds of $2,450,000. In addition, $800,000 in convertible notes and $91,400 in accrued interest were converted into 8,914 shares of the Company’s Series A.

  

During the year ended December 31, 2017, the Company converted 1,733 shares of Series A for 1,146,307 shares of common stock. 

 

The holders of the Series A shall be entitled to receive preferential dividends at the rate of 6% per share per annum on the Series A Stated Value, but before any dividend or other distribution will be paid or declared and set apart for payment on any shares of any Junior Stock, as defined. Such dividends shall compound annually and be fully cumulative, and shall accumulate from the date of original issuance of the Series A and shall be payable quarterly, in arrears, commencing on the first day of the calendar quarter following the date on which the Series A is issued. Upon the occurrence of an Event of Default (as defined below) and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series A Stated Value. At the Company’s option, such dividend payments may be made in (i) cash (ii) additional shares of Series A valued at the Series A Stated Value thereof, in an amount equal to 150% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series A, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series A Preferred.

 

The dividends on the Series A shall be cumulative whether or not declared so that, if at any time full cumulative dividends at the rate aforesaid on all shares of the Series A then outstanding from the date from and after which dividends thereon are cumulative to the end of the annual dividend period next preceding such time shall not have been paid or declared and set apart for payment, or if the full dividend on all such outstanding Series A for the then current dividend period shall not have been paid or declared and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment before any sum shall be set apart for or applied by the Corporation or a subsidiary of the Corporation to the purchase, redemption or other acquisition of the Series A or any shares of any other class of stock ranking on a parity with the Series A and before any dividend or other distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for or applied to the purchase, redemption or other acquisition of any Junior Stock.

 

Holder of Series A shall have the right at any time after the issuance, to convert such shares, accrued but unpaid declared dividends on the Series A and any other sum owed by the Corporation arising from the Series A into fully paid and non-assessable shares of Common Stock (the “Conversion Shares”) of the Corporation determined in accordance with the applicable conversion price (the “Conversion Price”). 

 

The number of Conversion Shares issuable upon conversion shall equal (i) the sum of (A) the Series A Stated Value being converted and/or (B) at the Holder’s election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series A shall be $0.25, subject to adjustment.

 

During the year ended December 31, 2016 the conversion price was adjusted to $0.164

 

The Corporation and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this provision is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty-one (61) days’ prior written notice to the Corporation.

 

The holders of our Series A do vote together with the holders of our Common Stock on an as converted basis on each matter submitted to a vote of holders of Common Stock. The number of votes that may be cast by a holder of Series A shall be equal to the number of shares of Common Stock issuable upon conversion of such Holder’s Series A on the record date for determining those stockholders entitled to vote on the matter. In addition, the affirmative vote of the holders of a majority of our outstanding Series A is required to for the following actions:

 

(a) amending the Corporation’s certificate of incorporation or by-laws if such amendment would adversely affect the Series A

 

(b) purchasing any of the Corporation’s securities other than required redemptions of Series A and repurchase under restricted stock and option agreements authorizing the Corporation’s employees;

 

(c) effecting a Liquidation Event;

 

(d) declaring or paying any dividends other than in respect of the Series A; and

 

(e) issuing any additional securities having rights senior to or on parity with the Series A.

 

During the year ended December 31, 2016, the Company accrued $3,318,353 for liquidating damages on the Series A and $309,665 on the warrants associated with the Series A.

 

During the year ended December 31, 2017, the Company accrued $0 for liquidating damages on the Series A and $0 on the warrants associated with the Series A.

 

Series B Cumulative Convertible Preferred Stock

 

On December 21, 2015, 20,000 shares of preferred stock were designated as Series B Cumulative Convertible Preferred Stock (“Series B”). Each share of Series B shall have a stated value equal to $100.00 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series B Stated Value”).

 

During the year ended December 31, 2015, the Company sold 7,000 shares of Series B for proceeds of $700,000.

 

The holders of outstanding shares of Series B shall be entitled to receive preferential dividends at the rate of 6% per share per annum on the Series B Stated Value, but before any dividend or other distribution will be paid or declared and set apart for payment on any shares of any Junior Stock as defined. Such dividends shall compound annually and be fully cumulative, and shall accumulate from the date of original issuance of the Series B, and shall be payable quarterly, in arrears, commencing on the first day of the calendar quarter following the date on which the Series B is issued. Upon the occurrence of an Event of Default as defined below and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series B Stated Value. At the Corporation’s option, such dividend payments may be made in (i) cash (ii) additional shares of Series B valued at the Series B Stated Value thereof, in an amount equal to 100% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series B, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series B Preferred.

 

The dividends on the Series B shall be cumulative whether or not declared so that, if at any time full cumulative dividends at the rate aforesaid on all shares of the Series B then outstanding from the date from and after which dividends thereon are cumulative to the end of the annual dividend period next preceding such time shall not have been paid or declared and set apart for payment, or if the full dividend on all such outstanding Series B for the then current dividend period shall not have been paid or declared and set apart for payment, the amount of the deficiency shall be paid or declared and set apart for payment before any sum shall be set apart for or applied by the Corporation or a subsidiary of the Corporation to the purchase, redemption or other acquisition of the Series B or any shares of any other class of stock ranking on a parity with the Series B and before any dividend or other distribution shall be paid or declared and set apart for payment on any Junior Stock and before any sum shall be set aside for or applied to the purchase, redemption or other acquisition of any Junior Stock.

 

Holders of shares of Series B shall have the right at any time commencing after the issuance to convert such shares, accrued but unpaid declared dividends on the Series B into fully paid and non-assessable shares of Common Stock (the “Conversion Shares”) of the Corporation determined in accordance with the applicable conversion price (the “Conversion Price”). All declared or accrued but unpaid dividends may be converted at the election of the Holder together with or independent of the conversion of the Series B Stated Value of the Series B. 

   

The number of Conversion Shares issuable upon conversion of the Conversion Amount shall equal (i) the sum of (A) the Series B Stated Value being converted and/or (B) at the Holder’s election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series B shall be $0.30, subject to adjustment.

 

During the year ended December 31, 2016 the conversion price was adjusted to $0.197

 

The Corporation and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this proviso is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty one (61) days’ prior written notice to the Corporation.

 

The holders of our Series B do vote together with the holders of our Common Stock on an as converted basis on each matter submitted to a vote of holders of Common Stock. The number of votes that may be cast by a holder of Series B shall be equal to the number of shares of Common Stock issuable upon conversion of such Holder’s Series B on the record date for determining those stockholders entitled to vote on the matter. In addition, the affirmative vote of the holders of a majority of our outstanding Series B is required to for the following actions:

 

(a) amending the Corporation’s certificate of incorporation or by-laws if such amendment would adversely affect the Series B

 

(b) purchasing any of the Corporation’s securities other than required redemptions of Series B and repurchase under restricted stock and option agreements authorizing the Corporation’s employees;

 

(c) effecting a Liquidation Event;

 

(d) declaring or paying any dividends other than in respect of the Company’s Series A or Series B; and

 

(e) issuing any additional securities having rights senior to the Series B. 

 

During the year ended December 31, 2016, the Company accrued $667,313 for liquidating damages on the Series B and $51,159 on the warrants associated with the Series B.

 

During the year ended December 31, 2016, the Company issued 1,063 shares of Series B upon conversion of interest totaling $108,844.

 

During the year ended December 31, 2017, the Company accrued $0 for liquidating damages on the Series B and $0 on the warrants associated with the Series B.

 

During the year ended December 31, 2017, the Company issued 0 shares of Series B upon conversion of interest totaling $0.

 

Series D Convertible Preferred Stock

 

On January 29, 2016, 2,100,000 shares of preferred stock were designated as Series D Convertible Preferred Stock (“Series D”). Each share of Series A shall have a stated value equal to $100.00 (as adjusted for any stock dividends, combinations or splits with respect to such shares) (the “Series D Stated Value”).

 

Holders of shares of Series D shall have the right at any time commencing after the issuance to convert such shares into fully paid and non-assessable shares of Common Stock (the “Conversion Shares”) of the Corporation determined in accordance with the applicable conversion price (the “Conversion Price”).

 

The number of Conversion Shares issuable upon conversion of the Conversion Amount shall equal (i) the sum of (A) the Series D Stated Value being converted and/or (B) at the Holder’s election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series D is $0.25, subject to adjustment.   

 

The Company and the Holder may not convert that amount of the Conversion Amount on a Conversion Date in amounts that would result in the Holder having a beneficial ownership of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this proviso is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty one (61) days’ prior written notice to the Corporation.

 

The holders of Series D Preferred shall not be entitled to a vote on matters submitted to a vote of the stockholders of the Company. Also, as long as any shares of Series D Preferred are outstanding, the Company shall not, without the affirmative vote of all of the Holders of the then outstanding shares of the Series D Preferred,

 

(a) alter or change adversely the powers, preferences or rights given to the Series D Preferred or alter or amend this Certificate of Designation,

 

(b) amend its articles of incorporation or other charter documents in any manner that adversely affects any rights of the Holders,

 

(c) increase the number of authorized shares of Series D Preferred, or

 

(d) enter into any agreement with respect to any of the foregoing.

 

On August 31, 2016, a holder of Series D converted 1,099 shares of Series A into 1,098,933 shares of the Company’s common stock.

 

During the year ended December 31, 2017, the Company converted 914 shares of Series D for 266,325 shares of common stock. 

  

Common Stock

 

On February 1, 2016, the Company issued 268,333 shares of its restricted common stock to its Placement Agent. Such shares were issued pursuant to a Placement Agent Agreement with the Company and services rendered in connection with a private placement of the Company’s securities.

 

On February 6, 2016, the Company entered into Stock Purchase Agreements (the “Purchase Agreements”) with three investors providing for the issuance and sale of an aggregate of 2,626,308 shares of the Company’s common stock, par value $0.001 per share, for an aggregate purchase price of $2,626.

 

On August 17, 2016, the Company entered into a subscription agreement (the “Subscription Agreement”) with an accredited investor for the sale of 666,666 shares of the Company’s Common Stock (the “Shares”) and warrants to purchase 333,333 shares of the Company’s Common Stock (the “Warrant”) for a purchase price of $250,000. The Warrant is exercisable at any time after the date of issuance and has a five year term. The Warrant is exercisable at price of $0.40 per share.

 

During the year ended December 31, 2016, the Company issued 392,764 common shares for cashless exercise of warrants.

 

On January 30, 2017, the Company issued 947,440 shares of its restricted common stock to settle outstanding vendor liabilities of $353,732. In connection with this transaction the company also recorded a gain on settlement of vendor liabilities of $167,905. 

 

On February 7, 2017, the Company issued 1,767,633 shares of its restricted common stock to consultants in exchange for services at a fair value of $293,427.

 

On February 1, 2017, the Company issued 800,000 shares of its restricted common stock to its placement agent. Such shares were issued pursuant to a Placement Agent Agreement with the Company and services rendered in connection with a private placement of the Company’s securities.

 

On February 13, 2017, the Company issued 133,333 shares of its restricted common stock to its placement agent. Such shares were issued pursuant to a Placement Agent Agreement with the Company and services rendered in connection with a private placement of the Company’s securities. 

  

Treasury Stock

 

 As discussed in Note 7, upon amendment of the July 2017 Convertible Note, the Company repurchased the 220,000 shares for an aggregate purchase price of $19,007 which is presented as Treasury Stock on the consolidated balance sheets.

 

Stock Options

 

The Company applied fair value accounting for all share based payments awards. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. 

 

The assumptions used for options granted during the year ended December 31, 2017 and December 31, 2016 are as follows:

 

  

December 31,

2017

  

December 31,

2016

 
Exercise price  0.16-0.75   0.25-0.40 
Expected dividends  0%   0% 
Expected volatility  86.62% - 92.14%   73.44%-90.05% 
Risk free interest rate  1.74% - 2.10%   1%-1.39% 
Expected life of option  5 years   4.68-5 years 

 

The following is a summary of the Company’s stock option activity:

 

  Options  Weighted
Average
Exercise
Price
  

Weighted

Average

Remaining
Contractual
Life

(in years)

 
Balance – December 31, 2015 – outstanding and exercisable  500,000   0.25   4.93 
Granted  1,750,000   0.36   5.0 
Exercised  -   -   - 
Cancelled/Modified  -   -   - 
Balance – December 31, 2016 – outstanding  2,250,000   0.34   4.38 
Balance – December 31, 2016 – exercisable  2,200,000   0.30   4.38 
             
Outstanding options held by related party – December 31, 2016  2,250,000   0.34   4.38 
Exercisable options held by related party – December 31, 2016  2,200,000   0.30   4.38 
             
Balance – December 31, 2016  2,250,000  $0.34   4.38 
Granted  15,499,990  $0.43   5.00 
Exercised  -   -   - 
Cancelled/Modified  (100,000) $0.40   - 
Balance – December 31, 2017 – outstanding  17,649,990  $0.42   4.27 
Balance – December 31, 2017 – exercisable  8,983,322  $0.27   4.15 
            
Outstanding options held by related party – December 31, 2017  17,429,990  $0.42   4.65 
Exercisable options held by related party – December 31, 2017  8,843,322  $0.27   4.15 

  

At December 31, 2017, the aggregate intrinsic value of options outstanding and exercisable was $3,500 and $ 3,500, respectively.

 

Stock-based compensation for stock options has been recorded in the consolidated statements of operations and totaled $1,092,970 and $231,035, for the year ended December 31, 2017 and 2016, respectively.

 

The following is a summary of the Company’s stock options granted during the year ended December 31, 2017:

 

Options  Value  Purpose for Grant
 15,499,990  $1,172,022  Service Rendered

   

Warrants

 

The Company applied fair value accounting for all share based payments awards. The fair value of each warrant granted is estimated on the date of grant using the Black-Scholes option-pricing model.

 

The assumptions used for warrants granted during the year ended December 31, 2017 are as follows:

 

  December 31,
2017
  December 31,
2016
 
Exercise price  $0.20-0.30  $0.40
Expected dividends  0%  0%
Expected volatility  96.76%-102.21%   73.44-91.54% 
Risk free interest rate  1.63%-2.26%   1.13%-1.39% 
Expected life of warrant  5 years   5 years 

 

Warrant Activities

 

The following is a summary of the Company’s warrant activity:

 

  Warrants  Weighted Average
Exercise
Price
 
       
Outstanding and Exercisable – December 31, 2015  10,750,000   0.35 
Granted  4,791,666   0.40 
Exercised  -   - 
Forfeited/Cancelled  -   - 
Outstanding – December 31, 2016  15,541,666  $0.36 
Granted  30,652,113   0.20 
Exercised  -   - 
Forfeited/Cancelled  -   - 
Outstanding and Exercisable – December 31, 2017  46,193,779  $0.25 

  

Warrants Outstanding  Warrants Exercisable 
Exercise price  Number Outstanding  Weighted Average
Remaining Contractual Life
(in years)
  Weighted
Average
Exercise Price
  Number
Exercisable
  Weighted Average
Exercise Price
 
$0.20– 0.40    46,193,779   4   0.25   46,193,779   0.25 

  

During the year ended December 31, 2017, a total of 5,811,360 warrants were issued with promissory notes (See Note 6 above). In addition, the placement agent was granted a total of 487,755 warrants to purchase common stock. The warrants have a grant date fair value of $1,189,235 using a Black-Scholes option-pricing model and the above assumptions.

 

During the year ended December 31, 2017, a total of 16,597,719 warrants were issued with convertible notes (See Note 7 above). In addition, the placement agent was granted a total of 12,150 warrants to purchase common stock. The warrants have a grant date fair value of $1,472,161 using a Black-Scholes option-pricing model and the above assumptions.

 

During the year ended December 31, 2017, a total of 345,500 warrants were issued with notes payable – related party (See Note 8 above). The warrants have a grant date fair value of $38,109 using a Black-Scholes option-pricing model and the above assumptions.

 

During the year ended December 31, 2017, a total of 7,115,129 warrants were issued with convertible notes payable – related party (See Note 8 above). The warrants have a grant date fair value of $680,037 using a Black-Scholes option-pricing model and the above assumptions. 

  

Stock Incentive Plan

 

On December 9, 2015, Jerrick adopted the 2015 Stock Incentive and Award Plan (the “Plan”) which will provide for the issuance of up to 18,000,000 shares of the Company’s Common Stock.

 

The purpose of the Plan is to provide additional incentive to those officers, employees, consultants and non-employee directors of the Company and its parents, subsidiaries and affiliates whose contributions are essential to the growth and success of the Company’s business.

 

Eligible recipients of option awards are employees, officers, consultants or directors (including non-employee directors) of the Company or of any parent, subsidiary or affiliate of the Company. Upon recommendation from the Compensation Committee, the board has the authority to grant to any eligible recipient any options, restricted stock or other awards valued in whole or in part by reference to, or otherwise based on, our Common Stock.

 

The provisions of each option granted need not be the same with respect to each option recipient. Option recipients shall enter into award agreements with us, in such form as the board shall determine.

 

The Plan shall be administered by the Compensation Committee consisting of two or more independent, non-employee and outside directors. In the absence of such a Committee, the Board of the Company shall administer the Plan.

 

Each Option shall contain the following material terms:

 

 (i)the purchase price of each share of Common Stock with respect to Incentive Options shall be determined by the Committee at the time of grant, shall not be less than 100% of the Fair Market Value (defined as the closing price on the final trading day immediately prior to the grant on the principal exchange or quotation system on which the Common Stock is listed or quoted, as applicable) of the Common Stock of the Jerrick,  provided  that if the recipient of the Option owns more than ten percent (10%) of the total combined voting power of the Jerrick, the exercise price shall be at least 110% of the Fair Market Value;
   
 (ii)The purchase price of each share of Common Stock purchasable under a Non-qualified Option shall be at least 100% of the Fair Market Value of such share of Common Stock on the date the Non-qualified Option is granted,  unless  the Committee, in its sole and absolute discretion, determines to set the purchase price of such Non-qualified Option below Fair Market Value.
   
 (iii)the term of each Option shall be fixed by the Committee,  provided  that such Option shall not be exercisable more than five (5) years after the date such Option is granted, and  provided further  that with respect to an Incentive Option, if the recipient owns more than ten percent (10%) of the total combined voting power of the Jerrick, the Incentive Option shall not be exercisable more than five (5) years after the date such Incentive Option is granted;
   
 (iv)subject to acceleration in the event of a Change of Control of the Jerrick (as further described in the Plan), the period during which the Options vest shall be designated by the Committee or, in the absence of any Option vesting periods designated by the Committee at the time of grant, shall vest and become exercisable in equal amounts on each fiscal quarter of the Jerrick through the four (4) year anniversary of the date on which the Option was granted;

 

 (v)no Option is transferable, and each is exercisable only by the recipient of such Option except in the event of the death of the recipient; and
   
 (vi)with respect to Incentive Options, the aggregate Fair Market Value of Common Stock exercisable for the first time during any calendar year shall not exceed $100,000.

 

Each award of Restricted Stock is subject to the following material terms:

 

 (i)no rights to an award of Restricted Stock are granted to the intended recipient of Restricted Stock unless and until the grant of Restricted Stock is accepted within the period prescribed by the Compensation Committee;
   
 (ii)Restricted Stock shall not be delivered until they are free of any restrictions specified by the Compensation Committee at the time of grant;
   
 (iii)recipients of Restricted Stock have the rights of a stockholder of the Jerrick as of the date of the grant of the Restricted Stock;
   
 (iv)shares of Restricted Stock are forfeitable until the terms of the Restricted Stock grant have been satisfied or the employment with the Company is terminated; and
   
 (v)the Restricted Stock is not transferable until the date on which the Compensation Committee has specified such restrictions have lapsed.
v3.10.0.1
Commitments and Contingencies
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 11 – Commitments and Contingencies

 

Lease Agreements

 

On May 5, 2018, the Company signed a 5-year lease for approximately 2,300 square feet of office space at 2050 Center Avenue suite 640, Fort lee, New Jersey 07024. Commencement date of the lease is June 1, 2018. Total amount due under this lease is $411,150.

 

Rent expense for the three and nine months ended September 30, 2018 was $20,557 and $146,056 respectively, and was $66,569 and $144,425, respectively, for the three and nine months ended September 30, 2017. 

v3.10.0.1
Revision of Prior Year Financial Statements
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Revision of Prior Year Financial Statements [Abstract]    
Revision of Prior Year Financial Statements

Note 12 – Revision of Prior Year Financial Statements:

 

The Company’s correction of accrued dividends was a result of the following:

 

  Management was accruing dividends as a liability, despite the fact the Board of Directors had not formally declared the dividends payable. This results in accrued dividends being removed from the liabilities section of the balance sheet,

 

  Management was not compounding the dividends annually,

 

  Management was not presenting the accrued dividends on the consolidated statement of operations, ultimately being included in the loss per share.

 

In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements the Company has determined that the impact of adjustments relating to the correction of this accounting error are not material to previously issued consolidated financial statements. Accordingly, these changes are disclosed herein and will be disclosed prospectively.

 

As a result of the aforementioned correction of accounting errors, the relevant financial statements have been revised as follows:

 

Effects on respective financial statements are as noted below:

 

    December 31, 2017  
    As Previously Reported     Adjustment     As Revised  
Balance Sheet                        
Current Liabilities                        
Accrued dividends   $ 472,444     $ (472,444 )   $ -  
Total Current Liabilities   $ 4,159,644     $ (472,444 )   $ 3,687,200  
Total Liabilities   $ 8,017,183     $ (472,444 )   $ 7,544,739  
                         
Stockholders’ Equity                        
Total Stockholders’ Equity   $ 7,839,751     $ (472,444 )   $ 7,367,307  

 

    For the nine months ended
September 30, 2017
 
    As Previously Reported after Adoption of ASU 2017-11     Adjustments     As Revised  
Statement of Operations                        
Deemed dividend   $ -     $       $ 203,365  
Net loss attributable to common stockholders   $ (6,377,874 )   $ (203,365 )   $ (6,581,239 )
Basic and diluted loss per share   $ (0.17 )   $         (0.17 )
                         
Statements of Cash Flows                        
Supplementary Disclosure of Non-Cash Investing And Financing Activities                        
Deemed dividend   $ -     $ 203,365     $ 203,365  

  

    For the three months ended
September 30, 2017
 
    As Previously Reported after Adoption of ASU 2017-11     Adjustments     As Revised  
Statement of Operations                  
Deemed dividend   $ -     $       $ 74,014  
Net loss attributable to common stockholders   $ (3,421,965 )   $ (74,014 )   $ (3,495,979 )
Basic and diluted loss per share   $ (0.09 )   $         (0.09 )

Note 12 - Revision of Prior Year Financial Statements:

 

The Company’s correction of accrued dividends were a result of the following:

 

 Management was accruing dividends as a liability, despite the fact the Board of Directors had not formally declared the dividends payable. This results in accrued dividends being removed from the liabilities section of the balance sheet,

 

 Management was not compounding the dividends annually,

 

 Management was not presenting the accrued dividends on the consolidated statement of operations, ultimately being included in the loss per share.

 

In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements the Company has determined that the impact of adjustments relating to the correction of this accounting error are not material to previously issued consolidated financial statements. Accordingly, these changes are disclosed herein and will be disclosed prospectively.

 

As a result of the aforementioned correction of accounting errors, the relevant financial statements have been revised as follows:

 

Effects on respective financial statements are as noted below:

 

  December 31, 2017 
  As Previously Reported  Adjustment  As Revised 
Balance Sheet         
Current Liabilities         
Accrued dividends $472,444  $(472,444) $- 
Total Current Liabilities  4,159,644   (472,444)  3,687,200 
Total Liabilities $8,017,183  $(472,444) $7,544,739 
             
Stockholders’ Equity            
Total Stockholders’ Equity  7,839,751   (472,444)  7,367,307 

 

  For the year ended December 31, 2017 
  As Previously Reported  Adjustments  As Revised 
Statement of Operations         
Deemed dividend $-  $297,323  $131,867 
Net loss attributable to common stockholders $8,751,586  $297,323  $9,079,872 
Basic and diluted loss per share $(0.23) $-   (0.23)
             
Statements of Cash Flows            
Supplementary Disclosure of Non-Cash Investing And Financing Activities            
Deemed dividend $217,985  $79,338  $297,323 

 

  December 31, 2016 
  As Previously Reported  Adjustment  As Revised 
Balance Sheet         
Current Liabilities         
Accrued dividends $259,170  $(259,170) $- 
Total Current Liabilities  3,544,996   (259,170)  3,285,826 
Total Liabilities $3,546,204  $(259,170) $3,287,034 
             
Stockholders’ Equity            
Total Stockholders’ Equity  3,168,103   (259,170)  2,908,933 

  

 For the year ended December 31, 2016 
  As Previously Reported  Adjustments  As Revised 
Statement of Operations         
Deemed dividend $-  $247,128  $247,128 
Net loss attributable to common stockholders $(7,391,907) $247,128  $(7,639,035)
Basic and diluted loss per share $(0.23) $(0.01)  (0.24)
             
Statements of Cash Flows            
Supplementary Disclosure of Non-Cash Investing And Financing Activities            
Deemed dividend $177,234  $69,894  $247,128 
v3.10.0.1
Income Taxes
12 Months Ended
Dec. 31, 2017
Income Taxes [Abstract]  
Income Taxes

Note 13 - Income Taxes

  

Components of deferred tax assets are as follows:

 

  December 31, 2017  December 31,
2016
 
Net deferred tax assets – Non-current:      
       
Expected income tax benefit from NOL carry-forwards $7,600,000  $3,100,000 
Less valuation allowance  (7,600,000)  (3,100,000)
Deferred tax assets, net of valuation allowance $-  $- 

 

Income Tax Provision in the Consolidated Statements of Operations

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

 

  For the Year Ended
December 31, 2017
  For the Year Ended
December 31, 2016
 
       
Federal statutory income tax rate  21.0%  34.0%
         
Change in valuation allowance on net operating loss carry-forwards  (21.0)%  (34.0)%
         
Effective income tax rate  0.0%  0.0%

  

Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets of the Company will not be fully realizable for the year ended December 31, 2017 and 2016. Accordingly, management had applied a full valuation allowance against net deferred tax assets as of December 31, 2017 and 2016.

 

As of December 31, 2017, the Company had approximately $7.6 million of federal net operating loss carryforwards available to reduce future taxable income which will begin to expire in 2033 for both federal and state purposes.

 

On December 22, 2017, the Tax Cuts and Jobs Act pf 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code of 1986, as amended (the “Code”). The Act reduces the federal corporate income tax rate from 35% to 21% effective for tax years beginning after December 31, 2017. ASC 470 requires the Company to remeasure the existing net deferred tax asset in the period of enactment. The Act also provides for immediate expensing of 100% or the costs of qualified property that is incurred and placed in service during the period from September 27, 2017 to December 31, 2022. Beginning January 1, 2023, the immediate expensing provision is phased down by 20% per year until it is completely phased out as of January 1, 2027. Additionally, effective January 1, 2018, the Act imposes possible limitations on the deductibility of interest expense. As a result of the provisions of the Act, the Company’s deduction for interest expense could be limited in future years. The effects of other provisions of the Act are not expected to have a material impact on the Company’s financial statements.

 

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to provide guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period that begins in the reporting period that includes the Act’s enactment date and ends when an entity has obtained, prepared and analyzed the information that was needed in order to complete the accounting requirements under ASC 720. However, in no circumstance should the measurement period extend beyond one year from the enactment date. In accordance with SAB 118, a company must reflect in its financial statements the income tax effects of those aspects of the Act for which the accounting under ASC 740 is complete. SAB 118 provides that to the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements.

 

The Company does not reflect a deferred tax asset in its financial statements but includes that calculation and valuation in its footnotes. We are still analyzing the impact of certain provisions of the Act and refining our calculations. The Company will disclose any change in the estimates as it refines the accounting for the impact of the Act.

v3.10.0.1
Subsequent Events
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Subsequent Events [Abstract]    
Subsequent Events

Note 13 – Subsequent Events

 

Second Closing of August 2018 Equity Raise

 

On or about October 30, 2018, the Company consummated the second closing (the “Second Closing”) of the August 2018 Equity Raise. In connection with the Second Closing, the Company entered into definitive securities purchase agreements (the “Purchase Agreements) with an additional 9 accredited investors (the “Purchasers”) for aggregate gross proceeds of $161,000. Pursuant to the Purchase Agreements, the Purchasers purchased an aggregate of 644,000 shares of common stock at $0.25 per share and received warrants to purchase 644,000 shares of common stock at an exercise price of $0.30 per share (the “Purchaser Warrants”, collectively, the “Securities”). More details regarding the Company’s August 2018 Equity Raise may be found in the Company’s Current Report on Form 8-K filed with the SEC on October 24, 2018.

Note 14 - Subsequent Events

 

Subsequent to December 31, 2017, the Company received gross proceeds of $1,780,750 of the issuance of convertible notes. In addition, $300,000 of the Company’s short term debt along with accrued but unpaid interest of $41,442 was converted into convertible debentures. As additional consideration for entering in the convertible debentures, the Company issued the investors 5-year warrant to purchase 10,488,708 shares of the Company’s common stock at a purchase price of $0.20 per share.

  

Subsequent to December 31, 2017, the Company received gross proceeds of $50,000 of the issuance of notes payable. As additional consideration for entering in the debentures, the Company issued the investors 5-year warrant to purchase 100,000 shares of the Company’s common stock at a purchase price of $0.20 per share.

  

Subsequent to December 31, 2017, the Company received gross proceeds from related parties of $40,750 of the issuance of convertible notes. As additional consideration for entering in the convertible debentures, the Company issued the investors 5-year warrant to purchase 81,500 shares of the Company’s common stock at a purchase price of $0.20 per share.

  

Subsequent to December 31, 2017, the Company received gross proceeds from related parties of $135,000 of the issuance of notes payable. As additional consideration for entering in the convertible debentures, the Company issued the investors 5-year warrant to purchase 35,000 shares of the Company’s common stock at a purchase price of $0.20 per share.

 

Subsequent to December 31, 2017, the Company issued 375,000 shares of its restricted common stock to its Placement Agent. Such shares were issued pursuant to a Placement Agent Agreement with the Company and services rendered in connection with a private placement of the Company’s securities.

 

Subsequent to December 31, 2017, the Company issued 628,750 shares of its common stock to consultants in exchange for services.

v3.10.0.1
Significant and Critical Accounting Policies and Practices (Policies)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Significant and Critical Accounting Policies and Practices [Abstract]    
Basis of Presentation - Unaudited Interim Financial Information

Basis of Presentation - Unaudited Interim Financial Information

 

The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”) with respect to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements furnished reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

Basis of Presentation

 

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). 

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

   

(i) Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
   
(ii) Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
   
(iii)   Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.
   
(iv) Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk-free rate(s) to value share options and similar instruments.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

Critical accounting estimates are estimates for which (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material. The Company’s critical accounting estimates and assumptions affecting the financial statements were:

   

(i)Assumption as a going concern: Management assumes that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
  
(ii)Fair value of long-lived assets: Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; (v) a significant decline in the Company’s stock price for a sustained period of time; and (vi) regulatory changes. The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.
  
(iii)  Valuation allowance for deferred tax assets: Management assumes that the realization of the Company’s net deferred tax assets resulting from its net operating loss (“NOL”) carry–forwards for Federal income tax purposes that may be offset against future taxable income was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance. Management made this assumption based on (a) the Company has incurred recurring losses, (b) general economic conditions, and (c) its ability to raise additional funds to support its daily operations by way of a public or private offering, among other factors.  
  
(iv)Estimates and assumptions used in valuation of equity instruments: Management estimates expected term of share options and similar instruments, expected volatility of the Company’s common shares and the method used to estimate it, expected annual rate of quarterly dividends, and risk free rate(s) to value share options and similar instruments.

 

These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.

 

Actual results could differ from those estimates.

Principles of consolidation

Principles of consolidation

 

The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to control exists.

 

As of September 30, 2018, the Company’s consolidated subsidiaries and/or entities are as follows:

 

Name of combined affiliate   State or other jurisdiction of
incorporation or organization
  Company interest  
             
Jerrick Ventures LLC   The State of Delaware     100%  
Jerrick Australia Pty Ltd   Australia     100%  

 

All inter-company balances and transactions have been eliminated.

 

Jerrick Australia Pty Ltd does not have any operations.

Principles of consolidation

 

The Company consolidates all majority-owned subsidiaries, if any, in which the parent’s power to control exists.

 

As of December 31, 2017, the Company’s consolidated subsidiaries and/or entities are as follows:

 

Name of combined affiliate State or other jurisdiction of
incorporation or organization
 Company interest 
      
Jerrick Ventures LLC The State of Delaware 100%

 

All inter-company balances and transactions have been eliminated.

 

On May 12, 2017, the Company assigned the right, title and interest to all of the membership interests of certain of it’s inactive business subsidiaries, with the exception of Jerrick Ventures LLC, to the Company’s Chief Executive Officer, Jeremy Frommer, in consideration for Mr. Frommer’s assumption of all liabilities of such subsidiaries, if any, with such assignment and assumption effected entirely in the interest of corporate efficiency. The Board reviewed the transaction and believes it to be fair in all respects, deeming it to advance the Company’s business interests by allowing the Company to divest non-producing and non-operating subsidiaries at no cost to the Company. All of the Company’s operations have been, and will continue to be, run through its operating subsidiary, Jerrick Ventures LLC.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1   Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
     
Level 2   Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
     
Level 3   Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. 

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities and accrued liquidating damages approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
   
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
   
Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data.

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities and accrued liquidating damages approximate their fair value because of the short maturity of those instruments. Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Cash Equivalents

Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits.

Property and Equipment

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

    Estimated Useful
Life
(Years)
     
Computer equipment and software   3
Furniture and fixture   5
Leasehold improvement   5

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

Property and Equipment

 

Property and equipment are recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Depreciation is computed by the straight-line method (after taking into account their respective estimated residual values) over the estimated useful lives of the respective assets as follows:

 

  Estimated Useful
Life
(Years)
 
    
Computer equipment and software 3 
Furniture and fixture 5 

 

Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

Investments - Cost Method, Equity Method and Joint Venture  

Investments - Cost Method, Equity Method and Joint Venture

 

In accordance with sub-topic 323-10 of the FASB ASC (“Sub-topic 323-10”), the Company accounts for investments in common stock of an investee for which the Company has significant influence in the operating or financial policies even though the Company holds 50% or less of the common stock or in-substance common stock.

 

On January 2, 2013, the Company purchased a minority interest in a business for proceeds of $83,333. The interest is accounted for under the cost method. The Company tests the carrying value annually for impairment. The company recorded an impairment of minority investment of $83,333.

Commitments and Contingencies

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

  

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Commitments and Contingencies

 

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Derivative Liability

Derivative Liability

 

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions. The Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 during the year ended December 31, 2017 on a retrospective basis.

Derivative Liability

 

The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 815-10-05-4 and Section 815-40-25 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then the related fair value is reclassified to equity.

   

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. 

 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

 

The Company adopted Section 815-40-15 of the FASB Accounting Standards Codification (“Section 815-40-15”) to determine whether an instrument (or an embedded feature) is indexed to the Company’s own stock. Section 815-40-15 provides that an entity should use a two-step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument’s contingent exercise and settlement provisions.  The Company changed its method of accounting for the debt and warrants through the early adoption of ASU 2017-11 during the three months ended December 31, 2017 on a retrospective basis.

 

The Company utilizes an option pricing model to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The Company records the change in the fair value of the derivative as other income or expense in the condensed consolidated statements of operations.

Revenue Recognition

Revenue Recognition

 

The Company adopted ASC 606, “Revenue from Contracts with Customers” (“ASC 606”), effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods.

 

Based on the Company’s analysis the Company did not identify a cumulative effect adjustment for initially applying the new revenue standards. During the nine months ended September 30, 2018 the Company recorded revenue from the following sources: products at auction, sponsored content and affiliate sites.

 

The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company’s services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company’s contracts as of September 30, 2018 contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below. 

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Product revenue

 

Revenue from multiple-element arrangements is allocated among separate elements based on their estimated sales prices, provided the elements have value on a stand-alone basis.

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes gross revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. During the year ended the recorded revenue from the following sources products at auction, sponsored content and affiliate sites.

Stock-Based Compensation

Stock-Based Compensation

 

The Company recognizes compensation expense for all equity–based payments granted to employees in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award. 

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a five-year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date. 

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is benchmarked against similar companies in a similar industry over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best estimate.  

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period.

Stock-Based Compensation

 

The Company recognizes compensation expense for all equity–based payments granted to employees in accordance with ASC 718 “Compensation – Stock Compensation”. Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

 

Restricted stock awards are granted at the discretion of the Company. These awards are restricted as to the transfer of ownership and generally vest over the requisite service periods, typically over a five year period (vesting on a straight–line basis). The fair value of a stock award is equal to the fair market value of a share of Company stock on the grant date. 

 

The fair value of an option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are inputs into the model. These assumptions are the value of the underlying share, the expected stock volatility, the risk–free interest rate, the expected life of the option, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is benchmarked against similar companies in a similar industry over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common stock and does not intend to pay dividends on its Common stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best estimate.  

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, our equity–based compensation could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the Company’s actual forfeiture rate is materially different from its estimate, the equity–based compensation could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505-40, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete. The fair value of the equity instruments is re-measured each reporting period over the requisite service period.

Income Taxes

Income Taxes

 

Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

Income Taxes

 

Income taxes are provided in accordance with ASC No. 740, “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the period of deferred tax assets and liabilities.

 

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. 

 

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary. 

Loss Per Share

Loss Per Share

 

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the nine months ended September 30, 2018 and 2017 presented in these consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

The Company had the following common stock equivalents at September 30, 2018 and 2017:

 

    September 30,
2018
    September 30,
2017
 
Series A Preferred stock     -       21,654,614  
Series B Preferred stock     -       4,431,987  
Options     17,649,990       17,749,990  
Warrants     103,341,735       34,457,024  
Convertible notes - related party     2,000       -  
Convertible notes     1,620,505       13,681,425  
Totals     122,614,230       91,975,040

Loss Per Share

 

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the year ended December 31, 2017 and 2016 presented in these consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

The Company had the following common stock equivalents at December 31, 2017:

 

  December 31,
2017
 
Series A Preferred stock  19,256,707 
Series B Preferred stock  4,092,893 
Options  17,749,990 
Warrants  46,193,779 
Convertible notes - related party  7,080,128 
Convertible notes  17,749,990 
Totals  112,123,487
Reclassifications

Reclassifications

 

Interest expense has been allocated to accretion of debt discount and issuance cost to conform to current period presentation.

Reclassifications

 

Certain prior year amounts in the consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year presentation. These reclassifications did not affect the prior period total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities.

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

 

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net)” (topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we adopted for interim and annual reporting periods beginning after December 15, 2017. The adoption of ASU 2016-10 did not have a material effect on its financial position or results of operations or cash flows.

 

Revenue Recognition

 

The Company adopted ASC 606 effective January 1, 2018 using the modified retrospective method which would require a cumulative effect adjustment for initially applying the new revenue standard as an adjustment to the opening balance of retained earnings and the comparative information would not require to be restated and continue to be reported under the accounting standards in effect for those periods.

  

Based on the Company’s analysis the Company did not identify a cumulative effect adjustment for initially applying the new revenue standards. During the six months ended June 30, 2018 the Company recorded revenue from the following sources: products at auction, sponsored content and affiliate sites.

 

The adoption of ASC 606 represents a change in accounting principle that will more closely align revenue recognition with the delivery of the Company's services and will provide financial statement readers with enhanced disclosures. In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services. To achieve this core principle, the Company applies the following five steps:

 

1) Identify the contract with a customer

 

A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the services to be transferred and identifies the payment terms related to these services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.

 

2) Identify the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised services, the Company must apply judgment to determine whether promised services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised services are accounted for as a combined performance obligation.

 

3) Determine the transaction price

 

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring services to the customer. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. None of the Company's contracts as of June 30, 2018 contained a significant financing component. Determining the transaction price requires significant judgment, which is discussed by revenue category in further detail below.

 

4) Allocate the transaction price to performance obligations in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. However, if a series of distinct services that are substantially the same qualifies as a single performance obligation in a contract with variable consideration, the Company must determine if the variable consideration is attributable to the entire contract or to a specific part of the contract. For example, a bonus or penalty may be associated with one or more, but not all, distinct services promised in a series of distinct services that forms part of a single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.

 

5) Recognize revenue when or as the Company satisfies a performance obligation

 

The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised service to a customer.

 

Product revenue

 

Revenue from multiple-element arrangements is allocated among separate elements based on their estimated sales prices, provided the elements have value on a stand-alone basis.

 

Adoption of ASU 2017-11

 

As noted above, in connection with the securities purchase agreement and debt transactions during the year ended December 31, 2017, the Company issued warrants and convertible notes, to purchase common stock with an exercise price of $0.20 and a five-year term. Upon issuance of the warrants and convertible notes, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the warrants and convertible notes that potentially could result in a net cash settlement in the event of a fundamental transaction, requiring the Company to classify the warrants and convertible notes as a derivative liability. The Company changed its method of accounting for the convertible notes and warrants through the early adoption of ASU 2017-11 during the three months ended December 31, 2017 on a retrospective basis. Accordingly, the Company recorded the warrant derivative and conversion option derivative liabilities to additional paid in capital upon issuance.

 

Tabular summaries of the revisions and the corresponding effects on the statement of earnings for the nine months ended September 30, 2017 are presented below:

 

Consolidated Statement of Operations Nine Months Ended September 30, 2017
    Previously 
Reported
    Revisions     Revised 
Reported
 
Accretion of debt discount and issuance cost   $ (2,025,486 )   $ 499,972     $ (1,525,514 )
                         
Derivative expense     (254,470 )     254,470       -  
                         
Change in fair value of derivative liabilities     1,257,716       (1,322,062 )     (64,346 )
                         
Loss on extinguishment of debt     (876,038 )     (47,784 )     (923,822 )
                         
Net loss   $ (5,762,470 )   $ (615,404 )   $ (6,377,874 )
                         
Net loss per ordinary share:                        
Basic and diluted loss per share   $ (0.15 )   $ (0.02 )   $ (0.17 )

 

Tabular summaries of the revisions and the corresponding effects on the statement of earnings for the three months ended September 30, 2017 are presented below:

 

Consolidated Statement of Operations Three Months Ended September 30, 2017
    Previously 
Reported
    Revisions     Revised 
Reported
 
Accretion of debt discount and issuance cost   $ (1,074,002 )   $ 273,388     $ (800,614 )
                         
Change in fair value of derivative liabilities     673,705       (738,051 )     (64,346 )
                         
Loss on extinguishment of debt     (876,038 )     (47,784 )     (923,822 )
                         
Net loss   $ (2,909,519 )   $ (512,446 )   $ (3,421,965 )
                         
Net loss per ordinary share:                        
Basic and diluted loss per share   $ (0.07 )   $ (0.02 )   $ (0.09 )

Recently Adopted Accounting Guidance

 

In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The adoption of ASU 2016-09 will not have a material effect on its financial position or results of operations or cash flows.

  

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross verses Net)” (topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers”. The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after December 15, 2017. The adoption of ASU 2016-10 will not have a material effect on its financial position or results of operations or cash flows.

 

In May 2016, the FASB issued ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients”, which narrowly amended the revenue recognition guidance regarding collectability, noncash consideration, presentation of sales tax and transition and is effective during the same period as ASU 2014-09. The adoption of ASU 2016-12 won’t have a material effect on its financial position or results of operations or cash flows.

 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The adoption of ASU 2016-15 won’t have a material effect on its financial position or results of operations or cash flows.

 

In July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception”. Part I of this update addresses the complexity of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company early adopted the ASU 2017-11 in the year ending December 31, 2017.

Recent Accounting Guidance Not Yet Adopted

Recent Accounting Guidance Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under ASU 2016-02, lessees will be required to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach. The Company is in the process of evaluating the effect of the new guidance on its condensed consolidated financial statements and disclosures.

 

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard.

  

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

Recent Accounting Guidance Not Yet Adopted

 

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Under ASU 2016-02, lessees will be required to recognize, for all leases of 12 months or more, a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the lease term. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature of an entity’s leasing activities. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective approach. The Company is in the process of evaluating the effect of the new guidance on its consolidated financial statements and disclosures.

 

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which eliminates the exception that prohibits the recognition of current and deferred income tax effects for intra-entity transfers of assets other than inventory until the asset has been sold to an outside party. The updated guidance is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard.

 

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230)”, requiring that the statement of cash flows explain the change in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. This guidance is effective for fiscal years, and interim reporting periods therein, beginning after December 15, 2017 with early adoption permitted. The provisions of this guidance are to be applied using a retrospective approach which requires application of the guidance for all periods presented. The Company is currently evaluating the impact of the new standard.

 

In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. This standard is required to be adopted in the first quarter of 2018. The Company is currently evaluating the impact this guidance will have on its consolidated financial statements and related disclosures.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

v3.10.0.1
Significant and Critical Accounting Policies and Practices (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Significant and Critical Accounting Policies and Practices [Abstract]    
Schedule of consolidated subsidiaries and/or entities
Name of combined affiliate   State or other jurisdiction of
incorporation or organization
  Company interest  
             
Jerrick Ventures LLC   The State of Delaware     100%  
Jerrick Australia Pty Ltd   Australia     100%
Name of combined affiliate State or other jurisdiction of
incorporation or organization
 Company interest 
      
Jerrick Ventures LLC The State of Delaware 100%
Schedule of property and equipment estimated useful life
    Estimated Useful
Life
(Years)
     
Computer equipment and software   3
Furniture and fixture   5
Leasehold improvement   5
  Estimated Useful
Life
(Years)
 
    
Computer equipment and software 3 
Furniture and fixture 5 
Schedule of common stock equivalents
    September 30,
2018
    September 30,
2017
 
Series A Preferred stock     -       21,654,614  
Series B Preferred stock     -       4,431,987  
Options     17,649,990       17,749,990  
Warrants     103,341,735       34,457,024  
Convertible notes - related party     2,000       -  
Convertible notes     1,620,505       13,681,425  
Totals     122,614,230       91,975,040
  December 31,
2017
 
Series A Preferred stock  19,256,707 
Series B Preferred stock  4,092,893 
Options  17,749,990 
Warrants  46,193,779 
Convertible notes - related party  7,080,128 
Convertible notes  17,749,990 
Totals  112,123,487
Schedule of the revisions and the corresponding effects on the consolidated statement of operations

Consolidated Statement of Operations Nine Months Ended September 30, 2017
    Previously 
Reported
    Revisions     Revised 
Reported
 
Accretion of debt discount and issuance cost   $ (2,025,486 )   $ 499,972     $ (1,525,514 )
                         
Derivative expense     (254,470 )     254,470       -  
                         
Change in fair value of derivative liabilities     1,257,716       (1,322,062 )     (64,346 )
                         
Loss on extinguishment of debt     (876,038 )     (47,784 )     (923,822 )
                         
Net loss   $ (5,762,470 )   $ (615,404 )   $ (6,377,874 )
                         
Net loss per ordinary share:                        
Basic and diluted loss per share   $ (0.15 )   $ (0.02 )   $ (0.17 )

 

Consolidated Statement of Operations Three Months Ended September 30, 2017
    Previously 
Reported
    Revisions     Revised 
Reported
 
Accretion of debt discount and issuance cost   $ (1,074,002 )   $ 273,388     $ (800,614 )
                         
Change in fair value of derivative liabilities     673,705       (738,051 )     (64,346 )
                         
Loss on extinguishment of debt     (876,038 )     (47,784 )     (923,822 )
                         
Net loss   $ (2,909,519 )   $ (512,446 )   $ (3,421,965 )
                         
Net loss per ordinary share:                        
Basic and diluted loss per share   $ (0.07 )   $ (0.02 )   $ (0.09 )
 
v3.10.0.1
Property and Equipment (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Property and Equipment [Abstract]    
Schedule of property and equipment
   

September 30,

2018

    December 31,
2017
 
Computer Equipment   $ 220,054     $ 234,315  
Furniture and Fixtures     61,803       61,803  
Leasehold Improvements     25,446       -  
      307,303       296,118  
Less: Accumulated Depreciation     (259,272 )     (248,062 )
    $ 48,031     $ 48,056
  

December 31,

2017

  

December 31,

2016

 
Computer Equipment $234,315  $219,653 
Furniture and Fixtures  61,803   61,803 
   296,118   281,456 
Less: Accumulated Depreciation  (248,062)  (209,627)
  $48,056  $71,829 
v3.10.0.1
Line of Credit (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Line of Credit/Notes Payable/Convertible Note Payable [Abstract]    
Schedule of line of credit

    Outstanding Balances as of  
   

September 30,

2018

   

December 31,

2017

 
Revolving Note               -       44,996  
    $ -     $ 44,996  
  Outstanding Balances as of 
  

December 31,

2017

  

December 31,

2016

 
Revolving Note  44,996   203,988 
Factoring Agreement  -   31,153 
  $44,996  $235,141
v3.10.0.1
Notes Payable (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Line of Credit/Notes Payable/Convertible Note Payable [Abstract]    
Schedule of notes payable
    Outstanding Principal as of               Warrants  
    September 30,
2018
    December 31,
2017
    Interest Rate     Maturity Date   Quantity     Exercise
Price
 
The February 2017 Offering   $ 5,369     $ 400,000       12 %   September 1, 2017     2,450,000     $ 0.20  
The June 2017 Loan Agreement     -       50,000       12 %   September 1, 2017     35,000       0.20  
The First November 2017 Loan Agreement     -       100,000       15 %   January 12, 2018     -       -  
The Second November 2017 Loan Agreement     -       50,000       15 %   January 13, 2018     -       -  
The Third November 2017 Loan Agreement     -       100,000       15 %   January 13, 2018     -       -  
July 2018 Loan Agreement     100,000               6 %    August 2018     300,000       -  
      105,369       700,000                              
Less: Debt Discount     -       (10,500 )                            
Less: Debt Issuance Costs     (241 )     -                              
    $ 105,128     $ 689,500                            
  Outstanding Principal as of       Warrants 
  December 31,
2017
  December 31,
2016
  Interest Rate  Maturity Date Quantity  Exercise
Price
 
October 25, 2016  -   25,000   9% July 1, 2017  50,000  $0.30 
February 22, 2017  400,000   -   12% September 1, 2017  2,450,000  $0.20 
June 12, 2017  50,000   -   12% September 1, 2017  35,000  $0.20 
November 28, 2017  100,000   -   15% January 12, 2018  -   - 
November 29, 2017  50,000   -   15% January 13, 2018  -   - 
November 29, 2017  100,000   -   15% January 13, 2018  -   - 
   700,000   25,000               
Less: Debt Discount  (10,500)  (9,421)              
Less: Debt Issuance Costs  -   -               
  $689,500  $15,579               
v3.10.0.1
Convertible Note Payable (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Line of Credit/Notes Payable/Convertible Note Payable [Abstract]    
Schedule of convertible notes payable

    Outstanding Principal as of                     Warrants  
    September 30,
2018
    December 31, 
2017
    Interest
Rate
    Conversion
Price
    Maturity Date   Quantity     Exercise
Price
 
The November 2016 Convertible Note Offering   $ -     $ 25,000       10 %     0.30     November 1, 2017     400,000     $ 0.30  
The June 2017 Convertible Note Offering     -       71,500       12 %     Not Applicable     September 1, 2017     114,700       0.20  
The August 2017 Convertible Note Offering     114,100       2,943,884       15 %     0.20 (*)   August – November 2019     14,716,419       0.20  
The First December 2017 Note     -       100,000       15 %     0.20 (*)   December 21, 2019     500,000       0.20  
The February 2018 Convertible Note Offering     75,000       -       15 %     0.20 (*)   January – February 2020     5,078,375       0.20  
The January 2018 
Note
    -       -               0.20 (*)   January 12, 2020     343,806       0.20  
The February 2018 Note     25,452       -       18 %     0.20 (*)   February 8, 2020     81,500       0.20  
The March 2018 Convertible Note Offering     75,000       -       14 %     0.20 (*)   March – April 2020     4,806,833       0.20  
      289,552       3,140,384                                      
Less: Debt Discount     (46,367 )     (452,022 )                                    
Less: Debt Issuance Costs     (16,681 )     (79,569 )                                    
      226,504       2,608,793                                      
Less: Current Debt     (40,401 )     (96,500 )                                    
Total Long-Term Debt   $ 186,103     $ 2,512,293                                      

 

(*) As subject to adjustment as further outlined in the notes

  Outstanding Principal as of          Warrants 
  December 31, 2017  December 31, 2016  Interest
Rate
  Conversion
Price
  Maturity Date Quantity  Exercise
Price
 
November – December, 2016  25,000   400,000   10%  0.30  November 1, 2017  400,000   0.30 
December 27, 2016  -   100,000   10%  0.30  December 27, 2017  100,000   0.30 
June, 2017  71,500   -   12%  Not Applicable  September 1, 2017  114,700   0.20 
July, 2017  -   -   8.5%  0.20(*) April 11, 2018  350,000   0.20 
August – November 2017  2,943,884   -   15%  0.20(*) August – November 2019  14,716,419   0.20 
December 21, 2017  100,000                       
   3,140,384   500,000                   
Less: Debt Discount  (452,022)  (184,398)                  
Less: Debt Issuance Costs  (79,569)  (46,779)                  
   2,672,574   268,823                   
Less: Current Debt  (96,500)  (268,823)                  
Total Long-Term Debt $2,512,293  $-                   

  

(*) As subject to adjustment as further outlined in the notes

v3.10.0.1
Related Party Loans (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Related Party Loans [Abstract]    
Schedule of convertible notes payable - related party
    Outstanding Principal as of               Warrants  
    September 30,
2018
    December 31,
2017
    Interest
Rate
    Maturity Date   Quantity     Exercise
Price
 
The August 2017 Convertible Note Offering   $ -     $ 1,416,026       15 %   August – October 2019     4,589,466     $ 0.20  
The Second December 2017 Note     -       100,000       15 %   December 21, 
2019
    500,000       0.20  
The February 2018 Convertible Note Offering     -       -       15 %   January – February 2020     125,000       0.20  
The Second February 2018 Note     -       -       20 %   September 30, 
2018
    81,500       0.20  
The March 2018 Convertible Note Offering     400       -       14 %   March 2020     1,197,000       0.20  
      400       1,516,026                              
Less: Debt Discount     (86 )     (170,780 )                            
Less: Debt Issuance Costs     -       -                              
      314       1,345,246                              
Less: Current Debt     -       -                              
Total Long-Term Debt   $ 314     $ 1,345,246                              

  Outstanding Principal as of       Warrants 
  December 31, 2017  December 31,
2016
  Interest Rate  Maturity Date Quantity  Exercise
Price
 
August – October 2017  1,416,026      -   15% August – October 2019  4,589,466   0.20 
December 21, 2018  100,000       15% December 21, 2019  500,000   0.20 
   1,516,026   -               
Less: Debt Discount  (170,780)  -               
   1,345,246   -               
Less: Current Debt  -   -               
Total Long-Term Debt $1,345,246  $                  -               
 
Schedule of notes payable - related party
    Outstanding Principal as of               Warrants  
    September 30,
2018
    December 31,
2017
    Interest
Rate
    Maturity Date   Quantity     Exercise
Price
 
The May 2016 Rosen Loan Agreement   $ 1,000,000     $ 1,000,000       13 %   November 26, 2017     1,000,000     $ 0.40  
The September 2017 Rosen Loan Agreement     -       224,000       18 %   September 24, 2017     125,000       0.20  
The November 2017 Schiller Loan Agreement     -       25,000       15 %   December 31, 2017     -       -  
The May 2018 Schiller Loan Agreements     -       -       13 %   February 2, 2019     300,000       0.20  
The June 2018 Frommer Loan Agreement     10,000       -       6 %   August 17, 2018     30,000       0.20  
The July 2018 Rosen Loan Agreement     60,000       -       6 %   August 17, 2018     30,000       0.20  
The July 2018 Schiller Loan Agreements     60,000       -       6 %   August 17, 2018     150,000       0.20  
      1,130,000       1,249,000                              
Less: Debt Discount     (14,400 )     -                              
      1,115,600                                      
Less: Current Debt     (1,115,600 )     -                              
    $ -     $ 1,249,000                              
  Outstanding Principal as of       Warrants 
  December 31, 2017  December 31, 2016  Interest
Rate
  Maturity Date Quantity  Exercise
Price
 
May 26, 2016  1,000,000   1,000,000   13% November 26, 2017  1,000,000   0.40 
September 12, 2016  -   100,000   12% November 22, 2017  17,500   0.20 
September 20, 2016  -   10,000   10% March 20, 2017  235,000   0.40 
October 13, 2016  -   50,000   12% November 22, 2017  50,000   0.40 
October 24, 2016  -   15,000   9% January 1, 2018  30,000   0.30 
October 31, 2016  -   10,000   10% November 10, 2016  10,000   0.30 
November 22, 2016  -   225,000   10% November 22, 2017  750,000   0.30 
December 21, 2016  -   50,000   10% November 22, 2017  166,666   0.30 
September 8, 2017  224,000   -   1% September 24, 2017  

125,000

   0.20 
November 20, 2017  25,000   -   15% December 31, 2017  -   - 
   1,249,000   1,460,000               
Less: Debt Discount  (-)   (94,675)              
  $1,249,000  $1,365,325   
v3.10.0.1
Capital Leases Payable (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Capital Leases Payable [Abstract]    
Summary of capital lease obligation

        September 30,
2018
    December 31,
2017
 
                 
(i)   Capital lease obligation to a financing company for a term of five (5) years, collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly installments of $383.10   $ 4,732     $ 4,732  
                     
    Less current maturities     (4,732 )     (4,732 )
                     
    Capital lease obligation, net of current maturities     -       -  
                     
    Total Capital Lease Obligation   $ 4,732     $ 4,732
   December 31,
2017
  December 31,
2016
 
        
(i)Capital lease obligation to a financing company for a term of five (5) years, collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly installments of $383.10 $4,732  $4,732 
          
 Less current maturities  (4,732)  (3,524)
          
 Capital lease obligation, net of current maturities  -   1,208 
          
 TOTAL CAPITAL LEASE OBLIGATION $4,732  $4,732
Summary of capital leases maturity
2018:   $ 4,732     $ 4,732  

2017: $-  $3,524 
2018:  4,732  $1,208
v3.10.0.1
Derivative Liabilities (Tables)
12 Months Ended
Dec. 31, 2017
Derivative Liabilities [Abstract]  
Schedule of fair value of the derivative liability
  Low  High 
Annual dividend rate  0%  0%
Expected life  0.58   0.75 
Risk-free interest rate  1.11%  1.16%
Expected volatility  90.71%  93.55%
Schedule of changes in derivative liabilities
  Year Ended
December 31, 2017
 
  Level 1  Level 2  Level 3 
Derivative liabilities as January 1, 2017 $       -  $      -  $- 
Addition  -   -   332,942 
Conversion  -   -     
Extinguishment Expense          (397,288)
Gain on changes in fair value  -   -   64,346 
Derivative liabilities as December 31, 2017 $-  $-  $- 
v3.10.0.1
Stockholders' Deficit (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Stock Option [Member]    
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]    
Schedule of assumptions used for options and warrants granted  
  

December 31,

2017

  

December 31,

2016

 
Exercise price  0.16-0.75   0.25-0.40 
Expected dividends  0%   0% 
Expected volatility  86.62% - 92.14%   73.44%-90.05% 
Risk free interest rate  1.74% - 2.10%   1%-1.39% 
Expected life of option  5 years   4.68-5 years
Schedule of stock option and warrant activity  
  Options  Weighted
Average
Exercise
Price
  

Weighted

Average

Remaining
Contractual
Life

(in years)

 
Balance – December 31, 2015 – outstanding and exercisable  500,000   0.25   4.93 
Granted  1,750,000   0.36   5.0 
Exercised  -   -   - 
Cancelled/Modified  -   -   - 
Balance – December 31, 2016 – outstanding  2,250,000   0.34   4.38 
Balance – December 31, 2016 – exercisable  2,200,000   0.30   4.38 
             
Outstanding options held by related party – December 31, 2016  2,250,000   0.34   4.38 
Exercisable options held by related party – December 31, 2016  2,200,000   0.30   4.38 
             
Balance – December 31, 2016  2,250,000  $0.34   4.38 
Granted  15,499,990  $0.43   5.00 
Exercised  -   -   - 
Cancelled/Modified  (100,000) $0.40   - 
Balance – December 31, 2017 – outstanding  17,649,990  $0.42   4.27 
Balance – December 31, 2017 – exercisable  8,983,322  $0.27   4.15 
            
Outstanding options held by related party – December 31, 2017  17,429,990  $0.42   4.65 
Exercisable options held by related party – December 31, 2017  8,843,322  $0.27   4.15
Schedule of stock options granted  
Options  Value  Purpose for Grant
 15,499,990  $1,172,022  Service Rendered
Warrants [Member]    
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]    
Schedule of assumptions used for options and warrants granted
    September 30,
2018
 
Exercise price   $ 0.20-.030  
Expected dividends     0 %
Expected volatility     102% - 107 %
Risk free interest rate     2%-3 %
Expected life of warrant     4 - 5 years
  December 31,
2017
  December 31,
2016
 
Exercise price  $0.20-0.30  $0.40
Expected dividends  0%  0%
Expected volatility  96.76%-102.21%   73.44-91.54% 
Risk free interest rate  1.63%-2.26%   1.13%-1.39% 
Expected life of warrant  5 years   5 years
Schedule of stock option and warrant activity
    Warrants     Weighted
Average
Exercise
Price
 
             
Outstanding – December 31, 2017     46,193,779     $ 0.24  
Granted     57,197,956       0.27  
Exercised     (50,000 )     0.40  
Forfeited/Cancelled     -       -  
Outstanding and Exercisable – September 30, 2018     103,341,735     $ 0.26
  Warrants  Weighted Average
Exercise
Price
 
       
Outstanding and Exercisable – December 31, 2015  10,750,000   0.35 
Granted  4,791,666   0.40 
Exercised  -   - 
Forfeited/Cancelled  -   - 
Outstanding – December 31, 2016  15,541,666  $0.36 
Granted  30,652,113   0.20 
Exercised  -   - 
Forfeited/Cancelled  -   - 
Outstanding and Exercisable – December 31, 2017  46,193,779  $0.25
Schedule of changes in warrants outstanding
Warrants Outstanding     Warrants Exercisable  
Exercise price     Number
Outstanding
    Weighted Average
Remaining Contractual Life
(in years)
    Weighted
Average
Exercise Price
    Number
Exercisable
    Weighted
Average
Exercise Price
 
$ 0.26       103,341,735       4.01       0.26       103,341,735       0.26
Warrants Outstanding  Warrants Exercisable 
Exercise price  Number Outstanding  Weighted Average
Remaining Contractual Life
(in years)
  Weighted
Average
Exercise Price
  Number
Exercisable
  Weighted Average
Exercise Price
 
$0.20– 0.40    46,193,779   4   0.25   46,193,779   0.25
v3.10.0.1
Revision of Prior Year Financial Statements (Tables)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Revision of Prior Year Financial Statements [Abstract]    
Schedule of correction of accounting errors, the relevant annual financial statements
    December 31, 2017  
    As Previously Reported     Adjustment     As Revised  
Balance Sheet                        
Current Liabilities                        
Accrued dividends   $ 472,444     $ (472,444 )   $ -  
Total Current Liabilities   $ 4,159,644     $ (472,444 )   $ 3,687,200  
Total Liabilities   $ 8,017,183     $ (472,444 )   $ 7,544,739  
                         
Stockholders’ Equity                        
Total Stockholders’ Equity   $ 7,839,751     $ (472,444 )   $ 7,367,307  

 

    For the nine months ended
September 30, 2017
 
    As Previously Reported after Adoption of ASU 2017-11     Adjustments     As Revised  
Statement of Operations                        
Deemed dividend   $ -     $       $ 203,365  
Net loss attributable to common stockholders   $ (6,377,874 )   $ (203,365 )   $ (6,581,239 )
Basic and diluted loss per share   $ (0.17 )   $         (0.17 )
                         
Statements of Cash Flows                        
Supplementary Disclosure of Non-Cash Investing And Financing Activities                        
Deemed dividend   $ -     $ 203,365     $ 203,365  

  

    For the three months ended
September 30, 2017
 
    As Previously Reported after Adoption of ASU 2017-11     Adjustments     As Revised  
Statement of Operations                  
Deemed dividend   $ -     $       $ 74,014  
Net loss attributable to common stockholders   $ (3,421,965 )   $ (74,014 )   $ (3,495,979 )
Basic and diluted loss per share   $ (0.09 )   $         (0.09 )

 

  December 31, 2017 
  As Previously Reported  Adjustment  As Revised 
Balance Sheet         
Current Liabilities         
Accrued dividends $472,444  $(472,444) $- 
Total Current Liabilities  4,159,644   (472,444)  3,687,200 
Total Liabilities $8,017,183  $(472,444) $7,544,739 
             
Stockholders’ Equity            
Total Stockholders’ Equity  7,839,751   (472,444)  7,367,307 

 

  For the year ended December 31, 2017 
  As Previously Reported  Adjustments  As Revised 
Statement of Operations         
Deemed dividend $-  $297,323  $131,867 
Net loss attributable to common stockholders $8,751,586  $297,323  $9,079,872 
Basic and diluted loss per share $(0.23) $-   (0.23)
             
Statements of Cash Flows            
Supplementary Disclosure of Non-Cash Investing And Financing Activities            
Deemed dividend $217,985  $79,338  $297,323 

  

 

  December 31, 2016 
  As Previously Reported  Adjustment  As Revised 
Balance Sheet         
Current Liabilities         
Accrued dividends $259,170  $(259,170) $- 
Total Current Liabilities  3,544,996   (259,170)  3,285,826 
Total Liabilities $3,546,204  $(259,170) $3,287,034 
             
Stockholders’ Equity            
Total Stockholders’ Equity  3,168,103   (259,170)  2,908,933 

  

 For the year ended December 31, 2016 
  As Previously Reported  Adjustments  As Revised 
Statement of Operations         
Deemed dividend $-  $247,128  $247,128 
Net loss attributable to common stockholders $(7,391,907) $247,128  $(7,639,035)
Basic and diluted loss per share $(0.23) $(0.01)  (0.24)
             
Statements of Cash Flows            
Supplementary Disclosure of Non-Cash Investing And Financing Activities            
Deemed dividend $177,234  $69,894  $247,128 

 

v3.10.0.1
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2017
Income Taxes [Abstract]  
Components of deferred tax assets

  December 31, 2017  December 31,
2016
 
Net deferred tax assets – Non-current:      
       
Expected income tax benefit from NOL carry-forwards $7,600,000  $3,100,000 
Less valuation allowance  (7,600,000)  (3,100,000)
Deferred tax assets, net of valuation allowance $-  $-
Schedule of reconciliation of the federal statutory income tax rate
  For the Year Ended
December 31, 2017
  For the Year Ended
December 31, 2016
 
       
Federal statutory income tax rate  21.0%  34.0%
         
Change in valuation allowance on net operating loss carry-forwards  (21.0)%  (34.0)%
         
Effective income tax rate  0.0%  0.0%
v3.10.0.1
Organization and Operations (Details) - shares
12 Months Ended
Feb. 05, 2016
Dec. 31, 2016
Kent Campbell [Member]    
Organization and Operations (Textual)    
Issuance of common shares for cash 28,500,000  
Cancelled of common stock 781,818  
Series A Convertible Preferred Stock [Member]    
Organization and Operations (Textual)    
Issuance of common shares for cash  
Series B Convertible Preferred Stock [Member]    
Organization and Operations (Textual)    
Issuance of common shares for cash  
Jerrick Ventures, Inc. [Member] | Series A Convertible Preferred Stock [Member]    
Organization and Operations (Textual)    
Issuance of common shares for cash 33,415  
Jerrick Ventures, Inc. [Member] | Series B Convertible Preferred Stock [Member]    
Organization and Operations (Textual)    
Issuance of common shares for cash 8,064  
v3.10.0.1
Significant and Critical Accounting Policies and Practices (Details)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Jerrick Ventures LLC [Member]    
Name of combined affiliate Jerrick Ventures LLC Jerrick Ventures LLC
State or other jurisdiction of incorporation or organization The State of Delaware The State of Delaware
Company interest 100.00% 100.00%
Jerrick Australia Pty Ltd [Member]    
Name of combined affiliate Jerrick Australia Pty Ltd  
State or other jurisdiction of incorporation or organization Australia  
Company interest 100.00%  
v3.10.0.1
Significant and Critical Accounting Policies and Practices (Details 1)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Computer equipment and software [Member]    
Property and Equipment, Estimated Useful Life (Years) 3 years 3 years
Furniture and fixture [Member]    
Property and Equipment, Estimated Useful Life (Years) 5 years 5 years
Leasehold improvement [Member]    
Property and Equipment, Estimated Useful Life (Years) 5 years  
v3.10.0.1
Significant and Critical Accounting Policies and Practices (Details 2) - shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Loss Per Share [Line Items]      
Common stock equivalents, total 122,614,230 91,975,040 112,123,487
Series A Preferred Stock [Member]      
Loss Per Share [Line Items]      
Common stock equivalents, total 21,654,614 19,256,707
Series B Preferred stock [Member]      
Loss Per Share [Line Items]      
Common stock equivalents, total 4,431,987 4,092,893
Convertible notes [Member]      
Loss Per Share [Line Items]      
Common stock equivalents, total 1,620,505 13,681,425 17,749,990
Convertible notes - related party [Member]      
Loss Per Share [Line Items]      
Common stock equivalents, total 2,000 7,080,128
Options [Member]      
Loss Per Share [Line Items]      
Common stock equivalents, total 17,649,990 17,749,990 17,749,990
Warrants [Member]      
Loss Per Share [Line Items]      
Common stock equivalents, total 103,341,735 34,457,024 46,193,779
v3.10.0.1
Significant and Critical Accounting Policies and Practices (Details 3) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Accretion of debt discount and issuance cost $ (1,449,656) $ (800,614) $ (2,039,589) $ (1,525,514) $ (1,828,027) $ (235,622)
Derivative expense          
Change in fair value of derivative liabilities   (64,346)   (64,346)    
Loss on extinguishment of debt (2,938,719) (923,822) (3,370,505) (923,822) (906,531)
Net loss $ (5,547,292) $ (3,421,965) $ (10,052,160) $ (6,377,874) $ (8,751,586) $ (7,391,907)
Net loss per ordinary share:            
Basic and diluted loss per share $ (0.11) $ (0.09) $ (0.25) $ (0.17) $ (0.23) $ (0.24)
Previously Reported [Member]            
Accretion of debt discount and issuance cost   $ (1,074,002)   $ (2,025,486)    
Derivative expense       (254,470)    
Change in fair value of derivative liabilities   673,705   1,257,716    
Loss on extinguishment of debt   (876,038)   (876,038)    
Net loss   $ (2,909,519)   $ (5,762,470)    
Net loss per ordinary share:            
Basic and diluted loss per share   $ (0.09)   $ (0.17) (0.23) (0.01)
Revisions [Member]            
Accretion of debt discount and issuance cost   $ (273,388)   $ (499,972)    
Derivative expense       254,470    
Change in fair value of derivative liabilities   (738,051)   (1,322,062)    
Loss on extinguishment of debt   (47,784)   (47,784)    
Net loss   $ (512,446)   $ (615,404)    
Net loss per ordinary share:            
Basic and diluted loss per share         $ (0.23)
v3.10.0.1
Significant and Critical Accounting Policies and Practices (Details Textual) - USD ($)
12 Months Ended
Jan. 02, 2013
Dec. 31, 2017
Dec. 31, 2016
Significant and Critical Accounting Policies and Practices (Textual)      
Investments minority interest $ 83,333    
Description of investments cost method equity method and joint venture   The Company holds 50% or less of the common stock or in-substance common stock.  
Impairment of minority investment   $ 83,333
Securities purchase agreement [Member]      
Significant and Critical Accounting Policies and Practices (Textual)      
Stock options exercisable term   5 years  
Stock options to purchase of common stock exercise price per share   $ 0.20  
v3.10.0.1
Property and Equipment (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Property, Plant and Equipment [Line Items]      
Property and equipment, gross $ 307,303 $ 296,118 $ 281,456
Less: Accumulated Depreciation (259,272) (248,062) (209,627)
Property and equipment, net 48,031 48,056 71,829
Computer Equipment [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment, gross 220,054 234,315 219,653
Furniture and Fixtures [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment, gross 61,803 61,803 $ 61,803
Leasehold Improvements [Member]      
Property, Plant and Equipment [Line Items]      
Property and equipment, gross $ 25,446  
v3.10.0.1
Property and Equipment (Details Textual) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Property and Equipment (Textual)            
Depreciation expense $ 11,670 $ 9,507 $ 33,109 $ 28,211 $ 38,435 $ 42,634
v3.10.0.1
Line of Credit (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Line of Credit Facility [Line Items]      
Line of credit outstanding balances $ 44,996 $ 235,141
Revolving Note [Member]      
Line of Credit Facility [Line Items]      
Line of credit outstanding balances 44,996 203,988
Factoring Agreement [Member]      
Line of Credit Facility [Line Items]      
Line of credit outstanding balances   $ 31,153
v3.10.0.1
Line of Credit (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Oct. 04, 2016
Aug. 21, 2017
Mar. 19, 2009
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Line of Credit (Textual)                  
Line of credit monthly interest rate during period               3.75% 3.75%
Line of credit           $ 44,996 $ 235,141
Line of credit balance outstanding on revenue factoring agreement               0 31,153
Company received proceeds from imperial advance, LLC $ 40,000             39,195
Agrees to pay for future receivable $ 52,400 $ 9,368       44,996 $ 125,324 199,574 24,007
Gain on settlement of debt       15,275 $ 2,079 2,079
Revolving Note [Member]                  
Line of Credit (Textual)                  
Line of credit maximum outstanding balance     $ 200,000            
Line of credit facility, expiration date     Mar. 19, 2010            
Line of credit           $ 44,996 $ 203,988
v3.10.0.1
Notes Payable (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 105,369 $ 700,000 $ 25,000
Less: Debt Discount (10,500) (9,421)
Less: Debt Issuance Costs (241)
Notes Payable 105,128 689,500 15,579
October 25, 2016 [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance   25,000
Interest Rate   9.00%  
Maturity Date   Jul. 01, 2017  
Warrants, Quantity   50,000  
Warrants, Exercise Price   $ 0.30  
Notes Payable   25,000
The February 2017 Offering [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 5,369 $ 400,000
Interest Rate 12.00% 12.00%  
Maturity Date Sep. 01, 2017 Sep. 01, 2017  
Warrants, Quantity 2,450,000 2,450,000  
Warrants, Exercise Price $ 0.20 $ 0.20  
Notes Payable $ 364,325 $ 400,000
The June 2017 Loan Agreement [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 50,000
Interest Rate 12.00% 12.00%  
Maturity Date Sep. 01, 2017 Sep. 01, 2017  
Warrants, Quantity 35,000 35,000  
Warrants, Exercise Price $ 0.2 $ 0.20  
Notes Payable $ 50,000
The First November 2017 Loan Agreement [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 100,000
Interest Rate 15.00% 15.00%  
Maturity Date Jan. 12, 2018 Jan. 12, 2018  
Warrants, Quantity  
Warrants, Exercise Price  
Notes Payable $ 100,000
The Second November 2017 Loan Agreement [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 50,000
Interest Rate 15.00% 15.00%  
Maturity Date Jan. 13, 2018 Jan. 13, 2018  
Warrants, Quantity  
Warrants, Exercise Price  
Notes Payable $ 50,000
The Third November 2017 Loan Agreement [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 100,000
Interest Rate 15.00% 15.00%  
Maturity Date Jan. 13, 2018 Jan. 13, 2018  
Warrants, Quantity  
Warrants, Exercise Price  
Notes Payable $ 100,000
July 2018 Loan Agreement [Member]      
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]      
Note payable, Outstanding Principal, Balance $ 100,000    
Interest Rate 6.00%    
Maturity Date Aug. 31, 2018    
Warrants, Quantity 300,000    
Warrants, Exercise Price    
Notes Payable $ 608,500    
v3.10.0.1
Notes Payable (Details Textual) - USD ($)
1 Months Ended 9 Months Ended 12 Months Ended
Nov. 08, 2018
Sep. 07, 2018
Mar. 14, 2018
Aug. 18, 2017
Jun. 12, 2017
Feb. 28, 2017
Oct. 31, 2018
Aug. 30, 2018
Jul. 31, 2018
May 31, 2018
Nov. 29, 2017
Nov. 28, 2017
Jul. 21, 2017
Mar. 17, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Aug. 17, 2016
Notes Payable (Textual)                                      
Promissory note                                 $ 60,000    
Aggregate gross proceeds of common stock                             $ 1,155,832      
Debt discount                               (10,500) $ (9,421)  
Aggregate gross proceeds                             299,852 $ 555,000 $ 655,000  
July 2018 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Warrants purchase of common stock                 300,000                    
Warrant term                 4 years                    
Debt discount                 $ 34,569                    
Aggregate gross proceeds                 $ 100,000                    
Conversion price per share                 $ 0.20                    
August 2018 Loan Agreements [Member]                                      
Notes Payable (Textual)                                      
Warrants purchase of common stock               33,333                      
Warrant term               4 years                      
Debt discount               $ 4,178                      
Principal payments   $ 33,333                                  
Aggregate gross proceeds               $ 33,333                      
Conversion price per share               $ 0.20                      
Subsequent Events [Member]                                      
Notes Payable (Textual)                                      
Warrants purchase of common stock             644,000                        
Warrant exercisable price, per share             $ 0.30                        
Aggregate gross proceeds             $ 161,000                        
Subsequent Events [Member] | July 2018 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Maturity date Mar. 07, 2019                                    
Warrants purchase of common stock 204,051                                    
Warrant exercisable price, per share $ 0.30                                    
Subscription Agreements [Member]                                      
Notes Payable (Textual)                                      
Warrant exercisable price, per share                                     $ 0.40
Eight Investor [Member]                                      
Notes Payable (Textual)                                      
Warrants purchase of common stock                                 10,488,708    
Warrant exercisable price, per share                                 $ 0.20    
Warrant term                                 5 years    
Issuance of warrants                                 778,750    
Private Placement Offering [Member] | Subscription Agreements [Member]                                      
Notes Payable (Textual)                                      
Interest rate                           6.00%          
Aggregate principal amount                           $ 975,511          
Aggregate gross proceeds of common stock                           $ 916,585          
June 2017 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Promissory note       $ 50,000 $ 50,000               $ 100,000            
Maturity date       Oct. 02, 2017 Jun. 30, 2017               Jul. 31, 2017            
Interest rate       15.00% 10.00%               10.00%            
Warrants purchase of common stock         35,000               100,000            
Warrant exercisable price, per share         $ 0.20               $ 0.20            
Warrant term         5 years               5 years            
Repayment of principal                             50,000        
Gain on forgiveness of debt                             4,424        
August 2017 Convertible Note Offering [Member]                                      
Notes Payable (Textual)                                      
Promissory note                                 $ 1,585,000    
Interest rate           15.00%                          
Aggregate gross proceeds of common stock           $ 400,000                          
Issuance of warrants                                 4,555,129    
August 2017 Convertible Note Offering [Member] | Eight Investor [Member]                                      
Notes Payable (Textual)                                      
Issuance of warrants                                 2,525,000    
February 2017 Offering Note [Member]                                      
Notes Payable (Textual)                                      
Maturity date                                 Sep. 01, 2017    
Interest rate           15.00%                          
Warrant exercisable price, per share           $ 0.20                          
Aggregate principal amount           $ 575,511                          
Notes conversion, description           The remaining investors representing an aggregate $400,000 in principal of the February 2017 Offering Notes agreed to forbear their right to declare an event of default until December 15, 2017 during which time they retain the right to convert their principal and any accrued but unpaid interest into the August 2017 Convertible Note Offering. In consideration of the forbearance for which the investors will receive a warrant to purchase up to fifteen percent (15%) of the shares of common stock underlying the warrant acquired with the purchase of the February 2017 Offering Notes at a purchase price of $0.20 per share, and the interest on their note would be increased to eighteen percent (18%) from September 1, 2017 through December 15, 2017 or the conversion date, whichever is sooner.                          
Principal payments                             131,606        
Unpaid interest                             45,931        
Converted principal amount                             263,025        
Conversion of unpaid interest                             $ 21,502        
Conversion common stock, shares                             1,422,639        
Issuance of warrants                             711,320        
Warrant grant date fair value                             $ 102,954        
February 2017 Offering Note [Member] | Private Placement Offering [Member] | Subscription Agreements [Member]                                      
Notes Payable (Textual)                                      
Warrant exercisable price, per share                             $ 0.20   $ 0.20    
Notes conversion, description                             The February 2017 Offering Notes are convertible into shares of the Company's common stock at the time of Company's next round of financing (the "Subsequent Offering") at a price equal to eighty-five percent (85%) of the price per share offered in the Subsequent Offering (the "Conversion Price"). The February 2017 Offering Warrants have a five-year term. Investors received the February 2017 Offering Warrants in the following amounts: (i) Investors purchasing $150,000 or more of the Offering received a February 2017 Offering Warrant equal to one hundred thirty percent (130%) of the dollar amount invested in the Offering; (ii) investors purchasing at least $100,000 but less than $150,000 of the February 2017 Offering received a February 2017 Offering Warrant equal to one hundred percent (100%) of the dollar amount invested in the Offering; and (iii) investors purchasing less than $100,000 of the Offering received to a February 2017 Offering Warrant equal to seventy percent (70%) of the dollar amount invested in the Offering.   The February 2017 Offering Notes are convertible into shares of the Company's common stock at the time of Company's next round of financing (the "Subsequent Offering") at a price equal to eighty-five percent (85%) of the price per share offered in the Subsequent Offering (the "Conversion Price"). The February 2017 Offering Warrants have a five-year term. Investors received the February 2017 Offering Warrants in the following amounts: (i) Investors purchasing $150,000 or more of the Offering received a February 2017 Offering Warrant equal to one hundred thirty percent (130%) of the dollar amount invested in the Offering; (ii) investors purchasing at least $100,000 but less than $150,000 of the February 2017 Offering received a February 2017 Offering Warrant equal to one hundred percent (100%) of the dollar amount invested in the Offering; and (iii) investors purchasing less than $100,000 of the Offering received to a February 2017 Offering Warrant equal to seventy percent (70%) of the dollar amount invested in the Offering.    
First November 2017 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Promissory note                       $ 100,000              
Notes conversion, description                       The First November 2017 Loan Agreement, the First November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $5,000) shall be payable in cash or convertible into shares of the Company's restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $10,000) shall be paid in the form of the Company's restricted common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company's common stock issued at $0.20 per share). The maturity date of the First November 2017 Note was January 12, 2018 (the "First November 2017 Maturity Date") at which time all outstanding principal, accrued and unpaid interest and other amounts due under the First November 2017 Note are due.              
Second November 2017 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Promissory note                     $ 50,000                
Notes conversion, description                     The Second November 2017 Loan Agreement, the Second November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $2,500) shall be payable in cash or convertible into shares of the Company's restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $5,000) shall be paid in the form of the Company's restricted common stock at a rate of $0.20 per share (equivalent to 25,000 shares of the Company's common stock issued at $0.20 per share). The maturity date of the Second November 2017 Note was January 13, 2018 (the "Second November 2017 Maturity Date") at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Second November 2017 Note are due.                
Third November 2017 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Promissory note                     $ 100,000                
Notes conversion, description                     The Third November 2017 Loan Agreement, the Third November 2017 Note has interest of fifteen percent (15%), (i) five percent (5%) (i.e. $5,000) shall be payable in cash or convertible into shares of the Company's restricted common stock at a rate of $0.20 per share, at the option of the Lender, at the Maturity Date; (ii) ten percent (10%) (i.e. $10,000) shall be paid in the form of the Company's restricted common stock at a rate of $0.20 per share (equivalent to 50,000 shares of the Company's common stock issued at $0.20 per share). The maturity date of the Third November 2017 Note was January 13, 2018 (the "Third November 2017 Maturity Date") at which time all outstanding principal, accrued and unpaid interest and other amounts due under the Third November 2017 Note are due.                
March 2018 Loan Agreement [Member]                                      
Notes Payable (Textual)                                      
Promissory note     $ 50,000                                
Maturity date     Mar. 29, 2018                                
Interest rate     12.00%                                
Warrants purchase of common stock     100,000                                
Warrant exercisable price, per share     $ 0.20                                
Warrant term     5 years                                
May 2018 Offering [Member]                                      
Notes Payable (Textual)                                      
Converted principal amount                             $ 608,500        
Conversion of unpaid interest                             $ 723,780        
May 2018 Offering [Member] | Subscription Agreements [Member]                                      
Notes Payable (Textual)                                      
Interest rate                   13.00%                  
Warrants purchase of common stock                             1,825,500        
Warrant exercisable price, per share                   $ 0.20                  
Aggregate principal amount                   $ 1,200,000                  
Aggregate gross proceeds of common stock                   $ 608,500         $ 608,500        
Notes conversion, description                   The Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (i) a 13% promissory note (each, a " May 2018 Offering Note" and, together, the "May 2018 Offering Notes"), and (ii) a four-year warrant ("May 2018 Offering Warrant") to purchase the number of shares of the Company's common stock equal to three times the principal amount in dollars invested by such investor in each May 2018 Offering Note (the "May 2018 Warrant Shares") at an exercise price of $0.20 per share (the "May Offering Warrant Exercise Price"), subject to adjustment upon the terms thereof.                  
Debt discount                             $ 215,032        
v3.10.0.1
Convertible Note Payable (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 289,552 $ 3,140,384 $ 500,000
Less: Debt Discount (46,367) (452,022) (184,398)
Less: Debt Issuance Costs (16,681) (79,569) (46,779)
Debt unamortized discount premium and debt issuance costs net 226,504 2,608,793 268,823
Convertible notes payable, Outstanding Principal, Total 40,401 96,500 268,823
Total Long-Term Debt 186,103 2,512,293
The November 2016 Convertible Note Offering [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 25,000 400,000
Interest Rate 10.00% 10.00%  
Conversion Price $ 0.30 $ 0.30  
Maturity Date Nov. 01, 2017 Nov. 01, 2017  
Warrants, Quantity 400,000 400,000  
Warrants, Exercise Price $ 0.30 $ 0.30  
The June, 2017 Convertible Note Offering [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 71,500
Interest Rate 12.00% 12.00%  
Conversion Price    
Maturity Date Sep. 01, 2017 Sep. 01, 2017  
Warrants, Quantity 114,700 114,700  
Warrants, Exercise Price $ 0.20 $ 0.20  
The August 2017 Convertible Note Offering [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 114,100 $ 2,943,884
Interest Rate 15.00% 15.00%  
Conversion Price [1] $ 0.20 $ 0.20  
Warrants, Quantity 14,716,419 14,716,419  
Warrants, Exercise Price $ 0.20 $ 0.20  
The August 2017 Convertible Note Offering [Member] | Minimum [Member]      
Short-term Debt [Line Items]      
Maturity Date Aug. 31, 2019 Aug. 31, 2019  
The August 2017 Convertible Note Offering [Member] | Maximum [Member]      
Short-term Debt [Line Items]      
Maturity Date Nov. 30, 2019 Nov. 30, 2019  
The First December 2017 Note [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 100,000  
Interest Rate 15.00%    
Conversion Price [1] $ 0.20    
Maturity Date Dec. 21, 2019    
Warrants, Quantity 500,000    
Warrants, Exercise Price $ 0.20    
The February 2018 Convertible Note Offering [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 75,000  
Interest Rate 15.00%    
Conversion Price [1] $ 0.20    
Warrants, Quantity 5,078,375    
Warrants, Exercise Price $ 0.20    
The February 2018 Convertible Note Offering [Member] | Minimum [Member]      
Short-term Debt [Line Items]      
Maturity Date Jan. 31, 2020    
The February 2018 Convertible Note Offering [Member] | Maximum [Member]      
Short-term Debt [Line Items]      
Maturity Date Feb. 29, 2020    
The January 2018 Note [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal  
Conversion Price [1] $ 0.20    
Maturity Date Jan. 12, 2020    
Warrants, Quantity 343,806    
Warrants, Exercise Price $ 0.20    
The February 2018 Note [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 25,452  
Interest Rate 18.00%    
Conversion Price [1] $ 0.20    
Maturity Date Feb. 08, 2020    
Warrants, Quantity 81,500    
Warrants, Exercise Price $ 0.20    
The March 2018 Convertible Note Offering [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal $ 75,000  
Interest Rate 14.00%    
Conversion Price [1] $ 0.20    
Warrants, Quantity 4,806,833    
Warrants, Exercise Price $ 0.20    
The March 2018 Convertible Note Offering [Member] | Minimum [Member]      
Short-term Debt [Line Items]      
Maturity Date Mar. 31, 2020    
The March 2018 Convertible Note Offering [Member] | Maximum [Member]      
Short-term Debt [Line Items]      
Maturity Date Apr. 30, 2020    
December 27, 2016 [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal   100,000
Interest Rate   10.00%  
Conversion Price   $ 0.30  
Maturity Date   Dec. 27, 2017  
Warrants, Quantity   100,000  
Warrants, Exercise Price   $ 0.30  
July, 2017 [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal  
Interest Rate   8.50%  
Conversion Price [1]   $ 0.20  
Maturity Date   Apr. 11, 2018  
Warrants, Quantity   350,000  
Warrants, Exercise Price   $ 0.20  
December 21, 2017 [Member]      
Short-term Debt [Line Items]      
Convertible notes payable, Outstanding Principal   $ 100,000
[1] As subject to adjustment as further outlined in the notes
v3.10.0.1
Convertible Note Payable (Details Textual) - USD ($)
1 Months Ended 4 Months Ended 9 Months Ended 12 Months Ended
Feb. 08, 2018
Jan. 12, 2018
Sep. 13, 2017
Aug. 31, 2017
Jun. 30, 2017
Dec. 27, 2017
Jul. 31, 2017
Dec. 27, 2016
Nov. 30, 2016
Nov. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Feb. 28, 2017
Convertible Note Payable (Textual)                              
Convertible notes payable outstanding balance                     $ 289,552   $ 3,140,384 $ 500,000  
Debt discount                     46,367   452,022 184,398  
Debt issuance costs                     (241)    
Proceeds from issuance of convertible notes                     299,852 $ 555,000 655,000  
Interest amount of convertible notes                         $ 206,026    
Consideration shares, number of shares repurchased                         220,000    
Consideration shares, repurchase amount                         $ 19,007    
Increase in derivative liability                     64,347 64,346  
Conversion feature of debt instrument                         583,681    
Placement agent fees                     90,508   90,508    
Convertible redeemable debentures, percentage     8.50%                        
Secured debt                         645,000    
Aggregate principal amount                         $ 60,000    
Three Investor [Member]                              
Convertible Note Payable (Textual)                              
Warrant term                         5 years    
Debt discount                         $ 78,823    
Warrants issued                         778,750    
Warrants, exercise price                         $ 0.20    
Principal amount of convertible notes     $ 606,812                        
Convertible Note to Third Party Lender [Member]                              
Convertible Note Payable (Textual)                              
Convertible note               $ 100,000 $ 400,000     $ 71,500   $ 400,000  
Note accrues interest rate               10.00% 10.00%     12.00%   10.00%  
Maturity date         Sep. 01, 2017     Dec. 27, 2017 Nov. 01, 2017     Sep. 01, 2017   Dec. 29, 2017  
Conversion price per share               $ 0.30              
Warrant term         5 years     5 years       5 years   5 years  
Debt issuance costs                   $ 101,561          
Warrants issued         67,550     100,000 400,000 6,791,419   67,550 6,791,419 400,000  
Warrants, exercise price               $ 0.40       $ 0.20 $ 0.20 $ 0.30  
Principal amount of convertible notes       $ 100,000                 $ 375,000 $ 375,000  
Interest amount of convertible notes       $ 6,767           $ 40,146     $ 30,719 30,719  
Conversion feature of debt instrument                   583,681          
Secured debt                   $ 1,217,177          
Convertible secured promissory note, description                   The August 2017 Convertible Note Offering consisted of a maximum of $6,000,000 of units of the Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "August 2017 Offering Note", and together the "August 2017 Offering Notes"), convertible into shares of the Company's common stock ("August 2017 Offering Conversion Shares") at a conversion price of $0.20 per share (the "August 2017 Note Conversion Price"), and (b) a five-year warrant (each a "August 2017 Offering Warrant and together the "August 2017 Offering Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the August 2017 Offering Notes can be converted into ("August 2017 Offering Warrant Shares") at an exercise price of $0.20 per share ("August 2017 Offering Warrant Exercise Price"). The August 2017 Offering Notes mature on the second (2nd) anniversary of their issuance dates.          
Aggregate principal amount                   $ 1,585,000          
Offering discount percentage         15.00%             15.00% 15.00%    
Current default principal amount                       $ 71,500      
July 2017 Convertible Offering [Member]                              
Convertible Note Payable (Textual)                              
Note accrues interest rate             8.50%                
Maturity date             Apr. 18, 2018                
Warrant term             5 years                
Warrants issued             245,000                
Proceeds from issuance of convertible notes             $ 445,000                
Warrants issued to purchase shares             778,750                
Warrants, exercise price             $ 0.20                
Convertible redeemable debentures redemption, description     The Company redeemed the 8.5% Convertible Redeemable Debentures by paying the three accredited investors an aggregate $606,812 representing 117.5% of the principal along with interest. Pursuant to such redemption, the Debentures are no longer in full force and effect.       (i) the issuance and sale of 8.5% Convertible Redeemable Debentures, containing a ten percent (10%) original issuance discount, due April 18, 2018 (the "Debentures") and (ii) the issuance and sale of five-year Common Stock Purchase Warrants to purchase up to 778,750 shares of the Company's common stock, par value $0.001 per share.                
Derivative liability                         $ 332,942    
August 2017 Convertible Note Offering [Member]                              
Convertible Note Payable (Textual)                              
Note accrues interest rate                             15.00%
Debt discount                         $ 472,675    
Warrants issued                         4,555,129    
Interest amount of convertible notes                         $ 40,146    
Fair value derivative liability                         440,157    
Secured debt                         $ 1,217,177    
Convertible secured promissory note, description       The August Offering consisted of a maximum of $6,000,000 of units of the Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a five-year warrant (each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price"). The Notes mature on the second (2nd) anniversary of their issuance dates.                 The Company offered, through a placement agent, $6,000,000 of units of its securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a five-year warrant ( each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price").    
Aggregate principal amount                         $ 1,585,000    
August 2017 Convertible Note Offering [Member] | Warrants [Member]                              
Convertible Note Payable (Textual)                              
Debt discount                     $ 472,675   472,675    
Debt issuance costs                         $ 101,561    
Warrants issued                     7,925,000        
August 2017 Convertible Note Offering [Member] | Three Investor [Member]                              
Convertible Note Payable (Textual)                              
Warrants issued                         2,525,000    
Warrants issued to purchase shares                         7,925,000    
August 2017 Convertible Note Offering One [Member]                              
Convertible Note Payable (Textual)                              
Unpaid interest                     $ 409,287        
Converted principal amount                     2,830,764        
First December 2017 Note [Member]                              
Convertible Note Payable (Textual)                              
Convertible note           $ 100,000                  
Note accrues interest rate           15.00%                  
Maturity date           Dec. 27, 2019                  
Conversion price per share           $ 0.20                  
Warrant term           5 years                  
Debt discount           $ 35,525                  
Warrants issued to purchase shares           500,000                  
Warrants, exercise price           $ 0.20                  
Unpaid interest                     10,292        
Converted principal amount                     $ 100,000        
February 2018 Convertible Note Offering [Member]                              
Convertible Note Payable (Textual)                              
Convertible note $ 40,750                            
Note accrues interest rate 18.00%                            
Maturity date Feb. 08, 2020                            
Conversion price per share $ 0.20                            
Warrant term 5 years                            
Debt discount $ 7,963                            
Warrants issued 81,500                   1,453,375        
Warrants, exercise price $ 0.20                            
Interest amount of convertible notes                     $ 40,675        
Convertible redeemable debentures redemption, description                     A maximum of $750,000 of units of the Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "February 2018 Convertible Note" and together the "February 2018 Convertible Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("February 2018 Conversion Shares") at a conversion price of $0.20 per share (the "February 2018 Note Conversion Price"), and (b) a five-year warrant (each a "February 2018 Offering Warrant and together the "February 2018 Offering Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the February 2018 Convertible Notes can be converted into ("February 2018 Warrant Shares") at an exercise price of $0.20 per share ("February 2018 Warrant Exercise Price"). The February 2018 Offering Notes mature on the second (2nd) anniversary of their issuance dates. The February 2018 Offering Notes are secured by a second priority security interest in the Company's assets up to $1,000,000.        
Conversion feature of debt instrument $ 5,298                   $ 37,350        
Placement agent fees                     $ 94,250        
Convertible redeemable debentures, percentage                     13.00%        
Fair value derivative liability                     $ 181,139        
Secured debt                     $ 250,000        
Convertible secured promissory note, description                     The Notes are secured by a second priority security interest in the Company's assets up to $1,000,000.        
Aggregate principal amount                     $ 725,000        
Repayment of principal                     $ 15,298        
Conversion shares                     362,500        
Conversion shares fair value                     $ 74,881        
February 2018 Convertible Note Offering [Member] | Warrants [Member]                              
Convertible Note Payable (Textual)                              
Debt discount                     $ 316,875        
Warrants issued                     3,625,000        
February 2018 Convertible Note Offering [Member] | Three Investor [Member]                              
Convertible Note Payable (Textual)                              
Convertible note                     $ 25,000        
Interest amount of convertible notes                     $ 2,219        
January 2018 Note [Member]                              
Convertible Note Payable (Textual)                              
Convertible note   $ 68,761                          
Note accrues interest rate   15.00%                          
Maturity date   Jan. 12, 2020                          
Conversion price per share   $ 0.20                          
Warrant term   5 years                          
Warrants issued   343,806                          
Convertible redeemable debentures redemption, description   the Company issued a convertible note to a third-party lender totaling $68,761 to settle an outstanding vendor liability (the "January 2018 Note"). The January 2018 Note accrues interest at 15% per annum and matures with interest and principal both due on January 12, 2020. The conversions resulted in the issuance of 343,806 warrants with a fair value of $42,850. These were recorded as a loss on extinguishment of debt. The warrant entitles the holder to purchase the Company's common stock at a purchase price of $0.20 per share for a period of five years from the issue date. The January 2018 Note and accrued interest is convertible at a conversion price of $0.20 per share, subject to adjustment.                          
Fair value derivative liability   $ 42,850                          
March 2018 Convertible Note Offering [Member]                              
Convertible Note Payable (Textual)                              
Warrants issued                     956,833        
Interest amount of convertible notes                     $ 767        
Fair value derivative liability                     84,087        
Secured debt                     $ 50,000        
Convertible secured promissory note, description                     A maximum of $900,000, with an over-allotment option of an additional $300,000 of units of the Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 14% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a four-year warrant (each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price"). The Notes mature on the second (2nd) anniversary of their issuance dates.        
Aggregate principal amount                     $ 770,000        
Unpaid interest                     140,600        
March 2018 Convertible Note Offering [Member] | Warrants [Member]                              
Convertible Note Payable (Textual)                              
Debt discount                     $ 254,788        
Warrants issued                     4,806,833        
The November 2016 Convertible Note Offering [Member]                              
Convertible Note Payable (Textual)                              
Note accrues interest rate                     10.00%   10.00%    
Maturity date                     Nov. 01, 2017   Nov. 01, 2017    
Conversion price per share                     $ 0.30   $ 0.30    
Convertible notes payable outstanding balance                       $ 25,000 $ 400,000  
Aggregate principal amount                     25,000        
Unpaid interest                     4,417        
Converted principal amount                     $ 25,000        
The November 2016 Convertible Note Offering [Member] | Warrants [Member]                              
Convertible Note Payable (Textual)                              
Warrants issued                     10,481,016        
The February 2018 Convertible Note Offering Four [Member]                              
Convertible Note Payable (Textual)                              
Unpaid interest                     $ 86,544        
Converted principal amount                     940,675        
The January 2018 Note One [Member]                              
Convertible Note Payable (Textual)                              
Unpaid interest                     7,212        
Converted principal amount                     68,761        
The March 2018 Convertible Note Offering Two [Member]                              
Convertible Note Payable (Textual)                              
Unpaid interest                     51,293        
Converted principal amount                     $ 886,367        
v3.10.0.1
Related Party Loans (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 21, 2017
Dec. 31, 2016
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross $ 400 $ 1,516,026  
Less: Debt Discount (86) (170,780)  
Less: Debt Issuance Costs    
Convertible notes unamortized discount premium and debt issuance cost 314 1,345,246  
Less: Current Debt  
Total Long-Term Debt 314 1,345,246  
The August 2017 Convertible Note Offering [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross 1,416,026    
Interest Rate 15.00%      
Maturity Date, description August - October 2019      
Warrants, Quantity 4,589,466      
Warrants, Exercise Price $ 0.20      
The Second December 2017 Note [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross 100,000    
Interest Rate 15.00%   15.00%  
Maturity Date, description December 21, 2019      
Warrants, Quantity 500,000      
Warrants, Exercise Price $ 0.20      
The February 2018 Convertible Note Offering [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross    
Interest Rate 15.00%      
Maturity Date, description January - February 2020      
Warrants, Quantity 125,000      
Warrants, Exercise Price $ 0.20      
The Second February 2018 Note [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross    
Interest Rate 20.00%      
Maturity Date, description September 30, 2018      
Warrants, Quantity 81,500      
Warrants, Exercise Price $ 0.20      
The March 2018 Convertible Note Offering [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross $ 400    
Interest Rate 14.00%      
Maturity Date, description March 2020      
Warrants, Quantity 1,197,000      
Warrants, Exercise Price $ 0.20      
August - October 2017 [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross   $ 1,416,026  
Interest Rate   15.00%    
Maturity Date, description   August - October 2019.    
Warrants, Quantity   4,589,466    
Warrants, Exercise Price   $ 0.20    
December 21, 2018 [Member]        
Related Party Transaction [Line Items]        
Convertible notes payable - related parties, gross   $ 100,000    
Interest Rate   15.00%    
Maturity Date, description   December 21, 2019    
Warrants, Quantity   500,000    
Warrants, Exercise Price   $ 0.20    
v3.10.0.1
Related Party Loans (Details 1) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Related Party Transaction [Line Items]      
Notes payable - related party, gross $ 1,130,000 $ 1,249,000 $ 1,460,000
Less: Debt Discount (14,400,000)  
Less: Current Debt (1,115,600) (94,675)
Notes payable - related party, net 1,112,295 1,249,000 1,365,325
The May 2016 Rosen Loan Agreement [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross $ 1,000,000 1,000,000  
Interest Rate 13.00%    
Maturity Date Nov. 26, 2017    
Warrants, Quantity 1,000,000    
Warrants, Exercise Price $ 0.40    
The September 2017 Rosen Loan Agreement [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross 224,000  
Interest Rate 18.00%    
Maturity Date Sep. 24, 2017    
Warrants, Quantity 125,000    
Warrants, Exercise Price $ 0.20    
The November 2017 Schiller Loan Agreement [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross 25,000  
Interest Rate 15.00%    
Maturity Date Dec. 31, 2017    
Warrants, Quantity    
Warrants, Exercise Price    
The May 2018 Schiller Loan Agreements [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross  
Interest Rate 13.00%    
Maturity Date Feb. 02, 2019    
Warrants, Quantity 300,000    
Warrants, Exercise Price $ 0.20    
The June 2018 Frommer Loan Agreement [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross $ 10,000  
Interest Rate 6.00%    
Maturity Date Aug. 17, 2018    
Warrants, Quantity 30,000    
Warrants, Exercise Price $ 0.20    
The July 2018 Rosen Loan Agreement [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross $ 60,000    
Interest Rate 6.00%    
Maturity Date Aug. 17, 2018    
Warrants, Quantity 30,000    
Warrants, Exercise Price $ 0.20    
The July 2018 Schiller Loan Agreements [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross $ 60,000    
Interest Rate 6.00%    
Maturity Date Aug. 17, 2018    
Warrants, Quantity 150,000    
Warrants, Exercise Price $ 0.20    
May 26, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   $ 1,000,000 1,000,000
Interest Rate   13.00%  
Maturity Date   Nov. 26, 2017  
Warrants, Quantity   1,000,000  
Warrants, Exercise Price   $ 0.40  
September 12, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   100,000
Interest Rate   12.00%  
Maturity Date   Nov. 22, 2017  
Warrants, Quantity   17,500  
Warrants, Exercise Price   $ 0.20  
September 20, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   10,000
Interest Rate   10.00%  
Maturity Date   Mar. 20, 2017  
Warrants, Quantity   235,000  
Warrants, Exercise Price   $ 0.40  
October 13, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   50,000
Interest Rate   12.00%  
Maturity Date   Nov. 22, 2017  
Warrants, Quantity   50,000  
Warrants, Exercise Price   $ 0.40  
October 24, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   15,000
Interest Rate   9.00%  
Maturity Date   Jan. 01, 2018  
Warrants, Quantity   30,000  
Warrants, Exercise Price   $ 0.30  
October 31, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   10,000
Interest Rate   10.00%  
Maturity Date   Nov. 10, 2016  
Warrants, Quantity   10,000  
Warrants, Exercise Price   $ 0.30  
November 22, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   225,000
Interest Rate   10.00%  
Maturity Date   Nov. 22, 2017  
Warrants, Quantity   750,000  
Warrants, Exercise Price   $ 0.30  
December 21, 2016 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   50,000
Interest Rate   10.00%  
Maturity Date   Nov. 22, 2017  
Warrants, Quantity   166,666  
Warrants, Exercise Price   $ 0.30  
September 8, 2017 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   $ 224,000
Interest Rate   1.00%  
Maturity Date   Sep. 24, 2017  
Warrants, Quantity   125,000  
Warrants, Exercise Price   $ 0.20  
November 20, 2017 [Member]      
Related Party Transaction [Line Items]      
Notes payable - related party, gross   $ 25,000
Interest Rate   15.00%  
Maturity Date   Dec. 31, 2017  
Warrants, Quantity    
Warrants, Exercise Price    
v3.10.0.1
Related Party Loans (Details Textual) - USD ($)
1 Months Ended 9 Months Ended 12 Months Ended
Nov. 08, 2018
Jul. 12, 2018
May 02, 2018
Mar. 13, 2018
Mar. 09, 2018
Mar. 04, 2018
Feb. 20, 2018
Feb. 08, 2018
Nov. 13, 2017
Sep. 08, 2017
Sep. 07, 2017
Aug. 31, 2017
Jul. 06, 2017
Jun. 26, 2017
May 11, 2017
May 09, 2017
May 04, 2017
Apr. 25, 2017
Apr. 12, 2017
Feb. 07, 2017
Dec. 21, 2016
Oct. 31, 2016
Oct. 13, 2016
Sep. 12, 2016
Oct. 31, 2018
Jul. 18, 2018
Jul. 17, 2018
Jul. 03, 2018
Jun. 29, 2018
Jun. 06, 2018
Dec. 21, 2017
Jan. 26, 2017
Jan. 25, 2017
Oct. 24, 2016
May 26, 2016
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Nov. 20, 2017
Aug. 24, 2017
Feb. 28, 2017
Related Party Loans (Textual)                                                                                    
Convertible Notes - related party, net of debt discount                                                                              
Net of debt discount                                                                       (86)   (170,780)      
Secured debt                                                                           645,000        
Debt instrument, unamortized discount, current                                                                       46,367   452,022 184,398      
Related party notes payable                                                                       1,112,295   1,249,000 1,365,325      
Debt discount                                                                             94,675      
Line of credit borrow principal                               $ 130,000                                                    
Line of credit interest rate, description                               The LOC bears interest at a rate of 18%.                                                    
Aggregate principal amount                                                                           60,000        
Line of credit - related party                                                                         130,000      
Unpaid interest                                                                           206,026        
BCF and related debt discount                                                                           583,681        
Note payable, outstanding principal, balance                                                                       105,369   700,000 25,000      
Notes payable related party                                                                       1,130,000   1,249,000 1,460,000      
Loss on extinguishment of debt                                                                           500,157        
Units of securities                                                                             288      
Repaid principal                                                                       214,939 $ 100,000 $ 100,000      
LOC bears interest rate                                                                           3.75% 3.75%      
Related party non-interest bearing loans                                                                       315,000 $ 479,000 $ 529,000 $ 1,446,500      
Subsequent Event [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Warrants purchase of common stock                                                 644,000                                  
Warrants, exercise price                                                 $ 0.30                                  
May 2016 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Maturity date, description                                                                     Payable on the maturity date of May 26, 2017 (the "May 2016 Rosen Maturity Date") at which time all outstanding principal, accrued and unpaid interest and other amounts due under the May 2016 Rosen Loan are due.              
Interest and principal both due date                                                                     May 26, 2017              
Warrants, exercise price                                                                     $ 0.40              
Secured debt                                                                     $ 1,000,000              
Warrants issued to purchase shares                                                                     1,000,000              
Note accrues interest rate                                                                     12.50%              
Warrant term                                                                     5 years              
Unpaid interest                     $ 150,128                                                              
September 2016 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                   Sep. 24, 2017                                                                
Warrants, exercise price                   $ 0.20                           $ 0.40                                    
Secured debt                                               $ 100,000                                    
Warrants issued to purchase shares                   25,000                           150,000                                    
Note accrues interest rate                                               12.00%                                    
Warrant term                   5 years                           5 years                                    
October 2016 Gordon Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                             Nov. 22, 2017                                      
Warrants, exercise price                                             $ 0.40                                      
Secured debt                                             $ 50,000                                      
Warrants issued to purchase shares                                             50,000                                      
Note accrues interest rate                                             12.00%                                      
October 2016 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                           Nov. 10, 2016                                        
Warrants, exercise price                                           $ 0.30                                        
Secured debt                                           $ 10,000                                        
Warrants issued to purchase shares                                           10,000                                        
Note accrues interest rate                                           10.00%                                        
Warrant term                                           5 years                                        
October 2016 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                                                   Jan. 01, 2018                
Warrants, exercise price                                                                   $ 0.30                
Secured debt                                                                   $ 30,000                
Warrants issued to purchase shares                                                                   15,000                
Note accrues interest rate                                                                   9.00%                
December 2016 Gordon Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                         Nov. 22, 2017                                          
Warrants, exercise price                                         $ 0.40                                          
Secured debt                                         $ 275,000                                          
Warrants issued to purchase shares                                         166,666                                          
Note accrues interest rate                                         10.00%                                          
Warrant term                                         5 years                                          
January 2017 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                                                 Jan. 01, 2018                  
Warrants, exercise price                                                                 $ 0.30                  
Secured debt                                                                 $ 50,000                  
Warrants issued to purchase shares                                                                 50,000                  
Note accrues interest rate                                                                 10.00%                  
Warrant term                                                                 5 years                  
January 2017 Gordon Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Warrants, exercise price                                                               $ 0.30                    
Secured debt                                                               $ 50,000                    
Warrants issued to purchase shares                                                               50,000                    
Note accrues interest rate                                                               10.00%                    
Warrant term                                                               5 years                    
February 2017 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Warrants, exercise price                                       $ 0.30                                            
Secured debt                                       $ 10,000                                            
Warrants issued to purchase shares                                       10,000                                            
Note accrues interest rate                                       10.00%                                            
Warrant term                                       5 years                                            
April 2017 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                     Jan. 21, 2018                                              
Warrants, exercise price                                     $ 0.30                                              
Secured debt                                     $ 10,000                                              
Warrants issued to purchase shares                                     10,000                                              
Note accrues interest rate                                     10.00%                                              
Warrant term                                     5 years                                              
April 2017 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                     Jan. 21, 2018                                              
Warrants, exercise price                                     $ 0.30                                              
Secured debt                                     $ 10,000                                              
Warrants issued to purchase shares                                     10,000                                              
Note accrues interest rate                                     10.00%                                              
Warrant term                                     5 years                                              
May 2017 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                 Sep. 01, 2017                                                  
Warrants, exercise price                                 $ 0.30                                                  
Secured debt                                 $ 15,000                                                  
Warrants issued to purchase shares                                 10,500                                                  
Note accrues interest rate                                 12.00%                                                  
Warrant term                                 5 years                                                  
May 2017 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                             Sep. 30, 2017                                                      
Warrants, exercise price                             $ 0.20                                                      
Secured debt                             $ 20,000                                                      
Warrants issued to purchase shares                             20,000                                                      
Note accrues interest rate                             10.00%                                                      
Warrant term                             5 years                                                      
June 2017 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                           Jan. 21, 2018                                                        
Warrants, exercise price                           $ 0.20                                                        
Secured debt                           $ 30,000                                                        
Warrants issued to purchase shares                           22,500                                                        
Note accrues interest rate                           10.00%                                                        
Warrant term                           5 years                                                        
July 2017 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                         Jul. 21, 2017                                                          
Note accrues interest rate                         10.00%                                                          
Warrant term                         5 years                                                          
July 2017 Gordon Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                         Jul. 21, 2017                                                          
Warrants, exercise price                         $ 0.20                                                          
Warrants issued to purchase shares                         18,750                                                          
Warrant term                         5 years                                                          
August 2017 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Note accrues interest rate                                                                                 12.00%  
September 2017 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                                       224,000            
Interest and principal both due date             Sep. 08, 2018                                                                      
Warrants, exercise price             $ 0.20   $ 0.20 $ 0.20                                                                
Net of debt discount                                                                           $ 0        
Warrants issued to purchase shares             448,000   100,000 25,000                                                                
Warrant term             5 years   5 years 5 years                                                                
Unpaid interest                                                                       20,496            
Loss on extinguishment of debt             $ 65,378                                                                      
November 2017 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Note accrues interest rate                                                                               15.00%    
Repaid principal                                                                       25,000            
Repaid of interest                                                                       637            
November 2017 Rosen Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Note accrues interest rate                                                                               15.00%    
March 2018 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                                       239,000            
Unpaid interest                                                                       15,401            
March 2018 Convertible Note Offering [Member] | Over-Allotment Option [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Fair value of warrants                                                                       $ 900,000            
Maturity date, description                                                                       The Notes mature on the second (2nd) anniversary of their issuance dates.            
Convertible secured promissory note, description                                                                       The Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 14% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a four-year warrant (each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price").            
Units of securities                                                                       $ 300,000            
First March 2018 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date           Mar. 19, 2018                                                                        
Warrants, exercise price           $ 0.20                                                                        
Warrants issued to purchase shares           10,000                                                                        
Note accrues interest rate           12.00%                                                                        
Warrant term           5 years                                                                        
Repaid principal                                                                       10,000            
Repaid of interest                                                                       260            
Second March 2018 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date         Mar. 24, 2018                                                                          
Warrants, exercise price         $ 0.20                                                                          
Warrants issued to purchase shares         15,000                                                                          
Note accrues interest rate         12.00%                                                                          
Warrant term         5 years                                                                          
Repaid principal                                                                       15,000            
Repaid of interest                                                                       365            
Third March 2018 Rosen Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date       Mar. 28, 2018                                                                            
Warrants, exercise price       $ 0.20                                                                            
Warrants issued to purchase shares       10,000                                                                            
Note accrues interest rate       12.00%                                                                            
Warrant term       5 years                                                                            
Repaid principal                                                                       10,000            
Repaid of interest                                                                       230            
May 2018 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                                       100,000            
Warrants, exercise price     $ 0.20                                                                              
Warrants issued to purchase shares     300,000                                                                              
Note accrues interest rate     13.00%                                                                              
Warrant term     4 years                                                                              
Unpaid interest                                                                       4,369            
June 2018 Frommer Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                                         Aug. 17, 2018                          
Warrants, exercise price                                                         $ 0.20                          
Warrants issued to purchase shares                                                         30,000                          
Note accrues interest rate                                                         6.00%                          
Warrant term                                                         4 years                          
Aggregate principal amount                                                         $ 10,000                          
June 2018 Frommer Loan Agreement [Member] | Subsequent Event [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date Mar. 07, 2019                                                                                  
Warrants purchase of common stock 40,854                                                                                  
Warrants, exercise price $ 0.30                                                                                  
First July 2018 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                                       Aug. 17, 2018                            
Warrants, exercise price                                                       $ 0.20                            
Warrants issued to purchase shares                                                       75,000                            
Note accrues interest rate                                                       6.00%                            
Warrant term                                                       4 years                            
Aggregate principal amount                                                       $ 35,000                            
First July 2018 Schiller Loan Agreement [Member] | Subsequent Event [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date Mar. 07, 2019                                                                                  
Warrants purchase of common stock 142,987                                                                                  
Warrants, exercise price $ 0.30                                                                                  
Second July 2018 Schiller Loan Agreement [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                                     Aug. 17, 2018                              
Warrants, exercise price                                                     $ 0.20                              
Warrants issued to purchase shares                                                     75,000                              
Note accrues interest rate                                                     6.00%                              
Warrant term                                                     4 years                              
Aggregate principal amount                                                     $ 25,000                              
Second July 2018 Schiller Loan Agreement [Member] | Subsequent Event [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date Mar. 07, 2019                                                                                  
Warrants purchase of common stock 101,900                                                                                  
Warrants, exercise price $ 0.30                                                                                  
First July 2018 Rosen Loan Agreements [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date   Aug. 17, 2018                                                                                
Note accrues interest rate   6.00%                                                                                
Aggregate principal amount   $ 10,000                                                                                
First July 2018 Rosen Loan Agreements [Member] | Subsequent Event [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date Mar. 07, 2019                                                                                  
Warrants purchase of common stock 27,534                                                                                  
Warrants, exercise price $ 0.30                                                                                  
Second July 2018 Rosen Loan Agreements [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date                                                   Aug. 17, 2018                                
Warrants, exercise price                                                   $ 0.20                                
Warrants issued to purchase shares                                                   150,000                                
Note accrues interest rate                                                   6.00%                                
Warrant term                                                   4 years                                
Aggregate principal amount                                                   $ 50,000                                
Second July 2018 Rosen Loan Agreements [Member] | Subsequent Event [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Interest and principal both due date Mar. 07, 2019                                                                                  
Warrants purchase of common stock 203,967                                                                                  
Warrants, exercise price $ 0.30                                                                                  
Line of Credit [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                                       130,000            
Unpaid interest                                                                       30,626            
Revolving line of credit                               $ 130,000                                                    
LOC bears interest rate                               18.00%                                                    
Total outstanding balance of line of credit - related party                                                                       $ 130,000            
Revolving line of credit's maturity date                               Jun. 01, 2019                                       Jun. 01, 2019            
Demand Loan [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Related party non-interest bearing loans                                                           $ 50,000                        
April Rosen Note [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                   $ 25,000                                                
Issuance of warrants                                   17,500                                                
Interest and principal both due date                                   Sep. 01, 2017                                                
Warrants, exercise price                                   $ 0.20                                                
Note accrues interest rate                                   12.00%                                                
Warrant term                                   5 years                                                
April Gordon Notes [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                   $ 25,000                                                
Issuance of warrants                                   17,500                                                
Interest and principal both due date                                   Sep. 01, 2017                                                
Warrants, exercise price                                   $ 0.20                                                
Note accrues interest rate                                   12.00%                                                
Warrant term                                   5 years                                                
August 2017 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Issuance of warrants                                                                           4,555,129        
Secured debt                                                                           $ 1,217,177        
Note accrues interest rate                                                                                   15.00%
Debt instrument, unamortized discount, current                                                                           472,675        
Aggregate principal amount                                                                           1,585,000        
Unpaid interest                                                                           40,146        
Fair value derivative liability                                                                           $ 440,157        
Convertible secured promissory note, description                       The August Offering consisted of a maximum of $6,000,000 of units of the Company's securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a five-year warrant (each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price"). The Notes mature on the second (2nd) anniversary of their issuance dates.                                                   The Company offered, through a placement agent, $6,000,000 of units of its securities (each, a "Unit" and collectively, the "Units"), with each Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a five-year warrant ( each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price").        
Second December 2017 Note [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                             $ 100,000                      
Maturity date, description                                                                       December 21, 2019            
Interest and principal both due date                                                             Dec. 27, 2019                      
Warrants, exercise price                                                             $ 0.20                      
Warrants issued to purchase shares                                                             500,000                      
Note accrues interest rate                                                             15.00%         15.00%            
Conversion price per share                                                             $ 0.20                      
Warrant term                                                             5 years                      
Debt instrument, unamortized discount, current                                                             $ 36,722                      
February 2018 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Notes conversion, description                                                                       The Placement Agent a cash fee of $3,250 and issued to the Placement Agent shares of the Company's common stock equal to ten percent (10%) of the Conversion Shares underlying the Notes or 12,500 shares that had a fair value of $2,606, which was recorded as issuance cost and is being accreted over the life of these notes to accretion of debt discount and issuance cost.            
Convertible note               $ 40,750                                                                    
Issuance of warrants               81,500                                                       1,453,375            
Interest and principal both due date               Feb. 08, 2020                                                                    
Warrants, exercise price               $ 0.20                                                                    
Secured debt                                                                       $ 250,000            
Note accrues interest rate               18.00%                                                                    
Conversion price per share               $ 0.20                                                                    
Warrant term               5 years                                                                    
Debt instrument, unamortized discount, current               $ 7,963                                                                    
Aggregate principal amount                                                                       725,000            
Unpaid interest                                                                       40,675            
Fair value derivative liability                                                                       181,139            
BCF and related debt discount               5,298                                                       $ 37,350            
Convertible secured promissory note, description                                                                       The Notes are secured by a second priority security interest in the Company's assets up to $1,000,000.            
Placement agent cash fee                                                                       $ 3,250            
Repayment of principal                                                                       15,298            
Investor [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Short term debt                                                                           $ 300,000        
Issuance of warrants                                                                           778,750        
Warrants purchase of common stock                                                                           10,488,708        
Warrants, exercise price                                                                           $ 0.20        
Warrant term                                                                           5 years        
Debt instrument, unamortized discount, current                                                                           $ 78,823        
Investor [Member] | August 2017 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Gross proceeds of private placement offering                                                                           505,000        
Short term debt                                                                           645,000        
Convertible note                                                                       1,416,026            
Fair value of warrants                                                                           $ 440,157        
Issuance of warrants                                                                           4,555,129        
Increase of principal amount                                                                           $ 60,000        
Maturity date, description                                                                           The Notes mature on the second (2nd) anniversary of their issuance dates.        
Warrants, exercise price                                                                           $ 0.20        
Warrants issued to purchase shares                                                                           2,525,000        
Conversion price per share                                                                           $ 0.20        
Warrant term                                                                           5 years        
Debt discount                                                                           $ 160,700        
Unpaid interest                                                                       202,362   $ 206,026        
Convertible secured promissory note, description                                                                           Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a five-year warrant ( each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price").        
Loss on extinguishment of debt                                                                           $ 500,157        
Units of securities                                                                           $ 6,000,000        
Investor [Member] | March 2018 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Gross proceeds of private placement offering                                                                       $ 239,400            
Issuance of warrants                                                                       1,197,000            
Debt discount                                                                       $ 84,854            
Investor [Member] | August 2017 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Issuance of warrants                                                                           2,525,000        
Warrants issued to purchase shares                                                                           7,925,000        
Debt discount                                                                           $ 160,700        
Investor [Member] | February 2018 Convertible Note Offering [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                                       25,000            
Unpaid interest                                                                       2,219            
Third Party Lender [Member] | Second February 2018 Note [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Gross proceeds of private placement offering                                                                       25,000            
Convertible note               $ 40,750                                                       $ 35,452            
Issuance of warrants                                                                       125,000            
Interest and principal both due date               Sep. 30, 2018                                                                    
Warrants, exercise price               $ 0.20                                                       $ 0.20            
Warrants issued to purchase shares               81,500                                                                    
Note accrues interest rate               18.00%                                                                    
Conversion price per share               $ 0.20                                                       $ 0.20            
Warrant term               5 years                                                       5 years            
Debt discount               $ 7,963                                                       $ 11,054            
Unpaid interest                                                                       4,116            
BCF and related debt discount                                                                       $ 1,063            
Convertible secured promissory note, description                                                                       Unit consisting of (a) a 15% Convertible Secured Promissory Note (each a "Note" and together the "Notes"), convertible into shares of the Company's common stock, par value $.001 per share ("Conversion Shares") at a conversion price of $0.20 per share (the "Conversion Price"), and (b) a five-year warrant (each a "Warrant and together the "Warrants") to purchase common stock equal to one hundred percent (100%) of the shares into which the Notes can be converted into ("Warrant Shares") at an exercise price of $0.20 per share ("Exercise Price").            
Units of securities                                                                       $ 750,000            
Original issue discount               $ 5,298                                                                    
Repayment of principal                                                                       5,298            
Third Party Lender [Member] | Second December 2017 Note [Member]                                                                                    
Related Party Loans (Textual)                                                                                    
Convertible note                                                             $ 100,000         100,000            
Interest and principal both due date                                                             Dec. 27, 2019                      
Warrants, exercise price                                                             $ 0.20                      
Warrants issued to purchase shares                                                             500,000                      
Note accrues interest rate                                                             15.00%                      
Conversion price per share                                                             $ 0.20                      
Warrant term                                                             5 years                      
Debt discount                                                             $ 36,722                      
Unpaid interest                                                                       $ 10,542            
v3.10.0.1
Capital Leases Payable (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Capital Leases Payable [Abstract]      
Capital lease obligation to a financing company for a term of five (5) years, collateralized by equipment, with interest at 10.0% per annum, with principal and interest due and payable in monthly installments of $383.10 $ 4,732 $ 4,732 $ 4,732
Less current maturities (4,732) (4,732) (3,524)
Capital lease obligation, net of current maturities 1,208
TOTAL CAPITAL LEASE OBLIGATION $ 4,732 $ 4,732 $ 4,732
v3.10.0.1
Capital Leases Payable (Details 1) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Capital Leases Payable [Abstract]      
2017:   $ 3,524
2018: $ 4,732 $ 4,732 $ 1,208
v3.10.0.1
Capital Leases Payable (Details Textual) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Capital Leases Payable (Textual)    
Capital leases due amount $ 383.10 $ 383.10
Capital leases interest per annum 10.00% 10.00%
Capital lease obligation term 5 years 5 years
v3.10.0.1
Derivative Liabilities (Details)
12 Months Ended
Dec. 31, 2017
Schedule of fair value of the derivative liability and warrant liability [Line Items]  
Annual dividend rate 0.00%
Low [Member] | Derivative Liabilities [Member]  
Schedule of fair value of the derivative liability and warrant liability [Line Items]  
Annual dividend rate 0.00%
Expected life 6 months 29 days
Risk-free interest rate 1.11%
Expected volatility 90.71%
High [Member] | Derivative Liabilities [Member]  
Schedule of fair value of the derivative liability and warrant liability [Line Items]  
Annual dividend rate 0.00%
Expected life 9 months
Risk-free interest rate 1.16%
Expected volatility 93.55%
v3.10.0.1
Derivative Liabilities (Details 1)
12 Months Ended
Dec. 31, 2017
USD ($)
Level 1 [Member]  
Schedule of changes in derivative liabilities (Line Items)  
Derivative liabilities as January 1, 2017
Addition
Conversion
Extinguishment Expense
Gain on changes in fair value
Derivative liabilities as December 31, 2017
Level 2 [Member]  
Schedule of changes in derivative liabilities (Line Items)  
Derivative liabilities as January 1, 2017
Addition
Conversion
Extinguishment Expense
Gain on changes in fair value
Derivative liabilities as December 31, 2017
Level 3 [Member]  
Schedule of changes in derivative liabilities (Line Items)  
Derivative liabilities as January 1, 2017
Addition 332,942
Conversion
Extinguishment Expense (397,288)
Gain on changes in fair value 64,346
Derivative liabilities as December 31, 2017
v3.10.0.1
Derivative Liabilities (Details Textual)
12 Months Ended
Dec. 31, 2017
Derivative Liabilities (Textual)  
Dividend yield 0.00%
v3.10.0.1
Stockholders' Deficit (Details) - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Expected dividends   0.00%  
Warrant [Member]      
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Exercise price     $ 0.40
Expected dividends 0.00% 0.00% 0.00%
Expected volatility, minimum 102.00% 96.76% 73.44%
Expected volatility, maximum 107.00% 102.21% 91.54%
Risk free interest rate, minimum 2.00% 1.63% 1.13%
Risk free interest rate, maximum 3.00% 2.26% 1.39%
Expected life of option   5 years 5 years
Minimum [Member] | Warrant [Member]      
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Exercise price $ 0.20 $ 0.20  
Expected life of option 4 years    
Maximum [Member] | Warrant [Member]      
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Exercise price $ 0.30 $ 0.30  
Expected life of option 5 years    
Stock Options [Member]      
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Expected dividends   0.00% 0.00%
Expected volatility, minimum   86.62% 73.44%
Expected volatility, maximum   92.14% 90.05%
Risk free interest rate, minimum   1.74% 1.00%
Risk free interest rate, maximum   2.10% 1.39%
Expected life of option   5 years  
Stock Options [Member] | Minimum [Member]      
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Exercise price   $ 0.16 $ 0.25
Expected life of option     4 years 8 months 5 days
Stock Options [Member] | Maximum [Member]      
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Exercise price   $ 0.75 $ 0.40
Expected life of option     5 years
v3.10.0.1
Stockholders' Deficit (Details 1) - Stock Option [Member] - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Options/Warrant, Outstanding 46,193,779 2,250,000 500,000
Options, Granted   15,499,990 1,750,000
Options, Exercised  
Options, Cancelled/Modified   (100,000)
Options/Warrant, Outstanding 62,016,795 46,193,779 2,250,000
Options, Exercisable   8,983,322 2,200,000
Outstanding options held by related party   17,429,990 2,250,000
Exercisable options held by related party   8,843,322 2,200,000
Weighted Average Exercise Price, Outstanding $ 0.24 $ 0.34 $ 0.25
Weighted Average Exercise Price, Granted   0.43 0.36
Weighted Average Exercise Price, Exercised  
Weighted Average Exercise Price Cancelled/Modified   0.40
Weighted Average Exercise Price, Outstanding $ 0.24 0.24 0.34
Weighted Average Exercise Price, Exercisable   0.27 0.30
Weighted Average Exercise Price Outstanding options held by related party   0.42 0.34
Weighted Average Exercise Price Exercisable options held by related party   $ 0.27 $ 0.30
Weighted Average Remaining Contractual Life (in years), Outstanding   4 years 4 months 17 days 4 years 11 months 4 days
Weighted Average Remaining Contractual Life (in years), Granted   5 years 5 years
Weighted Average Remaining Contractual Life (in years), Outstanding   4 years 3 months 8 days 4 years 4 months 17 days
Weighted Average Remaining Contractual Life (in years), Exercisable   4 years 1 month 24 days 4 years 4 months 17 days
Weighted Average Remaining Contractual Life (in years), Outstanding options held by related party   4 years 7 months 24 days 4 years 4 months 17 days
Weighted Average Remaining Contractual Life (in years), Exercisable options held by related party   4 years 1 month 24 days 4 years 4 months 17 days
v3.10.0.1
Stockholders' Deficit (Details 2)
12 Months Ended
Dec. 31, 2017
USD ($)
shares
Stockholders' Deficit [Abstract]  
Options | shares 15,499,990
Value | $ $ 1,172,022
Purpose for Grant Service Rendered
v3.10.0.1
Stockholders' Deficit (Details 3) - Warrants [Member] - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]      
Options/Warrant, Outstanding 46,193,779 15,541,666 10,750,000
Warrants, Granted 57,197,956 30,652,113 4,791,666
Warrants, Exercised 50,000
Warrants, Forfeited/Cancelled
Options/Warrant, Outstanding 103,341,735 46,193,779 15,541,666
Warrants, Exercisable 103,341,735 46,193,779  
Weighted Average Exercise Price, Outstanding $ 0.24 $ 0.36 $ 0.35
Weighted Average Exercise Price, Granted 0.27 0.20 0.40
Weighted Average Exercise Price, Exercised 0.40
Weighted Average Exercise Price, Forfeited/Cancelled
Weighted Average Exercise Price, Outstanding 0.26 0.24 $ 0.36
Weighted Average Exercise Price, Exercisable $ 0.26 $ 0.25  
v3.10.0.1
Stockholders' Deficit (Details 4) - Warrants [Member] - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Warrants Outstanding, Exercise price $ 0.26      
Warrants Outstanding, Exercise price, Minimum   $ 0.20    
Warrants Outstanding, Exercise price, Maximum   $ 0.40    
Warrants Outstanding, Number Outstanding 103,341,735 46,193,779 15,541,666 10,750,000
Warrants Outstanding, Weighted Average Remaining Contractual Life (in years) 4 years 22 days 5 years    
Warrants Outstanding, Weighted Average Exercise Price $ 0.26 $ 0.24 $ 0.36 $ 0.35
Warrants Exercisable , Number Exercisable 103,341,735 46,193,779    
Warrants Exercisable, Weighted Average Exercise Price $ 0.26 $ 0.25    
v3.10.0.1
Stockholders' Deficit (Details Textual)
1 Months Ended 3 Months Ended 9 Months Ended 12 Months Ended
Feb. 07, 2017
USD ($)
shares
Feb. 06, 2016
USD ($)
$ / shares
shares
Dec. 09, 2015
shares
Feb. 13, 2015
shares
Aug. 31, 2018
USD ($)
AccreditedInvestors
$ / shares
shares
Jan. 31, 2018
USD ($)
shares
Feb. 01, 2017
shares
Jan. 30, 2017
USD ($)
shares
Aug. 31, 2016
shares
Aug. 17, 2016
USD ($)
$ / shares
shares
Feb. 01, 2016
shares
Jan. 29, 2016
$ / shares
shares
Dec. 21, 2015
USD ($)
shares
Feb. 13, 2015
USD ($)
shares
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Sep. 30, 2018
USD ($)
$ / shares
shares
Sep. 30, 2017
USD ($)
Dec. 31, 2017
USD ($)
$ / shares
shares
Dec. 31, 2016
USD ($)
$ / shares
shares
Dec. 31, 2015
USD ($)
shares
Stockholders' Deficit (Textual)                                          
Capital stock authorized                             320,000,000   320,000,000        
Common stock, shares authorized                             300,000,000   300,000,000   300,000,000 300,000,000  
Common stock, par value | $ / shares                             $ 0.001   $ 0.001   $ 0.001 $ 0.001  
Common stock, shares issued                             40,524,432   40,524,432   33,894,582 33,894,592  
Common stock, shares outstanding                             40,524,432   40,524,432   33,894,582 33,894,592  
Issuance of common stock value | $                                       $ 322  
Gain on settlement of vendor liabilities | $                                 $ (2,886) $ 110,674 $ (167,905)  
Accrued interest | $                                     $ 206,026    
Aggregate repurchased shares                                     220,000    
Aggregate repurchased shares amount | $                                     $ 19,007    
Preferred stock, description                                     Upon incorporation, the total number of shares of all classes of stock which the Company is authorized to issue is Three Hundred Twenty Million (320,000,000) shares of which Three Hundred Million (300,000,000) shares shall be Common Stock, par value $0.001 per share and Twenty Million (20,000,000) shall be Preferred Stock, par value $0.001 per share. The designations, rights, and preferences of such preferred stock are to be determined by the Board of Directors.    
Stock issued to consultants for services, value | $                                     $ 307,427    
Conversion of common stock                 1,098,933                   914    
Investor deposit | $                                 208,428      
Conversion of an aggregate principal | $                                     $ 60,000    
Loss on extinguishment of debt | $                             $ (2,938,719) $ (923,822) $ (3,370,505) (923,822) $ (906,531)  
Placement Agent [Member]                                          
Stockholders' Deficit (Textual)                                          
Restricted stock issued during period             800,000                            
Preferred Stock Conversion Agreements [Member]                                          
Stockholders' Deficit (Textual)                                          
Convertible preferred stock, Shares                                 38,512        
Warrants to purchase shares of common stock                                 13,433,305        
Warrant exercisable price per share | $ / shares                             $ 0.30   $ 0.30        
Conversion of common stock shares                                 26,866,582.00        
Debt inducement conversion of preferred stock | $                                 $ 2,016,634        
August 2018 Equity Raise [Member]                                          
Stockholders' Deficit (Textual)                                          
Number of shares sold         4,623,328                                
Sale of stock price per share | $ / shares         $ 0.25                                
Warrants to purchase shares of common stock         4,623,328                                
Warrant exercisable price per share | $ / shares         $ 0.30                                
Private placement offering Securities | $         $ 5,000,000                                
Number of accredited investors | AccreditedInvestors         37                                
Aggregate gross proceeds | $         $ 1,155,832                                
Commitments for additional capital | $         2,022,996                                
Committed to additional offering | $         3,000,000                                
Investor deposit | $         $ 208,428                                
August 2018 Equity Raise [Member] | Debt Conversion Agreements [Member]                                          
Stockholders' Deficit (Textual)                                          
Conversion price | $ / shares                                 $ 0.20        
Warrants to purchase shares of common stock                                 22,553,390        
Warrant exercisable price per share | $ / shares                             $ 0.30   $ 0.30        
Accrued interest | $                                 $ 1,028,772        
Conversion of common stock                                 45,106,731        
Conversion of an aggregate principal | $                             $ 7,992,570   $ 7,992,570        
Loss on extinguishment of debt | $                                 2,914,917        
Promissory Notes [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                     5,811,360    
Warrants grant date fair value | $                                     $ 1,189,235    
Promissory Notes [Member] | Placement Agent [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants to purchase shares of common stock                                     487,755    
Convertible Notes Payable [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                     16,597,719    
Warrants grant date fair value | $                                     $ 1,472,161    
Conversion of an aggregate principal | $                             25,000   $ 25,000        
Convertible Notes Payable [Member] | Placement Agent [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants to purchase shares of common stock                                     12,150    
Notes Payable Related Party [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                     345,500    
Warrants grant date fair value | $                                     $ 38,109    
Convertible Notes Payable Related Party [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                     7,115,129    
Warrants grant date fair value | $                                     $ 680,037    
Common Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Common stock, par value | $ / shares   $ 0.001                                      
Number of shares sold                                       666,666  
Shares awarded to employees                                     788,395    
Restricted stock issued during period 1,767,633     133,333       947,440     268,333                    
Restricted stock issued fair value | $ $ 293,427                                        
Sale of shares of common stock   2,626,308                                      
Sale of stock value | $   $ 2,626                                      
Conversion of interest to series B preferred stock, shares                                        
Issuance of common stock for cashless exercise of warrants, shares                                       392,764  
Issuance of common stock                                       322,015  
Issuance of common stock value | $                                       $ 322  
Common stock service rendered                                     1,867,633    
Settlement of vendor liabilities | $               $ 353,732                          
Gain on settlement of vendor liabilities | $               $ 167,905                          
Stock issued to consultants for services, value | $                                     $ 1,868    
Common Stock [Member] | Consultants [Member]                                          
Stockholders' Deficit (Textual)                                          
Common stock service rendered                                 610,000        
Share based payments | $                                 $ 72,835        
Stock issued to consultants for services, value | $                                 $ 116,300        
Common Stock [Member] | Vendor [Member]                                          
Stockholders' Deficit (Textual)                                          
Restricted stock issued during period           18,750                              
Restricted stock issued fair value | $           $ 3,750                              
Gain on settlement of vendor liabilities | $           $ 375                              
Common Stock [Member] | Promissory Notes [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                 2,758,833        
Warrants associated value | $                                 $ 478,064        
Warrants [Member] | August 2018 Equity Raise [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                 40,691,607        
Warrants associated value | $                                 $ 5,741,297        
Warrants [Member] | Convertible Notes Payable [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                 10,481,016        
Warrants associated value | $                                 $ 1,284,683        
Warrants [Member] | Notes Payable Related Party [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                 1,863,000        
Warrants associated value | $                                 $ 358,030        
Warrants [Member] | Convertible Notes Payable Related Party [Member]                                          
Stockholders' Deficit (Textual)                                          
Warrants issued                                 1,403,500        
Warrants associated value | $                                 $ 162,834        
Stock Options [Member]                                          
Stockholders' Deficit (Textual)                                          
Aggregate intrinsic value of options outstanding | $                             $ 1,000 $ 1,000 1,000 1,000 3,500    
Aggregate intrinsic value of options exercisable | $                                     3,500    
Stock-based compensation for stock options | $                                     $ 1,092,970 $ 231,035  
Share based payments | $                                 $ 261,837.99 $ 560,794      
Stock Incentive Award Plan [Member]                                          
Stockholders' Deficit (Textual)                                          
Issuance of common stock     18,000,000                                    
Preferred Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Preferred stock, shares authorized                                     320,000,000 320,000,000  
Preferred stock, par value | $ / shares                             $ 0.001   $ 0.001   $ 0.001    
Preferred stock, shares issued                             20,000,000   20,000,000        
Purchaser Warrants [Member] | August 2018 Equity Raise [Member]                                          
Stockholders' Deficit (Textual)                                          
Sale of shares of common stock         2,200,000                                
Sale of stock value | $         $ 135,825                                
Warrants to purchase shares of common stock         81,584                                
Warrant exercisable price per share | $ / shares         $ 0.30                                
Issuance of common stock value | $         $ 375,082                                
Subscription Agreement [Member]                                          
Stockholders' Deficit (Textual)                                          
Sale of shares of common stock                   666,666                      
Warrants to purchase shares of common stock                   333,333                      
Warrant exercisable term                   5 years                      
Warrant exercisable price per share | $ / shares                   $ 0.40                      
Warrants grant date fair value | $                   $ 250,000                      
Series A Preferred Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Preferred stock, shares authorized                                     100,000 100,000  
Preferred stock, par value | $ / shares                             $ 0.001   $ 0.001   $ 0.001 $ 0.001  
Preferred stock, shares issued                             31,581   31,581   33,314 33,314  
Preferred stock, shares outstanding                             31,581   31,581   33,314 33,314  
Number of shares sold                                        
Convertible notes | $                                         $ 800,000
Convertible preferred stock, Shares       100,000                             1,733   8,914
Accrued for liquidating damages | $                                     $ 0 $ 3,318,353  
Warrants associated value | $                                     $ 0 $ 309,665  
Conversion price | $ / shares                                 $ 0.19683   $ 0.25 $ 0.164  
Dividend rate                                     6.00%    
Dividend, description                                     Upon the occurrence of an Event of Default (as defined below) and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series A Stated Value. At the Company's option, such dividend payments may be made in (i) cash (ii) additional shares of Series A valued at the Series A Stated Value thereof, in an amount equal to 150% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series A, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series A Preferred.    
Beneficial ownership by holder and affiliates                                     4.99%    
Conversion of interest to series B preferred stock, shares                                        
Issuance of common stock for cashless exercise of warrants, shares                                        
Issuance of common stock                                        
Issuance of common stock value | $                                        
Common stock service rendered                                        
Sale of preferred stock shares                                         24,400
Proceeds of preferred stock | $                                         $ 2,450,000
Accrued interest | $                                         $ 91,400
Stock issued to consultants for services, value | $                                        
Series A Preferred Stock [Member] | Common Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Convertible preferred stock, Shares                                     1,146,307    
Series B Preferred Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Preferred stock, shares authorized                                     20,000 20,000  
Series B Preferred stock issued with warrants, shares                                         7,000
Preferred stock, par value | $ / shares                             $ 0.001   $ 0.001   $ 0.001 $ 0.001  
Preferred stock, shares issued                             8,063   8,063   8,063 8,063  
Preferred stock, shares outstanding                             8,063   8,063   8,063 8,063  
Number of shares sold                                        
Convertible preferred stock, Shares                         20,000                
Proceeds from the issuance of stock | $                                         $ 700,000
Accrued for liquidating damages | $                                     $ 0 $ 667,313  
Warrants associated value | $                                     $ 0 $ 51,159  
Conversion price | $ / shares                                 $ 0.164   $ 0.30 $ 0.197  
Dividend rate                                     6.00%    
Dividend, description                                     Upon the occurrence of an Event of Default as defined below and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series B Stated Value. At the Corporation's option, such dividend payments may be made in (i) cash (ii) additional shares of Series B valued at the Series B Stated Value thereof, in an amount equal to 100% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series B, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series B Preferred.    
Beneficial ownership by holder and affiliates                                     4.99%    
Conversion of interest to series B preferred stock, shares                                       1,063  
Conversion of interest to series B preferred stock | $                                     $ 0 $ 1,063  
Issuance of common stock for cashless exercise of warrants, shares                                        
Issuance of common stock                                        
Issuance of common stock value | $                                        
Common stock service rendered                                        
Stock issued to consultants for services, value | $                                        
Series D Convertible Preferred Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Preferred stock, par value | $ / shares                       $ 100                  
Convertible preferred stock, Shares                 1,099     2,100,000                  
Conversion price | $ / shares                                     $ 0.25    
Dividend, description                       (i) the sum of (A) the Series D Stated Value being converted and/or (B) at the Holder's election, accrued and unpaid dividends or any other component of the Conversion Amount, divided by (ii) the Conversion Price. The Conversion Price of the Series D is $0.25.                  
Beneficial ownership by holder and affiliates                                 4.99%   4.99%    
Conversion of common stock to Series D preferred stock, shares                                     266,325    
Series A Cumulative Convertible Preferred Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Conversion of common stock, description                                 (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this provision is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty-one (61) days' prior written notice to the Corporation.        
Convertible preferred stock, Shares                           100,000              
Conversion price | $ / shares                                 $ 0.25     $ 0.164  
Dividend rate                                 6.00%        
Dividend, description                                 Upon the occurrence of an Event of Default (as defined below) and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series A Stated Value. At the Company's option, such dividend payments may be made in (i) cash (ii) additional shares of Series A valued at the Series A Stated Value thereof, in an amount equal to 150% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series A, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series A Preferred.        
Shares of Series A stated value | $                           $ 100              
Accrued dividends | $                             $ 0   $ 0        
Series B Cumulative Convertible Preferred Stock [Member]                                          
Stockholders' Deficit (Textual)                                          
Conversion of common stock, description                                 (i) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates on such Conversion Date, and (ii) the number of Conversion Shares issuable upon the conversion of the Conversion Amount with respect to which the determination of this proviso is being made on such Conversion Date, which would result in the aggregate beneficial ownership by the Holder and its Affiliates of more than 4.99% of the outstanding shares of Common Stock of the Corporation. For the purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13d-3 thereunder. Subject to the foregoing, the Holder shall not be limited to successive exercises which would result in the aggregate issuance of more than 4.99%. The Holder may allocate which of the equity of the Corporation deemed beneficially owned by the Holder shall be included in the 4.99% amount described above and which shall be allocated to the excess above 4.99%. The Holder may waive the conversion limitation described in this Section in whole or in part, upon and effective after sixty one (61) days' prior written notice to the Corporation.        
Convertible preferred stock, Shares                         20,000                
Conversion price | $ / shares                                 $ 0.30     $ 0.197  
Dividend rate                                 6.00%        
Dividend, description                                 Upon the occurrence of an Event of Default as defined below and while such Event of Default is outstanding, such dividend rate shall be increased to 15% per annum on the Series B Stated Value. At the Corporation's option, such dividend payments may be made in (i) cash (ii) additional shares of Series B valued at the Series B Stated Value thereof, in an amount equal to 100% of the cash dividend otherwise payable or (iii) a combination of cash and additional shares of Series B, provided there is not an existing current Event of Default on the date on which a dividend payment is payable, in which event the Holder entitled to receive such dividend may elect to receive such dividends in cash or additional shares of Series B Preferred.        
Shares of Series A stated value | $                         $ 100                
Accrued dividends | $                             $ 0   $ 0        
v3.10.0.1
Commitments and Contingencies (Details)
3 Months Ended 9 Months Ended
May 05, 2018
USD ($)
ft²
Sep. 30, 2018
USD ($)
Sep. 30, 2017
USD ($)
Sep. 30, 2018
USD ($)
Sep. 30, 2017
USD ($)
Commitments and Contingencies (Textual)          
Lease term 5 years        
Area of office space | ft² 2,300        
Rent expense   $ 20,557 $ 66,569 $ 146,056 $ 144,425
Lease term, description The Company signed a 5-year lease for approximately 2,300 square feet of office space at 2050 Center Avenue suite 640, Fort lee, New Jersey 07024. Commencement date of the lease is June 1, 2018. Total amount due under this lease is $411,150.        
Total amount due $ 411,150        
v3.10.0.1
Income Taxes (Details) - USD ($)
Dec. 31, 2017
Dec. 31, 2016
Net deferred tax assets - Non-current:    
Expected income tax benefit from NOL carry-forwards $ 7,600,000 $ 3,100,000
Less valuation allowance (7,600,000) (3,100,000)
Deferred tax assets, net of valuation allowance
v3.10.0.1
Income Taxes (Details 1)
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Income Taxes [Abstract]    
Federal statutory income tax rate 21.00% 34.00%
Change in valuation allowance on net operating loss carry-forwards (21.00%) (34.00%)
Effective income tax rate 0.00% 0.00%
v3.10.0.1
Income Taxes (Details Textual) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2017
Dec. 31, 2016
Income Taxes (Textual)    
Federal net operating loss carryforwards $ 7.6  
Federal net operating loss expire date Dec. 31, 2033  
Federal income tax rate 21.00% 34.00%
During period provides immediate expensing, description The Act also provides for immediate expensing of 100% or the costs of qualified property that is incurred and placed in service during the period from September 27, 2017 to December 31, 2022. Beginning January 1, 2023, the immediate expensing provision is phased down by 20% per year until it is completely phased out as of January 1, 2027.  
Minimum [Member]    
Income Taxes (Textual)    
Federal income tax rate 21.00%  
Maximum [Member]    
Income Taxes (Textual)    
Federal income tax rate 35.00%  
v3.10.0.1
Revision of Prior Year Financial Statements (Details) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Current Liabilities              
Accrued dividends $ 1,121,056   $ 1,121,056   $ 1,462,106 $ 1,387,068  
Total Current Liabilities 2,603,869   2,603,869   3,687,200 3,285,826  
Total Liabilities 2,790,286   2,790,286   7,544,739 3,287,034  
Stockholders' Equity              
Total Stockholders' Equity (2,492,539)   (2,492,539)   (7,367,307) (2,908,933) $ (360,464)
Statement of Operations              
Deemed dividend (45,367) $ (74,014) (174,232) $ (203,365) (297,323) (247,128)  
Net loss attributable to common stockholders $ (7,609,293) $ (3,495,979) $ (12,243,026) $ (6,581,239) $ (9,048,909) $ (7,639,035)  
Basic and diluted loss per share $ (0.11) $ (0.09) $ (0.25) $ (0.17) $ (0.23) $ (0.24)  
Statements of Cash Flows Supplementary Disclosure of Non-Cash Investing And Financing Activities              
Deemed dividend       $ 203,365 $ 297,323 $ 247,128  
As Previously Reported after Adoption of ASU 2017-11 [Member]              
Current Liabilities              
Accrued dividends         472,444 259,170  
Total Current Liabilities         4,159,644 3,544,996  
Total Liabilities         8,017,183 3,546,204  
Stockholders' Equity              
Total Stockholders' Equity         7,839,751 3,168,103  
Statement of Operations              
Deemed dividend     247,128  
Net loss attributable to common stockholders   $ (3,421,965)   $ (6,377,874) $ 8,751,586 $ 247,128  
Basic and diluted loss per share   $ (0.09)   $ (0.17) $ (0.23) $ (0.01)  
Statements of Cash Flows Supplementary Disclosure of Non-Cash Investing And Financing Activities              
Deemed dividend       $ 217,985 $ 69,894  
Adjustment [Member]              
Current Liabilities              
Accrued dividends         (472,444) (259,170)  
Total Current Liabilities         (472,444) (259,170)  
Total Liabilities         (472,444) (259,170)  
Stockholders' Equity              
Total Stockholders' Equity         (472,444) (259,170)  
Statement of Operations              
Deemed dividend     297,323  
Net loss attributable to common stockholders   $ (74,014)   (203,365) $ 297,323 $ (7,391,907)  
Basic and diluted loss per share         $ (0.23)  
Statements of Cash Flows Supplementary Disclosure of Non-Cash Investing And Financing Activities              
Deemed dividend       $ 203,365 $ 79,338 $ 177,234  
v3.10.0.1
Subsequent Events (Details) - USD ($)
1 Months Ended 9 Months Ended 12 Months Ended
Oct. 31, 2018
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Dec. 31, 2016
Short-term Debt [Line Items]          
Proceeds from issuance of note payable - related party   $ 315,000 $ 479,000 $ 529,000 $ 1,446,500
Aggregate gross proceeds   $ 299,852 $ 555,000 655,000
Subsequent Event [Member]          
Short-term Debt [Line Items]          
Warrants purchase of common stock 644,000        
Warrant exercisable price, per share $ 0.30        
Common stock, Share price $ 0.25        
Issuance of common shares for cash 644,000        
Aggregate gross proceeds $ 161,000        
Investors [Member]          
Short-term Debt [Line Items]          
Gross proceeds issuance of notes payable       41,442  
Short term debt       300,000  
Accrued unpaid interest       $ 41,442  
Warrant term       5 years  
Warrants purchase of common stock       10,488,708  
Warrant exercisable price, per share       $ 0.20  
Investors one [Member]          
Short-term Debt [Line Items]          
Gross proceeds issuance of notes payable       $ 50,000  
Warrant term       5 years  
Warrants purchase of common stock       100,000  
Warrant exercisable price, per share       $ 0.20  
Investors two [Member]          
Short-term Debt [Line Items]          
Warrant term       5 years  
Warrants purchase of common stock       81,500  
Warrant exercisable price, per share       $ 0.20  
Proceeds from issuance of note payable - related party       $ 40,750  
Investors three [Member]          
Short-term Debt [Line Items]          
Warrant term       5 years  
Warrants purchase of common stock       35,000  
Warrant exercisable price, per share       $ 0.20  
Proceeds from issuance of note payable - related party       $ 135,000  
Consultants [Member]          
Short-term Debt [Line Items]          
Common stock to consultants in exchange for services       628,750  
Placement Agent [Member]          
Short-term Debt [Line Items]          
Restricted common stock shares       375,000