10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

Commission File Number: 000-27841

Agritech Worldwide, Inc.

(Exact name of registrant as specified in its charter)

Nevada	36-4197173
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1011 Campus Drive, Mundelein, Illinois	60060
(Address of principal executive offices)	(Zip Code)

(847) 549-6002

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒     No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:

Class	Outstanding at November 14th, 2016
Common Stock, $0.00005 par value	101,878,858

AGRITECH WORLDWIDE, INC.

 FORM 10-Q QUARTERLY REPORT

Table of Contents

Item		Page
PART I	FINANCIAL INFORMATION
Item l.	Financial Statements	3
	Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015	3
	Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (unaudited)	4
	Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (unaudited)	5
	Notes to Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36
Item 4.	Controls and Procedures	36
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
SIGNATURES		40

2

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements.

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)

BALANCE SHEETS

	Unaudited
	9/30/2016			12/31/2015
ASSETS
Current Assets
Cash and cash equivalents	$	116,408		$	309,851
Accounts receivable		127,168			248,348
Inventory		163,455			238,264
Prepaid expenses and other assets		1,000			55,558
Total current assets		408,031			852,021
Long Term Assets
Property and equipment, net of depreciation		392,600			471,233
Other assets		17,626			31,193
Total long term assets		410,226			502,426
TOTAL ASSETS	$	818,257		$	1,354,447
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable	$	1,281,374		$	1,141,478
Short-term notes payable to unrelated parties, net of discount		1,722,096			750,000
Short-term non-convertible notes payable to related parties, net of discount		1,247,338			457,000
Short-term convertible notes payable to related parties		624,866			624,866
Accrued expenses and other		762,149			684,596
Accrued liquidated damages		36,178			36,178
Capital lease payable, short term		405,077			216,721
Derivative liabilities		376,890			742,833
Total Current Liabilities		6,455,968			4,653,672
Long Term Portion of Capital Lease Payable		-			264,980
Total Liabilities		6,455,968			4,918,652
Stockholders' Equity (Deficit)
Common Stock, $0.00005; authorized 500,000,000; shares issued and outstanding is 101,878,858 and 93,797,504 at September 30, 2016 and December 31, 2015, respectively		5,094			4,690
Convertible preferred stock, Series B, $0.01 par value authorized 3,000,000 shares; issued and outstanding 709,625 at both September 30 and December 31, 2015.		7,096			7,096
Additional paid-in capital		152,791,693			152,853,639
Accumulated deficit		(158,441,594	)		(156,429,630	)
Total Stockholders' Equity (Deficit)		(5,637,711	)		(3,564,205	)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)	$	818,257		$	1,354,447

The accompanying notes are an integral part of the financial statements.

3

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)

STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended						Nine Months Ended
	September 30th,						September 30th,
	2016			2015			2016			2015
REVENUES:
Products	$	371,085		$	218,732		$	923,513		$	834,563
Total revenues		371,085			218,732			923,513			834,563
COST OF REVENUES:
Products		509,767			445,936			1,295,444			1,420,476
Total cost of revenues		509,767			445,936			1,295,444			1,420,476
GROSS MARGIN (LOSS)		(138,682	)		(227,204	)		(371,931	)		(585,913	)
OPERATING EXPENSES:
Selling, general and administrative		529,287			772,957			1,657,371			6,881,428
Total operating expenses		529,287			772,957			1,657,371			6,881,428
OPERATING LOSS		(667,969	)		(1,000,161	)		(2,029,302	)		(7,467,341	)
OTHER INCOME (EXPENSES):
Interest expense - other		-			(21,518	)		-			(26,194	)
Interest expense - debt		(155,889	)		(35,743	)		(371,062	)		(128,006	)
Change in fair value - derivatives		127,857			66,561			388,400			(1,355,747	)
Loss on sale and leaseback transaction		-			(574,331	)		-			(574,331	)
Loss on settlement with vendor		-			-			-			(13,990	)
Loss on debt conversion		-			-			-			(351,314	)
Loss on exchange of warrants		-			-			-			(12,959,654	)
Total other income (expenses)		(28,032	)		(565,031	)		17,338			(15,409,236	)
NET  LOSS	$	(696,001	)	$	(1,565,192	)	$	(2,011,964	)	$	(22,876,577	)
Less Preferred Dividends		92,475			67,462			275,416			194,302
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(788,476	)	$	(1,632,654	)	$	(2,287,380	)	$	(23,070,879	)
NET LOSS PER SHARE - BASIC AND DILUTED	$	(0.01	)	$	(0.03	)	$	(0.02	)	$	(0.48	)
Weighted Average Number of Shares Basic and Diluted		101,878,858			47,517,640			97,838,181			47,313,497

The accompanying notes are an integral part of the financial statements.

4

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)

STATEMENTS OF CASH FLOWS (Unaudited)

FOR THE NINE MONTHS ENDED SEPTEMBER 30TH	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2,011,964	)	$	(22,876,577	)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Stock based compensation - stock options and warrants vested		317,955			4,534,849
Common shares issued for director fees		-			150,000
Amortization of debt discount		3,660			-
Shares & warrants issued for services		-			104,000
Preferred stock payable for services		-			258,731
Preferred stock to be issued for services		-			-
Warrants issued expense		-			259,662
Depreciation		75,184			154,250
Change in fair value of derivative liability		(365,943	)		1,355,747
Loss on exchange of warrants		-			12,959,654
Loss on debt conversion		-			351,314
Loss on sale and leaseback transaction		-			574,331
Loss on settlement with vendor		-			13,990
Changes in operating assets and liabilities:
Accounts receivable		121,180			(150,265	)
Inventory		74,809			306,611
Prepaid expenses and other assets		68,125			(19,564	)
Accounts payable and accrued expenses		(199,824	)		228,421
CASH USED IN OPERATING ACTIVITIES		(1,916,818	)		(1,794,846	)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash received from the sale of fixed assets		-			172,911
CASH PROVIDED BY INVESTING ACTIVITIES		-			172,911
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease		(76,624	)		-
Proceeds for the purchase of convertible preferred stock		-			880,000
Borrowing on short term debt to unrelated parties		1,600,000			400,000
Borrowing on short term debt to related parties		200,000			187,000
Borrowing on short term non-convertible notes payable to related parties		-			-
Principal payments on debt		-			(588,211	)
CASH PROVIDED BY FINANCING ACTIVITIES		1,723,376			878,789
NET DECREASE IN CASH		(193,443	)		(743,146	)
CASH AT BEGINNING OF PERIOD		309,851			1,027,713
CASH AT THE PERIOD ENDED SEPTEMBER 30TH	$	116,408		$	284,567
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest	$	80,259		$	53,596
Discount on debt due to derivitives	$	37,566		$	-
Preferred dividends payable declared	$	275,416		$	194,302
Preferred stock issued for preferred stock payable	$	-		$	1,010,000
Conversion of debt and interest into preferred stock	$	-		$	386,375
Reclassification of notes from unrelated to related	$	600,000		$	-
Warrants to be exchanged for common stock	$	-		$	542,944

The accompanying notes are an integral part of the financial statements.

5

AGRITECH WORLDWIDE, INC.

Notes to Financial Statements

September 30, 2016

(Unaudited)

NOTE 1 – NATURE OF BUSINESS

Agritech Worldwide, Inc., formerly known as Z Trim Holdings, Inc. (the “Company”), is an agricultural technology company that owns and develops products and processes for use in the food and industrial markets. The Company currently sells a line of products to the food industry that can help food manufacturers reduce their costs and help them solve many production problems. The Company’s technology provides value-added ingredients across virtually all food industry categories. The Company’s all-natural products, among other things, help to reduce fat and calories, add fiber, provide shelf-stability, prevent oil migration, and add binding capacity – all without degrading the taste and texture of the final food products. Perhaps most significantly, the Company’s products can help extend the shelf life of finished products, and thereby potentially increasing customers’ gross margins. The Company’s industrial division, opened in 2012, plans to sell eco-friendly ingredients to oil drilling, hydraulic fracturing, petroleum coke, steel/aluminum, paper and other industries. The Company’s industrial ingredients are highly functional in applications for adhesives, binders, viscofiers and emulsifiers.

The Company was originally incorporated in the State of Illinois on May 5, 1994 under the name Circle Group Entertainment Ltd. On June 21, 2006, the Company filed a certificate of amendment to our certificate of incorporation and changed its name to Z Trim Holdings Inc. On March 23, 2016, the Company changed its state of incorporation by engaging in a merger (the “Reincorporation”) with and into its newly formed wholly owned subsidiary, Agritech Worldwide, Inc., a Nevada corporation, pursuant to the terms and conditions of an Agreement and Plan of Merger entered into by Z Trim and Agritech on March 18, 2016 (the “Merger Agreement”). The Reincorporation was consummated on March 23, 2016 and was effectuated by the filing of (i) articles of merger with the Secretary of State of the State of Nevada, and (ii) articles of merger with the Secretary of State of the State of Illinois. The Reincorporation effected a change in the Company’s legal domicile from Illinois to Nevada. Upon the effectiveness of the Reincorporation the Company’s affairs ceased to be governed by (i) Illinois corporation laws, (ii) Illinois Articles of Incorporation, and (iii) Illinois Bylaws, and its affairs became subject to (a) Nevada corporation laws, (b) Agritech’s Articles of Incorporation of and (c) Agritech’s Bylaws. The resulting Nevada corporation (i) is deemed to be the same entity as the Illinois corporation for all purposes under the laws of Nevada, (ii) continues to have all of the rights, privileges and powers of the Illinois corporation, (iii) continues to possess all properties of the Illinois corporation, and (iv) continues to have all of the debts, liabilities and obligations of the Illinois corporation.

NOTE 2 – GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has an accumulated deficit equal to $158,441,594 as of September 30, 2016. This factor raises doubt regarding the ability of the Company to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary debt and equity financings, and the ability of the Company to improve operating margins. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Interim Information

The financial information at September 30, 2016 is unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The results for the three or nine months ended September 30, 2016 may not be indicative of results for the year ending December 31, 2016 or any future periods.

6

Use of Estimates

The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. In instances where the final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company’s historical experience.

Accounting for Derivative Instruments

All derivatives have been recorded on the balance sheet at fair value based on the lattice model calculation. These derivatives, including embedded derivatives in the Company’s warrants and convertible preferred stock which have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants and convertible preferred stock, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

Lattice Valuation Model

The Company valued the warrants and the conversion features in its formerly outstanding convertible notes and preferred stock using a lattice valuation model, with the assistance of a valuation consultant. The lattice model values these instruments based on a probability weighted discounted cash flow model. The Company uses the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the instruments are determined based on management's projections and the expert’s calculations. These probabilities are used to create a cash flow projection over the term of the instruments and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the instruments without the compound embedded derivative in order to determine a value for the compound embedded derivative.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Fair value of financial instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued liabilities. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. None of these instruments are held for trading purposes.

The Company has utilized various types of financing to fund its business needs, including convertible debt and convertible preferred stock with warrants attached. The Company reviews its warrants and any conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized in current earnings. At September 30, 2016, the Company had warrants to purchase common stock outstanding, the fair values of which are classified as a liability.

Inputs used in the valuation to derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

● Level one — Quoted market prices in active markets for identical assets or liabilities

● Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

● Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use

7

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with warrants and convertible preferred stock to purchase common stock. The Company classifies the fair value of these warrants under level three. The fair value of the derivative liability at September 30, 2016 was $376,890 compared to $742,833 as of December 31, 2015. The decrease in fair value for the nine months ended September 30, 2016 was $365,943 compared to an increase of $812,803 for the nine months ended September 30, 2015. Below is a hierarchy table of the components of the derivative liability:

	Carrying			Fair Value Measurements Using
	Value			Level 1		Level 2		Level 3			Total
Derivative Liabilities 12/31/2015	$	742,833			-		-	$	742,833		$	742,833
Change in derivative liabilities due to:
Issuance of warrants		41,226			-		-		41,226		$	41,226
Settlements		(18,769	)						(18,769	)	$	(18,769	)
Change in derivative liabilities valuation	$	(388,400	)		-		-		(388,400	)	$	(388,400	)
		(365,943	)				-		(365,943	)		(365,943	)
Derivative Liabilities 9/30/2016	$	376,890		$	-		-	$	376,890		$	376,890

Concentrations

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.

Inventory

Inventory is stated at the lower of cost or market, using the first-in, first-out method. The Company follows standard costing methods for manufactured products. Management assesses the recoverability and establishes reserves based on the net realizable value of the inventory.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Depreciation is calculated on the accelerated and straight-line methods over the estimated useful lives of the assets. Estimated useful lives of five to ten years are used for machinery and equipment, office equipment and furniture, and automobile. Estimated useful lives of up to five years are used for computer equipment and related software. Depreciation and amortization of leasehold improvements are computed using the term of the lease.

Intangible Assets

Intangible assets were carried at the purchased cost less accumulated amortization. Amortization was computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

8

Income Taxes

The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years.

Income (Loss) Per Common Share

Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding and, when diluted, potential shares from options and warrants to purchase common stock using the treasury stock method.

Cashless Exercise of Warrants/Options

The Company has issued warrants to purchase common stock where the holder is entitled to exercise the warrant via a cashless exercise. The Company accounts for the issuance of common stock on the cashless exercise of warrants on a net basis.

Stock-Based Compensation

The Company estimates the fair value of share-based payment awards made to employees, directors and related parties, including stock options, restricted stock, employee stock purchases related to employee stock purchase plans and warrants, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. We estimate the fair value of each share-based award using the Black-Scholes option pricing model. The Black-Scholes model is highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment are the estimated lives of the stock-based awards and the estimated volatility of the Company’s stock price. The Company recognized pre-tax compensation expense related to stock compensation awards of $317,955 and $4,534,849 for the nine months ended September 30, 2016 and 2015, respectively.

Recent Accounting Pronouncements

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period. The adoption of ASU 2015-14 is not expected to have a material effect on the Company’s consolidated financial statements.

On February 25, 2016, the FASB issued Topic 842, its highly-anticipated leasing standard for both lessees and lessors. Under its core principle, a lessee will recognize lease assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. Lessor accounting remains largely consistent with existing U.S. GAAP. The amendments are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. At inception, a lessee must classify all leases as either finance or operating. The Company intends to adopt Topic 842 upon extension of the current lease or upon entering into a new lease agreement for alternative facilities. The Company is investigating the effect of adoption of Topic 842 on its results of operations and financial condition. However, it is not anticipated that adoption of Topic 842 will have a material impact on the results of operations or financial condition of the Company.

9

NOTE 4 – INVENTORY

At September 30, 2016 and December 31, 2015, inventory consists of the following:

		9/30/2016			12/31/2015
Raw materials	$	30,318		$	18,228
Packaging		9,168			4,560
Finished goods		151,025			215,476
Less: Reserve to estimated net realizable value		(27,055	)
	$	163,455		$	238,264

NOTE 5 – PROPERTY AND EQUIPMENT, NET

At September 30, 2016 and December 31, 2015, property and equipment, net consists of the following:

	9/30/2016			12/31/2015
Leasehold Improvements	$	-		$	3,449
Capital Lease Assets		514,707			514,707
		514,707			518,156
Accumulated depreciation		(122,107	)		(46,923	)
Property and equipment, net	$	392,600		$	471,233

Depreciation expense was $75,184 and $154,250 for the nine months ended September 30, 2016 and 2015, respectively.

On July 17, 2015, the Company entered into an equipment purchase agreement (the “Purchase Agreement”) with Fordham Capital Partners, LLC (“Fordham”) pursuant to which the Company sold all of its right, title and interest in production equipment utilized by the Company to Fordham for a purchase price of $514,707. From the proceeds of the sale, the Company repaid outstanding borrowings of $200,000 due to Fordham Capital plus accrued interest of $3,112, franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease. The Company recognized a loss on the sale of $574,331. Concurrently with entering into the Purchase Agreement, on July 17, 2015, the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months, monthly lease payments by the Company of $15,800 and the option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no later than July 8, 2017): $325,000. The Equipment Lease Agreement includes customary events of default, including non- payment by the Company of the monthly lease payments and the payment of penalties upon such late payments. The equipment lease is secured by all of the assets of the Company. The Company received cash proceeds of $172,911 from the Purchase Agreement after paying off the obligations described above. These proceeds were used for general corporate purposes.

NOTE 6 – ACCRUED EXPENSES AND OTHER

At September 30, 2016 and December 31, 2015 accrued expenses consist of the following:

	9/30/2016		12/31/2015
Accrued payroll and taxes	$	52,709	$	166,713
Accrued settlements		102,000		102,000
Accrued interest		500,533		216,071
Accrued expenses and other		106,908		199,812
	$	762,149	$	684,596

10

NOTE 7 – SHORT-TERM BORROWINGS TO UNRELATED PARTIES

On July 17, 2015, the Company completed a sale and leaseback transaction with Fordham Capital. In the transaction, the Company sold all of its production equipment, furniture and fixtures for $514,707. From the proceeds of the sale, the Company repaid outstanding borrowings of $200,000 due to Fordham Capital plus accrued interest of $3,112, franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note initially matured in six months (March 26, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. On December 23, 2015, the Company executed an amendment whereby the maturity date was extended to July 1, 2016. On June 29, 2016, the Company executed an amendment whereby the maturity date was extended to October 1, 2016. On September 30, 2016, the Company executed an amendment whereby the maturity date was extended to April 3, 2017.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties. On May 17, 2016, Mr. Kahn became our Chief Executive Officer, interim Chief Financial Officer and a member of our Board of Directors

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 and amortized $438 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to Mr. Kahn. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 11, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The Company recognized $3,189 and amortized $355 of discount as of September 30, 2016. The note matures in one year (March 11, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 7, 2016, the Company issued 14% senior unsecured notes to two accredited investors in the total principal amount of $100,000. The Company recognized $3,924 and amortized $378 of discount as of September 30, 2016. The notes mature in one year (April 7, 2017) and bear interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued warrants to acquire a total of 400,000 shares of the Company’s common stock at an exercise price of $0.64 per share to the two accredited investors. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 8, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The Company recognized $15,342 and amortized $1,470 of discount as of September 30, 2016. The note matures in one year (April 8, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 14, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The Company recognized $6,383 and amortized $273 of discount as of September 30, 2016. The note matures in one year (July 14, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $300,000. The Company recognized $2,117 and amortized $82 of discount as of September 30, 2016. The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 600,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

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Below is a summary of the principal and interest activity for the period ended September 30, 2016:

	Principal			Interest
Balance at December 31, 2015	$	750,000		$	10,442
Principal advances and accrued interest		1,600,000			184,019
Reclassification of notes to related	$	(600,000	)	$	(60,679	)
Principal payments and interest		-			-
Balance at September 30, 2016	$	1,750,000		$	133,782
Less debt discount		(27,904	)
Balance at September 30, 2016	$	1,722,096		$	133,782

NOTE 8 – SHORT-TERM NONCONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

On September 29, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $85,000. The note was to mature in two months (November 29, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On October 23, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $85,000. The note was to mature in two months (December 23, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On October 30, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $70,000. The note was to mature in two months (December 30, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On December 3, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $30,000. The note was to mature in two months (February 3, 2015) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On December 19, 2014, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended to April 15, 2015.

On May 29, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to December 31, 2015.

On June 12, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $12,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On August 13, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $25,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement and the Factoring Agreement.

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On August 21, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $150,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note was to mature March 26, 2016 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash.

On December 23, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to July 1, 2016.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 and amortized $247 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Morris Garfinkle in the principal amount of $100,000. The Company recognized $3,094 and amortized $178 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Mr. Garfinkle. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 and amortized $105 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 28, 2016, the Company issued a 14% senior unsecured note to an entity related to Dan Jeffery in the principal amount of $50,000. The Company recognized $1,562 and amortized $55 of discount as of September 30, 2016. The note matures in one year (April 28, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 150,000 shares of the Common Stock at an exercise price of $0.64 per share to the entity related to Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On June 29, 2016, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to October 1, 2016.

On September 30, 2016, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to April 3, 2017.

The outstanding gross amount (before discount) of nonconvertible notes payable to a related party was $457,000 at December 31, 2015 and $1,257,000 at September 30, 2016. The amount of accrued and unpaid interest was $54,935 on December 31, 2015 and $133,782 on September 30, 2016.

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NOTE 9 – SHORT-TERM CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

On February 11, 2014, the Company entered into an agreement with Edward Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $200,000 in a convertible senior secured note. The note matures in two years (February 11, 2016) and bears interest at 12.5% computed based on a 365-day year. Accrued interest is payable either at maturity or quarterly at the option of Mr. Smith in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $2.25, subject to adjustment as provided in the note. If on the maturity date of the note, the thirty-day trailing average closing price of the Company’s common stock (the “Trailing Average Price”) is below $2.25, the Conversion Price on the maturity date will be reduced to the Trailing Average Price, but to not less than $1.25. The Conversion Price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

On April 25, 2014, the Company entered into an agreement with Edward Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $300,000 in a convertible subordinated secured note. The note matures in two years (April 25, 2016) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note.

On April 30, 2014, the Company issued a 14% convertible subordinated secured note to each of Morris Garfinkle, Mark Hershhorn, Brian Israel and Edward B. Smith, Directors of the Company, in the principal amount of $19,000, for director fees due and payable to them (the “Director Notes”). Each Director Note matured in two years (April 30, 2016) and bears interest at 14% computed on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the Director Note, the holder may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under each Director Note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

On May 12, 2014, the Company issued 14% convertible subordinated secured notes to both Morris Garfinkle and CKS Warehouse in the principal amount of $75,000 each. Both notes matured in two years (May 12, 2016) and bear interest at 14% computed on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of each note, Mr. Garfinkle and CKS Warehouse may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under each note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

On July 15, 2014, the Company entered into an agreement with Edward Smith III, pursuant to which Mr. Smith agreed to lend the Company $64,000 in an unsecured note payable. The note matured in 90 days (October 15, 2014) without interest payable on the unpaid principal and subject to the terms of the Company’s agreements with its secured creditors. On August 6, 2014, this note was rolled into the $264,000 convertible subordinated secured note discussed below.

On August 6, 2014, the Company issued a 14% convertible subordinated secured note to Edward B. Smith in the principal amount of $264,000. The note matured in two years (August 6, 2016) and bears interest at 14% computed on a 365-day year. Under this note Mr. Smith had provided $200,000 of cash as of August 6, 2014 and the parties agreed to include the unsecured funds in the amount of $64,000 provided by Mr. Smith on July 15, 2014 and include those amounts as part of this subordinated secured transaction. The loan agreement executed by the parties on July 15, 2014 is now null and void. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under this note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units, (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer at the time of the exchange and a director, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel (directors of the Company at the time of the exchange), in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491 of principal and interest on notes.

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The fair value of the preferred stock issued with the Units above was calculated using multinomial lattice models that valued the preferred stock based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result of the conversion of convertible debt into Units, the Company recorded a loss on debt conversion of $351,314 in the three months ended March 31, 2015.

On December 23, 2015, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014 whereby the maturity date for each note was extended to July 1, 2016.

On May 22, 2016, the Company executed an amendment to the note issued to CKS Warehouse dated May 12, 2014 whereby the maturity date was extended to October 1, 2016.

On June 29, 2016, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014) whereby the maturity date for each note was extended to October 1, 2016.

On September 30, 2016, the Company executed an amendment to the note issued to CKS Warehouse dated May 12, 2014 whereby the maturity date was extended to April 3, 2017.

On September 30, 2016, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014 whereby the maturity date for each note was extended to April 3, 2017.

The outstanding amount of convertible notes payable to related parties was $624,866 at September 30, 2016 and December 31, 2015. The amount of accrued and unpaid interest was $214,102 at September 30, 2016.

NOTE 10 – LIQUIDATED DAMAGES

In connection with certain private placements of the Company’s securities (the “Registrable Securities”) effected in 2008, the Company entered into registration rights agreements (the “RRA”) that required the Company to file a registration statement covering the Registrable Securities with the Securities and Exchange Commission no later than thirty days after the final closing as contemplated in the Private Placement Memorandum for the 2008 offering (the “Filing Deadline”), which the Company did not meet. Under the terms of the RRA, as partial compensation, the Company was required to make pro rata payments to each Investor in an amount equal to 1.5% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which no registration statement was filed. The Company obtained a release and waiver of the amounts due from almost all of the 2008 investors. Under the terms of the RRA, the Company potentially owes, and have recognized as liquidated damages, $36,178 relating to holders from whom we did not receive waivers.

NOTE 11 – DERIVATIVE LIABILITIES

Certain of the Company’s convertible preferred stock and warrants have reset provisions to the exercise price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such convertible preferred stock and warrants. This ratchet provision results in a derivative liability in our financial statements.

The Company’s derivative liabilities decreased to $376,890 at September 30, 2016 from $742,833 at December 31, 2015. The income recognized during the nine months ended September 30, 2016 was $388,400 as compared to an expense of $1,355,747 for the nine months ended September 30, 2015.

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The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at September 30, 2016 and December 31, 2015:

Components of derivative financial instruments
	9/30/2016			12/31/2015
Common stock warrants	$	67,108		$	130,028
Embedded conversion features for convertible debt or preferred shares		309,782			612,805
Total	$	376,890		$	742,833
Beginning balance	$	742,833		$	20,166
Change in derivative liability valuation		(388,400	)		1,265,611
Change in derivative liability - settlements		(18,769	)		-
Change in derivative liability - warrant issuance		41,226			(542,944	)
Total	$	376,890		$	742,833

NOTE 12 – COMMON STOCK

Common Stock Issued to Employees

On May 17, 2016, pursuant to the Kahn Employment Agreement, the Company’s Chief Executive Officer Jonathan Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock. The Company recognized a total expense of $180,824 related to this issuance. These shares were valued based on the closing price on the grant date and were issued pursuant to the Company’s Amended and Restated Incentive Compensation Plan as amended (the “Plan”).

In addition, on each of May 1, 2017 and May 1, 2018, respectively, pursuant to the Kahn Employment Agreement, Mr. Kahn will receive an additional grant of fully-vested common stock, such additional grants each representing 0.75% of the Company’s shares of common stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively. The Company expensed $13,879 through Sept 30, 2016 for stock compensation related to the May 1, 2017 and May 1, 2018 additional grants. The Company will expense a portion of this compensation quarterly until the grants are made at their respective due dates.

Common Stock Issued to Directors

On February 24, 2015, the Company issued 576,924 shares of common stock to its three non-executive directors at such time (192,308 shares each) Brian Israel, Morris Garfinkle and Dan Jeffery pursuant to the Plan. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On January 2, 2015, the Company issued 285,716 shares of common stock to its four non-executive directors (71,429 shares each) Mark Hershhorn, Brian Israel, Morris Garfinkle and Edward B. Smith III pursuant to the Plan. The Company recognized a total expense of $160,001 related to these issuances. These shares were valued based on the closing price on the grant date.

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Plan. The Company recognized a total expense of $160,001 related to this issuance. These shares were valued based on the closing price on the grant date.

Common Stock Issued on the Exercise of Stock Warrants and/or Options for Cash

During the three month and nine month periods ended September 30, 2016 and 2015, respectively, there were no warrants or options exercised for cash.

Common Stock Issued on the Cashless Exercise of Warrants and/or Stock Options

During the three months and nine months ended September 30, 2016, the Company did not issue any shares of common stock on the cashless exercise of warrants or options.

On April 22, 2016, the Company purchased 4,610,179 warrants from their holders for an aggregate price of $122,986.

During the three months and nine months ended September 30, 2015, the Company did not issue any shares of common stock on the cashless exercise of options.

16

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014)  to participate in a warrant exchange program whereby each warrant holder will be able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti-dilution rights on a one-time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015, there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti-dilution provisions resulting from the January 8, 2015 private placement.

As of September 30, 2015, the results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1), 318,750 additional warrants were issued under alternative (2) and a combination of 974,826 shares of Common Stock and 73,125 warrants were issued from elections made under alternative (3). The Company recorded a loss on exchange of warrants of $12,959,654 for the nine months ended September 30, 2015.

Common Stock Issued for Services

On March 1, 2015, the Company entered into a Business Development Agreement with Steeltown Consulting Group, LLC, pursuant to which Steeltown agreed to assist in evaluating various business and financial matters. The Company issued 400,000 restricted shares of common stock as consideration for the services being rendered in this agreement pursuant to the Plan. The common stock was valued at $104,000 based on the closing prices of the stock on the date the agreement was executed. This agreement terminated on March 1, 2016.

There were no shares issued for services during the nine months ended September 30, 2016.

NOTE 13 – PREFERRED STOCK

Preferred Stock Issued to Investors

On January 8, 2015, the Company entered into agreements to sell an aggregate of 260,000 Units to eight (8) accredited investors at a price per Unit of $4.00 for aggregate cash proceeds of $1,040,000 pursuant to separate purchase agreements entered into with each investor. In addition, the Company issued in the initial closing of 260,000 Units Additional Warrants that are exercisable for an aggregate of 946,400 shares of the Company’s common stock. The warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights. As a result, 260,000 shares of Preferred Stock were issued.

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units , 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer and director, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

The fair value of the Preferred Shares issued with the Units above was calculated using multinomial lattice models that valued the Preferred Shares based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result of the conversion of convertible debt into Units, the Company recorded a loss on debt conversion of $351,314.

On February 9, 2015, the Company closed a second round of its private placement offering with four (4) accredited investors in which it raised gross proceeds of $500,000 and sold 125,000 Units all pursuant to separate Securities Purchase Agreements entered into with each investor. In addition, the Company issued to each of the investors in the first and second rounds of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Company’s common stock at an exercise price of $0.64 per share. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of the Company’s common stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of the Company’s common stock.

The Preferred Shares are nonvoting, accrue dividends at the rate per annum equal to 12.5% of the sum of (i) the Stated Value (which initially is $4.00) until the Maturity Date as defined in the Certificate of Designations and (ii) the amount of accrued and unpaid dividends payable, are convertible into shares of common stock at the option of the holder as described in the Certificate of Designations, have anti- dilution protection, registration rights, may be redeemed under certain circumstances, liquidation preference, protective provisions and board rights under certain circumstances. 

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On March 18, 2015, the Company received $75,000 from an accredited investor towards the purchase of 18,750 units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, at an exercise price of $0.64 per share all pursuant to a separate securities purchase agreement entered into with the investor.

On June 1, 2015, the Company received $25,000 from an accredited investor towards the purchase of 6,250 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, at an exercise price of $0.64 per share all pursuant to a separate securities purchase agreement entered into with the investor.

On August 26, 2015, the Company received $250,000 from accredited investors towards the purchase of 62,500 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock at an exercise price of $0.64 per share all pursuant to a separate securities purchase agreement entered into with the investor.

On October 20, 2015, the Company received $200,000 from an accredited investor towards the purchase of 50,000 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate Securities Purchase Agreement entered into with the investor.

On November 4, 2015, the Company received $200,000 from an accredited investor towards the purchase of 50,000 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, at an exercise price of $0.64 per share all pursuant to a separate Securities Purchase Agreement entered into with the investor.

Preferred Stock Issued to Vendors

Effective January 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the Company would deliver (which the Company delivered on April 3, 2015) to the landlord 20,025 shares of its 12.5% Convertible Preferred Stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share. The fair value of the preferred stock issued was calculated using multinomial lattice models that valued the preferred stock based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result, the Company recorded an expense of $149,787 for the three months ended March 31, 2015 with an offset to preferred stock payable.

On May 1, 2015, the Company and its landlord executed an amendment to the then current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 Preferred Shares and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

On May 12, 2015, the Company agreed and issued 12,500 shares of 12.5% Convertible Preferred Stock and 107,000 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share in satisfaction of outstanding accounts payable due to a vendor. The outstanding balance due to this vendor was $60,885. The Company recognized a loss of $13,990 as a result of the conversion.

As of September 30, 2016, the Company had accrued dividends payable of $555,953 which are included in accounts payable on the balance sheet. As of December 31, 2015, the Company had accrued dividends payable of $280,675. 

NOTE 14 – STOCK OPTION PLAN AND WARRANTS

Incentive Compensation Plan

The Plan provides for the issuance of qualified options and other equity awards to all employees and non-qualified options and other equity awards to directors, consultants and other service providers.

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A summary of the status of stock options outstanding under the Plan as of September 30, 2016 and December 31, 2015 is as follows:

	9/30/2016					12/31/2015
				Weighted Average					Weighted Average
	Number of Shares			Exercise Price		Number of Shares			Exercise Price
Outstanding at beginning of year		11,103,275		$	0.78		11,033,675		$	1.05
Granted		3,020,134		$	0.03		6,299,600		$	0.29
Exercised		-					-
Expired and Cancelled		(3,772,386	)	$	0.89		(6,230,000	)	$	0.77
Outstanding, end of period		10,351,023		$	0.53		11,103,275		$	0.78
Exercisable at end of period		8,085,923		$	0.66		10,328,925		$	0.82

During the three and nine months ended September 30, 2016, the Company did not grant any stock options to employees.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Plan an option to purchase an aggregate 1,006,711 shares of common stock (the equivalent of $30,000 based on the common stock’s closing price of $0.0298 on the grant date) for a total of 3,020,134 shares of common stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant. As of September 30, 2016, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $80,453.

During the nine months ended September 30, 2015, the Company granted 6,299,600 options at an exercise price of $0.29 per share valued at $1,845,892. Stock- based compensation expense for both the three and nine months ended September 30, 2015 was $152,712 and $261,459 respectively. As of September 30, 2015, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $388,385. Of this amount, $158,959 was recognized during the fourth quarter of fiscal 2015.

During the nine months ended September 30, 2016 and September 30, 2015, there were no stock options exercised either for cash or on a cashless basis.

The fair value of each stock option granted is estimated on the date of grant using the Black- Scholes option valuation model. This model uses the assumptions listed in the table below for stock options granted in 2015 and 2016. Expected volatilities are based on the historical volatility of the Company’s stock. The risk- free rate for periods within the expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

	5/17/2016			6/30/2015
Weighted average fair value per option granted		0.0298			0.1431 – 0.3606
Risk-free interest rate		1.2	%		1.00% - 1.54	%
Expected dividend yield		0.0	%		0.0	%
Expected lives		2.7			3.0
Expected volatility		201.10	%		86.22% - 120.51	%

Stock options outstanding at September 30, 2016 are as follows:

Range of Exercise Prices	Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price		Options Exercisable
$0.01 - $1.50		8,854,489		4.8	$	0.33		6,589,389
$1.51 - $3.00		1,496,534		1.3	$	1.67		1,496,534
$3.01 - $5.00		-		-	$	-		-
		10,351,023		2.8	$	0.53		8,085,923

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Warrants

As of September 30, 2016, the Company had warrants outstanding to purchase 52,897,601 shares of the Common Stock, at prices ranging from $0.35 to $0.64 per share. These warrants expire at various dates through July 2021. The summary of the status of the warrants issued by the Company as of September 30, 2016 and December 31, 2015 are as follows:

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)
SUMMARY OF WARRANTS

	9/30/2016					12/31/2015
	Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price		Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price
Outstanding at beginning of year		50,957,780		$	0.52		16,446,351		$	1.44
Granted		6,550,000		$	0.64		87,825,204		$	0.42
Exercised		(4,610,179	)	$	0.43		(53,095,204	)	$	0.66
Cashless Exercises		-		$	-		-			-
Expired and Cancelled		-					(218,571	)	$	0.66
		52,897,601		$	0.50		50,957,780		$	0.52
Outstanding, end of period		52,897,601		$	0.50		50,957,780		$	0.52
Exercisable at end of period		52,897,601		$	0.50		50,957,780		$	0.52

Effective January 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the Company will deliver to the landlord 20,025 shares of its Preferred Shares which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of Common Stock at $0.64 per share.

On January 8, 2015, in conjunction with the sale of units consisting of convertible preferred stock, the “Company”), issued warrants (the “Initial Warrant”) to acquire 8.56 shares of the Company’s common stock at an exercise price of $0.64 per share. In addition, the Company agreed to issue to each of the investors in the first round of financing an additional warrant to acquire (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Common Stock at an exercise price of $0.64 per share. The Additional Warrants issued are exercisable for an aggregate of 946,400 shares of the Common Stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights as set forth below.

Due to the anti-dilution provisions of some of the outstanding warrants before the January 8, 2015 transaction, the exercise price on 15,512,057 warrants has been reduced to $0.35 and the number of shares of common stock into which the warrants are now exercisable has been adjusted such that the warrants are now exercisable into 54,400,204 shares of common stock.

In addition to the foregoing, the members of the Company’s Board of Directors agreed to receive 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

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On February 9, 2015, the Company closed a second round of a private placement offering in which investors received the Initial Warrants to acquire 8.56 shares of the Common Stock at an exercise price of $0.64 per share all pursuant to separate securities purchase agreements entered into with each investor. In addition, the Company issued to each of the investors in the first and second rounds of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Common Stock at an exercise price of $0.64 per share. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of the Common Stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of the Common Stock. The sale was part of a private placement offering (the “Offering”) in which the Company offered for sale a maximum of 5,000,000 units (gross proceeds of $20,000,000). Prior to the second closing, the Company raised gross proceeds of $1,040,000 in the initial closing of the Offering issued Initial Warrants to acquire 2,225,600 shares of common stock and Additional Warrants to acquire 946,400 shares of common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights.

The fair values for the Company’s derivative liabilities related to the Warrants issued is $67,108. The derivative instruments were valued as of September 30, 2016 with the following assumptions:

- The Holder would automatically exercise the warrants at a stock price above the exercise price, with the target exercise price dropping as expiration approaches,

- The projected annual volatility was based on the Company’s historical volatility,

- An event of default would occur 5% of the time, increasing by 0.10% per month,

- Dilutive/Full Reset events projected to occur based on future projected capital needs (capital funds raised were projected in prior quarters – future financings are projected going forward in 2016) resulting in the weighted conversion price dropping from the initial conversion price.

Effective January 1, 2015 the Company entered into a Consulting Agreement with Jeffery Consulting Group, LLC pursuant to which Jeffery Consulting will provide assistance with operational improvements including manufacturing processes, strategic and tactical advice with respect to the Company’s sales and marketing initiatives, and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting, the Company issued a warrant to purchase 1,250,000 shares of common stock at $0.35 per share. The warrant vested 500,000 shares upon the mutual execution of this agreement, and 250,000 shares each at the three month, six month, and nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. For the three months ended September 30, 2015 the Company recognized compensation expense of $128,880. The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital. The Company terminated the Consulting Agreement as of April 1, 2016.

On February 9, 2015, Edward B. Smith, III and Morris Garfinkle were issued warrants exercisable for 31,000,000 and 5,500,000 shares of common stock, respectively, in consideration of the services to be provided to the Company as Chief Executive Officer of the Company and Chairman of the Board, respectively. The exercise price of these warrants is $0.45 per share. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 81.99%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.85%. For the three months ended September 30, 2015 the Company recognized compensation expense of $3,749,259.

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014), which offered to participate in a warrant exchange program whereby each warrant holder was able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti- dilution rights on a one- time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015, there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti- dilution provisions resulting from the January 8, 2015 private placement.

The results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1). The Company recorded a loss on exchange of warrants in the amount of $12,959,654. Warrant holders elected to receive 318,750 additional warrants under alternative (2). Finally, warrant holders elected to receive a combination of 974,826 shares of Common Stock and 73,125 warrants under alternative (3). The Company recognized a warrant expense of $259,662.

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On May 14, 2015, the Company entered into a consulting agreement with E.B. Smith Jr. (father of the Company’s former Chief Executive Officer, director and largest shareholder, Edward B. Smith III) pursuant to which E.B. Smith Jr. agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by E.B. Smith Jr., the Company issued warrants to purchase 750,000 shares of common stock at $0.35 per share. The warrants vested 450,000 shares upon the mutual execution of the agreement and then in 150,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.6%. In 2015 the Company recognized an expense of $117,642. The agreement terminated on May 14, 2016.

On May 14, 2015, the Company entered into a consulting agreement with Terme Bancorp pursuant to which Terme Bancorp agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by Terme Bancorp, the Company issued warrants to purchase 1,250,000 shares of Common Stock at $0.35 per share. The warrants vested 750,000 shares upon the mutual execution of this agreement and then in 250,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.60%. In 2015 the Company recognized an expense of $197,075. The agreement terminated on May 14, 2016.

On October 2, 2015, the Company issued a warrant to acquire 250,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $250,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On December 23, 2015, the Company issued a warrant to acquire 500,000 shares of the Common Stock, at an exercise price of $0.64 per share to Jonathan Kahn in conjunction with his $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 2 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to Jonathan Kahn in conjunction with his $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 11, 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Morris Garfinkle in conjunction with its $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a warrant to acquire 200,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Dan Jeffery in conjunction with its $50,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 7, 2016, the Company issued two warrants to acquire a total of 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to two accredited investors in conjunction with their total of $100,000 note investments. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

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On April 8, 2016, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 22, 2016, the Company purchased 4,610,178 warrants from their holders for an aggregate price of $122,805.

On April 28, 2016, the Company issued a warrant to acquire 150,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Dan Jeffery in conjunction with its $50,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 14, 2016, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a warrant to acquire 600,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $300,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

There were no warrants exercised either for cash or on a cashless basis.

NOTE 15 – MAJOR CUSTOMERS AND CREDIT CONCENTRATION

The Company’s customers are food manufacturers, school districts and distributors. There were two significant customers who accounted for 52% and 13% of total sales for the three months ended September 30, 2016. Further, these same two customers accounted for 42% and 29% of the total accounts receivable at September 30, 2016. There were two significant customers who accounted for 38% and 13% of total sales for the nine months ended September 30, 2016.

The Company maintains cash deposits with major banks, which from time to time may exceed federally insured limits. The Company periodically assesses the financial condition of the institutions and believes that the risk of any loss is minimal.

NOTE 16 – COMMITMENTS

Building Lease

The Company leases a combined research and development and office facility located in Mundelein, Illinois. The facility is approximately 44,000 square feet. 

On March 14, 2014, the Company extended the lease until May 2015 and the required monthly rental payments increased to $21,361, inclusive of property taxes. Insurance and maintenance are billed when due. 

Effective January 1, 2015, the Company and its landlord executed an amendment to the lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the Company delivered to the landlord 20,025 shares of its 12.5% convertible preferred stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share.

On May 1, 2015, the Company and its landlord executed an amendment to the then current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 Preferred Shares and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

On October 14, 2015, the lease converted to a month to month basis. Monthly rental payments are currently $17,972, inclusive of property taxes. We believe we will be successful in negotiating a new lease with the landlord. 

For nine months ended September 30, 2016 and 2015, the Company recognized rent expense of $183,090 and $308,756 respectively. 

NOTE 17 – PENDING LITIGATION/CONTINGENT LIABILITY

On July 7, 2007, the Company and Greg Halpern, its former Chief Executive Officer in his individual capacity, were served with a complaint by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act and the plaintiffs are seeking damages in excess of $200,000. The trial court has issued a default order against the Company, and has denied the Company’s Motion to reconsider. Management believes that the trial court’s rulings were erroneous and that it has grounds for appeal, and that the underlying allegations are frivolous and wholly without merit and will vigorously defends the claim. The outcome of this matter is unknown as of the report date. However, the Company has accrued a liability in the amount of $102,000 in respect to this litigation.

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NOTE 18 – RELATED PARTY TRANSACTIONS

Effective January 1, 2015, the Company entered into a Consulting Agreement with Jeffery Consulting Group, LLC pursuant to which Jeffery Consulting agreed to provide assistance with operational improvements including manufacturing processes, strategic and tactical advice with respect to the Company’s sales and marketing initiatives, and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting, the Company issued a warrant to purchase 1,250,000 shares of Common Stock at $0.35 per share. The warrant vested 500,000 shares upon the mutual execution of this agreement, and 250,000 shares each at the three month, six month, and nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. For the three months ended September 30, 2015 the Company recognized compensation expense of $128,880. The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital. The Company terminated the Consulting Agreement as of April 1, 2016.

On January 8, 2015, the Company, entered into agreements to sell an aggregate of 260,000 Units to eight (8) accredited investors at a price per unit of $4.00 (the “Units”) In addition, the Company issued Additional Warrants exercisable for an aggregate of 946,400 shares of the Company’s common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights.

In addition to the foregoing, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

On February 9, 2015, Edward B. Smith, III and Morris Garfinkle were issued warrants exercisable for 31,000,000 and 5,500,000 shares of common stock, respectively, in consideration of the services to be provided to the Company as Chief Executive Officer of the Company and Chairman of the Board, respectively. The exercise price of these warrants is $0.45 per share. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 81.99%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.85%. For the three months ended September 30, 2015 the Company recognized compensation expense of $3,749,259.

On February 24, 2015, the Company issued 576,924 shares of common stock to its then three non-executive directors (192,308 shares each) Brian Israel, Morris Garfinkle and Dan Jeffery. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On May 14, 2015, the Company entered into a consulting agreement with E.B. Smith Jr. (father of the Company’s former Chief Executive Officer, director and largest shareholder, Edward B. Smith III) pursuant to which E.B. Smith Jr. agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by E.B. Smith Jr., the Company issued warrants to purchase 750,000 shares of common stock at $0.35 per share. The warrants vested 450,000 shares upon the mutual execution of the agreement and then in 150,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.6%. In 2015 the Company recognized an expense of $117,642. The agreement terminated on May 14, 2016. 

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

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On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn, the Company’s current Chief Executive Officer, interim Chief Financial Officer and member of the Board of Directors in the principal amount of $100,000. The Company recognized $3,791 and amortized $247 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Morris Garfinkle in the principal amount of $100,000. The Company recognized $3,094 and amortized $178 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Mr. Garfinkle. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 and amortized $105 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 28, 2016, the Company issued a 14% senior unsecured note to an entity related to Dan Jeffery in the principal amount of $50,000. The Company recognized $1,562 and amortized $55 of discount as of September 30, 2016. The note matures in one year (April 28, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 150,000 shares of the Common Stock at an exercise price of $0.64 per share to the entity related to Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Company’s Amended and Restated Incentive Compensation Plan an option to purchase 1,006,711 shares of Common Stock (the equivalent of $30,000 based on the Common Stock’s closing price of $0.0298 on the grant date) for a total of 3,020,133 shares of Common Stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant.

On May 17, 2016 (the “Effective Date”), the Company” entered into an employment agreement with Jonathan Kahn (the “Kahn Employment Agreement”) in connection with the appointment of Mr. Kahn as the Company’s new Chief Executive Officer. The Kahn Employment Agreement will continue until June 30, 2019 (subject to automatic one year extensions), unless earlier terminated pursuant to its terms. Pursuant to the Kahn Employment Agreement, Mr. Kahn’s annual base salary will be $200,000 per year from the Effective Date through December 31, 2016 and $225,000 beginning January 1, 2017. Mr. Kahn will also be eligible to participate in Company’s annual incentive compensation program (the “Annual Incentive Program”), with a target annual bonus equal to 100% of his annual base salary and a maximum annual bonus each year equal to 200% of his base salary. Mr. Kahn’s annual bonus for the 2016 calendar year will be prorated based on the number of days served during 2016. The actual amount of the annual bonus earned by and payable to Mr. Kahn in any year will be determined upon the satisfaction of goals and objectives established by the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”) and will be subject to such other terms and conditions of the Company’s Annual Incentive Program as in effect from time to time.

Pursuant to the Kahn Employment Agreement, Mr. Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock, par value $0.00005 per share (the “Common Stock”), such amount representing 3.5% of the Company’s shares of Common Stock on a fully diluted basis as of the Effective Date. In addition, on each of May 1, 2017 and May 1, 2018, respectively, Mr. Kahn will receive an additional grant of fully-vested Company Common Stock, such additional grants each representing 0.75% of the Company’s shares of Common Stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively (together with the 6,067,931 shares granted on the Effective Date, the “Equity Award”).

Commencing in calendar year 2017, and each year thereafter, Mr. Kahn will be eligible to participate in the Company’s annual equity incentive compensation program, with an annual target equity grant for each year in which Mr. Kahn participates in the equity incentive compensation program having a grant date fair value equal to 100% of Mr. Kahn’s base salary and a maximum annual equity award for each year in which Mr. Kahn participates in the equity incentive compensation program equal to 250% of Mr. Kahn’s base salary. In determining the amount of Mr. Kahn’s equity grant for any year, the Compensation Committee will consider the Company’s performance over the immediately preceding fiscal year.

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On each anniversary of the Effective Date and each Equity Issuance Date (as defined below), until such time as Mr. Kahn terminates employment with the Company, Mr. Kahn will receive an additional grant of unrestricted Common Stock (which additional grant will be deemed to be a part of the initial Equity Award), if necessary, so that on each such anniversary and each such Equity Issuance Date, the total number of shares received by Mr. Kahn pursuant to the Equity Award will equal at least 3.5% of the Company’s shares of Common Stock on a fully diluted basis until April 30, 2016, 4.25% until April 30, 2018, and 5.0% thereafter. For purposes of the Kahn Employment Agreement, an “Equity Issuance Date” is any date on which the Company consummates the sale of or issuance of (i) more than 1% of the Company’s shares of Common Stock on a fully diluted basis; or (ii) any instrument that is convertible into more than 1% of the Company’s shares of Common Stock on a fully diluted basis. For the sake of clarity, in calculating the total number of shares held by Mr. Kahn pursuant to the Equity Award, only the initial shares granted and any additional shares granted in accordance with this paragraph will be considered and any shares (A) held by Mr. Kahn on or prior to the Effective Date or (B) granted to or acquired by Mr. Kahn in any other manner following the grant to Mr. Kahn of the Equity Award (including any annual equity award grant or otherwise) will be disregarded.

If Mr. Kahn’s employment contract is terminated for death or Cause (as such terms are defined in the Kahn Employment Agreement), he (or his estate in the event of death) will receive (i) unpaid salary and expenses as well as his annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has not been paid as of the date of termination; (ii) any accrued vacation pay to the extent not theretofore paid; and (iii) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company.

If Mr. Kahn’s employment is terminated by the Company without Cause or terminated by him for Good Reason, he will receive two times the sum of (1) his base salary at the time of termination (or, in the event of a Termination for Good Reason, the base salary prior to the event constituting Good Reason if such Base Salary is higher than the base salary at the time of termination) plus (2) Target Bonus (as such term is defined in the Kahn Employment Agreement) at the time of termination (the “Severance Payment”). In addition, Mr. Kahn shall receive (i) an annual bonus for the year in which the terminations occurs, determined based on actual performance during such year and prorated for the period during the year in which Executive was employed by the Company, payable at the same time annual bonuses are paid to other senior executives of the Company; (ii) accelerated vesting of all outstanding Company equity awards, and, in the case of stock options, if any, such options shall remain exercisable until the expiration date of such option; and (iii) if Mr. Kahn timely and properly elects health continuation coverage under COBRA, the Company shall reimburse Mr. Kahn for the monthly COBRA premium paid by for himself and his dependents until the earlier of: (x) the 18-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage.

If (1) during the two year period following a Change of Control (as defined in the Kahn Employment Agreement), Mr. Kahn’s employment is terminated due to a Termination Without Cause or a Termination for Good Reason or (2) during the 90-day period preceding a Change of Control, his employment is terminated due to a Termination Without Cause in anticipation of a Change of Control transaction that the Board is actively considering and that is ultimately consummated, Mr. Kahn is entitled to receive the benefits set forth in the preceding paragraph, except that (i) in lieu of the Severance Payment, Mr. Kahn will receive two times the sum of (A) his base salary at the time of such termination or Change of Control, whichever base salary level is greater, plus (B) the Maximum Bonus (as such term is defined in the Kahn Employment Agreement) at the time of such termination or Change of Control, whichever Maximum Bonus level is greater (the “CIC Severance Payment”) and (2) Mr. Kahn will be eligible to receive such COBRA premium reimbursement until the earlier of: (x) the 24-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage. Under his employment agreement, Mr. Kahn has also agreed to non-competition provisions.

If Mr. Kahn’s employment is terminated due to Disability (as defined in the Kahn Employment Agreement), he will receive an annual bonus for the year in which the termination occurs, determined based on actual performance during such year and prorated for the period during the year in which Mr. Kahn was employed by the Company.

Pursuant to the Kahn Employment Agreement, Mr. Kahn was granted 6,067,931 fully-vested shares of Common Stock pursuant to the Company’s Amended and Restated Incentive Compensation Plan.

The foregoing summary description of the Kahn Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the Kahn Employment Agreement, a copy of which is attached as Exhibit 10.1 to the Form 8-K filed on May 17, 2016 and are incorporated herein by reference.

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There are no family relationships between Mr. Kahn and any former director, officer or person nominated or chosen by the Company to become director.

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Plan. The Company recognized a total expense of $160,001 related to this issuance. These shares were valued based on the closing price on the grant date.

NOTE 19 – GUARANTEES

The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship. The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on its balance sheet as of September 30, 2016.

In general, the Company offers a one-year warranty for most of the products it sells. To date, the Company has not incurred any material costs associated with these warranties.

NOTE 20 – SUBSEQUENT EVENTS

On November 4, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The note matures in one year (November 4, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Statement Regarding Forward Looking Information

This report contains or incorporates by reference various forward-looking statements concerning the Company’s prospects that are based on the current expectations and beliefs of management. Forward-looking statements may contain words such as “anticipate,” “believe,” “estimate,” “expect,” “objective,” “projection” and similar expressions or use of verbs in the future tense, which are intended to identify forward-looking statements; any discussions of periods after the date for which this report is filed are also forward-looking statements. The forward-looking statements contained herein and such future statements involve or may involve certain assumptions, risks, and uncertainties, many of which are beyond the Company’s control, which could cause the Company’s actual results and performance to differ materially from what is expected. Readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.

In addition to the assumptions and other factors referenced specifically in connection with such statements, factors that could cause or contribute to our actual results differing materially from those discussed herein or for our stock price to be adversely affected include, but are not limited to:

- our history of operating losses and our inability to achieve or guarantee profitable operations in the future or to continue operations;

- the risk that we will be unable to pay our debt obligations as they become due or that we will be able to find sufficient financing to fund our operations;

- risk that there will not be market acceptance of our products;

- our plans for commercialization of our products;

- possible problems in implementing new relationships or the failure to achieve the desire benefits from such relationships;

- our reliance on a limited number of product offerings;

- our product development efforts, including risk that we will not be able to produce our products in a cost-effective manner;

- our substantial dependence on the manufacturing facility owned by our toll manufacturer;

- our ability to secure new customers, maintain our current customer base and deliver product on a timely basis;

- our dependence on a small concentration of customers;

- possible issuances of common stock subject to options, warrants and other securities that may dilute the interest of stockholders, and/or future exercise of such options and warrants;

- our ability to protect technology through patents;

- our ability to protect our proprietary technology and information as trade secrets and through confidentiality agreements or other similar means;

- the effects of the 2015 expiration of the USDA patent we have employed in manufacturing our products;

- competition from larger, more established companies with far greater economic and human resources;

- fluctuations in the availability of raw materials and the price for agricultural products;

- the effect of changes in the pricing and margins of products;

- the potential loss of key personnel or other personnel disruptions;

- possible product recalls due to adulteration of products or materials, future regulatory action, or other concerns;

- our ability to comply with all government regulation and retain favorable regulatory status, such as GRAS status, of our products and ingredients;

- risk that we will not be able to remediate identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting;

- sufficient voting power by one large stockholder to make corporate governance decisions that could have significant effect on us and the other stockholders;

- our nonpayment of dividends to common stockholders and lack of plans to pay dividends to common stockholders in the future;

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- our need for additional financing;

- our ability to successfully defend future litigation, including possible claims related to products liability and infringement of intellectual property, as well as the outcome of regulatory actions and inquiries;

- future sale of a substantial number of shares of our common stock that could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital;

- our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock;

- our stock is classified as a penny stock and subject to additional regulation as such; and

- our stock price is likely to be highly volatile due to a number of factors, including a relatively limited public float and potential for short sales of our stock.

In addition, see Risk Factors in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for a further discussion of some of the factors that could affect future results.

The following discussion is intended to assist in understanding the financial condition and results of operations of Agritech Worldwide, Inc. You should read the following discussion along with our financial statements and related notes included in this Form 10-Q.

Unless the context requires otherwise, in this report, the “Company,” “Agritech,” “Agritech Worldwide,” “we,” “us” and “our” refer to Agritech Worldwide, Inc.

Overview

Agritech Worldwide, Inc. (formerly Z Trim Holdings, Inc.) is an agricultural technology company that owns existing, and seeks to develop new, products and processes that convert generally available agricultural by-products into multi-functional all-natural ingredients that can be used in food manufacturing and other industries. Our primary focus and the source of substantially all of our revenue is from the sale of our all-natural products, Z Trim®, to the food industry. We currently sell a line of all-natural products to the food industry designed to help manufacturers reduce their costs, improve the quality of finished goods, and solve many production problems. Our innovative technology can provide value-added all-natural ingredients across virtually all food industry categories. These products offer a range of functional attributes, including helping to reduce fat and calories, adding fiber, improving shelf-stability, preventing oil migration, and enhancing binding capacity – all without degrading the taste and texture of the final food products. Perhaps most significantly, our ingredients can help extend the life of finished products, potentially increasing our customers’ gross margins.

We have developed products that manage moisture to help reduce production costs and improve nutritional value in finished foods, while maintaining the essential taste and mouth-feel associated with full-fat products. The potential global market for our line of products spans the entire food and nutritional beverage industry, including fat-free, low-fat, reduced-fat and full-fat, across meats, baked goods, dairy and non-dairy products, snacks, beverages, dressings, sauces and dips.

In July 2012, we opened an industrial products division focusing on the manufacture, marketing and sales of products designed specifically for industrial applications, including oil drilling fluids, petroleum coke, charcoal briquettes, hydraulic fracturing, and paper and wood adhesives. When used in industrial operations, we believe that our products can reduce costs, enhance supply-chain reliability, limit environmental impact, and improve finished product quality compared to current products such as guar gum, xanthan gum, CMC, lignosulfonates and starches used as binders, adhesives, viscofiers or emulsifiers.

Going Concern

For the nine months ended September 30, 2016, we incurred a net loss of $2,011,964 and had an accumulated deficit of $158,441,594. We incurred a net loss of $23,976,431 for the twelve months ended December 31, 2015, and had an accumulated deficit of $156,429,630. As of September 30, 2016, we had cash and cash equivalents in the amount of $116,408 and total liabilities of $6,455,968. As of December 31, 2015, we had cash and cash equivalents in the amount of $309,851 and total liabilities in the amount of $4,918,652. We also had a working capital deficit of $6,047,937 and $3,801,651 as of September 30, 2016 and December 31, 2015, respectively. Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities. However, we still require additional financing to fully implement our business plan for the next twelve months and beyond. As of the date of this quarterly report, we had not generated sufficient revenues to meet our cash flow needs. As of November 14, 2016, our current cash on hand is not sufficient for us to be able to maintain our operations at the current level through December 31, 2016 and not enough to fund our operations for the next 12 months. As a result, there is substantial doubt about our ability to continue as a going concern. Although we have generated revenue, we are still operating at a net loss, and may continue to incur losses for a period of time. We cannot assure you that we will be able to obtain sufficient funds from our operating or financing activities to support our continued operations past December 31, 2016. If we cannot continue as a going concern, we will need to substantially revise our business plan or cease operations, which will reduce or completely eliminate the value of your investment.

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Reincorporation

We were originally incorporated in the State of Illinois on May 5, 1994 under the name Circle Group Entertainment Ltd. On June 21, 2006, we filed a certificate of amendment to our certificate of incorporation and changed our name to Z Trim Holdings Inc. On March 23, 2016, we changed our state of incorporation by engaging in a merger (the “Reincorporation”) with and into our newly formed wholly owned subsidiary, Agritech Worldwide, Inc., a Nevada corporation, pursuant to the terms and conditions of an Agreement and Plan of Merger entered into by Z Trim and Agritech on March 18, 2016 (the “Merger Agreement”). The Reincorporation was consummated on March 23, 2016 and was effectuated by the filing of (i) articles of merger with the Secretary of State of the State of Nevada, and (ii) articles of merger with the Secretary of State of the State of Illinois. The Reincorporation effected a change in our legal domicile from Illinois to Nevada. Upon the effectiveness of the Reincorporation our affairs ceased to be governed by (i) Illinois corporation laws, (ii) our Illinois Articles of Incorporation, and (iii) our Illinois Bylaws, and our affairs became subject to (a) Nevada corporation laws, (b) Agritech’s Articles of Incorporation of and (c) Agritech’s Bylaws. The resulting Nevada corporation is (i) be deemed to be the same entity as the Illinois corporation for all purposes under the laws of Nevada, (ii) continue to have all of the rights, privileges and powers of the Illinois corporation, (iii) continue to possess all properties of the Illinois corporation, and (iv) continues to have all of the debts, liabilities and obligations of the Illinois corporation.

Current Trends and Recent Developments Affecting the Company

Sales and Manufacturing

Revenues for the third quarter of 2016 increased approximately 70% as compared to revenues for the third quarter of 2015 due to increased demand for our product and catch-up orders from customers who did not order product in the second quarter due to a price increase. This price increase was implemented after a review of production costs and product benefits and functionality. The determination by management was that our products and price points were not commensurate with our benefits and value propositions available to the Company’s customers. In its history, the Company had experimented with outside toll manufacturing arrangements. These efforts were not successful. This year, the Company returned its focus to its facility in Mundelein, IL as its primary manufacturing facility. This return resulted in greater production control but with the result of experiencing very limited manufacturing output. In the second quarter, meaningful capacity increases were achieved yielding approximately 30% greater production. Gross margins, while still at a loss improved 67%. The comprehensive process engineering and structural review of company operations and its current manufacturing facility commenced last quarter is continuing. An outside process and structural engineering firm has been hired to help the Company develop a path forward to find significantly more capacity at our Mundelein, IL facility. With greater product availability management expects current customers will order greater quantities and our new customer acquisition efforts will be supported as well.

Funding Initiatives

On January 8, 2015, the Company entered into agreements to sell an aggregate of 260,000 units to eight (8) accredited investors at a price per unit of $4.00 (the “Units”) with each Unit consisting of (i) one (1) share of 12.5% Redeemable Convertible Preferred Stock (the “Preferred Shares”) and (ii) one (1) warrant (the “Initial Warrant”), representing the right to acquire 8.56 shares of our common stock at an exercise price of $0.64 per share, for aggregate cash proceeds of $1,040,000 pursuant to separate purchase agreements entered into with each investor (the “Securities Purchase Agreements”). On February 9, 2015, we closed a second round of our private placement offering with four (4) accredited investors in which we raised gross proceeds of $500,000 and sold 125,000 Units. In addition, we issued to each of the investors in the first and second round of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of our common stock at an exercise price of $0.64 per share. The Additional Warrants issued in the initial closing of 260,000 Units are exercisable for an aggregate of 946,400 shares of our common stock. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of our common stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of our common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights as set forth below. Subsequent to February 9, 2015, we sold an additional 187,500 units, each unit consists of (i) one Preferred Share and (ii) one (1) warrant to acquire 8.56 shares of our common stock at an exercise price of $0.64 per share for aggregate cash proceeds of $750,000.

We used the net proceeds of the above-described offering (the “Offering”) for working capital and general corporate purposes, including without limitation, to repay certain loans. The Offering is part of a private placement offering in which the Company offered for sale on a “best efforts–all or none” basis up to 250,000 units (gross proceeds of $1,000,000, including the principal amount of bridge notes exchanged for Units, and on a “best efforts” basis the remaining 4,750,000 Units for a maximum of 5,000,000 Units (gross proceeds of $20,000,000).

As of January 8^th, 2015, due to the anti-dilution provisions of some of the outstanding warrants, the exercise price on 15,512,057 warrants was reduced to $0.35 and the number of shares of common stock into which the warrants were then exercisable was adjusted such that the warrants became exercisable into 50,957,780 shares of common stock.

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In addition to the foregoing, the members of our Board of Directors agreed to receive an aggregate of 96,589 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith III, our Chief Executive Officer, in exchange for an aggregate of $284,844 of notes and accrued interest, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes and accrued interest; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes and accrued interest, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491 of principal and interest on notes and accrued interest.

After the Reincorporation, each outstanding Preferred Share continued to be an outstanding share of the Nevada corporation’s preferred stock. The following is a summary of material provisions of the Preferred Shares as set forth in the Certificate of Designations:

The Preferred Shares are nonvoting, accrue dividends at the rate per annum equal to 12.5% of the sum of (i) the Stated Value (which initially is $4.00) until the Maturity Date as defined in the Statement of Resolution Establishing Preferred Shares and (ii) the amount of accrued and unpaid dividends payable, are convertible into shares of common stock at the option of the holder as described in the Statement of Resolution Establishing Preferred Shares, have anti- dilution protection, registration rights, may be redeemed under certain circumstances, liquidation preference, protective provisions and board rights under certain circumstances.

Results of Operations

Three Months Ended September 30, 2016 Compared with Three Months Ended September 30, 2015

Revenues

Revenue for the three months ended September 30, 2016 was $371,085, as compared to revenue of $218,732 for the three months ended September 30, 2015, an increase of 70%. Our revenue for the three months ended September 30, 2016 and 2015 was entirely attributable to product sales. We attribute the increase in sales in the current year’s period to increased demand and catch-up orders from customers that initially balked at a product price increase initiated in the second quarter. Our ability to generate increased revenue in future reporting periods will be dependent on continued increased demand for our products from existing and new customers, and the completion of changes in our production process to further improve our capacity and reduce costs, all of which cannot be assured.

Cost of Revenues

Cost of revenues for products sold for the three months ended September 30, 2016 and 2015 was $509,767 and $445,936, respectively, an increase of $63,831 or 14.3%. The increase in costs of goods sold in the current year’s period was attributable to increased production. However, margins improved by 67% as cost of revenues to revenues as a percentage decreased from 204% for the three months ended September 30, 2015 to 137% for the three months ended September 30, 2016. We believe that increases in sales and monthly production volume will enable us to allocate our fixed costs over a greater number of finished goods and reduce the cost of goods sold in the future to improve margins. 

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Gross Margin (Loss)

Gross loss for the three months ended September 30, 2016 was $138,682 compared to a gross loss of $227,204, for the three months ended September 30, 2015. Gross loss reflects a number of factors that can vary from period to period, including those described above.

Selling, General and Administrative Expenses

Operating expenses for the three months ended September 30, 2016 were $529,287 a decrease of $243,670 over the comparable period ended September 30, 2015 of $772,957. The decrease was primarily due to a decrease in stock based compensation, salary expenses and consulting fees.

The components of selling, general and administrative expenses for the quarters ended September 30, 2016 and 2015 respectively are as follows:

	Three Months Ended September 30,
	2016		2015
Stock based compensation expenses	$	9,388	$	208,991
Salary expenses		99,947		271,710
Professional fees		51,444		96,146
Directors fees		22,802		-
Consultant fees		135,765		106,640
Other		210,241		116,469
	$	529,287	$	772,957

The decrease in salary and employee benefits to $99,947 for the three months ended September 30, 2016 from $271,710 for the three months ended September 30, 2016 is attributable to fewer employees. Stock based compensation decreased by $199,603 in 2016 as compared to 2015. Consultant fees increased by $29,125.

Operating Loss

The operating loss for the three months ended September 30, 2016 decreased to $667,969 compared to a loss of $1,000,161 for the three months ended September 30, 2015 due to the reasons described above.

Other Income (Expenses)

Other expense for the three months ended September 30, 2016 was $28,032 as compared to other expense of $565,031 for the three months ended September 30, 2016. The change was primarily due to the large expense, in 2015, related to the loss on sale and leaseback transaction. Interest expense in the three months ended September 30, 2016 was $155,889 compared to $57,261 for the prior year.

Net Loss

As a result of the above, for the three months ended September 30, 2016, we reported a net loss of $696,001 as compared to a net loss of $1,562,192 for the three months ended September 30, 2015.

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Basic and Diluted Net Loss per Share

The basic and diluted net loss per share for the three months ended September 30, 2016 was $0.01 as compared to the basic and diluted net loss per share of $0.03 for the three months ended September 30, 2015. The per share results were impacted by the decrease in the Operating Loss and Other Expenses as discussed above and the significant increase in the average number of shares outstanding in 2016 compared to 2015.

Nine months Ended September 30, 2016 Compared with Nine months Ended September 30, 2015

Revenues

Revenue for the nine months ended September 30, 2016 was $923,513, as compared to revenue of $834,563 for the nine months ended September 30, 2015, an increase of 11%. Our revenue for the nine months ended September 30, 2016 and 2015 was entirely attributable to product sales. We attribute the increase in sales in the current year’s period due to increased customer demand. Our ability to generate increased revenue in future reporting periods will be dependent on continued increased demand for our products from existing and new customers, and the completion of changes in our production process to further improve our capacity and reduce costs, all of which cannot be assured.

Cost of Revenues

Cost of revenues for products sold for the nine months ended September 30, 2016 and 2015 was $1,295,444 and $1,420,476, respectively, a decrease of $125,032 or 9%. The decrease in costs of goods sold in the current year’s period was attributable to improved production efficiency. Margins improved by 30% as cost of revenues to revenues as a percentage decreased from 170% for the nine months ended September 30, 2015 to 140% for the nine months ended September 30, 2016. We believe that increases in sales and monthly production volume will enable us to allocate our fixed costs over a greater number of finished goods and reduce the cost of goods sold in the future to improve margins. 

Gross Margin (Loss)

Gross loss for the nine months ended September 30, 2016 was $371,931, compared to a gross loss of $585,913 for the nine months ended September 30, 2015. Gross loss reflects a number of factors that can vary from period to period, including those described above.

Selling, General and Administrative Expenses

Operating expenses for the nine months ended September 30, 2016 were $1,657,371 a decrease of $5,224,057 over the comparable period ended September 30, 2015 of $6,881,428. The decrease was primarily due to a decrease in stock based compensation and to a lesser extent a decrease in salary expense and consulting fees.

The components of selling, general and administrative expenses for the nine months ended September 30, 2016 and 2015 respectively are as follows:

	Nine months Ended September 30,
	2016		2015
Stock based compensation expenses	$	247,315	$	4,326,659
Salary expenses		372,424		863,175
Professional fees		188,610		206,812
Directors fees		70,640		150,000
Consultant fees		141,015		657,963
Other		637,367		676,819
	$	1,657,371	$	6,881,428

The decrease in salary and employee benefits to $372,424 for the nine months ended September 30, 2016 from $863,175 for the nine months ended September 30, 2016 is attributable to fewer employees. Stock based compensation decreased by $4,079,344 in 2016 as compared to 2015. All other expenses in total decreased by $653,962, as a result of lower consultant fees and directors’ fees.

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Operating Loss

The operating loss for the nine months ended September 30, 2016 decreased to $2,029,302 compared to a loss of $7,467,341 for the nine months ended September 30, 2015 due to the reasons described above.

Other Income (Expenses)

Other income for the nine months ended September 30, 2016 was $17,388 as compared to other expense of $15,409,236 for the nine months ended September 30, 2016. The change was primarily due to the large expense, in 2015, related to the loss on warrant exchanges. Interest expense in the nine months ended September 30, 2016 was $371,062 compared to $154,200 for the prior year.

Net Loss

As a result of the above, for the nine months ended September 30, 2016, we reported a net loss of 2,011,964 as compared to a net loss of $22,876,577 for the nine months ended September 30, 2015.

Basic and Diluted Net Loss per Share

The basic and diluted net loss per share for the nine months ended September 30, 2016 was $0.02 as compared to the basic and diluted net loss per share of $0.48 for the nine months ended September 30, 2015. The per share results were impacted by the decrease in the Operating Loss and Other Expenses as discussed above and the significant increase in the average number of shares outstanding in 2016 compared to 2015.

Liquidity and Capital Resources

As of September 30, 2016, we had a cash and cash equivalents balance of $116,408, a decrease from a balance of $309,851 at December 31, 2015. At September 30, 2016, we had working capital deficit of $6,047,937 as compared to working capital deficit of $3,801,651 as of December 31, 2015. The decrease in working capital primarily resulted from the decreases in cash, and increased short-term borrowings. Subsequent to September 30, 2016 we raised an aggregate $100,000 from debt financing. As of November 10, 2016, we had a cash balance of $22,982.

Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities. We continue to explore additional equity and debt funding however, there can be no assurance that we will be successful in raising all of the additional funding that it is seeking or that such amount will be sufficient for our needs. As of the date of our most recent audit, for the fiscal year ended December 31, 2015, we had not generated sufficient revenues to meet our cash flow needs. Our current cash on hand as of November 10, 2016 is insufficient for us to be able to maintain our operations at the current level beyond December 31, 2016. As a result, there is doubt about our ability to continue as a going concern. Although we have generated revenue, we are still operating at a net loss, and may continue to incur losses for a period of time. We cannot assure you that we will be able to obtain sufficient funds from our operating or financing activities to support our continued operations past December 31, 2016. If we cannot continue as a going concern, we will need to substantially revise our business plan or cease operations, which will reduce or completely eliminate the value of our security holders’ investment.

Certain of our Preferred Shares and warrants have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such preferred stock and warrants. These reset provisions result in a derivative liability in our financial statements. Our derivative liabilities decreased to $376,890 at September 30, 2016 from $742,833 at December 31, 2015. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

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The following discussion focuses on information in more detail on the main elements of the $193,443 net decrease in cash during the nine months ended September 30, 2016 included in the accompanying Statements of Cash Flows. The table below sets forth a summary of the sources and uses of cash for the nine month periods ended September 30:

	2016			2015
Cash used in operating activities	$	(1,916,818	)	$	(1,794,846	)
Cash provided by investing activities		-			172,911
Cash provided by financing activities		1,723,376			878,789
Decrease in cash	$	(193,443	)	$	(743,146	)

Cash used in operating activities was $1,916,818 during the nine-month period ended September 30, 2016, compared to $1,794,846 in the nine-month period ended September 30, 2015. Net losses of $2,011,964 and $22,876,577 for the nine months ended September 30, 2016 and 2015, respectively, were the primary reasons for our negative operating cash flow in both periods. During the nine months ended September 30, 2015 our negative operating cash flow was significantly offset by the effects of non-cash charges to income including stock-based compensation, shares issued for directors’ fees and depreciation.

No cash was provided by or used in investing activities in the nine-month period ended September 30, 2016. Cash provided by investing activities was $172,911 in the nine-month period ended September 30, 2015 due to the sale leaseback transaction.

Cash provided by financing activities was $1,723,376 in the nine-month period ended September 30, 2016, compared to $878,789 during the nine-month period ended September 30, 2015. Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities and the cash conversion of warrants into equity. During the nine months ended September 30, 2016, we raised $1,800,000 from the issuance of short term non-convertible notes and paid down $76,624 in capital lease obligations resulting in cash provided by financing activities of $1,723,376. During the first nine months of 2015, we raised $880,000 from the sale of Units consisting of Preferred Shares and warrants and $587,000 from the sale of short-term non-convertible notes mostly offset by the payoff of short term borrowings from Fordham Capital. On March 24, 2015, we made a final payment of principal and interest in the amount of $570,449 to Fordham Capital Partners in satisfaction of the Amended and Restated Equipment Revolving Note dated July 16, 2014.

Commitments/Contingencies:

As of September 30, 2016, we had outstanding non-convertible notes in the aggregate principal amount of $1,257,000 due to related parties that mature within one year.

We also have non-convertible notes in the aggregate principal amount of $1,750,000 payable to unrelated parties that mature within one year.

In addition, we have outstanding convertible notes payable to related parties in the principal amount of $624,866 at September 30, 2016.

The amount of accrued and unpaid interest was $500,533 on the same date.

Capital Expenditures. At September 30, 2016, we have no material commitments for capital expenditures.

Lease commitments. We lease a combined manufacturing, research and development and office facility located in Mundelein, Illinois. The lease is on a month to month basis. Monthly rental payments are $17,972, inclusive of property taxes. We believe we will be successful in negotiating a new lease with the landlord.

On July 17, 2015, the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months, monthly lease payments by the Company of $15,800 and the option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no later than July 8, 2017): $325,000. The Equipment Lease Agreement includes customary events of default, including non- payment by the Company of the monthly lease payments and the payment of penalties upon such late payments. The equipment lease is secured by all of the assets of the Company.

Litigation. In July 2007, we and Greg Halpern, its former Chief Executive Officer in his individual capacity, were sued in the 20th Judicial Circuit Court, St. Clair County, Illinois by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act and damages in excess of $200,000. The trial court has issued a default order against us, and has denied our motion to reconsider. Management believes that the trial court’s rulings were erroneous and that it has grounds for appeal, and that the underlying allegations are frivolous and wholly without merit and the Company will vigorously defend the claim. The outcome of this matter is unknown as of the date of this report. However, the Company has allocated a reserve of $102,000 to satisfy any liability it may incur as a result of this matter.

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Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

Our financial statements have been prepared in conformity with GAAP. For a full discussion of our accounting policies as required by GAAP, refer to our Annual Report on Form 10-K for the year ended December 31, 2015. We consider certain accounting policies to be critical to an understanding of our condensed consolidated financial statements because their application requires significant judgment and reliance on estimations of matters that are inherently uncertain. The specific risks related to these critical accounting policies are unchanged at the date of this report and are described in detail in our Annual Report on Form 10-K.

Item 3. Quantitative and Qualitative Disclosure About Market Risks

Not Applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

The Company’s management, with the participation of the Company’s Chief Executive Officer, who also serves as the Company’s interim Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and interim Chief Financial Officer concluded that, as of September 30, 2016, the Company’s disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our Chief Executive Officer and interim Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. This conclusion is based primarily on the material weaknesses in internal control over financial reporting that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015, where management identified material weaknesses consisting of ineffective controls over (i) the control environment, (ii) financial statement disclosure; and (iii) financial reporting, and our failure to complete the process of remediating these weaknesses by the end of the period covered by this Quarterly Report.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2016, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Company continues to develop internal processes and segregations to mitigate the internal control deficiencies but that is still a work in process.

Limitations on the Effectiveness of Controls

Our Principal Executive Officer and Principal Financial Officer do not expect that our disclosure controls or internal controls will prevent all error and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

36

Remediation of Material Weaknesses

As discussed above, as of December 31, 2015, we identified material weaknesses in our internal control over financial reporting primarily due to us not having developed accounting policies and procedures and effectively communicating the same to our employees. Management plans to address these weaknesses by looking to hire a part time accountant for monthly or quarterly work and providing future investments in the continuing education of our accounting and financial professionals.

If the remedial measures described above are insufficient to address any of the identified material weaknesses or are not implemented effectively, or if additional deficiencies arise in the future, material misstatements in our interim or annual financial statements may occur in the future. Among other things, any unremediated material weaknesses could result in material post-closing adjustments in future financial statements.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

The following information and updates should be read in conjunction with the information disclosed in Part 1, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Annual Report”). Except as disclosed below, there have been no material changes from the risk factors and uncertainties disclosed in our 2015 Annual Report.

We have a history of operating losses and cannot guarantee profitable operations in the future. Failure on our part to achieve profitability may cause us to reduce or eventually cease operations.

We incurred a net loss of $2,011,964 for the nine months ended September 30, 2016, and had an accumulated deficit of $158,441,594. We incurred a net loss of $23,976,431 for the twelve months ended December 31, 2015, and had an accumulated deficit of $156,429,630. 

If we continue to incur significant losses, we may not be able to continue operations. Even if we can continue operations, our cash reserves may be depleted earlier than currently anticipated, and we may be required to limit its future growth objectives to levels corresponding with its then available cash reserves.

If we do not obtain additional financing, we will be required to discontinue operations.

As September 30, 2016, we had cash in the amount of $116,408 and total liabilities in the amount of $6,455,968. We also had a working capital deficit of $6,047,937 as of September 30, 2016. As of December 31, 2015, we had cash in the amount of $309,851 and total liabilities in the amount of $4,918,652. We also had a working capital deficit of $3,801,651 as of December 31, 2015. Over the last several years, our operations have been funded primarily through the sale of both equity and debt securities. However, we still require additional financing to fully implement our business plan for the next twelve months and beyond. Our current cash on hand is insufficient for us to be able to maintain its operations at the current level through December 31, 2016. In order to continue to pursue our business plan, we will require additional funding. If we are not able to secure additional funding, the implementation of our business plan will be delayed and its ability to maintain or expand operations will be impaired. We intend to secure additional funding through debt or equity financing arrangements, increased sales generated by operations and reduced expenses.

Our ability to repay our loans is predicated on future sales growth and generating positive cash flow from the business or securing other financing.

As of September 30, 2016, we had total liabilities of $6,455,968, which includes $3,594,300 of short term notes. As of December 31, 2015, we had total liabilities of $4,918,652, which includes $1,831,866 of short term notes. The amount of revenues generated by the business has been insufficient to support ongoing daily operations. Previously, we had to rely on new equity or debt financing in order to satisfy other financings incurred by us. Our current cash balance as of November 14, 2016 of $22,982 will not be sufficient to repay the loans and support our continuing operations as planned. There are no assurances that we will secure additional debt or equity financing in order to pay off the loans and support our continuing operations as planned.

37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On July 14, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The note matures in one year (July 14, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $300,000. The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 600,000 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On November 4th, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The note matures in one year (November 4th, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

None of the issuances of the securities described above were registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a) (2) under the Securities Act and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering. The investors represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit Number	Description
31.1	Certification of Chief Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended.*
32.1	Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Link base Document*
1.01 LAB	XBRL Extension Labels Link base Document*
101.PRE	XBRL Taxonomy Extension Presentation Link base Document*
101.DEF	XBRL Taxonomy Extension Definition Link base Document*

* Filed herewith.

39

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AGRITECH WORLWIDE, INC.
	(Registrant)
Date: November 14, 2016	/s/ Jonathan Kahn
	Jonathan Kahn
	Chief Executive Officer (Principal Executive Officer) and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

40

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jonathan Kahn, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2016, of Agritech Worldwide, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) (if any) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) (if any) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2016

/s/ Jonathan Kahn

Jonathan Kahn

Chief Executive Officer
(Principal Executive Officer) and
Interim Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Agritech Worldwide, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2016, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Jonathan Kahn, Chief Executive Officer and interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Jonathan Kahn

Jonathan Kahn

Chief Executive Officer
(Principal Executive Officer) and
Interim Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

November 14, 2016

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Agritech Worldwide, Inc. and will be retained by Agritech Worldwide, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 14, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Agritech Worldwide, Inc.
Entity Central Index Key	0001052257
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		101,878,858

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Balance Sheets - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current Assets
Cash and cash equivalents	$ 116,408	$ 309,851
Accounts receivable	127,168	248,348
Inventory	163,455	238,264
Prepaid expenses and other assets	1,000	55,558
Total current assets	408,031	852,021
Long Term Assets
Property and equipment, net of depreciation	392,600	471,233
Other assets	17,626	31,193
Total long term assets	410,226	502,426
TOTAL ASSETS	818,257	1,354,447
Current Liabilities
Accounts payable	1,281,374	1,141,478
Short-term notes payable to unrelated parties, net of discount	1,722,096	750,000
Short-term non-convertible notes payable to related parties, net of discount	1,247,338	457,000
Short-term convertible notes payable to related parties	624,866	624,866
Accrued expenses and other	762,149	684,596
Accrued liquidated damages	36,178	36,178
Capital lease payable, short term	405,077	216,721
Derivative liabilities	376,890	742,833
Total Current Liabilities	6,455,968	4,653,672
Long Term Portion of Capital Lease Payable		264,980
Total Liabilities	6,455,968	4,918,652
Stockholders' Equity (Deficit)
Common Stock, $0.00005; authorized 500,000,000; shares issued and outstanding is 101,878,858 and 93,797,504 at September 30, 2016 and December 31, 2015, respectively	5,094	4,690
Additional paid-in capital	152,791,693	152,853,639
Accumulated deficit	(158,441,594)	(156,429,630)
Total Stockholders' Equity (Deficit)	(5,637,711)	(3,564,205)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)	818,257	1,354,447
Convertible Preferred Stock, Series B
Stockholders' Equity (Deficit)
Convertible preferred stock, Series B, $0.01 par value authorized 3,000,000 shares; issued and outstanding 709,625 at both September and December 31, 2015.	$ 7,096	$ 7,096

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Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Common stock, par value	$ 0.00005	$ 0.00005
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	101,878,858	93,797,504
Common stock, shares outstanding	101,878,858	93,797,504
Convertible Preferred Stock, Series B
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	709,625	709,625
Preferred stock, shares outstanding	709,625	709,625

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Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
REVENUES:
Products	$ 371,085	$ 218,732	$ 923,513	$ 834,563
Total revenues	371,085	218,732	923,513	834,563
COST OF REVENUES:
Products	509,767	445,936	1,295,444	1,420,476
Total cost of revenues	509,767	445,936	1,295,444	1,420,476
GROSS MARGIN (LOSS)	(138,682)	(227,204)	(371,931)	(585,913)
OPERATING EXPENSES:
Selling, general and administrative	529,287	772,957	1,657,371	6,881,428
Total operating expenses	529,287	772,957	1,657,371	6,881,428
OPERATING LOSS	(667,969)	(1,000,161)	(2,029,302)	(7,467,341)
OTHER INCOME (EXPENSES):
Interest expense - other		(21,518)		(26,194)
Interest expense - debt	(155,889)	(35,743)	(371,062)	(128,006)
Change in fair value - derivatives	127,857	66,561	388,400	(1,355,747)
Loss on sale and leaseback transaction		(574,331)		(574,331)
Loss on settlement with vendor				(13,990)
Loss on debt conversion				(351,314)
Loss on exchange of warrants				(12,959,654)
Total other income (expenses)	(28,032)	(565,031)	17,338	(15,409,236)
NET LOSS	(696,001)	(1,565,192)	(2,011,964)	(22,876,577)
Less Preferred Dividends	92,475	67,462	275,416	194,302
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (788,476)	$ (1,632,654)	$ (2,287,380)	$ (23,070,879)
NET LOSS PER SHARE - BASIC AND DILUTED	$ (0.01)	$ (0.03)	$ (0.02)	$ (0.48)
Weighted Average Number of Shares Basic and Diluted	101,878,858	47,517,640	97,838,181	47,313,497

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Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,011,964)	$ (22,876,577)
Adjustments to reconcile loss from continuing operations to net cash used in operating activities:
Stock based compensation - stock options and warrants vested	317,955	4,534,849
Common shares issued for director fees		150,000
Amortization of debt discount	3,660
Shares & warrants issued for services		104,000
Preferred stock payable for services		258,731
Preferred stock to be issued for services
Warrants issued expense		259,662
Depreciation	75,184	154,250
Change in fair value of derivative liability	(365,943)	1,355,747
Loss on exchange of warrants		12,959,654
Loss on debt conversion		351,314
Loss on sale and leaseback transaction		574,331
Loss on settlement with vendor		13,990
Changes in operating assets and liabilities:
Accounts receivable	121,180	(150,265)
Inventory	74,809	306,611
Prepaid expenses and other assets	68,125	(19,564)
Accounts payable and accrued expenses	(199,824)	228,421
CASH USED IN OPERATING ACTIVITIES	(1,916,818)	(1,794,846)
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash received from the sale of fixed assets		172,911
CASH PROVIDED BY INVESTING ACTIVITIES		172,911
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on capital lease	(76,624)
Proceeds for the purchase of convertible preferred stock		880,000
Borrowing on short term debt to unrelated parties	1,600,000	400,000
Borrowing on short term debt to related parties	200,000	187,000
Borrowing on short term non-convertible notes payable to related parties
Principal payments on debt		(588,211)
CASH PROVIDED BY FINANCING ACTIVITIES	1,723,376	878,789
NET DECREASE IN CASH	(193,443)	(743,146)
CASH AT BEGINNING OF PERIOD	309,851	1,027,713
CASH AT THE PERIOD ENDED SEPTEMBER 30TH	116,408	284,567
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for interest	80,259	53,596
Discount on debt due to derivitives	37,566
Preferred dividends payable declared	275,416	194,302
Preferred stock issued for preferred stock payable		1,010,000
Conversion of debt and interest into preferred stock		386,375
Reclassification of notes from unrelated to related	600,000
Warrants to be exchanged for common stock		$ 542,944

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Nature of Business

9 Months Ended

Sep. 30, 2016

Nature of Business [Abstract]

NATURE OF BUSINESS

NOTE 1 – NATURE OF BUSINESS

Agritech Worldwide, Inc., formerly known as Z Trim Holdings, Inc. (the “Company”), is an agricultural technology company that owns and develops products and processes for use in the food and industrial markets. The Company currently sells a line of products to the food industry that can help food manufacturers reduce their costs and help them solve many production problems. The Company’s technology provides value-added ingredients across virtually all food industry categories. The Company’s all-natural products, among other things, help to reduce fat and calories, add fiber, provide shelf-stability, prevent oil migration, and add binding capacity – all without degrading the taste and texture of the final food products. Perhaps most significantly, the Company’s products can help extend the shelf life of finished products, and thereby potentially increasing customers’ gross margins. The Company’s industrial division, opened in 2012, plans to sell eco-friendly ingredients to oil drilling, hydraulic fracturing, petroleum coke, steel/aluminum, paper and other industries. The Company’s industrial ingredients are highly functional in applications for adhesives, binders, viscofiers and emulsifiers.

The Company was originally incorporated in the State of Illinois on May 5, 1994 under the name Circle Group Entertainment Ltd. On June 21, 2006, the Company filed a certificate of amendment to our certificate of incorporation and changed its name to Z Trim Holdings Inc. On March 23, 2016, the Company changed its state of incorporation by engaging in a merger (the “Reincorporation”) with and into its newly formed wholly owned subsidiary, Agritech Worldwide, Inc., a Nevada corporation, pursuant to the terms and conditions of an Agreement and Plan of Merger entered into by Z Trim and Agritech on March 18, 2016 (the “Merger Agreement”). The Reincorporation was consummated on March 23, 2016 and was effectuated by the filing of (i) articles of merger with the Secretary of State of the State of Nevada, and (ii) articles of merger with the Secretary of State of the State of Illinois. The Reincorporation effected a change in the Company’s legal domicile from Illinois to Nevada. Upon the effectiveness of the Reincorporation the Company’s affairs ceased to be governed by (i) Illinois corporation laws, (ii) Illinois Articles of Incorporation, and (iii) Illinois Bylaws, and its affairs became subject to (a) Nevada corporation laws, (b) Agritech’s Articles of Incorporation of and (c) Agritech’s Bylaws. The resulting Nevada corporation (i) is deemed to be the same entity as the Illinois corporation for all purposes under the laws of Nevada, (ii) continues to have all of the rights, privileges and powers of the Illinois corporation, (iii) continues to possess all properties of the Illinois corporation, and (iv) continues to have all of the debts, liabilities and obligations of the Illinois corporation.

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Going Concern

9 Months Ended

Sep. 30, 2016

Going Concern [Abstract]

GOING CONCERN

NOTE 2 – GOING CONCERN

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has an accumulated deficit equal to $158,441,594 as of September 30, 2016. This factor raises doubt regarding the ability of the Company to continue as a going concern. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary debt and equity financings, and the ability of the Company to improve operating margins. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Presentation of Interim Information

The financial information at September 30, 2016 is unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The results for the three or nine months ended September 30, 2016 may not be indicative of results for the year ending December 31, 2016 or any future periods.

Use of Estimates

The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. In instances where the final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company’s historical experience.

Accounting for Derivative Instruments

All derivatives have been recorded on the balance sheet at fair value based on the lattice model calculation. These derivatives, including embedded derivatives in the Company’s warrants and convertible preferred stock which have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants and convertible preferred stock, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

Lattice Valuation Model

The Company valued the warrants and the conversion features in its formerly outstanding convertible notes and preferred stock using a lattice valuation model, with the assistance of a valuation consultant. The lattice model values these instruments based on a probability weighted discounted cash flow model. The Company uses the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the instruments are determined based on management's projections and the expert’s calculations. These probabilities are used to create a cash flow projection over the term of the instruments and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the instruments without the compound embedded derivative in order to determine a value for the compound embedded derivative.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Fair value of financial instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued liabilities. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. None of these instruments are held for trading purposes.

The Company has utilized various types of financing to fund its business needs, including convertible debt and convertible preferred stock with warrants attached. The Company reviews its warrants and any conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized in current earnings. At September 30, 2016, the Company had warrants to purchase common stock outstanding, the fair values of which are classified as a liability.

Inputs used in the valuation to derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

● Level one — Quoted market prices in active markets for identical assets or liabilities

● Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

● Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with warrants and convertible preferred stock to purchase common stock. The Company classifies the fair value of these warrants under level three. The fair value of the derivative liability at September 30, 2016 was $376,890 compared to $742,833 as of December 31, 2015. The decrease in fair value for the nine months ended September 30, 2016 was $365,943 compared to an increase of $812,803 for the nine months ended September 30, 2015. Below is a hierarchy table of the components of the derivative liability:

	Carrying			Fair Value Measurements Using
	Value			Level 1		Level 2		Level 3				Total
Derivative Liabilities 12/31/2015	$	742,833			-		-	$	742,833			$	742,833
Change in derivative liabilities due to:
Issuance of warrants		41,226			-		-		41,226		$	41,226
Settlements		(18,769	)						(18,769	)		$	(18,769	)
Change in derivative liabilities valuation	$	(388,400	)		-		-		(388,400	)		$	(388,400	)
		(365,943	)				-		(365,943	)			(365,943	)
Derivative Liabilities 9/30/2016	$	376,890		$	-		-	$	376,890			$	376,890

Concentrations

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.

Inventory

Inventory is stated at the lower of cost or market, using the first-in, first-out method. The Company follows standard costing methods for manufactured products. Management assesses the recoverability and establishes reserves based on the net realizable value of the inventory.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Depreciation is calculated on the accelerated and straight-line methods over the estimated useful lives of the assets. Estimated useful lives of five to ten years are used for machinery and equipment, office equipment and furniture, and automobile. Estimated useful lives of up to five years are used for computer equipment and related software. Depreciation and amortization of leasehold improvements are computed using the term of the lease.

Intangible Assets

Intangible assets were carried at the purchased cost less accumulated amortization. Amortization was computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Income Taxes

The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years.

Income (Loss) Per Common Share

Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding and, when diluted, potential shares from options and warrants to purchase common stock using the treasury stock method.

Cashless Exercise of Warrants/Options

The Company has issued warrants to purchase common stock where the holder is entitled to exercise the warrant via a cashless exercise. The Company accounts for the issuance of common stock on the cashless exercise of warrants on a net basis.

Stock-Based Compensation

The Company estimates the fair value of share-based payment awards made to employees, directors and related parties, including stock options, restricted stock, employee stock purchases related to employee stock purchase plans and warrants, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. We estimate the fair value of each share-based award using the Black-Scholes option pricing model. The Black-Scholes model is highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment are the estimated lives of the stock-based awards and the estimated volatility of the Company’s stock price. The Company recognized pre-tax compensation expense related to stock compensation awards of $317,955 and $4,534,849 for the nine months ended September 30, 2016 and 2015, respectively.

Recent Accounting Pronouncements

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period. The adoption of ASU 2015-14 is not expected to have a material effect on the Company’s consolidated financial statements.

On February 25, 2016, the FASB issued Topic 842, its highly-anticipated leasing standard for both lessees and lessors. Under its core principle, a lessee will recognize lease assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. Lessor accounting remains largely consistent with existing U.S. GAAP. The amendments are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. At inception, a lessee must classify all leases as either finance or operating. The Company intends to adopt Topic 842 upon extension of the current lease or upon entering into a new lease agreement for alternative facilities. The Company is investigating the effect of adoption of Topic 842 on its results of operations and financial condition. However, it is not anticipated that adoption of Topic 842 will have a material impact on the results of operations or financial condition of the Company.

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Inventory

9 Months Ended

Sep. 30, 2016

Inventory [Abstract]

INVENTORY

NOTE 4 – INVENTORY

At September 30, 2016 and December 31, 2015, inventory consists of the following:

		9/30/2016			12/31/2015
Raw materials	$	30,318		$	18,228
Packaging		9,168			4,560
Finished goods		151,025			215,476
Less: Reserve to estimated net realizable value		(27,055	)
	$	163,455		$	238,264

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Property and Equipment, Net

9 Months Ended

Sep. 30, 2016

Property and Equipment, Net [Abstract]

PROPERTY AND EQUIPMENT, NET

NOTE 5 – PROPERTY AND EQUIPMENT, NET

At September 30, 2016 and December 31, 2015, property and equipment, net consists of the following:

	9/30/2016			12/31/2015
Leasehold Improvements	$	-		$	3,449
Capital Lease Assets		514,707			514,707
		514,707			518,156
Accumulated depreciation		(122,107	)		(46,923	)
Property and equipment, net	$	392,600		$	471,233

Depreciation expense was $75,184 and $154,250 for the nine months ended September 30, 2016 and 2015, respectively.

On July 17, 2015, the Company entered into an equipment purchase agreement (the “Purchase Agreement”) with Fordham Capital Partners, LLC (“Fordham”) pursuant to which the Company sold all of its right, title and interest in production equipment utilized by the Company to Fordham for a purchase price of $514,707. From the proceeds of the sale, the Company repaid outstanding borrowings of $200,000 due to Fordham Capital plus accrued interest of $3,112, franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease. The Company recognized a loss on the sale of $574,331. Concurrently with entering into the Purchase Agreement, on July 17, 2015, the Company entered into an equipment lease agreement (the “Equipment Lease Agreement”) with Fordham pursuant to which the Company leased the production equipment from Fordham on terms that included the following: a lease term of 24 months, monthly lease payments by the Company of $15,800 and the option (at the election of the Company) to purchase the equipment on or after July 8, 2016 on the following terms: (i) if the purchase date is between 12- 18 months $425,000; (ii) if the purchase date is between 19- 23 months: $360,000; and (iii) if the purchase date is during the 24th month (but no later than July 8, 2017): $325,000. The Equipment Lease Agreement includes customary events of default, including non- payment by the Company of the monthly lease payments and the payment of penalties upon such late payments. The equipment lease is secured by all of the assets of the Company. The Company received cash proceeds of $172,911 from the Purchase Agreement after paying off the obligations described above. These proceeds were used for general corporate purposes.

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Accrued Expenses and Other

9 Months Ended

Sep. 30, 2016

Accrued Expenses and Other [Abstract]

ACCRUED EXPENSES AND OTHER

NOTE 6 – ACCRUED EXPENSES AND OTHER

At September 30, 2016 and December 31, 2015 accrued expenses consist of the following:

	9/30/2016		12/31/2015
Accrued payroll and taxes	$	52,709	$	166,713
Accrued settlements		102,000		102,000
Accrued interest		500,533		216,071
Accrued expenses and other		106,908		199,812
	$	762,149	$	684,596

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Short-Term Borrowings to Unrelated Parties

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

SHORT-TERM BORROWINGS TO UNRELATED PARTIES

NOTE 7 – SHORT-TERM BORROWINGS TO UNRELATED PARTIES

On July 17, 2015, the Company completed a sale and leaseback transaction with Fordham Capital. In the transaction, the Company sold all of its production equipment, furniture and fixtures for $514,707. From the proceeds of the sale, the Company repaid outstanding borrowings of $200,000 due to Fordham Capital plus accrued interest of $3,112, franchise taxes of $96,542 and a security deposit of $15,800 related to the equipment lease.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note initially matured in six months (March 26, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. On December 23, 2015, the Company executed an amendment whereby the maturity date was extended to July 1, 2016. On June 29, 2016, the Company executed an amendment whereby the maturity date was extended to October 1, 2016. On September 30, 2016, the Company executed an amendment whereby the maturity date was extended to April 3, 2017.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties. On May 17, 2016, Mr. Kahn became our Chief Executive Officer, interim Chief Financial Officer and a member of our Board of Directors

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 and amortized $438 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to Mr. Kahn. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 11, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The Company recognized $3,189 and amortized $355 of discount as of September 30, 2016. The note matures in one year (March 11, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 7, 2016, the Company issued 14% senior unsecured notes to two accredited investors in the total principal amount of $100,000. The Company recognized $3,924 and amortized $378 of discount as of September 30, 2016. The notes mature in one year (April 7, 2017) and bear interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued warrants to acquire a total of 400,000 shares of the Company’s common stock at an exercise price of $0.64 per share to the two accredited investors. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 8, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The Company recognized $15,342 and amortized $1,470 of discount as of September 30, 2016. The note matures in one year (April 8, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 14, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $500,000. The Company recognized $6,383 and amortized $273 of discount as of September 30, 2016. The note matures in one year (July 14, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 2,000,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $300,000. The Company recognized $2,117 and amortized $82 of discount as of September 30, 2016. The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 600,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

Below is a summary of the principal and interest activity for the period ended September 30, 2016:

	Principal			Interest
Balance at December 31, 2015	$	750,000		$	10,442
Principal advances and accrued interest		1,600,000			184,019
Reclassification of notes to related	$	(600,000	)	$	(60,679	)
Principal payments and interest		-			-
Balance at September 30, 2016	$	1,750,000		$	133,782
Less debt discount		(27,904	)
Balance at September 30, 2016	$	1,722,096		$	133,782

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Short-Term Nonconvertible Notes Payable to Related Parties

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

SHORT-TERM NONCONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

NOTE 8 – SHORT-TERM NONCONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

On September 29, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $85,000. The note was to mature in two months (November 29, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On October 23, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $85,000. The note was to mature in two months (December 23, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On October 30, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $70,000. The note was to mature in two months (December 30, 2014) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On December 3, 2014, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith in the principal amount of $30,000. The note was to mature in two months (February 3, 2015) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On December 19, 2014, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended to April 15, 2015.

On May 29, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to December 31, 2015.

On June 12, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $12,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On August 13, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $25,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Lease Agreement and the Factoring Agreement.

On August 21, 2015, the Company issued a 14% nonconvertible subordinated secured note to Edward B. Smith III in the principal amount of $150,000. The note was to mature on December 31, 2015 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. The note is secured by the assets of the Company, which security interest is subordinate to the security interest granted to Fordham in connection with the Equipment Loan and the Factoring Agreement.

On September 29, 2015, the Company issued a 14% nonconvertible senior unsecured note to an accredited investor in the principal amount of $250,000. The note was to mature March 26, 2016 and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash.

On December 23, 2015, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to July 1, 2016.

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn in the principal amount of $100,000. The Company recognized $3,791 and amortized $247 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties to a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Morris Garfinkle in the principal amount of $100,000. The Company recognized $3,094 and amortized $178 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Mr. Garfinkle. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 and amortized $105 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 28, 2016, the Company issued a 14% senior unsecured note to an entity related to Dan Jeffery in the principal amount of $50,000. The Company recognized $1,562 and amortized $55 of discount as of September 30, 2016. The note matures in one year (April 28, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 150,000 shares of the Common Stock at an exercise price of $0.64 per share to the entity related to Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On June 29, 2016, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to October 1, 2016.

On September 30, 2016, the Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to April 3, 2017.

The outstanding gross amount (before discount) of nonconvertible notes payable to a related party was $457,000 at December 31, 2015 and $1,257,000 at September 30, 2016. The amount of accrued and unpaid interest was $54,935 on December 31, 2015 and $133,782 on September 30, 2016.

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Short-Term Convertible Notes Payable to Related Parties

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

SHORT-TERM CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

NOTE 9 – SHORT-TERM CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

On February 11, 2014, the Company entered into an agreement with Edward Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $200,000 in a convertible senior secured note. The note matures in two years (February 11, 2016) and bears interest at 12.5% computed based on a 365-day year. Accrued interest is payable either at maturity or quarterly at the option of Mr. Smith in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $2.25, subject to adjustment as provided in the note. If on the maturity date of the note, the thirty-day trailing average closing price of the Company’s common stock (the “Trailing Average Price”) is below $2.25, the Conversion Price on the maturity date will be reduced to the Trailing Average Price, but to not less than $1.25. The Conversion Price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

On April 25, 2014, the Company entered into an agreement with Edward Smith III, a Director and Shareholder of the Company, pursuant to which Mr. Smith agreed to lend the Company $300,000 in a convertible subordinated secured note. The note matures in two years (April 25, 2016) and bears interest at 14% computed based on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under the note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note.

On April 30, 2014, the Company issued a 14% convertible subordinated secured note to each of Morris Garfinkle, Mark Hershhorn, Brian Israel and Edward B. Smith, Directors of the Company, in the principal amount of $19,000, for director fees due and payable to them (the “Director Notes”). Each Director Note matured in two years (April 30, 2016) and bears interest at 14% computed on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the Director Note, the holder may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under each Director Note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

On May 12, 2014, the Company issued 14% convertible subordinated secured notes to both Morris Garfinkle and CKS Warehouse in the principal amount of $75,000 each. Both notes matured in two years (May 12, 2016) and bear interest at 14% computed on a 365-day year. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of each note, Mr. Garfinkle and CKS Warehouse may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under each note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

On July 15, 2014, the Company entered into an agreement with Edward Smith III, pursuant to which Mr. Smith agreed to lend the Company $64,000 in an unsecured note payable. The note matured in 90 days (October 15, 2014) without interest payable on the unpaid principal and subject to the terms of the Company’s agreements with its secured creditors. On August 6, 2014, this note was rolled into the $264,000 convertible subordinated secured note discussed below.

On August 6, 2014, the Company issued a 14% convertible subordinated secured note to Edward B. Smith in the principal amount of $264,000. The note matured in two years (August 6, 2016) and bears interest at 14% computed on a 365-day year. Under this note Mr. Smith had provided $200,000 of cash as of August 6, 2014 and the parties agreed to include the unsecured funds in the amount of $64,000 provided by Mr. Smith on July 15, 2014 and include those amounts as part of this subordinated secured transaction. The loan agreement executed by the parties on July 15, 2014 is now null and void. Accrued interest is payable at maturity in shares of the Company’s common stock. At any time on or after the date that is 90 days after the date of issuance of the note, Mr. Smith may elect to convert the aggregate principal balance and accrued interest into shares of common stock of the Company. The conversion price under this note is $1.00. The conversion price was greater than the closing stock price on the agreement date; therefore, no beneficial conversion feature was recorded on this note. 

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units, (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer at the time of the exchange and a director, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel (directors of the Company at the time of the exchange), in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491 of principal and interest on notes.

The fair value of the preferred stock issued with the Units above was calculated using multinomial lattice models that valued the preferred stock based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result of the conversion of convertible debt into Units, the Company recorded a loss on debt conversion of $351,314 in the three months ended March 31, 2015.

On December 23, 2015, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014 whereby the maturity date for each note was extended to July 1, 2016.

On May 22, 2016, the Company executed an amendment to the note issued to CKS Warehouse dated May 12, 2014 whereby the maturity date was extended to October 1, 2016.

On June 29, 2016, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014) whereby the maturity date for each note was extended to October 1, 2016.

On September 30, 2016, the Company executed an amendment to the note issued to CKS Warehouse dated May 12, 2014 whereby the maturity date was extended to April 3, 2017.

On September 30, 2016, the Company executed an amendment to the $200,000 12.5% convertible subordinated secured note dated February 11, 2014, the $300,000 14% convertible subordinated secured notes dated April 25, 2014, and the note issued to Mr. Garfinkle dated May 12, 2014 whereby the maturity date for each note was extended to April 3, 2017.

The outstanding amount of convertible notes payable to related parties was $624,866 at September 30, 2016 and December 31, 2015. The amount of accrued and unpaid interest was $214,102 at September 30, 2016.

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Liquidated Damages

9 Months Ended

Sep. 30, 2016

Liquidated Damages [Abstract]

LIQUIDATED DAMAGES

NOTE 10 – LIQUIDATED DAMAGES

In connection with certain private placements of the Company’s securities (the “Registrable Securities”) effected in 2008, the Company entered into registration rights agreements (the “RRA”) that required the Company to file a registration statement covering the Registrable Securities with the Securities and Exchange Commission no later than thirty days after the final closing as contemplated in the Private Placement Memorandum for the 2008 offering (the “Filing Deadline”), which the Company did not meet. Under the terms of the RRA, as partial compensation, the Company was required to make pro rata payments to each Investor in an amount equal to 1.5% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the Filing Deadline for which no registration statement was filed. The Company obtained a release and waiver of the amounts due from almost all of the 2008 investors. Under the terms of the RRA, the Company potentially owes, and have recognized as liquidated damages, $36,178 relating to holders from whom we did not receive waivers.

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Derivative Liabilities

9 Months Ended

Sep. 30, 2016

Derivative Liabilities [Abstract]

DERIVATIVE LIABILITIES

NOTE 11 – DERIVATIVE LIABILITIES

Certain of the Company’s convertible preferred stock and warrants have reset provisions to the exercise price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such convertible preferred stock and warrants. This ratchet provision results in a derivative liability in our financial statements.

The Company’s derivative liabilities decreased to $376,890 at September 30, 2016 from $742,833 at December 31, 2015. The income recognized during the nine months ended September 30, 2016 was $388,400 as compared to an expense of $1,355,747 for the nine months ended September 30, 2015.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at September 30, 2016 and December 31, 2015:

Components of derivative financial instruments
	9/30/2016			12/31/2015
Common stock warrants	$	67,108		$	130,028
Embedded conversion features for convertible debt or preferred shares		309,782			612,805
Total	$	376,890		$	742,833
Beginning balance	$	742,833		$	20,166
Change in derivative liability valuation		(388,400	)		1,265,611
Change in derivative liability - settlements		(18,769	)		-
Change in derivative liability - warrant issuance		41,226			(542,944	)
Total	$	376,890		$	742,833

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Common Stock

9 Months Ended

Sep. 30, 2016

Common Stock [Abstract]

COMMON STOCK

NOTE 12 – COMMON STOCK

Common Stock Issued to Employees

On May 17, 2016, pursuant to the Kahn Employment Agreement, the Company’s Chief Executive Officer Jonathan Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock. The Company recognized a total expense of $180,824 related to this issuance. These shares were valued based on the closing price on the grant date and were issued pursuant to the Company’s Amended and Restated Incentive Compensation Plan as amended (the “Plan”).

In addition, on each of May 1, 2017 and May 1, 2018, respectively, pursuant to the Kahn Employment Agreement, Mr. Kahn will receive an additional grant of fully-vested common stock, such additional grants each representing 0.75% of the Company’s shares of common stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively. The Company expensed $13,879 through Sept 30, 2016 for stock compensation related to the May 1, 2017 and May 1, 2018 additional grants. The Company will expense a portion of this compensation quarterly until the grants are made at their respective due dates.

Common Stock Issued to Directors

On February 24, 2015, the Company issued 576,924 shares of common stock to its three non-executive directors at such time (192,308 shares each) Brian Israel, Morris Garfinkle and Dan Jeffery pursuant to the Plan. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On January 2, 2015, the Company issued 285,716 shares of common stock to its four non-executive directors (71,429 shares each) Mark Hershhorn, Brian Israel, Morris Garfinkle and Edward B. Smith III pursuant to the Plan. The Company recognized a total expense of $160,001 related to these issuances. These shares were valued based on the closing price on the grant date.

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Plan. The Company recognized a total expense of $160,001 related to this issuance. These shares were valued based on the closing price on the grant date.

Common Stock Issued on the Exercise of Stock Warrants and/or Options for Cash

During the three month and nine month periods ended September 30, 2016 and 2015, respectively, there were no warrants or options exercised for cash.

Common Stock Issued on the Cashless Exercise of Warrants and/or Stock Options

During the three months and nine months ended September 30, 2016, the Company did not issue any shares of common stock on the cashless exercise of warrants or options.

On April 22, 2016, the Company purchased 4,610,179 warrants from their holders for an aggregate price of $122,986.

During the three months and nine months ended September 30, 2015, the Company did not issue any shares of common stock on the cashless exercise of options.

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014)  to participate in a warrant exchange program whereby each warrant holder will be able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti-dilution rights on a one-time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015, there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti-dilution provisions resulting from the January 8, 2015 private placement.

As of September 30, 2015, the results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1), 318,750 additional warrants were issued under alternative (2) and a combination of 974,826 shares of Common Stock and 73,125 warrants were issued from elections made under alternative (3). The Company recorded a loss on exchange of warrants of $12,959,654 for the nine months ended September 30, 2015.

Common Stock Issued for Services

On March 1, 2015, the Company entered into a Business Development Agreement with Steeltown Consulting Group, LLC, pursuant to which Steeltown agreed to assist in evaluating various business and financial matters. The Company issued 400,000 restricted shares of common stock as consideration for the services being rendered in this agreement pursuant to the Plan. The common stock was valued at $104,000 based on the closing prices of the stock on the date the agreement was executed. This agreement terminated on March 1, 2016.

There were no shares issued for services during the nine months ended September 30, 2016.

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Preferred Stock

9 Months Ended

Sep. 30, 2016

Preferred Stock [Abstract]

PREFERRED STOCK

NOTE 13 – PREFERRED STOCK

Preferred Stock Issued to Investors

On January 8, 2015, the Company entered into agreements to sell an aggregate of 260,000 Units to eight (8) accredited investors at a price per Unit of $4.00 for aggregate cash proceeds of $1,040,000 pursuant to separate purchase agreements entered into with each investor. In addition, the Company issued in the initial closing of 260,000 Units Additional Warrants that are exercisable for an aggregate of 946,400 shares of the Company’s common stock. The warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights. As a result, 260,000 shares of Preferred Stock were issued.

In connection with the private placement offering that was consummated in January 2015, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units , 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer and director, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

The fair value of the Preferred Shares issued with the Units above was calculated using multinomial lattice models that valued the Preferred Shares based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result of the conversion of convertible debt into Units, the Company recorded a loss on debt conversion of $351,314.

On February 9, 2015, the Company closed a second round of its private placement offering with four (4) accredited investors in which it raised gross proceeds of $500,000 and sold 125,000 Units all pursuant to separate Securities Purchase Agreements entered into with each investor. In addition, the Company issued to each of the investors in the first and second rounds of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Company’s common stock at an exercise price of $0.64 per share. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of the Company’s common stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of the Company’s common stock.

The Preferred Shares are nonvoting, accrue dividends at the rate per annum equal to 12.5% of the sum of (i) the Stated Value (which initially is $4.00) until the Maturity Date as defined in the Certificate of Designations and (ii) the amount of accrued and unpaid dividends payable, are convertible into shares of common stock at the option of the holder as described in the Certificate of Designations, have anti- dilution protection, registration rights, may be redeemed under certain circumstances, liquidation preference, protective provisions and board rights under certain circumstances. 

On March 18, 2015, the Company received $75,000 from an accredited investor towards the purchase of 18,750 units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, at an exercise price of $0.64 per share all pursuant to a separate securities purchase agreement entered into with the investor.

On June 1, 2015, the Company received $25,000 from an accredited investor towards the purchase of 6,250 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, at an exercise price of $0.64 per share all pursuant to a separate securities purchase agreement entered into with the investor.

On August 26, 2015, the Company received $250,000 from accredited investors towards the purchase of 62,500 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock at an exercise price of $0.64 per share all pursuant to a separate securities purchase agreement entered into with the investor.

On October 20, 2015, the Company received $200,000 from an accredited investor towards the purchase of 50,000 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, par value, $0.00005 per share, at an exercise price of $0.64 per share all pursuant to a separate Securities Purchase Agreement entered into with the investor.

On November 4, 2015, the Company received $200,000 from an accredited investor towards the purchase of 50,000 Units in a private placement offering. Each unit consists of (i) one (1) share of 12.5% Convertible Preferred Stock and (ii) one (1) warrant, to acquire 8.56 shares of the Company’s common stock, at an exercise price of $0.64 per share all pursuant to a separate Securities Purchase Agreement entered into with the investor.

Preferred Stock Issued to Vendors

Effective January 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the Company would deliver (which the Company delivered on April 3, 2015) to the landlord 20,025 shares of its 12.5% Convertible Preferred Stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share. The fair value of the preferred stock issued was calculated using multinomial lattice models that valued the preferred stock based on a probability weighted discounted cash flow model. The assumptions used to determine the fair value included the holder of the preferred stock would convert the preferred stock once the stock price exceeded the exercise price, the historical annual volatility of the Company’s stock price was 119% and the weighted cost of capital for the Company was 16.93%. As a result, the Company recorded an expense of $149,787 for the three months ended March 31, 2015 with an offset to preferred stock payable.

On May 1, 2015, the Company and its landlord executed an amendment to the then current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 Preferred Shares and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

On May 12, 2015, the Company agreed and issued 12,500 shares of 12.5% Convertible Preferred Stock and 107,000 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share in satisfaction of outstanding accounts payable due to a vendor. The outstanding balance due to this vendor was $60,885. The Company recognized a loss of $13,990 as a result of the conversion.

As of September 30, 2016, the Company had accrued dividends payable of $555,953 which are included in accounts payable on the balance sheet. As of December 31, 2015, the Company had accrued dividends payable of $280,675. 

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Stock Option Plan and Warrants

9 Months Ended

Sep. 30, 2016

Stock Option Plan and Warrants [Abstract]

STOCK OPTION PLAN AND WARRANTS

NOTE 14 – STOCK OPTION PLAN AND WARRANTS

Incentive Compensation Plan

The Plan provides for the issuance of qualified options and other equity awards to all employees and non-qualified options and other equity awards to directors, consultants and other service providers.

A summary of the status of stock options outstanding under the Plan as of September 30, 2016 and December 31, 2015 is as follows:

	9/30/2016					12/31/2015
				Weighted Average					Weighted Average
	Number of Shares			Exercise Price		Number of Shares			Exercise Price
Outstanding at beginning of year		11,103,275		$	0.78		11,033,675		$	1.05
Granted		3,020,134		$	0.03		6,299,600		$	0.29
Exercised		-					-
Expired and Cancelled		(3,772,386	)	$	0.89		(6,230,000	)	$	0.77
Outstanding, end of period		10,351,023		$	0.53		11,103,275		$	0.78
Exercisable at end of period		8,085,923		$	0.66		10,328,925		$	0.82

During the three and nine months ended September 30, 2016, the Company did not grant any stock options to employees.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Plan an option to purchase an aggregate 1,006,711 shares of common stock (the equivalent of $30,000 based on the common stock’s closing price of $0.0298 on the grant date) for a total of 3,020,134 shares of common stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant. As of September 30, 2016, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $80,453.

During the nine months ended September 30, 2015, the Company granted 6,299,600 options at an exercise price of $0.29 per share valued at $1,845,892. Stock- based compensation expense for both the three and nine months ended September 30, 2015 was $152,712 and $261,459 respectively. As of September 30, 2015, the unrecognized compensation cost related to all non- vested share- based compensation arrangements granted under the Plan was $388,385. Of this amount, $158,959 was recognized during the fourth quarter of fiscal 2015.

During the nine months ended September 30, 2016 and September 30, 2015, there were no stock options exercised either for cash or on a cashless basis.

The fair value of each stock option granted is estimated on the date of grant using the Black- Scholes option valuation model. This model uses the assumptions listed in the table below for stock options granted in 2015 and 2016. Expected volatilities are based on the historical volatility of the Company’s stock. The risk- free rate for periods within the expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

	5/17/2016			6/30/2015
Weighted average fair value per option granted		0.0298			0.1431 – 0.3606
Risk-free interest rate		1.2	%		1.00% - 1.54	%
Expected dividend yield		0.0	%		0.0	%
Expected lives		2.7			3.0
Expected volatility		201.10	%		86.22% - 120.51	%

Stock options outstanding at September 30, 2016 are as follows:

Range of Exercise Prices	Options  Outstanding		Weighted Average Remaining Contractual  Life		Weighted  Average  Exercise  Price		Options Exercisable
$0.01 - $1.50		8,854,489		4.8	$	0.33		6,589,389
$1.51 - $3.00		1,496,534		1.3	$	1.67		1,496,534
$3.01 - $5.00		-		-	$	-		-
		10,351,023		2.8	$	0.53		8,085,923

Warrants

As of September 30, 2016, the Company had warrants outstanding to purchase 52,897,601 shares of the Common Stock, at prices ranging from $0.35 to $0.64 per share. These warrants expire at various dates through July 2021. The summary of the status of the warrants issued by the Company as of September 30, 2016 and December 31, 2015 are as follows:

AGRITECH WORLDWIDE, INC. (FORMERLY Z TRIM HOLDINGS, INC.)
SUMMARY OF WARRANTS

	9/30/2016					12/31/2015
	Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price		Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price
Outstanding at beginning of year		50,957,780		$	0.52		16,446,351		$	1.44
Granted		6,550,000		$	0.64		87,825,204		$	0.42
Exercised		(4,610,179	)	$	0.43		(53,095,204	)	$	0.66
Cashless Exercises		-		$	-		-			-
Expired and Cancelled		-					(218,571	)	$	0.66
		52,897,601		$	0.50		50,957,780		$	0.52
Outstanding, end of period		52,897,601		$	0.50		50,957,780		$	0.52
Exercisable at end of period		52,897,601		$	0.50		50,957,780		$	0.52

Effective January 1, 2015, the Company and its landlord executed an amendment to the current lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the parties agreed that the Company will deliver to the landlord 20,025 shares of its Preferred Shares which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of Common Stock at $0.64 per share.

On January 8, 2015, in conjunction with the sale of units consisting of convertible preferred stock, the “Company”), issued warrants (the “Initial Warrant”) to acquire 8.56 shares of the Company’s common stock at an exercise price of $0.64 per share. In addition, the Company agreed to issue to each of the investors in the first round of financing an additional warrant to acquire (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Common Stock at an exercise price of $0.64 per share. The Additional Warrants issued are exercisable for an aggregate of 946,400 shares of the Common Stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights as set forth below.

Due to the anti-dilution provisions of some of the outstanding warrants before the January 8, 2015 transaction, the exercise price on 15,512,057 warrants has been reduced to $0.35 and the number of shares of common stock into which the warrants are now exercisable has been adjusted such that the warrants are now exercisable into 54,400,204 shares of common stock.

In addition to the foregoing, the members of the Company’s Board of Directors agreed to receive 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

On February 9, 2015, the Company closed a second round of a private placement offering in which investors received the Initial Warrants to acquire 8.56 shares of the Common Stock at an exercise price of $0.64 per share all pursuant to separate securities purchase agreements entered into with each investor. In addition, the Company issued to each of the investors in the first and second rounds of financing an additional warrant for each Unit acquired (the “Additional Warrant” and together with the Initial Warrant, the “Warrants”) to acquire 3.64 shares of the Common Stock at an exercise price of $0.64 per share. The Initial Warrants issued in the second closing are exercisable for 1,070,000 shares of the Common Stock and the Additional Warrants issued in the second closing are exercisable for an aggregate of 455,000 shares of the Common Stock. The sale was part of a private placement offering (the “Offering”) in which the Company offered for sale a maximum of 5,000,000 units (gross proceeds of $20,000,000). Prior to the second closing, the Company raised gross proceeds of $1,040,000 in the initial closing of the Offering issued Initial Warrants to acquire 2,225,600 shares of common stock and Additional Warrants to acquire 946,400 shares of common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights.

The fair values for the Company’s derivative liabilities related to the Warrants issued is $67,108. The derivative instruments were valued as of September 30, 2016 with the following assumptions:

- The Holder would automatically exercise the warrants at a stock price above the exercise price, with the target exercise price dropping as expiration approaches,

- The projected annual volatility was based on the Company’s historical volatility,

- An event of default would occur 5% of the time, increasing by 0.10% per month,

- Dilutive/Full Reset events projected to occur based on future projected capital needs (capital funds raised were projected in prior quarters – future financings are projected going forward in 2016) resulting in the weighted conversion price dropping from the initial conversion price.

Effective January 1, 2015 the Company entered into a Consulting Agreement with Jeffery Consulting Group, LLC pursuant to which Jeffery Consulting will provide assistance with operational improvements including manufacturing processes, strategic and tactical advice with respect to the Company’s sales and marketing initiatives, and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting, the Company issued a warrant to purchase 1,250,000 shares of common stock at $0.35 per share. The warrant vested 500,000 shares upon the mutual execution of this agreement, and 250,000 shares each at the three month, six month, and nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. For the three months ended September 30, 2015 the Company recognized compensation expense of $128,880. The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital. The Company terminated the Consulting Agreement as of April 1, 2016.

On February 9, 2015, Edward B. Smith, III and Morris Garfinkle were issued warrants exercisable for 31,000,000 and 5,500,000 shares of common stock, respectively, in consideration of the services to be provided to the Company as Chief Executive Officer of the Company and Chairman of the Board, respectively. The exercise price of these warrants is $0.45 per share. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 81.99%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.85%. For the three months ended September 30, 2015 the Company recognized compensation expense of $3,749,259.

On April 29, 2015, the Company sent a proposal to all warrant holders (as of September 30, 2014), which offered to participate in a warrant exchange program whereby each warrant holder was able to 1) exchange their warrants for common stock, on a cashless basis, at a reduced exercise price of $0.00005 per share, 2) if applicable, receive the right to 17.5% more warrants and a two year extension on all of their warrants in return for waiving their anti- dilution rights on a one- time basis for the exchange, or 3) elect to take advantage of (1) and (2) by (i) exchanging a portion of their Warrants that they so designate for shares of Common Stock in accordance with the applicable terms in (1) and (ii) the remainder of the Warrant not exchanged will be retained and amended pursuant to the applicable provisions of (2). As of April 29, 2015, there were 55,334,490 warrants outstanding that were eligible to participate in the proposal inclusive of 38,888,147 warrants associated with anti- dilution provisions resulting from the January 8, 2015 private placement.

The results of this exchange were warrant holders elected to receive 52,110,896 shares of Common Stock under alternative (1). The Company recorded a loss on exchange of warrants in the amount of $12,959,654. Warrant holders elected to receive 318,750 additional warrants under alternative (2). Finally, warrant holders elected to receive a combination of 974,826 shares of Common Stock and 73,125 warrants under alternative (3). The Company recognized a warrant expense of $259,662.

On May 14, 2015, the Company entered into a consulting agreement with E.B. Smith Jr. (father of the Company’s former Chief Executive Officer, director and largest shareholder, Edward B. Smith III) pursuant to which E.B. Smith Jr. agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by E.B. Smith Jr., the Company issued warrants to purchase 750,000 shares of common stock at $0.35 per share. The warrants vested 450,000 shares upon the mutual execution of the agreement and then in 150,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.6%. In 2015 the Company recognized an expense of $117,642. The agreement terminated on May 14, 2016.

On May 14, 2015, the Company entered into a consulting agreement with Terme Bancorp pursuant to which Terme Bancorp agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by Terme Bancorp, the Company issued warrants to purchase 1,250,000 shares of Common Stock at $0.35 per share. The warrants vested 750,000 shares upon the mutual execution of this agreement and then in 250,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.60%. In 2015 the Company recognized an expense of $197,075. The agreement terminated on May 14, 2016.

On October 2, 2015, the Company issued a warrant to acquire 250,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $250,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On December 23, 2015, the Company issued a warrant to acquire 500,000 shares of the Common Stock, at an exercise price of $0.64 per share to Jonathan Kahn in conjunction with his $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 2 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to Jonathan Kahn in conjunction with his $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 11, 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a warrant to acquire 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Morris Garfinkle in conjunction with its $100,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a warrant to acquire 200,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Dan Jeffery in conjunction with its $50,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 7, 2016, the Company issued two warrants to acquire a total of 400,000 shares of the Common Stock, at an exercise price of $0.64 per share to two accredited investors in conjunction with their total of $100,000 note investments. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 8, 2016, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 22, 2016, the Company purchased 4,610,178 warrants from their holders for an aggregate price of $122,805.

On April 28, 2016, the Company issued a warrant to acquire 150,000 shares of the Common Stock, at an exercise price of $0.64 per share to an entity controlled by Dan Jeffery in conjunction with its $50,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 14, 2016, the Company issued a warrant to acquire 2,000,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $500,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On July 21, 2016, the Company issued a warrant to acquire 600,000 shares of the Common Stock, at an exercise price of $0.64 per share to an accredited investor in conjunction with their $300,000 note investment. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

There were no warrants exercised either for cash or on a cashless basis.

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Major Customers and Credit Concentration

9 Months Ended

Sep. 30, 2016

MAJOR CUSTOMERS AND CREDIT CONCENTRATION [Abstract]

MAJOR CUSTOMERS AND CREDIT CONCENTRATION

NOTE 15 – MAJOR CUSTOMERS AND CREDIT CONCENTRATION

The Company’s customers are food manufacturers, school districts and distributors. There were two significant customers who accounted for 52% and 13% of total sales for the three months ended September 30, 2016. Further, these same two customers accounted for 42% and 29% of the total accounts receivable at September 30, 2016. There were two significant customers who accounted for 38% and 13% of total sales for the nine months ended September 30, 2016.

The Company maintains cash deposits with major banks, which from time to time may exceed federally insured limits. The Company periodically assesses the financial condition of the institutions and believes that the risk of any loss is minimal.

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Commitments

9 Months Ended

Sep. 30, 2016

Commitments [Abstract]

COMMITMENTS

NOTE 16 – COMMITMENTS

Building Lease

The Company leases a combined research and development and office facility located in Mundelein, Illinois. The facility is approximately 44,000 square feet. 

On March 14, 2014, the Company extended the lease until May 2015 and the required monthly rental payments increased to $21,361, inclusive of property taxes. Insurance and maintenance are billed when due. 

Effective January 1, 2015, the Company and its landlord executed an amendment to the lease extending the lease until July 14, 2015. Commencing on May 1, 2015, the parties agreed to a monthly base rent of $10,681 plus property taxes. The Company also agreed to pay $71,125 in rental arrears on April 30, 2015 and another $71,125 in rental arrears on July 1, 2015. Finally, the Company delivered to the landlord 20,025 shares of its 12.5% convertible preferred stock which shares are convertible to common stock at the landlord’s option at .088 per preferred share. Also, the Company issued a five-year warrant to the landlord to purchase 171,454 shares of common stock at $0.64 per share.

On May 1, 2015, the Company and its landlord executed an amendment to the then current lease extending the lease until October 14, 2015. The parties agreed and the Company delivered to the landlord 8,010 Preferred Shares and agreed to issue 68,566 warrants to acquire the Company’s Common Stock at an exercise price of $0.64 per share. The Company recorded additional rent expense of $48,060.

On October 14, 2015, the lease converted to a month to month basis. Monthly rental payments are currently $17,972, inclusive of property taxes. We believe we will be successful in negotiating a new lease with the landlord. 

For nine months ended September 30, 2016 and 2015, the Company recognized rent expense of $183,090 and $308,756 respectively. 

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Pending Litigation/Contingent Liability

9 Months Ended

Sep. 30, 2016

PENDING LITIGATION/CONTINGENT LIABILITY [Abstract]

PENDING LITIGATION/CONTINGENT LIABILITY

NOTE 17 – PENDING LITIGATION/CONTINGENT LIABILITY

On July 7, 2007, the Company and Greg Halpern, its former Chief Executive Officer in his individual capacity, were served with a complaint by Joseph Sanfilippo and James Cluck for violation of the Consumer Fraud Act and the plaintiffs are seeking damages in excess of $200,000. The trial court has issued a default order against the Company, and has denied the Company’s Motion to reconsider. Management believes that the trial court’s rulings were erroneous and that it has grounds for appeal, and that the underlying allegations are frivolous and wholly without merit and will vigorously defends the claim. The outcome of this matter is unknown as of the report date. However, the Company has accrued a liability in the amount of $102,000 in respect to this litigation.

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Related Party Transactions

9 Months Ended

Sep. 30, 2016

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 18 – RELATED PARTY TRANSACTIONS

Effective January 1, 2015, the Company entered into a Consulting Agreement with Jeffery Consulting Group, LLC pursuant to which Jeffery Consulting agreed to provide assistance with operational improvements including manufacturing processes, strategic and tactical advice with respect to the Company’s sales and marketing initiatives, and provide customer introductions and strategic sales opportunities. In consideration of services rendered by Jeffery Consulting, the Company issued a warrant to purchase 1,250,000 shares of Common Stock at $0.35 per share. The warrant vested 500,000 shares upon the mutual execution of this agreement, and 250,000 shares each at the three month, six month, and nine month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 84.52%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.07%. For the three months ended September 30, 2015 the Company recognized compensation expense of $128,880. The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital. The Company terminated the Consulting Agreement as of April 1, 2016.

On January 8, 2015, the Company, entered into agreements to sell an aggregate of 260,000 Units to eight (8) accredited investors at a price per unit of $4.00 (the “Units”) In addition, the Company issued Additional Warrants exercisable for an aggregate of 946,400 shares of the Company’s common stock. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti-dilution protection and entitled to registration rights.

In addition to the foregoing, the members of the Company’s Board of Directors agreed to receive an aggregate of 96,590 Units (representing one (1) Unit for every $4.00 of debt exchanged), 826,806 Initial Warrants and 351,586 Additional Warrants in exchange for previously issued convertible notes (including principal and accrued and unpaid interest) (the “Notes”) held by the directors or affiliated entities as follows: (i) 71,211 Units, 609,566 Initial Warrants and 259,208 Additional Warrants were issued to Edward B. Smith, III, the Company’s Chief Executive Officer, in exchange for an aggregate of $284,844 of notes, (ii) 10,084 Units, 86,317 Initial Warrants and 36,705 Additional Warrants were issued to Morris Garfinkle in exchange for $40,335 of notes; (iii) 5,211 Units, 44,606 Initial Warrants and 18,968 Additional Warrants were issued to each of Mark Hershhorn and Brian Israel in exchange for an aggregate of $20,844 of notes, respectively; and (v) 4,873 Units, 41,712 Initial Warrants and 17,737 Additional Warrants were issued to CKS Warehouse, an entity in which Mr. Hershhorn owns a controlling interest, in exchange for an aggregate of $19,491of principal and interest on notes.

On February 9, 2015, Edward B. Smith, III and Morris Garfinkle were issued warrants exercisable for 31,000,000 and 5,500,000 shares of common stock, respectively, in consideration of the services to be provided to the Company as Chief Executive Officer of the Company and Chairman of the Board, respectively. The exercise price of these warrants is $0.45 per share. The fair value of the warrants issued is estimated on the date of grant using the Black-Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 81.99%, and the risk-free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 0.85%. For the three months ended September 30, 2015 the Company recognized compensation expense of $3,749,259.

On February 24, 2015, the Company issued 576,924 shares of common stock to its then three non-executive directors (192,308 shares each) Brian Israel, Morris Garfinkle and Dan Jeffery. The Company recognized a total expense of $150,000 related to these issuances. These shares were valued based on the closing price on the grant date.

On May 14, 2015, the Company entered into a consulting agreement with E.B. Smith Jr. (father of the Company’s former Chief Executive Officer, director and largest shareholder, Edward B. Smith III) pursuant to which E.B. Smith Jr. agreed to provide advice with respect to the Company’s marketing initiatives, provide customer introductions and investigating strategic transactions. In consideration of services rendered by E.B. Smith Jr., the Company issued warrants to purchase 750,000 shares of common stock at $0.35 per share. The warrants vested 450,000 shares upon the mutual execution of the agreement and then in 150,000 share increments at the three month and six month anniversaries of this agreement. The fair value of the warrants issued is estimated on the date of grant using the Black- Scholes valuation model. The assumptions used in the model included the historical volatility of the Company’s stock of 104.65%, and the risk- free rate for periods within the expected life of the warrant based on the U.S. Treasury yield curve in effect of 1.6%. In 2015 the Company recognized an expense of $117,642. The agreement terminated on May 14, 2016. 

On December 23, 2015, the Company issued a 14% nonconvertible senior unsecured note to Jonathan Kahn in the principal amount of $500,000. The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year. Accrued interest is payable at maturity in cash. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

On March 2, 2016, the Company issued a 14% senior unsecured note to Jonathan Kahn, the Company’s current Chief Executive Officer, interim Chief Financial Officer and member of the Board of Directors in the principal amount of $100,000. The Company recognized $3,791 and amortized $247 of discount as of September 30, 2016. The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights. During the three months ended June 30, 2016 this note was reclassified from a short-term borrowing to unrelated parties as a short-term non-convertible note to related parties.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Morris Garfinkle in the principal amount of $100,000. The Company recognized $3,094 and amortized $178 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 400,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the entity controlled by Mr. Garfinkle. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On March 17, 2016, the Company issued a 14% senior unsecured note to an entity controlled by Dan Jeffery in the principal amount of $50,000. The Company recognized $1,824 and amortized $105 of discount as of September 30, 2016. The note matures in one year (March 17, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock at an exercise price of $0.64 per share to the entity controlled by Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On April 28, 2016, the Company issued a 14% senior unsecured note to an entity related to Dan Jeffery in the principal amount of $50,000. The Company recognized $1,562 and amortized $55 of discount as of September 30, 2016. The note matures in one year (April 28, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 150,000 shares of the Common Stock at an exercise price of $0.64 per share to the entity related to Dan Jeffery. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

On May 17, 2016, each non-executive member of the Board (Morris Garfinkle, Dan Jeffery and Edward B. Smith III) was granted pursuant to the Company’s Amended and Restated Incentive Compensation Plan an option to purchase 1,006,711 shares of Common Stock (the equivalent of $30,000 based on the Common Stock’s closing price of $0.0298 on the grant date) for a total of 3,020,133 shares of Common Stock at an exercise price of $0.0298 per share. These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant.

On May 17, 2016 (the “Effective Date”), the Company” entered into an employment agreement with Jonathan Kahn (the “Kahn Employment Agreement”) in connection with the appointment of Mr. Kahn as the Company’s new Chief Executive Officer. The Kahn Employment Agreement will continue until June 30, 2019 (subject to automatic one year extensions), unless earlier terminated pursuant to its terms. Pursuant to the Kahn Employment Agreement, Mr. Kahn’s annual base salary will be $200,000 per year from the Effective Date through December 31, 2016 and $225,000 beginning January 1, 2017. Mr. Kahn will also be eligible to participate in Company’s annual incentive compensation program (the “Annual Incentive Program”), with a target annual bonus equal to 100% of his annual base salary and a maximum annual bonus each year equal to 200% of his base salary. Mr. Kahn’s annual bonus for the 2016 calendar year will be prorated based on the number of days served during 2016. The actual amount of the annual bonus earned by and payable to Mr. Kahn in any year will be determined upon the satisfaction of goals and objectives established by the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”) and will be subject to such other terms and conditions of the Company’s Annual Incentive Program as in effect from time to time.

Pursuant to the Kahn Employment Agreement, Mr. Kahn was granted 6,067,931 fully-vested shares of the Company’s common stock, par value $0.00005 per share (the “Common Stock”), such amount representing 3.5% of the Company’s shares of Common Stock on a fully diluted basis as of the Effective Date. In addition, on each of May 1, 2017 and May 1, 2018, respectively, Mr. Kahn will receive an additional grant of fully-vested Company Common Stock, such additional grants each representing 0.75% of the Company’s shares of Common Stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively (together with the 6,067,931 shares granted on the Effective Date, the “Equity Award”).

Commencing in calendar year 2017, and each year thereafter, Mr. Kahn will be eligible to participate in the Company’s annual equity incentive compensation program, with an annual target equity grant for each year in which Mr. Kahn participates in the equity incentive compensation program having a grant date fair value equal to 100% of Mr. Kahn’s base salary and a maximum annual equity award for each year in which Mr. Kahn participates in the equity incentive compensation program equal to 250% of Mr. Kahn’s base salary. In determining the amount of Mr. Kahn’s equity grant for any year, the Compensation Committee will consider the Company’s performance over the immediately preceding fiscal year.

On each anniversary of the Effective Date and each Equity Issuance Date (as defined below), until such time as Mr. Kahn terminates employment with the Company, Mr. Kahn will receive an additional grant of unrestricted Common Stock (which additional grant will be deemed to be a part of the initial Equity Award), if necessary, so that on each such anniversary and each such Equity Issuance Date, the total number of shares received by Mr. Kahn pursuant to the Equity Award will equal at least 3.5% of the Company’s shares of Common Stock on a fully diluted basis until April 30, 2016, 4.25% until April 30, 2018, and 5.0% thereafter. For purposes of the Kahn Employment Agreement, an “Equity Issuance Date” is any date on which the Company consummates the sale of or issuance of (i) more than 1% of the Company’s shares of Common Stock on a fully diluted basis; or (ii) any instrument that is convertible into more than 1% of the Company’s shares of Common Stock on a fully diluted basis. For the sake of clarity, in calculating the total number of shares held by Mr. Kahn pursuant to the Equity Award, only the initial shares granted and any additional shares granted in accordance with this paragraph will be considered and any shares (A) held by Mr. Kahn on or prior to the Effective Date or (B) granted to or acquired by Mr. Kahn in any other manner following the grant to Mr. Kahn of the Equity Award (including any annual equity award grant or otherwise) will be disregarded.

If Mr. Kahn’s employment contract is terminated for death or Cause (as such terms are defined in the Kahn Employment Agreement), he (or his estate in the event of death) will receive (i) unpaid salary and expenses as well as his annual bonus for the fiscal year immediately preceding the fiscal year in which the date of termination occurs, if such bonus has not been paid as of the date of termination; (ii) any accrued vacation pay to the extent not theretofore paid; and (iii) any other amounts or benefits required to be paid or provided by law or under any plan, program, policy or practice of the Company.

If Mr. Kahn’s employment is terminated by the Company without Cause or terminated by him for Good Reason, he will receive two times the sum of (1) his base salary at the time of termination (or, in the event of a Termination for Good Reason, the base salary prior to the event constituting Good Reason if such Base Salary is higher than the base salary at the time of termination) plus (2) Target Bonus (as such term is defined in the Kahn Employment Agreement) at the time of termination (the “Severance Payment”). In addition, Mr. Kahn shall receive (i) an annual bonus for the year in which the terminations occurs, determined based on actual performance during such year and prorated for the period during the year in which Executive was employed by the Company, payable at the same time annual bonuses are paid to other senior executives of the Company; (ii) accelerated vesting of all outstanding Company equity awards, and, in the case of stock options, if any, such options shall remain exercisable until the expiration date of such option; and (iii) if Mr. Kahn timely and properly elects health continuation coverage under COBRA, the Company shall reimburse Mr. Kahn for the monthly COBRA premium paid by for himself and his dependents until the earlier of: (x) the 18-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage.

If (1) during the two year period following a Change of Control (as defined in the Kahn Employment Agreement), Mr. Kahn’s employment is terminated due to a Termination Without Cause or a Termination for Good Reason or (2) during the 90-day period preceding a Change of Control, his employment is terminated due to a Termination Without Cause in anticipation of a Change of Control transaction that the Board is actively considering and that is ultimately consummated, Mr. Kahn is entitled to receive the benefits set forth in the preceding paragraph, except that (i) in lieu of the Severance Payment, Mr. Kahn will receive two times the sum of (A) his base salary at the time of such termination or Change of Control, whichever base salary level is greater, plus (B) the Maximum Bonus (as such term is defined in the Kahn Employment Agreement) at the time of such termination or Change of Control, whichever Maximum Bonus level is greater (the “CIC Severance Payment”) and (2) Mr. Kahn will be eligible to receive such COBRA premium reimbursement until the earlier of: (x) the 24-month anniversary of the Termination Date; and (y) the date the Executive is no longer eligible to receive COBRA continuation coverage. Under his employment agreement, Mr. Kahn has also agreed to non-competition provisions.

If Mr. Kahn’s employment is terminated due to Disability (as defined in the Kahn Employment Agreement), he will receive an annual bonus for the year in which the termination occurs, determined based on actual performance during such year and prorated for the period during the year in which Mr. Kahn was employed by the Company.

Pursuant to the Kahn Employment Agreement, Mr. Kahn was granted 6,067,931 fully-vested shares of Common Stock pursuant to the Company’s Amended and Restated Incentive Compensation Plan.

The foregoing summary description of the Kahn Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to the Kahn Employment Agreement, a copy of which is attached as Exhibit 10.1 to the Form 8-K filed on May 17, 2016 and are incorporated herein by reference.

There are no family relationships between Mr. Kahn and any former director, officer or person nominated or chosen by the Company to become director.

On June 21, 2016, the Company issued 2,013,423 shares of common stock to its Chairman Morris Garfinkle pursuant to the Plan. The Company recognized a total expense of $160,001 related to this issuance. These shares were valued based on the closing price on the grant date.

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Guarantees

9 Months Ended

Sep. 30, 2016

Guarantees [Abstract]

GUARANTEES

NOTE 19 – GUARANTEES

The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third party claims. These contracts primarily relate to: (i) divestiture agreements, under which the Company may provide customary indemnifications to purchasers of the Company’s businesses or assets; (ii) certain real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities, and other claims arising from the Company’s use of the applicable premises; and (iii) certain agreements with the Company's officers, directors and employees, under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship. The terms of such obligations vary. Generally, a maximum obligation is not explicitly stated. Because the obligated amounts of these types of agreements often are not explicitly stated, the overall maximum amount of the obligations cannot be reasonably estimated. Historically, the Company has not been obligated to make significant payments for these obligations, and no liabilities have been recorded for these obligations on its balance sheet as of September 30, 2016.

In general, the Company offers a one-year warranty for most of the products it sells. To date, the Company has not incurred any material costs associated with these warranties.

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Subsequent Events

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 20 – SUBSEQUENT EVENTS

On November 4, 2016, the Company issued a 14% senior unsecured note to an accredited investor in the principal amount of $100,000. The note matures in one year (November 4, 2017) and bears interest at 14% compounded based on a 365-day year. Accrued interest is payable at maturity in cash. In addition, the Company issued a warrant to acquire 200,000 shares of the Company’s common stock, at an exercise price of $0.64 per share to the accredited investor. The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies [Abstract]

Presentation of Interim Information

Presentation of Interim Information

The financial information at September 30, 2016 is unaudited, but includes all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of the financial information set forth herein, in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, such information does not include all of the information and footnotes required by U.S. GAAP for annual financial statements. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The results for the three or nine months ended September 30, 2016 may not be indicative of results for the year ending December 31, 2016 or any future periods.

Use of Estimates

Use of Estimates

The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition

The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. In instances where the final acceptance of the product is specified by the customer, revenue is deferred until all acceptance criteria have been met. No provisions were established for estimated product returns and allowances based on the Company’s historical experience.

Accounting for Derivative Instruments

Accounting for Derivative Instruments

All derivatives have been recorded on the balance sheet at fair value based on the lattice model calculation. These derivatives, including embedded derivatives in the Company’s warrants and convertible preferred stock which have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants and convertible preferred stock, are separately valued and accounted for on the Company’s balance sheet. Fair values for exchange traded securities and derivatives are based on quoted market prices. Where market prices are not readily available, fair values are determined using market based pricing models incorporating readily observable market data and requiring judgment and estimates.

Lattice Valuation Model

Lattice Valuation Model

The Company valued the warrants and the conversion features in its formerly outstanding convertible notes and preferred stock using a lattice valuation model, with the assistance of a valuation consultant. The lattice model values these instruments based on a probability weighted discounted cash flow model. The Company uses the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the instruments are determined based on management's projections and the expert’s calculations. These probabilities are used to create a cash flow projection over the term of the instruments and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the instruments without the compound embedded derivative in order to determine a value for the compound embedded derivative.

Cash and cash equivalents

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Fair value of financial instruments

Fair value of financial instruments

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued liabilities. The estimated fair value of cash, accounts receivable, accounts payable and accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments. None of these instruments are held for trading purposes.

The Company has utilized various types of financing to fund its business needs, including convertible debt and convertible preferred stock with warrants attached. The Company reviews its warrants and any conversion features of securities issued as to whether they are freestanding or contain an embedded derivative and, if so, whether they are classified as a liability at each reporting period until the amount is settled and reclassified into equity with changes in fair value recognized in current earnings. At September 30, 2016, the Company had warrants to purchase common stock outstanding, the fair values of which are classified as a liability.

Inputs used in the valuation to derive fair value are classified based on a fair value hierarchy which distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

● Level one — Quoted market prices in active markets for identical assets or liabilities

● Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

● Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company’s only asset or liability measured at fair value on a recurring basis is its derivative liability associated with warrants and convertible preferred stock to purchase common stock. The Company classifies the fair value of these warrants under level three. The fair value of the derivative liability at September 30, 2016 was $376,890 compared to $742,833 as of December 31, 2015. The decrease in fair value for the nine months ended September 30, 2016 was $365,943 compared to an increase of $812,803 for the nine months ended September 30, 2015. Below is a hierarchy table of the components of the derivative liability:

	Carrying			Fair Value Measurements Using
	Value			Level 1		Level 2		Level 3			Total
Derivative Liabilities 12/31/2015	$	742,833			-		-	$	742,833		$	742,833
Change in derivative liabilities due to:
Issuance of warrants		41,226			-		-		41,226		$	41,226
Settlements		(18,769	)						(18,769	)	$	(18,769	)
Change in derivative liabilities valuation	$	(388,400	)		-		-		(388,400	)	$	(388,400	)
		(365,943	)				-		(365,943	)		(365,943	)
Derivative Liabilities 9/30/2016	$	376,890		$	-		-	$	376,890		$	376,890

Concentrations

Concentrations

Cash and cash equivalents are maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk.

Inventory

Inventory

Inventory is stated at the lower of cost or market, using the first-in, first-out method. The Company follows standard costing methods for manufactured products. Management assesses the recoverability and establishes reserves based on the net realizable value of the inventory.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Maintenance and repair costs are expensed as incurred. Depreciation is calculated on the accelerated and straight-line methods over the estimated useful lives of the assets. Estimated useful lives of five to ten years are used for machinery and equipment, office equipment and furniture, and automobile. Estimated useful lives of up to five years are used for computer equipment and related software. Depreciation and amortization of leasehold improvements are computed using the term of the lease.

Intangible Assets

Intangible Assets

Intangible assets were carried at the purchased cost less accumulated amortization. Amortization was computed over the estimated useful lives of the respective assets, generally from fifteen to twenty years.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstance indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Income Taxes

Income Taxes

The amount of current and deferred taxes payable or refundable is recognized as of the date of the financial statements, utilizing currently enacted tax laws and rates. Deferred tax expenses or benefits are recognized in the financial statements for the changes in deferred tax liabilities or assets between years.

Income (Loss) Per Common Share

Income (Loss) Per Common Share

Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares outstanding and, when diluted, potential shares from options and warrants to purchase common stock using the treasury stock method.

Cashless Exercise of Warrants/Options

Cashless Exercise of Warrants/Options

The Company has issued warrants to purchase common stock where the holder is entitled to exercise the warrant via a cashless exercise. The Company accounts for the issuance of common stock on the cashless exercise of warrants on a net basis.

Stock-Based Compensation

Stock-Based Compensation

The Company estimates the fair value of share-based payment awards made to employees, directors and related parties, including stock options, restricted stock, employee stock purchases related to employee stock purchase plans and warrants, on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense ratably over the requisite service periods. We estimate the fair value of each share-based award using the Black-Scholes option pricing model. The Black-Scholes model is highly complex and dependent on key estimates by management. The estimates with the greatest degree of subjective judgment are the estimated lives of the stock-based awards and the estimated volatility of the Company’s stock price. The Company recognized pre-tax compensation expense related to stock compensation awards of $317,955 and $4,0534,849 for the nine months ended September 30, 2016 and 2015, respectively.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August, 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods with that reporting period. The adoption of ASU 2015-14 is not expected to have a material effect on the Company’s consolidated financial statements.

On February 25, 2016, the FASB issued Topic 842, its highly-anticipated leasing standard for both lessees and lessors. Under its core principle, a lessee will recognize lease assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months. Lessor accounting remains largely consistent with existing U.S. GAAP. The amendments are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. At inception, a lessee must classify all leases as either finance or operating. The Company intends to adopt Topic 842 upon extension of the current lease or upon entering into a new lease agreement for alternative facilities. The Company is investigating the effect of adoption of Topic 842 on its results of operations and financial condition. However, it is not anticipated that adoption of Topic 842 will have a material impact on the results of operations or financial condition of the Company.

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2016

Summary of Significant Accounting Policies [Abstract]

Components of derivative liability

	Carrying			Fair Value Measurements Using
	Value			Level 1		Level 2		Level 3			Total
Derivative Liabilities 12/31/2015	$	742,833			-		-	$	742,833		$	742,833
Change in derivative liabilities due to:
Issuance of warrants		41,226			-		-		41,226		$	41,226
Settlements		(18,769	)						(18,769	)	$	(18,769	)
Change in derivative liabilities valuation	$	(388,400	)		-		-		(388,400	)	$	(388,400	)
		(365,943	)				-		(365,943	)		(365,943	)
Derivative Liabilities 9/30/2016	$	376,890		$	-		-	$	376,890		$	376,890

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Inventory (Tables)

9 Months Ended

Sep. 30, 2016

Inventory [Abstract]

Summary of inventory

		9/30/2016			12/31/2015
Raw materials	$	30,318		$	18,228
Packaging		9,168			4,560
Finished goods		151,025			215,476
Less: Reserve to estimated net realizable value		(27,055	)
	$	163,455		$	238,264

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Property and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2016

Property and Equipment, Net [Abstract]

Schedule of property and equipment

	9/30/2016			12/31/2015
Leasehold Improvements	$	-		$	3,449
Capital Lease Assets		514,707			514,707
		514,707			518,156
Accumulated depreciation		(122,107	)		(46,923	)
Property and equipment, net	$	392,600		$	471,233

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Accrued Expenses and Other (Tables)

9 Months Ended

Sep. 30, 2016

Accrued Expenses and Other [Abstract]

Schedule of accrued expenses

	9/30/2016		12/31/2015
Accrued payroll and taxes	$	52,709	$	166,713
Accrued settlements		102,000		102,000
Accrued interest		500,533		216,071
Accrued expenses and other		106,908		199,812
	$	762,149	$	684,596

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Short-Term Borrowings to Unrelated Parties (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Summary of principal and interest activity

	Principal			Interest
Balance at December 31, 2015	$	750,000		$	10,442
Principal advances and accrued interest		1,600,000			184,019
Reclassification of notes to related	$	(600,000	)	$	(60,679	)
Principal payments and interest		-			-
Balance at September 30, 2016	$	1,750,000		$	133,782
Less debt discount		(27,904	)		-
Balance at September 30, 2016	$	1,722,096		$	133,782

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Derivative Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Liabilities [Abstract]

Schedule of components of derivative financial instruments

Components of derivative financial instruments
	9/30/2016			12/31/2015
Common stock warrants	$	67,108		$	130,028
Embedded conversion features for convertible debt or preferred shares		309,782			612,805
Total	$	376,890		$	742,833
Beginning balance	$	742,833		$	20,166
Change in derivative liability valuation		(388,400	)		1,265,611
Change in derivative liability - settlements		(18,769	)		-
Change in derivative liability - warrant issuance		41,226			(542,944	)
Total	$	376,890		$	742,833

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Stock Option Plan And Warrants (Tables)

9 Months Ended

Sep. 30, 2016

Stock Option Plan and Warrants [Abstract]

Summary of the status of stock options

	9/30/2016					12/31/2015
				Weighted Average					Weighted Average
	Number of Shares			Exercise Price		Number of Shares			Exercise Price
Outstanding at beginning of year		11,103,275		$	0.78		11,033,675		$	1.05
Granted		3,020,134		$	0.03		6,299,600		$	0.29
Exercised		-					-
Expired and Cancelled		(3,772,386	)	$	0.89		(6,230,000	)	$	0.77
Outstanding, end of period		10,351,023		$	0.53		11,103,275		$	0.78
Exercisable at end of period		8,085,923		$	0.66		10,328,925		$	0.82

Schedule of stock options granted

	5/17/2016			6/30/2015
Weighted average fair value per option granted		0.0298			0.1431 – 0.3606
Risk-free interest rate		1.2	%		1.00% - 1.54	%
Expected dividend yield		0.0	%		0.0	%
Expected lives		2.7			3.0
Expected volatility		201.10	%		86.22% - 120.51	%

Summary of stock options outstanding

Range of Exercise Prices	Options  Outstanding		Weighted Average Remaining Contractual  Life		Weighted  Average  Exercise  Price		Options Exercisable
$0.01 - $1.50		8,854,489		4.8	$	0.33		6,589,389
$1.51 - $3.00		1,496,534		1.3	$	1.67		1,496,534
$3.01 - $5.00		-		-	$	-		-
		10,351,023		2.8	$	0.53		8,085,923

Summary of warrant activity

	9/30/2016					12/31/2015
	Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price		Number of Shares of Common Stock Underlying Warrants			Weighted Average Exercise Price
Outstanding at beginning of year		50,957,780		$	0.52		16,446,351		$	1.44
Granted		6,550,000		$	0.64		87,825,204		$	0.42
Exercised		(4,610,179	)	$	0.43		(53,095,204	)	$	0.66
Cashless Exercises		-		$	-		-			-
Expired and Cancelled		-					(218,571	)	$	0.66
		52,897,601		$	0.50		50,957,780		$	0.52
Outstanding, end of period		52,897,601		$	0.50		50,957,780		$	0.52
Exercisable at end of period		52,897,601		$	0.50		50,957,780		$	0.52

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Going Concern (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Going Concern (Textual)
Accumulated deficit	$ (158,441,594)	$ (156,429,630)

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Summary of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2016 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative Liabilities, beginning of period	$ 742,833
Change in derivative liabilities due to:
Derivative Liabilities, end of period	376,890
Recurring Basis [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative Liabilities, beginning of period	742,833
Change in derivative liabilities due to:
Issuance of warrants	41,226
Settlements	(18,769)
Change in derivative liabilities valuation	(388,400)
Total change in derivative liabilities	(365,943)
Derivative Liabilities, end of period	376,890
Recurring Basis [Member] | Level 1 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative Liabilities, beginning of period
Change in derivative liabilities due to:
Issuance of warrants
Settlements
Change in derivative liabilities valuation
Total change in derivative liabilities
Derivative Liabilities, end of period
Recurring Basis [Member] | Level 2 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative Liabilities, beginning of period
Change in derivative liabilities due to:
Issuance of warrants
Settlements
Change in derivative liabilities valuation
Total change in derivative liabilities
Derivative Liabilities, end of period
Recurring Basis [Member] | Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative Liabilities, beginning of period	742,833
Change in derivative liabilities due to:
Issuance of warrants	41,226
Settlements	(18,769)
Change in derivative liabilities valuation	(388,400)
Total change in derivative liabilities	(365,943)
Derivative Liabilities, end of period	376,890
Recurring Basis [Member] | Carrying Value [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Derivative Liabilities, beginning of period	742,833
Change in derivative liabilities due to:
Issuance of warrants	41,226
Settlements	(18,769)
Change in derivative liabilities valuation	(388,400)
Total change in derivative liabilities	(365,943)
Derivative Liabilities, end of period	$ 376,890

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Summary of Significant Accounting Policies (Details Textual) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Summary of Significant Accounting Policies (Textual)
Compensation expense related to awards	$ 317,955	$ 4,534,849
Fair value of derivative liability	376,890		$ 742,833
Change in fair value of derivative liability	$ 365,943	$ 812,803
Machinery and Equipment [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	5 years
Machinery and Equipment [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	10 years
Office Equipment and Furniture [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	5 years
Office Equipment and Furniture [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	10 years
Automobile [Member] | Minimum [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	5 years
Automobile [Member] | Maximum [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	10 years
Computer Equipment and Related Software [Member]
Summary of Significant Accounting Policies (Textual)
Estimated useful lives	5 years

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Inventory (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Inventory [Abstract]
Raw materials	$ 30,318	$ 18,228
Packaging	9,168	4,560
Finished goods	151,025	215,476
Less: Reserve to estimated net realizable value	(27,055)
Total inventory	$ 163,455	$ 238,264

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Property and Equipment, Net (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Property and Equipment [Line Items]
Property and equipment, gross	$ 514,707	$ 518,156
Accumulated depreciation	(122,107)	(46,923)
Property and equipment, net	392,600	471,233
Leasehold Improvements [Member]
Property and Equipment [Line Items]
Property and equipment, gross		3,449
Capital Lease Assets [Member]
Property and Equipment [Line Items]
Property and equipment, gross	$ 514,707	$ 514,707

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Property and Equipment, Net (Details Textual) - USD ($)		9 Months Ended
	Jul. 17, 2015	Sep. 30, 2016	Sep. 30, 2015
Property and Equipment, Net (Textual)
Depreciation expense		$ 75,184	$ 154,250
Repayment of outstanding borrowings			588,211
Accrued interest paid		$ 80,259	$ 53,596
12- 18 months [Member]
Property and Equipment, Net (Textual)
Purchase of property and equipment	$ 425,000
19- 23 months [Member]
Property and Equipment, Net (Textual)
Purchase of property and equipment	360,000
24th month [Member]
Property and Equipment, Net (Textual)
Purchase of property and equipment	325,000
Fordham Capital Partners, LLC [Member]
Property and Equipment, Net (Textual)
Proceeds from sale of production equipment, furniture and fixtures	514,707
Repayment of outstanding borrowings	200,000
Accrued interest paid	3,112
Franchise taxes paid	96,542
Security deposit related to equipment lease	$ 15,800
Equipment lease agreement term	24 months
Loss recognized	$ 574,331
Equipment lease monthly lease payment	15,800
Proceeds from purchase agreement	$ 172,911

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Accrued Expenses and Other (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Accrued Expenses and Other [Abstract]
Accrued payroll and taxes	$ 52,709	$ 166,713
Accrued settlements	102,000	102,000
Accrued interest	133,782	10,442
Accrued expenses and other	106,908	199,812
Total accrued expenses and other	$ 762,149	$ 684,596

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Short-Term Borrowings to Unrelated Parties (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Beginning balance, Principal	$ 750,000
Principal advances and accrued interest, Principal	1,600,000
Reclassification of notes to related, Principal	(600,000)
Principal payments and interest, Principal
Ending balance, Principal	1,750,000
Less debt discount	(27,904)
Balance at September 30, 2016	1,722,096	$ 750,000
Beginning balance, Interest	10,442
Principal advances and accrued interest, Interest	184,019
Reclassification of notes to related, Interest	(60,679)
Principal payments and interest, Interest
Ending balance, Interest	$ 133,782

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Short-Term Borrowings to Unrelated Parties (Details Textual)												1 Months Ended	9 Months Ended
	Jul. 14, 2016 USD ($) $ / shares shares	Jun. 29, 2016	Apr. 08, 2016 USD ($) $ / shares shares	Apr. 07, 2016 USD ($) Investors $ / shares shares	Mar. 11, 2016 USD ($) $ / shares shares	Mar. 02, 2016 USD ($) $ / shares shares	Dec. 23, 2015 USD ($)	Sep. 29, 2015 USD ($)	Jul. 17, 2015 USD ($)	May 29, 2015	Dec. 19, 2014	Jul. 21, 2016 USD ($) $ / shares shares	Sep. 30, 2016 USD ($)	Sep. 30, 2015 USD ($)	Jan. 08, 2015 Investors
Short-Term Borrowings to Unrelated Parties (Textual)
Repayment of outstanding borrowings														$ 588,211
Amortization of debt discount													3,660
Accrued interest paid													$ 80,259	$ 53,596
Extended maturity date, description		The Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to October 1, 2016.					The Company executed an amendment to the 14% nonconvertible subordinated secured notes (October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to July 1, 2016.			The Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to December 31, 2015.	The Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended to April 15, 2015.		The Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to April 3, 2017.
Number of accredited investors | Investors															8
Fordham Capital [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Sale of production equipment, furniture and fixtures									$ 514,707
Repayment of outstanding borrowings									200,000
Franchise taxes paid									96,542
Security deposit related to equipment lease									15,800
Accrued interest paid									$ 3,112
Senior unsecured note [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Amortization of debt discount													$ 355
Recognition of debt discount													3,189
Senior unsecured note [Member] | Jonathan Kahn [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Exercise price of warrants | $ / shares						$ 0.64
Warrants issued to purchase common stock | shares						400,000
Amortization of debt discount													438
Interest rate on nonconvertible senior unsecured notes						14.00%
Debt instrument interest rate term, description						The note matures in one year (March 2, 2017) and bears interest at 14% compounded based on a 365-day year.
Principal amount of nonconvertible senior unsecured note						$ 100,000
Maturity date						Mar. 02, 2017
Warrants expire ,Description						The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Recognition of debt discount													3,791
Nonconvertible senior unsecured note [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Interest rate on nonconvertible senior unsecured notes								14.00%
Debt instrument interest rate term, description								The note initially matured in six months (March 26, 2016) and bears interest at 14% computed based on a 365- day year.
Principal amount of nonconvertible senior unsecured note								$ 250,000
Maturity date								Mar. 26, 2016
Extended maturity date, description								On December 23, 2015, the company executed an amendment whereby the maturity date was extended to July 1, 2016. On June 29, 2016, the company executed an amendment whereby the maturity date was extended to October 1, 2016. On September 30, 2016, the company executed an amendment whereby the maturity date was extended to April 3, 2017.
Nonconvertible senior unsecured note [Member] | Jonathan Kahn [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Interest rate on nonconvertible senior unsecured notes							14.00%
Debt instrument interest rate term, description							The note matures in twelve months (December 23, 2016) and bears interest at 14% computed based on a 365- day year.
Principal amount of nonconvertible senior unsecured note							$ 500,000
Maturity date							Dec. 23, 2016
Senior unsecured note one [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Exercise price of warrants | $ / shares					$ 0.64
Warrants issued to purchase common stock | shares					400,000
Interest rate on nonconvertible senior unsecured notes					14.00%
Debt instrument interest rate term, description					The note matures in one year (March 11, 2017) and bears interest at 14% compounded based on a 365-day year.
Principal amount of nonconvertible senior unsecured note					$ 100,000
Maturity date					Mar. 11, 2017
Warrants expire ,Description					The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Senior unsecured note two [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Exercise price of warrants | $ / shares				$ 0.64
Warrants issued to purchase common stock | shares				400,000
Amortization of debt discount													378
Interest rate on nonconvertible senior unsecured notes				14.00%
Debt instrument interest rate term, description				The notes mature in one year (April 7, 2017) and bear interest at 14% compounded based on a 365-day year.
Principal amount of nonconvertible senior unsecured note				$ 100,000
Maturity date				Apr. 07, 2017
Warrants expire ,Description				The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Recognition of debt discount													3,924
Number of accredited investors | Investors				2
Senior unsecured note three [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Exercise price of warrants | $ / shares			$ 0.64
Warrants issued to purchase common stock | shares			2,000,000
Amortization of debt discount													1,470
Interest rate on nonconvertible senior unsecured notes			14.00%
Debt instrument interest rate term, description			The note matures in one year (April 8, 2017) and bears interest at 14% compounded based on a 365-day year.
Principal amount of nonconvertible senior unsecured note			$ 500,000
Maturity date			Apr. 08, 2017
Warrants expire ,Description			The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Recognition of debt discount													15,342
Senior unsecured note four [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Exercise price of warrants | $ / shares	$ 0.64
Warrants issued to purchase common stock | shares	2,000,000
Amortization of debt discount													273
Interest rate on nonconvertible senior unsecured notes	14.00%
Debt instrument interest rate term, description	The note matures in one year (July 14, 2017) and bears interest at 14% compounded based on a 365-day year.
Principal amount of nonconvertible senior unsecured note	$ 500,000
Maturity date	Jul. 14, 2017
Warrants expire ,Description	The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Recognition of debt discount													6,383
Senior unsecured note five [Member]
Short-Term Borrowings to Unrelated Parties (Textual)
Exercise price of warrants | $ / shares												$ 0.64
Warrants issued to purchase common stock | shares												600,000
Amortization of debt discount													82
Interest rate on nonconvertible senior unsecured notes												14.00%
Debt instrument interest rate term, description												The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year.
Principal amount of nonconvertible senior unsecured note												$ 300,000
Maturity date												Jul. 21, 2017
Warrants expire ,Description												The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Recognition of debt discount													$ 2,117

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Short-Term Nonconvertible Notes Payable to Related Parties (Details) - USD ($)																1 Months Ended	9 Months Ended
	Nov. 04, 2016	Jun. 29, 2016	Mar. 17, 2016	Mar. 02, 2016	Dec. 23, 2015	Sep. 29, 2015	Aug. 21, 2015	Aug. 13, 2015	Jun. 12, 2015	May 29, 2015	Dec. 19, 2014	Dec. 03, 2014	Oct. 30, 2014	Oct. 23, 2014	Sep. 29, 2014	Apr. 28, 2016	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Feb. 09, 2015
Short-term Debt [Line Items]
Principal amount																	$ 1,722,096		$ 750,000
Accrued and unpaid interest																	133,782		10,442
Amortization of debt discount																	$ 3,660
Extended maturity date, description		The Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to October 1, 2016.			The Company executed an amendment to the 14% nonconvertible subordinated secured notes (October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to July 1, 2016.					The Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended from May 29, 2015 to December 31, 2015.	The Company executed an amendment to the 14% nonconvertible subordinated secured notes (dated September 29, 2014, October 23, 2014, October 30, 2014 and December 3, 2014, respectively) whereby the maturity date for each note was extended to April 15, 2015.						The Company executed an amendment to the 14% nonconvertible subordinated secured notes (September 29, 2014, October 23, 2014, October 30, 2014, December 3, 2014, June 12, 2015, August 13, 2015, and August 21, 2015 respectively) whereby the maturity date for each note was extended to April 3, 2017.
Subsequent Event [Member]
Short-term Debt [Line Items]
Maturity date	Nov. 04, 2017
Exercise price of warrants	$ 0.64
Morris Garfinkle [Member]
Short-term Debt [Line Items]
Warrants issued to purchase common stock			400,000																	5,500,000
Exercise price of warrants			$ 0.64																	$ 0.45
Dan Jeffery [Member]
Short-term Debt [Line Items]
Warrants issued to purchase common stock			200,000													150,000
Exercise price of warrants			$ 0.64													$ 0.64
Jonathan Kahn [Member]
Short-term Debt [Line Items]
Warrants issued to purchase common stock				400,000	500,000
Exercise price of warrants				$ 0.64	$ 0.64
Nonconvertible Note [Member]
Short-term Debt [Line Items]
Note payable to related party																	$ 1,257,000		457,000
Accrued and unpaid interest																	133,782		$ 54,935
Nonconvertible subordinated secured note 1 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount															$ 85,000
Interest rate on convertible senior secured notes															14.00%
Term of debt															2 months
Maturity date															Nov. 29, 2014
Debt instrument interest rate term, description															Bears interest at 14% computed based on a 365-day year.
Nonconvertible subordinated secured note 2 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount														$ 85,000
Interest rate on convertible senior secured notes														14.00%
Term of debt														2 months
Maturity date														Dec. 23, 2014
Debt instrument interest rate term, description														Bears interest at 14% computed based on a 365-day year.
Nonconvertible subordinated secured note 3 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount													$ 70,000
Interest rate on convertible senior secured notes													14.00%
Term of debt													2 months
Maturity date													Dec. 30, 2014
Debt instrument interest rate term, description													Bears interest at 14% computed based on a 365-day year.
Nonconvertible subordinated secured note 4 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount												$ 30,000
Interest rate on convertible senior secured notes												14.00%
Term of debt												2 months
Maturity date												Feb. 03, 2015
Debt instrument interest rate term, description												Bears interest at 14% computed based on a 365-day year.
Nonconvertible subordinated secured note 5 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount									$ 12,000
Interest rate on convertible senior secured notes									14.00%
Maturity date									Dec. 31, 2015
Debt instrument interest rate term, description									Bears interest at 14% computed based on a 365-day year.
Nonconvertible subordinated secured note 6 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount								$ 25,000
Interest rate on convertible senior secured notes								14.00%
Maturity date								Dec. 31, 2015
Debt instrument interest rate term, description								Bears interest at 14% computed based on a 365-day year.
Nonconvertible subordinated secured note 7 [Member] | Edward B. Smith [Member]
Short-term Debt [Line Items]
Principal amount							$ 150,000
Interest rate on convertible senior secured notes							14.00%
Maturity date							Dec. 31, 2015
Debt instrument interest rate term, description							Bears interest at 14% computed based on a 365-day year.
Nonconvertible senior unsecured note 1 [Member]
Short-term Debt [Line Items]
Principal amount						$ 250,000
Interest rate on convertible senior secured notes						14.00%
Term of debt						6 months
Maturity date						Mar. 26, 2016
Debt instrument interest rate term, description						Bears interest at 14% computed based on a 365-day year.
Nonconvertible senior unsecured note 2 [Member] | Jonathan Kahn [Member]
Short-term Debt [Line Items]
Principal amount					$ 500,000
Interest rate on convertible senior secured notes					14.00%
Term of debt					12 months
Maturity date					Dec. 23, 2016
Debt instrument interest rate term, description					Bears interest at 14% computed based on a 365- day year.
Senior unsecured note 1 [Member] | Jonathan Kahn [Member]
Short-term Debt [Line Items]
Principal amount				$ 100,000
Interest rate on convertible senior secured notes				14.00%
Term of debt				1 year
Maturity date				Mar. 02, 2017
Amortization of debt discount																	247
Warrants issued to purchase common stock				400,000
Exercise price of warrants				$ 0.64
Debt instrument interest rate term, description				Bears interest at 14% compounded based on a 365-day year.
Recognition of debt discount																	3,791
Warrants expire ,Description				The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Senior unsecured note 2 [Member] | Morris Garfinkle [Member]
Short-term Debt [Line Items]
Principal amount			$ 100,000
Interest rate on convertible senior secured notes			14.00%
Term of debt			1 year
Maturity date			Mar. 17, 2017
Amortization of debt discount																	178
Warrants issued to purchase common stock			400,000
Exercise price of warrants			$ 0.64
Debt instrument interest rate term, description			Bears interest at 14% compounded based on a 365-day year.
Recognition of debt discount																	3,094
Warrants expire ,Description			The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Senior unsecured note 3 [Member] | Dan Jeffery [Member]
Short-term Debt [Line Items]
Principal amount			$ 50,000
Interest rate on convertible senior secured notes			14.00%
Term of debt			1 year
Maturity date			Mar. 17, 2017
Amortization of debt discount																	105
Warrants issued to purchase common stock			200,000
Exercise price of warrants			$ 0.64
Debt instrument interest rate term, description			Bears interest at 14% compounded based on a 365-day year.
Recognition of debt discount																	1,824
Warrants expire ,Description			The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.
Senior unsecured note 4 [Member] | Dan Jeffery [Member]
Short-term Debt [Line Items]
Principal amount																$ 50,000
Interest rate on convertible senior secured notes																14.00%
Term of debt																1 year
Maturity date																Apr. 28, 2017
Accrued and unpaid interest																	55
Amortization of debt discount																	55
Warrants issued to purchase common stock																150,000
Exercise price of warrants																$ 0.64
Debt instrument interest rate term, description																Bears interest at 14% compounded based on a 365-day year.
Recognition of debt discount																	$ 1,562
Warrants expire ,Description																The Warrants expire on the fifth anniversary of their issuance, may be exercised on a cashless basis, are subject to full ratchet price anti- dilution protection and entitled to registration rights.

XML

Short-Term Convertible Notes Payable to Related Parties (Details) - USD ($)											3 Months Ended	9 Months Ended
	Jun. 29, 2016	May 22, 2016	Dec. 23, 2015	Jan. 08, 2015	Aug. 06, 2014	Jul. 15, 2014	May 12, 2014	Apr. 30, 2014	Apr. 25, 2014	Feb. 11, 2014	Mar. 31, 2015	Sep. 30, 2016	Dec. 31, 2015
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible senior secured note												$ 624,866	$ 624,866
Accrued and unpaid interest												$ 214,102
Subordinated secured notes [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Maturity date												Apr. 03, 2017
Interest rate on convertible senior secured notes												14.00%
Convertible notes [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Historical annual volatility of stock price												119.00%
Weighted cost of capital												16.93%
Loss on conversion to preferred stock											$ 351,314
Convertible notes [Member] | Edward Smith [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt					$ 264,000
Term of debt					2 years
Maturity date					Aug. 06, 2016
Interest rate on convertible senior secured notes					14.00%
Conversion price					$ 1.00
Proceeds from debt					$ 200,000
Debt instrument interest rate term, description					Bear interest at 14% computed on a 365-day year.
Period after which conversion option become effective					90 days
Convertible notes [Member] | Edward Smith III [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible senior secured note									$ 300,000	$ 200,000
Unsecured note payable						$ 64,000
Term of debt						90 days			2 years	2 years
Maturity date						Oct. 15, 2014			Apr. 25, 2016	Feb. 11, 2016
Interest rate on convertible senior secured notes									14.00%	12.50%
Conversion price									$ 1.00	$ 2.25
Trailing average price										$ 1.25
Period after which conversion option become effective									90 days	90 days
Initial warrants received				609,566
Additional warrants received				259,208
Convertible, warrants held by directors				71,211
Exchange price for convertible notes				$ 284,844
Convertible notes [Member] | Edward B. Smith, Director and Shareholder [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt								$ 19,000
Term of debt								2 years
Maturity date								Apr. 30, 2016
Interest rate on convertible senior secured notes								14.00%
Conversion price								$ 1.00
Debt instrument interest rate term, description								Bears interest at 14% computed on a 365-day year.
Period after which conversion option become effective								90 days
Convertible notes [Member] | Morris Garfinkle [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt								$ 19,000
Term of debt								2 years
Maturity date								Apr. 30, 2016
Interest rate on convertible senior secured notes								14.00%
Conversion price								$ 1.00
Debt instrument interest rate term, description								Bears interest at 14% computed on a 365-day year.
Period after which conversion option become effective								90 days
Initial warrants received				86,317
Additional warrants received				36,705
Convertible, warrants held by directors				10,084
Exchange price for convertible notes				$ 40,335
Convertible notes [Member] | CKS Warehouse [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt							$ 75,000
Term of debt							2 years
Maturity date		Oct. 01, 2016					May 12, 2016
Interest rate on convertible senior secured notes							14.00%
Conversion price							$ 1.00
Debt instrument interest rate term, description							Bear interest at 14% computed on a 365-day year.
Period after which conversion option become effective							90 days
Initial warrants received				41,712
Additional warrants received				17,737
Convertible, warrants held by directors				4,873
Exchange price for convertible notes				$ 19,491
Convertible notes [Member] | Mark Hershorn [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt								$ 19,000
Term of debt								2 years
Maturity date								Apr. 30, 2016
Interest rate on convertible senior secured notes								14.00%
Conversion price								$ 1.00
Debt instrument interest rate term, description								Bears interest at 14% computed on a 365-day year.
Period after which conversion option become effective								90 days
Initial warrants received				44,606
Additional warrants received				18,968
Convertible, warrants held by directors				5,211
Exchange price for convertible notes				$ 20,844
Convertible notes [Member] | Brian Israel [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt								$ 19,000
Term of debt								2 years
Maturity date								Apr. 30, 2016
Interest rate on convertible senior secured notes								14.00%
Conversion price								$ 1.00
Debt instrument interest rate term, description								Bears interest at 14% computed on a 365-day year.
Period after which conversion option become effective								90 days
Initial warrants received				44,606
Additional warrants received				18,968
Convertible, warrants held by directors				5,211
Exchange price for convertible notes				$ 20,844
Convertible notes [Member] | Mo Grafinkle [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt							$ 75,000					$ 200,000,000
Term of debt							2 years
Maturity date	Oct. 01, 2016		Jul. 01, 2016				May 12, 2016
Interest rate on convertible senior secured notes							14.00%					12.50%
Conversion price							$ 1.00
Debt instrument interest rate term, description							Bear interest at 14% computed on a 365-day year.
Period after which conversion option become effective							90 days
Convertible notes [Member] | Mo Grafinkle [Member] | February 11, 2014 [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt	$ 200,000		$ 200,000									$ 200,000,000
Interest rate on convertible senior secured notes	12.50%		12.50%									12.50%
Convertible notes [Member] | Mo Grafinkle [Member] | April 25, 2014 [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Convertible subordinate secured debt	$ 300,000		$ 300,000									$ 300,000
Maturity date												Apr. 03, 2017
Interest rate on convertible senior secured notes	14.00%		14.00%									14.00%
Convertible notes [Member] | Private Placement [Member]
Short-Term Convertible Notes Payable to Related Parties (Textual)
Conversion price				$ 4.00
Shares received by director under private placement				96,590
Initial warrants received				826,806
Additional warrants received				351,586

XML

Liquidated Damages (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Liquidated Damages [Abstract]
Pro rata payments percentage	1.50%
Maximum period to file a registration statement	30 days
Liquidated damages	$ 36,178	$ 36,178

XML

Derivative Liabilities (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Total	$ 376,890	$ 742,833
Embedded conversion features for convertible debt or preferred shares [Member]
Derivatives, Fair Value [Line Items]
Total	309,782	612,805
Common stock warrants [Member]
Derivatives, Fair Value [Line Items]
Total	63,037	130,028
Recurring Basis [Member]
Derivatives, Fair Value [Line Items]
Total	376,890	742,833
Derivative Liabilities, beginning of period	742,833
Change in derivative liability valuation	(388,400)
Change in derivative liability - settlements	18,769
Change in derivative liability - warrant issuance	41,226
Derivative Liabilities, end of period	376,890	742,833
Recurring Basis [Member] | Derivative Liabilities [Member]
Derivatives, Fair Value [Line Items]
Total	376,890	742,833
Derivative Liabilities, beginning of period	742,833	20,166
Change in derivative liability valuation	388,400	1,265,611
Change in derivative liability - settlements	18,769
Change in derivative liability - warrant issuance	41,226	(542,944)
Derivative Liabilities, end of period	$ 376,890	$ 742,833

XML

Derivative Liabilities (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Derivative Liabilities (Textual)
Derivative liabilities	$ 376,890		$ 376,890		$ 742,833
Change in fair value - derivatives	$ 127,857	$ 66,561	$ 388,400	$ (1,355,747)

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Common Stock (Details)							1 Months Ended	3 Months Ended		9 Months Ended
	Jun. 21, 2016 USD ($) shares	May 17, 2016 USD ($) shares	Apr. 22, 2016 USD ($) shares	Apr. 29, 2015 $ / shares shares	Mar. 01, 2015 USD ($) shares	Jan. 02, 2015 USD ($) Nonexecutivedirectors shares	Feb. 24, 2015 USD ($) Nonexecutivedirectors shares	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($) shares	Sep. 30, 2016 USD ($) shares	Sep. 30, 2015 USD ($) shares	Apr. 28, 2016 shares	Mar. 17, 2016 shares	Feb. 09, 2015 shares	Jan. 08, 2015 shares
Subsidiary, Sale of Stock [Line Items]
Warrant purchased aggregate price | $											$ 1,845,892
Restricted shares issued					400,000
Restricted shares issued value | $					$ 104,000
Warrants outstanding to purchase				55,334,490
Class of warrant or right outstanding associated with anti-dilutive provision (in shares)				38,888,147
Reduced exercise price (in dollars per share) | $ / shares				$ 0.00005
Percentage of warrants receive common stock in exchange				17.50%
Extension term of warrants to waive anti-dilution rights				2 years
Loss on exchange of warrants | $											$ (12,959,654)
Kahn Employment Agreement [Member]
Subsidiary, Sale of Stock [Line Items]
Shares granted		6,067,931
Share-based compensation expense | $		$ 180,824
Common Stock diluted basis, description										Mr. Kahn will receive an additional grant of fully-vested common stock, such additional grants each representing 0.75% of the Company's shares of common stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively. The Company expensed $13,879 through Sept 30, 2016 for stock compensation related to the May 1, 2017 and May 1, 2018 additional grants. The Company will expense a portion of this compensation quarterly until the grants are made at their respective due dates.
Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Class of warrant or right outstanding associated with anti-dilutive provision (in shares)															15,512,057
Warrants issued to purchase common stock (in shares)															54,400,204
Common Stock [Member] | Alternative (1) [Member]
Subsidiary, Sale of Stock [Line Items]
Warrants issued to purchase common stock (in shares)								52,110,896	52,110,896	52,110,896	52,110,896
Common Stock [Member] | Alternative (3) [Member]
Subsidiary, Sale of Stock [Line Items]
Warrants issued to purchase common stock (in shares)								974,826	974,826	974,826	974,826
Warrant [Member]
Subsidiary, Sale of Stock [Line Items]
Warrant purchased			4,610,179
Warrant purchased aggregate price | $			$ 122,986
Warrants issued to purchase common stock (in shares)								52,897,601		52,897,601
Warrant [Member] | Alternative (2) [Member]
Subsidiary, Sale of Stock [Line Items]
Warrants issued to purchase common stock (in shares)									318,750		318,750
Warrant [Member] | Alternative (3) [Member]
Subsidiary, Sale of Stock [Line Items]
Warrants issued to purchase common stock (in shares)									73,125		73,125
Non-Executive Directors [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued for services (in shares)						285,716	576,924
Share-based compensation expense | $						$ 160,001	$ 150,000
Number of non-executive directors | Nonexecutivedirectors						4	3
Mark Hershorn [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued for services (in shares)						71,429
Brian Israel [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued for services (in shares)						71,429	192,308
Morris Garfinkle [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued for services (in shares)	2,013,423					71,429	192,308
Share-based compensation expense | $	$ 160,001								$ 3,749,259
Warrants issued to purchase common stock (in shares)													400,000	5,500,000
Edward Smith III [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued for services (in shares)						71,429
Dan jeffery [Member]
Subsidiary, Sale of Stock [Line Items]
Shares issued for services (in shares)							192,308
Warrants issued to purchase common stock (in shares)												150,000	200,000

XML

Preferred Stock (Details)								1 Months Ended			3 Months Ended	9 Months Ended	12 Months Ended
	Nov. 04, 2015 USD ($) $ / shares shares	Jul. 14, 2015 $ / shares shares	Jun. 01, 2015 USD ($) $ / shares shares	May 12, 2015 USD ($) $ / shares shares	Mar. 18, 2015 USD ($) $ / shares shares	Feb. 09, 2015 USD ($) Investor $ / shares shares	Jan. 08, 2015 USD ($) Investors $ / shares shares	Oct. 20, 2015 USD ($) $ / shares shares	Aug. 26, 2015 USD ($) $ / shares shares	May 01, 2015 USD ($) $ / shares shares	Mar. 31, 2015 USD ($)	Sep. 30, 2016 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Jul. 21, 2016 $ / shares shares	Jul. 14, 2016 $ / shares shares	Apr. 08, 2016 $ / shares shares	Apr. 07, 2016 $ / shares shares	Mar. 11, 2016 $ / shares shares	Oct. 02, 2015 $ / shares shares	Jul. 01, 2015 USD ($)	Apr. 30, 2015 USD ($)
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)							260,000
Units price (in dollars per shares) | $ / shares							$ 4.00
Common stock, par value (in dollars per share) | $ / shares												$ 0.00005	$ 0.00005
Rental arrears | $																				$ 71,125	$ 71,125
Number of accredited investors | Investors							8
Monthly base rent | $										$ 10,681
Value of accrued dividends on convertible preferred stock converted into common stock | $												$ 555,953	$ 280,675
Recorded rental expense | $											$ 149,787	$ 48,060
Convertible notes [Member]
Subsidiary, Sale of Stock [Line Items]
Fair Value Assumptions, Expected Volatility Rate												119.00%
Weighted cost of capital												16.93%
Loss on conversion to preferred stock | $											$ 351,314
Convertible notes [Member] | Edward B. Smith, Director and Shareholder [Member]
Subsidiary, Sale of Stock [Line Items]
Exchange price for convertible notes | $							$ 284,844
Convertible notes [Member] | Morris Garfinkle [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible, warrants held by directors (in shares)							10,084
Initial warrants received (in shares)							86,317
Additional warrants received ( in shares)							36,705
Exchange price for convertible notes | $							$ 40,335
Convertible notes [Member] | Mark Hershorn [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible, warrants held by directors (in shares)							5,211
Initial warrants received (in shares)							44,606
Additional warrants received ( in shares)							18,968
Exchange price for convertible notes | $							$ 20,844
Convertible notes [Member] | Brian Israel [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible, warrants held by directors (in shares)							5,211
Initial warrants received (in shares)							44,606
Additional warrants received ( in shares)							18,968
Exchange price for convertible notes | $							$ 20,844
Convertible notes [Member] | CKS Warehouse [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible, warrants held by directors (in shares)							4,873
Initial warrants received (in shares)							41,712
Additional warrants received ( in shares)							17,737
Exchange price for convertible notes | $							$ 19,491
Convertible notes [Member] | Edward Smith III [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible, warrants held by directors (in shares)							71,211
Initial warrants received (in shares)							609,566
Additional warrants received ( in shares)							259,208
Initial Closing [Member]
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)						260,000
Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)						125,000
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares						$ 0.64
Gross proceeds from offering | $						$ 500,000
Number of accredited investors | Investor						4
Private Placement [Member] | Preferred Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)	50,000		6,250		18,750			50,000	62,500
Preferred stock, dividend rate	12.50%		12.50%		12.50%			12.50%	12.50%
Shares of company's common stock per one warrant (in shares)	8.56		8.56		8.56			8.56	8.56
Common stock, par value (in dollars per share) | $ / shares								$ 0.00005
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares	$ 0.64		$ 0.64		$ 0.64			$ 0.64	$ 0.64
Gross proceeds from offering | $	$ 200,000		$ 25,000		$ 75,000			$ 200,000	$ 250,000
Number of share and warrant, each unit considered (in shares)	1		1		1			1	1
Private Placement [Member] | Convertible notes [Member]
Subsidiary, Sale of Stock [Line Items]
Shares received by director under private placement (in shares) | $							$ 96,590
Initial warrants received (in shares)							826,806
Additional warrants received ( in shares)							351,586
Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)						5,000,000
Gross proceeds from offering | $						$ 20,000,000
Maximum [Member] | Private Placement [Member]
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)						5,000,000
Convertible Preferred Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Preferred stock, dividend rate						12.50%
Preferred stock, shares issued (in shares)												709,625	709,625
Preferred stock conversion into common stock (in dollars per share) | $ / shares						$ 4						$ 0.01	$ 0.01
Number of share and warrant, each unit considered (in shares)	1		1		1			1	1
Additional Warrants [Member]
Subsidiary, Sale of Stock [Line Items]
Shares of company's common stock per one warrant (in shares)						3.64	3.64
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares						$ 0.64
Warrants issued to purchase common stock						455,000	946,400
Initial Warrant [Member]
Subsidiary, Sale of Stock [Line Items]
Shares of company's common stock per one warrant (in shares)						8.56	8.56
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares						$ 0.64	$ 0.64
Warrants issued to purchase common stock						1,070,000
Investors [Member]
Subsidiary, Sale of Stock [Line Items]
Number of unit sold (in shares)							260,000
Aggregate cash proceeds for sales | $							$ 1,040,000
Units price (in dollars per shares) | $ / shares							$ 4.00
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares														$ 0.64	$ 0.64	$ 0.64	$ 0.64	$ 0.64	$ 0.64
Warrants issued to purchase common stock														600,000	2,000,000	2,000,000	400,000	400,000	250,000
Number of accredited investors | Investors							8
Investors [Member] | Additional Warrants [Member]
Subsidiary, Sale of Stock [Line Items]
Warrants issued to purchase common stock							946,400
Preferred stock, shares issued (in shares)							260,000
Warrants issued (in shares)							260,000
Landlord [Member]
Subsidiary, Sale of Stock [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares		$ 0.64								$ 0.64		$ 0.64
Warrants issued to purchase common stock										68,566		171,454
Preferred stock, shares issued (in shares)										8,010
Warrant term		5 years
Landlord [Member] | Convertible Preferred Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Preferred stock, dividend rate												12.50%
Preferred stock, shares issued (in shares)		20,025
Preferred stock conversion into common stock (in dollars per share) | $ / shares		$ 0.088
Vendor [Member] | Convertible notes [Member]
Subsidiary, Sale of Stock [Line Items]
Preferred stock, dividend rate				12.50%
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares				$ 0.64
Warrants issued to purchase common stock				107,000
Preferred stock conversion into common stock (in shares)				12,500
Outstanding balance to vendor | $				$ 60,885
Loss on accounts payable conversion | $				$ 13,990

XML

Stock Option Plan and Warrants (Details) - Stock options [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Number of shares
Outstanding at beginning of year	11,103,275	11,033,675
Granted	3,020,134	6,299,600
Exercised
Expired and Cancelled	(3,772,386)	(6,230,000)
Outstanding, end of period	10,351,023	11,103,275
Exercisable at end of period	8,085,923	10,328,925
Weighted average exercise price
Outstanding at the beginning of year	$ 0.78	$ 1.05
Granted	0.03	0.29
Expired and Cancelled	0.89	0.77
Outstanding, end of period	0.53	0.78
Exercisable at end of period	$ 0.66	$ 0.82

XML

Stock Option Plan and Warrants (Details 1) - Black- Scholes option [Member] - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per option granted	$ 0.0298
Risk-free interest rate	1.20%
Expected dividend yield	0.00%	0.00%
Expected lives	2 years 8 months 12 days	3 years
Expected volatility	201.10%
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per option granted		$ 0.1431
Risk-free interest rate		1.00%
Expected volatility		86.22%
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value per option granted		$ 0.3606
Risk-free interest rate		1.54%
Expected volatility		120.51%

XML

Stock Option Plan and Warrants (Details 2)	9 Months Ended
	Sep. 30, 2016 $ / shares shares
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding | shares	10,351,023
Weighted Average Remaining Contractual Life	2 years 9 months 18 days
Weighted Average Exercise Price	$ 0.53
Options Exercisable | shares	8,085,923
$0.01 - $1.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices Lower Range	$ 0.01
Range of Exercise Prices Upper Range	$ 1.50
Options Outstanding | shares	8,854,489
Weighted Average Remaining Contractual Life	4 years 9 months 18 days
Weighted Average Exercise Price	$ 0.33
Options Exercisable | shares	6,589,389
$1.51 - $3.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices Lower Range	$ 1.51
Range of Exercise Prices Upper Range	$ 3.00
Options Outstanding | shares	1,496,534
Weighted Average Remaining Contractual Life	1 year 3 months 18 days
Weighted Average Exercise Price	$ 1.67
Options Exercisable | shares	1,496,534
$3.01 - $5.00 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Prices Lower Range	$ 3.01
Range of Exercise Prices Upper Range	$ 5.00
Options Outstanding | shares
Weighted Average Remaining Contractual Life	0 years
Weighted Average Exercise Price
Options Exercisable | shares

XML

Stock Option Plan and Warrants (Details 3) - Warrants [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Number of Warrants
Number of Shares of Common Stock Underlying Warrants Outstanding at beginning of year	50,957,780	16,446,351
Number of Shares of Common Stock Underlying Warrants Outstanding Granted	6,550,000	87,825,204
Number of Shares of Common Stock Underlying Warrants Outstanding Exercised	(4,610,179)	(53,095,204)
Number of Shares of Common Stock Underlying Warrants Outstanding Cashless Exercises
Number of Shares of Common Stock Underlying Warrants Outstanding Expired and Cancelled		(218,571)
Number of Shares of Common Stock Underlying Warrants Outstanding at end of period	52,897,601	50,957,780
Number of Shares of Common Stock Underlying Warrants Outstanding Exercisable at end of period	52,897,601	50,957,780
Weighted Average Exercise Price
Weighted Average Exercise Price- Outstanding at beginning of year	$ 0.52	$ 1.44
Weighted Average Exercise Price, Granted	0.64	0.42
Weighted Average Exercise Price, Exercised	0.43	0.66
Weighted Average Exercise Price, Cashless Exercises
Weighted Average Exercise Price, Expired and Cancelled		0.66
Weighted Average Exercise Price - Outstanding, end of period	0.50	0.52
Weighted Average Exercise Price - Exercisable at end of period	$ 0.50	$ 0.52

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Stock Option Plan And Warrants (Details Textual) - USD ($)												1 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 21, 2016	May 17, 2016	Apr. 22, 2016	Oct. 14, 2015	Jul. 14, 2015	May 14, 2015	Apr. 29, 2015	Feb. 09, 2015	Jan. 08, 2015	Jan. 01, 2015	Mar. 14, 2014	May 01, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Nov. 04, 2016	Jul. 21, 2016	Jul. 14, 2016	Apr. 28, 2016	Apr. 08, 2016	Apr. 07, 2016	Mar. 17, 2016	Mar. 11, 2016	Mar. 02, 2016	Dec. 23, 2015	Oct. 02, 2015	Jul. 01, 2015	Apr. 30, 2015	Dec. 31, 2014
Class of Warrant or Right [Line Items]
Employee stock ownership plan																	$ 158,959
Non- vested share- based compensation													$ 80,453		$ 80,453		388,385
Stock- based compensation expense														$ 152,712		$ 261,459
Warrants outstanding to purchase							55,334,490
Lease expiration date												Oct. 14, 2015			Jul. 14, 2015
Rental arrears																													$ 71,125	$ 71,125
Additional capital													$ 152,791,693		$ 152,791,693		$ 152,853,639
Common stock, par value													$ 0.00005		$ 0.00005		$ 0.00005
Number of unit sold (in shares)									260,000
Rent expenses				$ 17,972							$ 21,361	$ 10,681
Reduced exercise price (in dollars per share)							$ 0.00005
Percentage of warrants receive common stock in exchange							17.50%
Extension term of warrants to waive anti-dilution rights							2 years
Class of warrant or right outstanding associated with anti-dilutive provision (in shares)							38,888,147
Loss on exchange of warrants																(12,959,654)
Warrants issued expense																$ 259,662
Warrants expire period															Jul. 31, 2021
Stock Option [Member]
Class of Warrant or Right [Line Items]
Granted																6,299,600
Granted exercise price																$ 0.29
Warrant purchased aggregate price																$ 1,845,892
Year 2 [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants													$ 0.35		$ 0.35
Year 3 [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants													0.64		0.64
Morris Garfinkle, Dan Jeffery and Edward B. Smith III [Member]
Class of Warrant or Right [Line Items]
Option to purchase shares of common stock amount		$ 30,000
Option to purchase shares of common stock per share		$ 0.0298
Option to purchase shares of common stock		1,006,711
Option to purchase shares of common stock total		3,020,134
Stock options vest description		These stock options vest 25% on date of grant and 25% every 90, 180 and 270 days subsequent to the grant date and expire ten years after the date of the grant.
Investors [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants																			$ 0.64	$ 0.64		$ 0.64	$ 0.64		$ 0.64			$ 0.64
Warrants issued to purchase common stock																			600,000	2,000,000		2,000,000	400,000		400,000			250,000
Value of warrants issued to purchase common stock																			$ 300,000	$ 500,000		$ 500,000	$ 100,000		$ 100,000			$ 250,000
Number of unit sold (in shares)									260,000
Jeffery Consulting Group, LLC [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants										$ 0.35
Warrants issued to purchase common stock										1,250,000
Volatility rate of the company stock										84.52%
Risk free interest rate										1.07%
Number of warrants vesting after mutual execution of agreement (in shares)										500,000
Number of warrants vesting after three months of agreement (in shares)										250,000
Number of warrants vesting after six months of agreement (in shares)										250,000
Accrued Description										The Company also agreed to accrue $5,000 per month which becomes payable to Jeffery Consulting once the Company has raised $3 million in additional capital.
Edward B. Smith, Director and Shareholder [Member]
Class of Warrant or Right [Line Items]
Recognized compensation expense														3,749,259
Edward Smith III, Director [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants						$ 0.35		$ 0.45
Warrants issued to purchase common stock						750,000		31,000,000
Volatility rate of the company stock						104.65%		81.99%
Risk free interest rate						1.60%		0.85%
Recognized compensation expense																	$ 117,642
Number of unit sold (in shares)								5,500,000
Number of warrants vesting after mutual execution of agreement (in shares)						450,000
Number of warrants vesting after three months of agreement (in shares)						150,000
Morris Garfinkle [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants								$ 0.45																$ 0.64
Warrants issued to purchase common stock								5,500,000																400,000
Volatility rate of the company stock								81.99%
Risk free interest rate								0.85%
Recognized compensation expense	$ 160,001													$ 3,749,259
Value of warrants issued to purchase common stock																								$ 100,000
Number of unit sold (in shares)								5,500,000
Terme Bancorp [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants						$ 0.35
Warrants issued to purchase common stock						1,250,000
Volatility rate of the company stock						104.65%
Risk free interest rate						1.60%
Recognized compensation expense																	$ 197,075
Number of warrants vesting after mutual execution of agreement (in shares)						750,000
Number of warrants vesting after three months of agreement (in shares)						250,000
Number of warrants vesting after six months of agreement (in shares)						250,000
Landlord [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants					$ 0.64							$ 0.64	$ 0.64		$ 0.64
Convertible preferred stock issued (in shares)												8,010
Warrants issued to purchase common stock												68,566	171,454		171,454
Warrants vesting term					5 years
Number of warrants issued to landlord (in shares)					171,454
Jonathan Kahn [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants																										$ 0.64	$ 0.64
Warrants issued to purchase common stock																										400,000	500,000
Value of warrants issued to purchase common stock																										$ 100,000	$ 500,000
Dan Jeffery [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants																					$ 0.64			$ 0.64
Warrants issued to purchase common stock																					150,000			200,000
Value of warrants issued to purchase common stock																					$ 50,000			$ 50,000
Initial Closing [Member]
Class of Warrant or Right [Line Items]
Number of unit sold (in shares)								260,000
Second Closing [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants								$ 0.64
Number of unit sold (in shares)								125,000
Gross proceeds from offering								$ 500,000
Maximum [Member]
Class of Warrant or Right [Line Items]
Number of unit sold (in shares)								5,000,000
Gross proceeds from offering								$ 20,000,000
Maximum [Member] | Second Closing [Member]
Class of Warrant or Right [Line Items]
Number of unit sold (in shares)								5,000,000
Subsequent Event [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants																		$ 0.64
Value of warrants issued to purchase common stock																		$ 100,000
Common stock [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants									$ 0.35
Warrants issued to purchase common stock									54,400,204
Class of warrant or right outstanding associated with anti-dilutive provision (in shares)									15,512,057
Common stock [Member] | Alternative (1) [Member]
Class of Warrant or Right [Line Items]
Warrants issued to purchase common stock													52,110,896	52,110,896	52,110,896	52,110,896
Common stock [Member] | Alternative (3) [Member]
Class of Warrant or Right [Line Items]
Warrants issued to purchase common stock													974,826	974,826	974,826	974,826
Convertible Preferred Stock [Member]
Class of Warrant or Right [Line Items]
Convertible preferred stock issued (in shares)													709,625		709,625		709,625
Preferred stock, per share								$ 4					$ 0.01		$ 0.01		$ 0.01
Convertible Preferred Stock [Member] | Landlord [Member]
Class of Warrant or Right [Line Items]
Convertible preferred stock issued (in shares)					20,025
Preferred stock, per share					$ 0.088
Warrants [Member]
Class of Warrant or Right [Line Items]
Warrant purchased			4,610,178
Warrant purchased aggregate price			$ 122,805
Exercise price of warrants													$ 0.52		$ 0.52		$ 0.52														$ 1.44
Warrants issued to purchase common stock													52,897,601		52,897,601
Derivative liabilities													$ 67,108		$ 67,108
Warrants vesting term															5 years
Percentage of time that event default would occur															5.00%
Default percentage per month															0.10%
Warrants [Member] | Alternative (2) [Member]
Class of Warrant or Right [Line Items]
Warrants issued to purchase common stock														318,750		318,750
Warrants [Member] | Alternative (3) [Member]
Class of Warrant or Right [Line Items]
Warrants issued to purchase common stock														73,125		73,125
Warrants [Member] | Jeffery Consulting Group, LLC [Member]
Class of Warrant or Right [Line Items]
Recognized compensation expense														$ 128,880
Warrants [Member] | Minimum [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants													$ 0.35		$ 0.35
Inception to date, weighted average issue price (in dollars per share)															0.35
Warrants [Member] | Maximum [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants													$ 0.64		0.64
Inception to date, weighted average issue price (in dollars per share)															$ 0.64
Convertible notes [Member]
Class of Warrant or Right [Line Items]
Initial warrants received									826,806
Additional warrants received									351,586
Convertible notes [Member] | Edward Smith III, Director [Member]
Class of Warrant or Right [Line Items]
Convertible, warrants held by directors									71,211
Initial warrants received									609,566
Additional warrants received									259,208
Exchange price for convertible notes									$ 284,844
Convertible notes [Member] | Morris Garfinkle [Member]
Class of Warrant or Right [Line Items]
Convertible, warrants held by directors									10,084
Initial warrants received									86,317
Additional warrants received									36,705
Exchange price for convertible notes									$ 40,335
Convertible notes [Member] | Mark Hershhorn [Member]
Class of Warrant or Right [Line Items]
Convertible, warrants held by directors									5,211
Initial warrants received									44,606
Additional warrants received									18,968
Exchange price for convertible notes									$ 20,844
Convertible notes [Member] | Brian Israel [Member]
Class of Warrant or Right [Line Items]
Convertible, warrants held by directors									5,211
Initial warrants received									44,606
Additional warrants received									18,968
Exchange price for convertible notes									$ 20,844
Convertible notes [Member] | CKS Warehouse [Member]
Class of Warrant or Right [Line Items]
Convertible, warrants held by directors									4,873
Initial warrants received									41,712
Additional warrants received									17,737
Exchange price for convertible notes									$ 19,491
Initial Warrant [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants								$ 0.64	$ 0.64
Warrants issued to purchase common stock								1,070,000
Shares of company's common stock per one warrant (in shares)								8.56	8.56
Number of warrants issued in initial closing offer to purchase common stock (in shares)								2,225,600
Additional Warrants [Member]
Class of Warrant or Right [Line Items]
Exercise price of warrants								$ 0.64
Warrants issued to purchase common stock								455,000	946,400
Shares of company's common stock per one warrant (in shares)								3.64	3.64
Number of warrants issued in initial closing offer to purchase common stock (in shares)								946,400
Additional Warrants [Member] | Investors [Member]
Class of Warrant or Right [Line Items]
Convertible preferred stock issued (in shares)									260,000
Warrants issued to purchase common stock									946,400

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Major Customers and Credit Concentration (Details) - Customer Concentration Risk [Member] - customer	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Sales Revenue, Goods, Net [Member]
Concentration Risk [Line Items]
Number of customers above risk benchmark	2	2
Sales Revenue, Goods, Net [Member] | Customer One [Member]
Concentration Risk [Line Items]
Concentration risk	52.00%	38.00%
Sales Revenue, Goods, Net [Member] | Customer Two [Member]
Concentration Risk [Line Items]
Concentration risk	13.00%	13.00%
Accounts Receivable [Member]
Concentration Risk [Line Items]
Number of customers above risk benchmark	2
Accounts Receivable [Member] | Customer One [Member]
Concentration Risk [Line Items]
Concentration risk	42.00%
Accounts Receivable [Member] | Customer Two [Member]
Concentration Risk [Line Items]
Concentration risk	29.00%

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Commitments (Details)					1 Months Ended	3 Months Ended	9 Months Ended
	Oct. 14, 2015 USD ($)	Jul. 14, 2015 $ / shares shares	Feb. 09, 2015	Mar. 14, 2014 USD ($)	May 01, 2015 USD ($) $ / shares shares	Mar. 31, 2015 USD ($)	Sep. 30, 2016 USD ($) ft² $ / shares shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 shares	Jul. 01, 2015 USD ($)	Apr. 30, 2015 USD ($)
Operating Leased Assets [Line Items]
Monthly base rent							$ 10,681
Lease expiration date					Oct. 14, 2015		Jul. 14, 2015
Rental arrears										$ 71,125	$ 71,125
Rent expense							$ 183,090	$ 308,756
Required monthly rental payments	$ 17,972			$ 21,361	$ 10,681
Recorded rental expense						$ 149,787	$ 48,060
Landlord [Member]
Operating Leased Assets [Line Items]
Convertible preferred stock issued (in shares) | shares					8,010
Warrants issued to purchase common stock (in shares) | shares					68,566		171,454
Exercise price of warrants | $ / shares		$ 0.64			$ 0.64		$ 0.64
Term of warrant		5 years
Convertible Preferred Stock [Member]
Operating Leased Assets [Line Items]
Convertible preferred stock issued (in shares) | shares							709,625		709,625
Percentage of convertible preferred stock,			12.50%
Convertible Preferred Stock [Member] | Landlord [Member]
Operating Leased Assets [Line Items]
Convertible preferred stock issued (in shares) | shares		20,025
Percentage of convertible preferred stock,							12.50%
Preferred stock conversion price | $ / shares							$ 0.088
Combined Production and Office Facility [Member]
Operating Leased Assets [Line Items]
Area of leased property (in sq. feet) | ft²							44,000

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Pending Litigation/Contingent Liability (Details) - Violation of the Consumer Fraud Act [Member]	Jul. 07, 2007 USD ($)
Loss Contingencies [Line Items]
Reserve allocated for litigation settlement	$ 102,000
Minimum [Member]
Loss Contingencies [Line Items]
Damages sought in case	$ 200,000

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Related Party Transactions (Details)														1 Months Ended				3 Months Ended	9 Months Ended		12 Months Ended
	Jun. 21, 2016 USD ($) shares	Apr. 08, 2016	Apr. 07, 2016 USD ($) Investors	Mar. 17, 2016 USD ($) $ / shares shares	Mar. 11, 2016 $ / shares shares	Mar. 02, 2016 USD ($) $ / shares shares	Dec. 23, 2015	Sep. 29, 2015	May 14, 2015 $ / shares shares	Feb. 09, 2015 $ / shares shares	Jan. 08, 2015 USD ($) Investors $ / shares shares	Jan. 02, 2015 shares	Jan. 01, 2015 $ / shares shares	Jul. 21, 2016 USD ($) $ / shares shares	May 17, 2016	Apr. 28, 2016 USD ($) $ / shares shares	Feb. 24, 2015 USD ($) Investor shares	Sep. 30, 2015 USD ($)	Sep. 30, 2016 USD ($) $ / shares shares	Sep. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) $ / shares
Related Party Transaction (Textual)
Additional capital | $																			$ 152,791,693		$ 152,853,639
Number of unit sold (in shares)											260,000
Number of accredited investors | Investors											8
Units price (in dollars per shares) | $ / shares											$ 4.00
Amortization of debt discount | $																			$ 3,660
Common stock, par value | $ / shares																			$ 0.00005		$ 0.00005
Diluted basis shares of common stock description																			Mr. Kahn pursuant to the Equity Award will equal at least 3.5% of the Company's shares of Common Stock on a fully diluted basis until April 30, 2016, 4.25% until April 30, 2018, and 5.0% thereafter. For purposes of the Kahn Employment Agreement, an "Equity Issuance Date" is any date on which the Company consummates the sale of or issuance of (i) more than 1% of the Company's shares of Common Stock on a fully diluted basis; or (ii) any instrument that is convertible into more than 1% of the Company's shares of Common Stock on a fully diluted basis.
Nonconvertible Senior Unsecured Note [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock					400,000									600,000
Exercise price of warrants | $ / shares					$ 0.64									$ 0.64
Number of accredited investors | Investors			2
Term of debt		1 year	1 year		1 year	1 year		6 months
Principal amount | $			$ 100,000
Maturity date					Mar. 11, 2017									Jul. 21, 2017					Apr. 03, 2017
Period considered to calculate interest rate		365 days	365 days		365 days	365 days		365 days
Amortization of debt discount | $														$ 82					$ 355
Interest rate on convertible senior secured notes					14.00%									14.00%
Debt instrument interest rate term					The note matures in one year (March 11, 2017) and bears interest at 14% compounded based on a 365-day year.									The note matures in one year (July 21, 2017) and bears interest at 14% compounded based on a 365-day year.
Recognition of debt discount | $														$ 2,117					$ 3,189
Common stock [Member]
Related Party Transaction (Textual)
Recognized compensation expense | $																	$ 150,000
Shares received by director under private placement (in shares)																	576,924
Number of non-executive directors | Investor																	3
Initial Warrant [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock										1,070,000
Exercise price of warrants | $ / shares										$ 0.64	$ 0.64
Convertible Notes [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)											96,590
Conversion price | $ / shares											$ 4.00
Initial warrants received (in shares)											826,806
Additional warrants received (in shares)											351,586
Additional Warrants [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock										455,000	946,400
Exercise price of warrants | $ / shares										$ 0.64
Maximum [Member]
Related Party Transaction (Textual)
Number of unit sold (in shares)										5,000,000
Jeffery Consulting Group, LLC [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock													1,250,000
Exercise price of warrants | $ / shares													$ 0.35
Number of warrants vesting after mutual execution of agreement (in shares)													500,000
Number of warrants vesting after three months of agreement (in shares)													250,000
Number of warrants vesting after six months of agreement (in shares)													250,000
Volatility rate of the company stock													84.52%
Risk free interest rate													1.07%
Consulting Agreement termination, Description																			The Company terminated the Consulting Agreement as of April 1, 2016.
Jeffery Consulting Group, LLC [Member] | Warrants [Member]
Related Party Transaction (Textual)
Volatility rate of the company stock																			84.52%
Risk free interest rate																			1.07%
Recognized compensation expense | $																		$ 128,880
Accrued liabilities payable | $																			$ 5,000
Additional capital | $																			$ 3,000,000
Edward Smith III, Director [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock									750,000	31,000,000
Exercise price of warrants | $ / shares									$ 0.35	$ 0.45
Number of warrants vesting after mutual execution of agreement (in shares)									450,000
Number of warrants vesting after three months of agreement (in shares)									150,000
Volatility rate of the company stock									104.65%	81.99%
Risk free interest rate									1.60%	0.85%
Recognized compensation expense | $																					$ 117,642
Number of unit sold (in shares)										5,500,000
Consulting Agreement termination, Description																					The agreement terminated on May 14, 2016
Edward Smith III, Director [Member] | Convertible Notes [Member]
Related Party Transaction (Textual)
Exchange price for convertible notes | $											$ 284,844
Morris Garfinkle [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock				400,000						5,500,000
Exercise price of warrants | $ / shares				$ 0.64						$ 0.45
Volatility rate of the company stock										81.99%
Risk free interest rate										0.85%
Recognized compensation expense | $	$ 160,001																	3,749,259
Number of unit sold (in shares)										5,500,000
Shares received by director under private placement (in shares)	2,013,423											71,429					192,308
Principal amount | $				$ 100,000
Shares of common stock																			2,013,423
Recognized total expense of related issuance | $																			$ 160,001
Morris Garfinkle [Member] | Nonconvertible Senior Unsecured Note [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock				400,000
Exercise price of warrants | $ / shares				$ 0.64
Term of debt				1 year
Principal amount | $				$ 100,000
Maturity date				Mar. 17, 2017															Mar. 17, 2017
Period considered to calculate interest rate				365 days
Amortization of debt discount | $				$ 178
Interest rate on convertible senior secured notes				0.14%
Debt instrument interest rate term				P365D
Recognition of debt discount | $				$ 3,094
Morris Garfinkle [Member] | Common stock [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)																	192,308
Morris Garfinkle [Member] | Convertible Notes [Member]
Related Party Transaction (Textual)
Convertible, warrants held by directors (in shares)											10,084
Initial warrants received (in shares)											86,317
Additional warrants received (in shares)											36,705
Exchange price for convertible notes | $											$ 40,335
Mark Hershhorn [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)												71,429
Mark Hershhorn [Member] | Convertible Notes [Member]
Related Party Transaction (Textual)
Convertible, warrants held by directors (in shares)											5,211
Initial warrants received (in shares)											44,606
Additional warrants received (in shares)											18,968
Exchange price for convertible notes | $											$ 20,844
CKS Warehouse [Member] | Convertible Notes [Member]
Related Party Transaction (Textual)
Convertible, warrants held by directors (in shares)											4,873
Initial warrants received (in shares)											41,712
Additional warrants received (in shares)											17,737
Exchange price for convertible notes | $											$ 19,491
Edward B. Smith, Director and Shareholder [Member]
Related Party Transaction (Textual)
Recognized compensation expense | $																		$ 3,749,259
Edward B. Smith, Director and Shareholder [Member] | Convertible Notes [Member]
Related Party Transaction (Textual)
Convertible, warrants held by directors (in shares)											71,211
Initial warrants received (in shares)											609,566
Additional warrants received (in shares)											259,208
Exchange price for convertible notes | $											$ 284,844
Brian Israel [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)												71,429					192,308
Brian Israel [Member] | Common stock [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)																	192,308
Brian Israel [Member] | Convertible Notes [Member]
Related Party Transaction (Textual)
Convertible, warrants held by directors (in shares)											5,211
Initial warrants received (in shares)											44,606
Additional warrants received (in shares)											18,968
Exchange price for convertible notes | $											$ 20,844
Dan Jeffery [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock				200,000												150,000
Exercise price of warrants | $ / shares				$ 0.64												$ 0.64
Shares received by director under private placement (in shares)																	192,308
Principal amount | $				$ 50,000												$ 50,000
Dan Jeffery [Member] | Nonconvertible Senior Unsecured Note [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock				200,000												150,000
Exercise price of warrants | $ / shares				$ 0.64												$ 0.64
Term of debt				1 year												1 year
Principal amount | $				$ 50,000												$ 50,000
Maturity date				Mar. 17, 2017												Apr. 28, 2017			Mar. 17, 2017
Period considered to calculate interest rate				365 days												365 days
Amortization of debt discount | $				$ 105												$ 55
Interest rate on convertible senior secured notes				0.14%												14.00%
Common stock, par value | $ / shares				$ 0.00005
Debt instrument interest rate term				P365D
Recognition of debt discount | $				$ 1,824												$ 1,562
Dan Jeffery [Member] | Common stock [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)																	192,308
Jonathan Kahn [Member]
Related Party Transaction (Textual)
Maturity date							Dec. 23, 2016
Interest rate on convertible senior secured notes							14.00%
Debt instrument interest rate term							Bears interest at 14% computed based on a 365- day year.
Annual base salary description															The Kahn Employment Agreement, Mr. Kahn's annual base salary will be $200,000 per year from the Effective Date through December 31, 2016 and $225,000 beginning January 1, 2017. Mr. Kahn will also be eligible to participate in Company's annual incentive compensation program (the "Annual Incentive Program"), with a target annual bonus equal to 100% of his annual base salary and a maximum annual bonus each year equal to 200% of his base salary. Mr. Kahn's annual bonus for the 2016 calendar year will be prorated based on the number of days served during 2016.				Grant date fair value equal to 100% of Mr. Kahn's base salary and a maximum annual equity award for each year in which Mr. Kahn participates in the equity incentive compensation program equal to 250% of Mr. Kahn's base salary.
Vested shares of common stock																			6,067,931
Vested shares of common stock per share | $ / shares																			$ 0.00005
Diluted basis shares of common stock description																			Such amount representing 3.5% of the Company's shares of Common Stock on a fully diluted basis as of the Effective Date. In addition, on each of May 1, 2017 and May 1, 2018, respectively, Mr. Kahn will receive an additional grant of fully-vested Company Common Stock, such additional grants each representing 0.75% of the Company's shares of Common Stock on a fully diluted basis as of May 1, 2017 and May 1, 2018, respectively (together with the 6,067,931 shares granted on the Effective Date, the "Equity Award").
Jonathan Kahn [Member] | Nonconvertible Senior Unsecured Note [Member]
Related Party Transaction (Textual)
Warrants issued to purchase common stock						400,000
Exercise price of warrants | $ / shares						$ 0.64
Term of debt						1 year
Principal amount | $						$ 100,000
Maturity date						Mar. 02, 2017
Amortization of debt discount | $						$ 247
Interest rate on convertible senior secured notes						14.00%
Debt instrument interest rate term						Bears interest at 14% compounded based on a 365-day year.
Recognition of debt discount | $						$ 3,791
Edward Smith III [Member]
Related Party Transaction (Textual)
Shares received by director under private placement (in shares)												71,429

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Guarantees (Details)	9 Months Ended
	Sep. 30, 2016
Guarantees [Abstract]
Standard product warranty period	One-year warranty.

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Subsequent Events (Details) - Subsequent Event [Member]	Nov. 04, 2016 USD ($) $ / shares shares
Subsequent Events (Textual)
Issued senior unsecured note, Percentage	14.00%
Principal amount | $	$ 100,000
Maturity date	Nov. 04, 2017
Interest, Percentage	14.00%
Issued warrant to acquire | shares	200,000
Exercise price of warrants | $ / shares	$ 0.64