UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2018
OR
☐ 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:
000-55465
MEDIFIRST SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 27-3888260 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S.
Employer Identification No.) |
4400 Route 9 South, Suite 1000, Freehold NJ |
07728 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 732-786-8044
(Former name, former address and former fiscal year, if changed since last report) N/A
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 every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b- 2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |
| Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 19, 2018, there were 2,889,851 shares of Common Stock, $0.0001 par value, issued and outstanding.
TABLE OF CONTENTS
| Page | |
| PART I. FINANCIAL INFORMATION | |
| Item 1. Financial Statements. | 1 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 23 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 26 |
| Item 4. Controls and Procedures. | 26 |
| PART II. OTHER INFORMATION | |
| Item 1. Legal Proceedings. | 27 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | 27 |
| Item 3. Defaults Upon Senior Securities. | 27 |
| Item 4. Mine Safety Disclosures | 27 |
| Item 5. Other Information. | 27 |
| Item 6. Exhibits. | 27 |
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
MEDIFIRST SOLUTIONS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017
1
INDEX TO FINANCIAL STATEMENTS
| Financial Statements | |
| Consolidated Balance Sheets as of December 31, 2017 and September 30, 2018 | 3 |
| Consolidated Statements of Operations (unaudited) for the nine months ended September 30, 2018 and 2017 | 4 |
| Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2018 and 2017 | 5 |
| Notes to Consolidated Financial Statements | 6 - 22 |
2
Medifirst Solutions, Inc.
Consolidated Balance Sheets
September 30, 2018 and December 31, 2017
| September 30, 2018 (Unaudited) | December 31, 2017 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 77,714 | $ | 287,569 | ||||
| Inventory | 33,056 | 33,435 | ||||||
| Prepaid items | - | - | ||||||
| Total current assets | 110,770 | 321,004 | ||||||
| Property, Plant and Equipment, net | 752 | 1,232 | ||||||
| Other Assets | ||||||||
| Security Deposit | 650 | 650 | ||||||
| Intangible Asset -License Agreement, net | 105,002 | 116,252 | ||||||
| Total other assets | 105,652 | 116,902 | ||||||
| Total Assets | $ | 217,174 | $ | 439,138 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 186,753 | $ | 97,621 | ||||
| Accrued expenses - officer’s compensation | 390,283 | 401,079 | ||||||
| Due to related party | 8,921 | 8,921 | ||||||
| Loans payable - stockholders | 7,789 | 14,499 | ||||||
| Note Payable for license agreement | - | - | ||||||
| Convertible notes payable | 548,451 | 280,351 | ||||||
| Convertible notes payable - related party | 68,040 | 133,750 | ||||||
| Derivative Liabilities | 211,955 | 251,886 | ||||||
| Total current liabilities | 1,422,192 | 1,188,107 | ||||||
| Commitments & Contingencies (Note 8) | - | - | ||||||
| Stockholders’ Equity: | ||||||||
| Series A preferred stock, $0.0001 par value; 1,000,000 shares authorized, 500,000 and 500,000 shares issued and outstanding, respectively | 50 | 50 | ||||||
| Series B convertible preferred stock, $0.0001 par value; 50,000 shares authorized, 8,000 and 8,000 shares issued and outstanding, respectively | 1 | 1 | ||||||
| Common stock, $0.0001 par value; 4,000,000,000 shares authorized, 2,464,881 and 849,437 shares issued and outstanding, respectively | 246 | 85 | ||||||
| Additional paid in capital | 3,230,822 | 2,916,024 | ||||||
| Accumulated deficit | (4,436,137 | ) | (3,665,129 | ) | ||||
| Total Stockholders’ Equity | (1,205,018 | ) | (748,969 | ) | ||||
| Total Liabilities & Stockholders’ Equity | $ | 217,174 | $ | 439,138 | ||||
3
Medifirst Solutions, Inc.
Consolidated Statements of Operations
For the Nine Months Ended September 30, 2018 and 2017
(Unaudited)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Product sales, net | - | 20,000 | 4,550 | 29,995 | ||||||||||||
| Consulting Income | 11,500 | - | 11,500 | - | ||||||||||||
| 11,500 | 20,000 | 16,050 | 29,995 | |||||||||||||
| Cost of goods sold | - | 705 | 379 | 1,058 | ||||||||||||
| Gross income | 11,500 | 19,295 | 15,671 | 28,937 | ||||||||||||
| Expenses: | ||||||||||||||||
| Officer’s compensation | 37,500 | 25,000 | 112,500 | 75,000 | ||||||||||||
| Advertising and promotion | 940 | 35,503 | 3,533 | 61,385 | ||||||||||||
| Computer and internet | 327 | 668 | 706 | 3,310 | ||||||||||||
| Consulting fees | 51,084 | 87,400 | 133,287 | 350,600 | ||||||||||||
| Professional fees | 22,884 | 23,823 | 99,878 | 198,143 | ||||||||||||
| Rent | 6,522 | 6,222 | 18,866 | 13,866 | ||||||||||||
| Travel | 1,337 | 642 | 6,776 | 9,823 | ||||||||||||
| Lab testing | - | - | - | 8,175 | ||||||||||||
| Dues and subscriptions | 478 | 1,186 | 1,938 | 3,450 | ||||||||||||
| Other | 27,516 | 17,283 | 75,234 | 62,149 | ||||||||||||
| 148,588 | 197,727 | 452,718 | 785,901 | |||||||||||||
| Net loss from Operations before other income, expenses | (137,088 | ) | (178,432 | ) | (437,047 | ) | (756,964 | ) | ||||||||
| Other income and (expense) | ||||||||||||||||
| Interest expense | (285,047 | ) | (62,003 | ) | (575,882 | ) | (337,154 | ) | ||||||||
| Interest income | 1 | 8,920 | 2 | 11,441 | ||||||||||||
| Gain on extinguishment of debt | 11,775 | 11,775 | - | |||||||||||||
| Change in fair value -derivatives | 370,247 | (1,113 | ) | 230,144 | (293,384 | ) | ||||||||||
| Net loss before provision for income tax | $ | (40,112 | ) | $ | (232,628 | ) | $ | (771,008 | ) | $ | (1,376,061 | ) | ||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net Loss | $ | (40,112 | ) | $ | (232,628 | ) | $ | (771,008 | ) | $ | (1,376,061 | ) | ||||
| Loss per common share - Basic and fully diluted | $ | (0.02 | ) | $ | (0.37 | ) | $ | (0.56 | ) | $ | (2.85 | ) | ||||
| Weighted average number of shares outstanding - Basic and fully diluted | 1,828,726 | 630,071 | 1,379,162 | 482,717 | ||||||||||||
4
Medifirst Solutions, Inc.
Consolidated Statement of Cash Flows
For the Nine Months Ended September 30, 2018 and 2017
(Unaudited)
| 2018 | 2017 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (771,008 | ) | $ | (1,376,061 | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Depreciation & amortization expense | 11,730 | 17,980 | ||||||
| Gain on debt settlement | (11,775 | ) | - | |||||
| Stock Based Compensation | 82,133 | 431,925 | ||||||
| Change in assets and liabilities | ||||||||
| Accrued interest receivable | - | (11,441 | ) | |||||
| Accounts payable and accrued expenses | 78,336 | 75,940 | ||||||
| Change in fair value - derivatives | (230,144 | ) | 293,384 | |||||
| Amortization of debt discount & other financing costs | 526,504 | 257,323 | ||||||
| Related party and stockholder’s loan | (6,710 | ) | - | |||||
| Prepaid expenses | - | 15,720 | ||||||
| Inventory | 379 | (13,862 | ) | |||||
| Net cash used by operating activities | (320,555 | ) | (309,092 | ) | ||||
| Cash flows from investing activities: | ||||||||
| None | - | - | ||||||
| Net cash used by investing activities | - | - | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from stockholder loan | - | 5,000 | ||||||
| Principal payments on debt | (20,550 | ) | - | |||||
| Proceeds from sale of Convertible notes payable | 131,250 | 556,250 | ||||||
| Net cash provided by financing activities | 110,700 | 561,250 | ||||||
| Net increase (decrease) in cash | (209,855 | ) | 252,158 | |||||
| Cash at beginning of period | 287,569 | 165,017 | ||||||
| Cash at end of period | $ | 77,714 | $ | 417,175 | ||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes | $ | 651 | $ | 1,276 | ||||
| Non-cash investing and financing activities: | ||||||||
| Common stock issued for convertible debt-related party | $ | 25,160 | $ | - | ||||
| Common stock issued for note interest and note conversions | $ | - | $ | 1,070,846 | ||||
| Derivative liability extinguished upon conversion | $ | 123,602 | $ | - | ||||
| Common stock issued for convertible debt with derivatives | $ | 109,224 | $ | - | ||||
| Preferred stock exchanged for common stock | $ | - | $ | 905 | ||||
| Accounts Payable exchanged for promissory note | $ | - | $ | 15,000 | ||||
| Note receivable - investor unfunded note payable | $ | - | $ | 506,230 | ||||
| Related party note reclassified to promissory note | $ | 20,000 | $ | - | ||||
5
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Medifirst Solutions, Inc. (“MSI” or the “Company”) was incorporated in Nevada in November 2010. The Company has not generated significant sales to date. The Company intends to have a diverse product line of consumer products. Since inception, the Company has been engaged in business planning activities, including researching the industry, identifying target markets for the Company’s products, developing the Company’s models and financial forecasts, performing due diligence regarding potential geographic locations most suitable for establishing the Company’s offices and identifying future sources of capital. At the present time, the Company is building products and affiliations in and related to the cosmetic healthcare industry. The company has started to hire a salesforce and sign distribution agreements in anticipation of future sales.
In July 2016, Medifirst, in response to its Premarket Notification 510(k) submission for “The Time Machine” Series Laser, received clearance from the U.S. Food and Drug Administration (“FDA”) to market its infrared Time Machine TTML-8102000 Laser Thermal Therapeutic Device.The Company is actively putting together a sales and distribution team to offer our lasers in the US and foreign markets.
Pursuant to a sale and purchase agreement dated August 19, 2015 between the Company and the Company’s president, the Company acquired 100% of the equity interests in Medical Lasers Manufacturer, Inc. (“MLM”) with the total purchase price of 20,000 shares of the Company’s common stock at $0.001 per share (or $20). The fair value of the acquired entity was $20.
The transaction was considered as a business acquisition and accordingly the acquisition method of accounting has been applied. MLM had no assets at the date of the business combination.
On April 18, 2018, the Company incorporated Concierge Concepts Rx (CCRx), in the State of New Jersey, to be an 80% majority-owned subsidiary. In consideration for his contribution of know-how, CCRx’s co-founder, Walter Molokie, CCRx has agreed to issue a 20% minority interest in CCRx to Mr. Molokie and/or his designees.On July 1, 2018 the Company acquired 100% of the equity interest in Concierge Concepts Rx, Inc. (“CCRx”) with the total purchase price of $20. The fair value of the acquired entity was $20 since the entity was just recently formed and had no identifiable assets or liabilities.The $20 cash payment is for the purchase of CCRx common stock upon acquisition. Medifirst launched Concierge Concepts Rx, a new division focused on the pharmaceutical industry.CCRx that provides unique specialty drug consulting and niche billing services to independent pharmacies and retail pharmacy chains. This division commenced operations in the quarter ended September 30, 2018 with limited activity and is included in the accompanying consolidated financial statements.
The Consolidated financial statements include the accounts of MSI and its wholly owned subsidiaries, MLM and CCRx. All material intercompany balances and transactions have been eliminated in consolidation.
The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s current technology.
Basis of Presentation
The unaudited interim consolidated financial statements include the accounts of Medifirst Solutions Inc. and its wholly owned subsidiary (Medical Laser Manufactures, Inc., (collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial position of the Company as of September 30, 2018, the consolidated results of its operations for the three-month period ended September 30, 2017 and 2018 and and nine-month period ended September 30, 2017 and 2018, and the consolidated cash flows for the nine-month periods ended September 30, 2017 and 2018 .. The results of operations for the three-month period ended September 30, 2018 are not necessarily indicative of the operating results for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K for the year then ended.
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.
6
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented.
Revenue Recognition
In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:
Revenue is recognized at the time the product is delivered or services are performed. Provision for sales returns are estimated based on the Company’s historical return experience. Revenue is presented net of returns.
Accounts Receivable
The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management’s estimate of the amount of receivables that will actually be collected. The Company has not recorded an allowance for doubtful accounts as of September 30, 2018 or December 31, 2017. There are no customer account receivables as of September 30, 2018 or December 31, 2017.
Inventory
Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. Finished goods inventory includes hand held laser devices, their carrying cases and goggles.
Equipment
Equipment, consisting of computer equipment, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, of five years.
Long-Lived Assets
The Company reviews long-lived assets, such as equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment loss will be recorded by the amount the carrying value exceeds the fair value of the asset.
Intangible Asset- Licensing Agreement
On March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The license provides with respect to the Technology, Licensor hereby grants to Licensee an irrevocable, nontransferable, royalty-bearing license, with a right of sublicense (the “License”), throughout the Territory in the Field of Use, whether or not under the Licensed Patent, to:
-use or submit or deliver the Technology and/or any Product to any regulatory body throughout the Territory for purposes of obtaining approval to make, Sell, offer for Sale, import, export and distribute the Technology or Products; and
- use or copy the Technology and/or any Product; and
- market, make, have made, Sell, offer for Sale, import and distribute Products; and
- sublicense the Technology; and
- prepare, or have prepared on its behalf, modifications, enhancements and/or derivative works of the Technology.
In connection with the license granted, Licensor hereby grants to Licensee a license to the Licensed Patents, whether now existing or hereafter acquired.
7
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000,000 shares of the Company’s common stock. On January 31, 2018, $7,500 in principal on this note was satisfied by the conversion into 30,000,000 shares of the Company’s common stock. On March 2, 2018, another $7,500 in principal on this note was satisfied by the conversion into 30,000,000 shares of the Company’s common stock During the quarter ended June 30, 2018, the original noteholder assigned $20,000 in principal to an unrelated third-party. The principal balance on this note as of September 30, 2018 is $68,040 to the original noteholder and $17,900 in principal balance to the new unrelated third-party noteholder. Various principal paydowns and conversions to common stock took place on these two notes during the quarted ended September 30, 2018.
The last part of the consideration in this license agreement is the royalty payments which have not taken effect yet since they are based on sales for which the company has had only minimum thus far.
The licensing agreement is for a ten year period effective from October 1, 2015. The cost of the licensing agreement is being amortized over it’s ten-year period and charged to income on a straight-line basis.
Debt Issue Costs and Debt Discount
The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts are immediately expensed. Beginning in 2015, the Company adopted ASU 2015-03: Simplifying the Presentation of Debt Issuance Costs and has reflected the deferred financing costs as a direct reduction of the related debt (See table included in Note 5 to Consolidated Financial Statements).
Original Issue Discount
For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.
Derivative Liabilities
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. The Company assessed its securities for purposes of determining the proper accounting treatment and valuation as set forth in the Statement of Financial Accounting Standard ASC 820–10–35–37 Fair Value in Financial Instruments; Statement of Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging Activities; and Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05.
In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once the derivative liabilities are determined, they are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Financial Instruments
The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and other accrued liabilities approximate their fair values.
Segment Information
The Company follows Accounting Standards Codification (“ASC”) 280, “Segment Reporting”. The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
8
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As described in Note 5 to the financial statements, as of September 30, 2018, convertible debt can be converted into approximately 768,596 shares of common stock.
Income Taxes
The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.
The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of September\ 30, 2018, and does not expect this to change significantly over the next 12 months.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date.
Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At June 30, 2018, the Company had $77,714 in cash equivalents.
Recent Pronouncements
In May 2014, FASB and IASB issued a new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principle of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Company to annual reporting periods beginning after December 15, 2017 (that is, a public organization is required to apply the new revenue standard beginning in the first interim period within the year of adoption). Additionally, the Board decided to permit public organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after December 15, 2016). A public organization should apply the new revenue standard to all interim reporting periods within the year of adoption.The Company has evaluated the impact of this ASU on the consolidated financial statements and has determined, at this time, the ASU’s implementation would not have a material impact on revenue recognition. See below - Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing
In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 is not expected to have any impact on the Company’s financial statement presentation or disclosures.
9
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
In April 2016, the FASB issued Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)”. The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
Company is currently an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act and the extended transition period applies to all aforementioned ASUs, until such time as the Company is no longer an “emerging growth company”.
Note 2. PROPERTY, PLANT AND EQUIPMENT (NET)
Equipment is recorded at cost and consisted of the following at September 30, 2018 and December 31, 2017:
| September 30, 2018 | December 31, 2017 | |||||||
| Computer equipment | $ | 8,956 | $ | 8,956 | ||||
| Less: accumulated depreciation | (8,205 | ) | (7,725 | ) | ||||
| $ | 752 | $ | 1,232 | |||||
Depreciation expense was $480 and $480, for the nine months ended September 30, 2018 and 2017 respectively.
Note 3. DUE TO RELATED PARTY
The Company was indebted to a related party through common management in the amount of $8,921 at September 30, 2018 and December 31, 2017, respectively. The loan bears no interest and is payable on demand. See Note 10 for additional related party transactions.
Note 4. LOANS PAYABLE - STOCKHOLDERS
During the periods ended September 30, 2018 and 2017 a stockholder of the Company advanced the Company $-0- and $-0- respectively. The loan has a balance of $8,955 at September 30, 2018 and December 31, 2017, respectively. The loan bears no interest and is payable on demand.
In December 2012, the Company issued a promissory note to a stockholder in the amount of $5,000 with interest at 10% per annum. Principal and interest were due and payable on June 2, 2013. In April 2014, the note was amended to provide the note holder with the option to convert the note to the Company’s common stock at $0.0001 per share. Subsequently, in 2014, in a private transactions, the note holder transferred $2,500 of note principal to third parties and the new holders converted their holdings into 2,500 shares of the Company’s common stock. During 2015, the original note holder transferred an additional $2,400 of note principal to third parties who converted their holdings into 2,400 shares of the Company’s common stock. At September 30, 2018 and December 31, 2017, the loan balance was $100 and $100, respectively.
At September 30, 2018 and December 31, 2017, the Company was indebted to a stockholder in the amount of $1,000 and $1,500, respectively. The loan has an interest rate of 26.7%. In February 2017 the note was sold to another investor and that noteholder converted $500 in principal into 5,000 shares of common stock. Principal and accrued interest were due and payable on January 1, 2014.
In February 2016, the Company issued a promissory note to a stockholder in the amount of $7,000 with interest at the rate of 6% per annum. On September 6, 2016 the note holder converted the entire principal balance and accrued interest into common stock and therefore at September 30, 2018 there is no principal balance remaining on the note.
10
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Note 5. CONVERTIBLE NOTES PAYABLE
Note Payable-BS
In March 2011, the Company issued $800 aggregate principal amount of 6% convertible notes due in January 2012. Interest on the notes accrue at the rate of 6% per annum and are payable when the notes mature. The notes matured prior to conversion but have not been repaid. Interest continues to accrue at the rate of 6% per annum.
The holder of one of the notes converted $110 of note principal into 1,100 shares of common stock as follows:
| Date of Conversion | Principal Amount Converted | Conversion Rate | Shares Received | |||||||||
| June 2013 | $ | 70 | $ | 0.0001 | 700 | |||||||
| August 2013 | $ | 40 | $ | 0.0001 | 400 | |||||||
In August 2013, in a private transaction, the same note holder transferred $330 of the remaining note principal plus $55 in accrued interest to a third party.
In August 2013, in a private transaction, the new note holder transferred $5 of the remaining note principal to a third party who then converted the note into 50 shares of common stock.
In September 2013, the new note holder converted $100 of note principal into 1,000 shares of common stock.
In September 2013, in a private transaction, the new note holder transferred $35 of the remaining note principal to a third party who then converted the note into 350 shares of common stock.
In November and December 2013, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows:
| Date of Conversion | Principal Amount Converted | Conversion Rate | Shares Received | |||||||||
| November 2013 | $ | 40 | $ | 0.0001 | 400 | |||||||
| December 2013 | $ | 50 | $ | 0.0001 | 500 | |||||||
In March and April 2014, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows:
| Date of Conversion | Principal Amount Converted | Conversion Rate | Shares Received | |||||||||
| March 2014 | $ | 50 | $ | 0.0001 | 500 | |||||||
| April 2014 | $ | 40 | $ | 0.0001 | 400 | |||||||
Subsequent to these conversions there remains $125 in note principal outstanding at September 30, 2018.
Note Payable-SF
In July 2013, the holder of the second note converted $240 of note principal into 400 shares of the Company’s common stock at $0.0006 per share. At September 30, 2018 and December 31 2017, the note had a remaining principal balance of $60 and $60, respectively.
At any time on or after the maturity date, the holders of the notes, have the option of converting any of the unpaid principal and interest into the Company’s common stock. The notes plus any accrued but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 246,242 shares at September 30, 2018 and 84,859 shares at December 31, 2017.
11
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Note Payable-RK
In May 2012, the Company issued a $25,000 6% per annum note that matured in November 2012. In December 2012 the note was amended to be a convertible note. Interest on the note accrues interest at 6% per annum and is payable when the note matures.
The holder of the $25,000 note had the option of converting it at any time prior to maturity. The note plus any accrued but unpaid interest were convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock.
The holder of the note converted $1,010 of note principal into 1,010 shares of common stock as follows:
| Date of Conversion | Principal Amount Converted | Conversion Rate | Shares Received | |||||||||
| December 2012 | $ | 150 | $ | 0.001 | 150 | |||||||
| January 2013 | $ | 660 | $ | 0.001 | 660 | |||||||
| March 2013 | $ | 200 | $ | 0.001 | 200 | |||||||
In July 2013, the Company retired $14,000 of note principal in payment for consulting services provided to the note holder.
In July 2013, the note holder converted $300 of note principal into 300 shares of the Company’s common stock.
In July 2013, in a private transaction, the note holder transferred the remaining note principal balance of $9,690 to a third party (See Note Payable-NW below).
Note Payable-NW
After receiving the transfer of the principal balance of $9,690 in July 2013 in the private transaction noted in Note Payable-RK above, in August 2013, in a private transaction, the new note holder of the aforementioned note transferred $4,475 of principal to a stockholder of the company.
In October 2013, the note holder converted $400 of note principal into 400 shares of the Company’s common stock at $0.001 per share.
In October 2014, the note holder converted $1,100 of note principal into 1,100 of the Company’s common stock.The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 246,242 shares at September 30, 2018 and 84,858,757 shares at December 31, 2017.
In August 2016, the note holder converted $3,000 of note principal into 3,000,000 shares of the Company’s common stock. At September 30, 2018 and December 31, 2017, the remaining principal balance on this portion of the note is $715 and $715 respectively.
Note Payable-MC #2
In April 2015, the Company issued a $3,000 8% per annum note that matures in October 2015. The holder of the note has the right to convert the principal into shares of the Company’s common stock at any time 180 days after the closing date at $0.0001 per share. Interest on the note accrues interest at 8% per annum and is payable when the note matures. During January 2017, the current noteholder converted $1,100 in principal balance into 11,000 shares of common stock. During the same period, the current noteholder transfered $600 of the remaining principal balance to another investor who then converted the entire principal balance he received into 6,000 shares of common stock. During April 2017, the current notholder converted $410 of remaining principal into 6,000 shares of common stock. There remains $890 in principal balance at September 30, 2018 with the current noteholder and $890 in principal balance with the original noteholder at December 31, 2017.
12
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Convertible Note Payable-LGC (8%)
On January 7 2016, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”); and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K Note, the “Notes”). Under the Purchase Agreement, on March 15, 2016 and June 15, 2016, the Company and the Investor conducted additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $50,000 and $46, 803, respectively (see Convertible Notes Payable-LGC (8%) BEN below). During the quarter ended March 31, 2017 the noteholder converted the entire principal balance into 62,068 shares of common stock and therefore there is no principle balance outstanding at September 30, 2018 and December 31, 2017.
Convertible Notes Payable-LGC (8%) BEN
In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,697. In consideration for the issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. The Notes, which are due on January 7, 2017, bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest on the Notes is convertible into shares of the Company’s common stock (“Common Stock”) at a conversion price equal to 55% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion.
In accordance with the terms of the Purchase Agreement, the investor and the Company closed on the two outstanding notes ($50,000 and $46,803) in May and June 2016 when the Company received the cash funding. During April 2017 the noteholder converted the entire principal balance of the $50,000 note into common stock of the Company. During June 2017 the noteholder converted $16,000 of the remaining principal of the $46,803 note into common stock of the Company. In July and September 2017 the noteholder converted the remaining $30,803 of the note’s principal balance into common stock. As a result, there is no principal balance remaining on either note as of September 30, 2018 and December 31, 2017.
Convertible Notes Payable-SO (8%)
On May 2, 2016, the Company issued to an Investor a convertible redeemable note in the principal amount of $57,750 (“the Note”). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. The note contains a 10% original issue discount. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion. During the quarter ended March 31, 2017 the noteholder converted $32,298 of the principle balance into 23,490 shares of common stock thereby leaving a principal balance of $25,452 on the note at December 31, 2017. During the first quarter of 2018, the noteholder converted $23,000 of the principle balance into 122,727 shares of common stock thereby leaving a principal balance of $2,452 on the note at June 30, 2018. During the quarter ended September 30, 2018, the noteholder converted the remaing balance of the note into 148,316 shares on common leaving no balance due on the note as of September 30, 2018. There is $12,896 in accrued interest and penalty assessments on this note as of September 30, 2018 which is included in accrued expenses payable on the balance sheet,
Convertible Notes Payable-BBCG (9%)
On October 11, 2016, the Company issued to an Investor a convertible note in the principal amount of $157,895 (“the Note”). The Note, which matures on March 27, 2018, pays interest at the rate of 9% per annum. The note contains an original issue discount in the amount of $7,895. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 57.5% of the lowest trading price for the twenty prior trading days including the date of conversion. During April and June of 2017, the noteholder converted the entire remaining principal balance of the note into common stock of the Company. There is no principal balance remaining on the note as of September 30, 2018 and December 31, 2017.
13
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Convertible Notes Payable - Funding (8%)
On May 1 2017 ,the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of 8 convertible redeemable notes in aggregate principal amount of $1,012,500. On May 1st, 2017 and June 2, 2017, the Company and the Investor conducted the first two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $131,250 (the “$131K Note”) ; and (ii) a convertible redeemable note in principal amount of $125,000 (the “$125K Note”). On July 10, 2017 and August 7, 2017, the Company and the Investor conducted the second two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor two convertible redeemable notes each in the principal amount of $125,000; Under the Purchase Agreement, on January 1, 2018, February 2, 2018, March 10 ,2018 and April 7, 2018 the Company and the Investor expected to conduct additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $131,250, $125,000, $125,000 and $125,000 respectively (the “back-end notes”). However, all these “back-end notes” were cancelled in early 2018 and will not fund. Accordingly, all the “back-end” notes were removed from the books at December 31, 2017 along with the associated investor notes receivable. In addition, all previously accrued interest expense and interest income as been removed on these “back-end notes” for the period ended December 31, 2017.
In consideration for the issuance of the $131K Note and the $125K Note, on May 1, 2017 and June 2, 2017 and for the two $125k Notes on July 10, 2017 and August 7, 2017, the Company received net proceeds (after deducting $25,000 in legal fees) in the amount of $481,250. In consideration for the issuance of the $131K and the three $125k Notes, the Investor issued to the Company a $131,250 fully-collateralized secured promissory note and three $125,000 fully-collateralized secured promissory notes (the “Investor Notes”), pursuant to which the Investor agreed to pay the Company $131,250 and $375,000 on or before January 1, 2018, February 2, 2018, March 10, 2018 and April 7, 2018 respectively. These Notes (often referred to as “back-end Notes”), bear interest at the rate of 8% per annum. However, all these “back-end notes” were cancelled in early 2018 and will not fund. According, all the “back-end” notes were removed from the books at December 31, 2017 along with the associated investor notes receivable. In addition, all previously accrued interest expense and interest income as been removed on these “back-end notes” for the period ended December 31, 2017.
The two notes issued May 1,2017 ($131,250) and June 2, 2017 ($125,000) became convertible on October 28, 2017 and December 4, 2017 respectively and required derivative treatment at that time. The embedded derivative was bifurcated and accounted for separately along with the derivative discount. The derivative liability is marked-to-market each quarter with the resulting gain or loss valuation being reported in the statement of operations.
During the quarter ended December 31, 2017 (after the six-month waiting period) the holder of the original note in the principal amount of $131,250 converted $21,500 and $15,350 of the note’s principal balance into 35,058 and 39,714 shares of the Company’s common stock, respectively. The principal balance remaining on this convertible note is $94,400 as of December 31,2017. During the quarter ended March 31, 2018 the holder of the original note converted, through four separate conversion transactions, a total of $38,870 of the note’s principal balance into total of 193,384 shares of the Company’s common stock. During the quarter ended June 30, 2018 the holder of the original note converted $10,030 of the note’s principal balance into total of 62,015 shares of the Company’s common stock.During the quarter ended September 30, 2018 the holder of the original note converted $2,200 of the note’s principal balance into total of 69,439 shares of the Company’s common stock.The principal balance remaining on this convertible note is $43,300 as of September 30,2018.
Convertible Notes Payable - JR (5%)
On August 2, 2017 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $50,000 . The note matures on August 2, 2018 and bears interest at 5%. The note holder has has the right at any time on or after the day that is six months from August 2, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at a fixed price of .003 per share. The entire principal balance of $50,000 is outstanding as of September 30, 2018 and December 31, 2017
Convertible Notes Payable - MLM (10%)
As more fuly described in Note 1 to the financial statements, on March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. During the quarter-ended June 30, 2017, $18,986 in accrued interest was satisfied through the issuance of 17,273 shares of the Company’s common stock. On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. At such time the Note was valued with it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock leaving a balance on the note of $133,750 at December 31, 2017. During the quarter-ended March 31, 2018, $15,000 in principal on this note was satisfied by the conversion into 60,000 shares of the Company’s common stock. During the quarter-ended June 30, 2018, $7,500 in principal on this note was converted into 30,000 shares of the company’s common stock. In addition, on May 26, 2018, the original note holder sold $20,000 in principal to an unrelated third-party investor with the sames terms as the original note thereby leaving a balance on the original note of $80,250 at June 30, 2018 and a balance of $20,000 to the new third-party noteholder. During the nine months-ended September 30, 2018 the Company made cash paydowns on the note in the amount of $11,550 and in addition, the noteholder converted $2,660 in principal balance into 140,000 shares of common stock. The ending principal balnce on this note at September 30, 2018 is $68,040 to the original noteholder. During the quarter-ended September 30, 2018 the unrelated third-party noteholder converted $2,100 in principal balance into 70,000 shares of the Company’s common stock thereby leaving a principal balance to this unrealted noteholder in the amount of $17.900.
14
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Convertible Notes Payable - LG (8%) (Notes 5 & 6)
On January 25, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $78,750. The note matures on January 25, 2019 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from January 25, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $78,750 is outstanding as of September 30, 2018. The embedded derivative and related derivative discount on this convertible note, although not convertible during the six months ended June 30, 2018, has nonetheless been valued and recorded on the books as of April 1, 2018 in accordance with ASC 815.
On June 4, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $52,500. The note matures on June 4, 2019 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from June 4, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $52,500 is outstanding as of September 30, 2018. The embedded derivative and related derivative discount on this convertible note, although not convertible during the six months ended June 30, 2018, has nonetheless been valued and recorded on the books as of June 4, 2018 in accordance with ASC 815.
The Company’s convertible notes payable and the related derivative liabilities, derivative discount, deferred financing costs and original-issue discount are presented in the financial statements at September 30, 2018 as follows:
| 9/30/2018 | Remaining | Original | Deferred | Total | ||||||||||||||||||||
| Principal | Issue | Derivative | Financing | Convertible | Derivative | |||||||||||||||||||
| Debt | Amount | Discount | Discount | Costs | Notes Payable | Liability | ||||||||||||||||||
| Note Payable - BS | $ | 125 | $ | 125 | ||||||||||||||||||||
| Note Payable - SF | 60 | 60 | ||||||||||||||||||||||
| Note Payable - SD | 15,000 | 15,000 | ||||||||||||||||||||||
| Note Payable - NW | 715 | 715 | ||||||||||||||||||||||
| Note Payable - MC #2 | 890 | 890 | ||||||||||||||||||||||
| Convertible Note Payable - JR (5%) | 50,000 | 50,000 | ||||||||||||||||||||||
| Convertible Note Payable - HG (10%) | 17,900 | 17,900 | ||||||||||||||||||||||
| Convertible Note Payable - CB (5%) | - | - | 1,115 | |||||||||||||||||||||
| Convertible Notes Payable- SO (8%) | - | - | - | |||||||||||||||||||||
| Convertible Note Payable - LGC (8%) 1 | 43,300 | 43,300 | 26,128 | |||||||||||||||||||||
| Convertible Note Payable - LGC (8%) 2 | 125,000 | - | 125,000 | 30,623 | ||||||||||||||||||||
| Convertible Note Payable - LGC (8%) 3 | 125,000 | - | - | 125,000 | 30,577 | |||||||||||||||||||
| Convertible Note Payable - LGC (8%) 4 | 125,000 | - | - | 125,000 | 30,528 | |||||||||||||||||||
| Convertible Note Payable - MLM (10%) (Related party) | 68,040 | - | 68,040 | 41,967 | ||||||||||||||||||||
| Convertible Note Payable - LGC (8%) 5 | 78,750 | (47,012 | ) | (1,657 | ) | 30,081 | 21,814 | |||||||||||||||||
| Convertible Note Payable - LGC (8%) 6 | 52,500 | (35,688 | ) | (1,432 | ) | 15,380 | 29,203 | |||||||||||||||||
| $ | 702,280 | $ | - | $ | (82,700 | ) | $ | (3,089 | ) | $ | 616,491 | $ | 211,955 | |||||||||||
As of September 30, 2018, the convertible notes payable can be converted into approximately 768,596 shares of common stock.
Note 6. DERIVATIVES AND FAIR VALUE INSTRUMENTS
The Company applied paragraph 815-10-05-4 of the FASB Accounting Standards Codification to the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016, the 9% Convertible Note payable issued October 1, 2016 and the 8% Convertible Notes Payable issued January 25, 2018 and June 4, 2018. Based on the guidance in paragraph 815-10-05-4 of the FASB Accounting Standards Codification the Company concluded these instruments were required to be accounted for as derivatives on issuance date. The Company records the fair value of the Convertible Notes Payable and certain warrants that are classified as derivatives on issuance date and the fair value changes on each reporting date reflected in the consolidated statements of operations as “Change in Fair Value - derivatives.” These derivative instruments are not designated as hedging instruments under paragraph 815-10-05-4 of the FASB Accounting Standards Codification and are disclosed on the balance sheet under Derivative Liabilities.
The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data.
15
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepayments and other current assets, accounts payable, and accrued expenses, approximate their fair values because of the short maturity of these instruments.
The Company’s Level 3 financial liabilities consist of the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016 and May 1, 2017 and June 2, 2017 and July 10, 2017 and August 15, 2017, the 9% Convertible Note payable issued October 1, 2016, The 8% Convertible note payable issued January 25, 2018 and the 8% Convertible note payable issued June 4, 2018 for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. We have valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation consultant, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of issuance and June 30, 2018. The primary assumptions include: projected annual volatility of 145%-240%; the follow-on securities purchase option; the conversion feature as a percentage of Market; automatic/conditional conversions; market price trigger events.
As of September 30, 2018 the Company’s derivative financial instruments included:
1) Embedded derivatives associated with certain of the Company’s unsecured convertible notes payable. The Company’s 5% convertible notes payable and 8% convertible notes payable and 9% convertible note payable issued to unrelated investors is a hybrid instrument, which warrants separate accounting as a derivative instrument. The embedded derivative feature has been bifurcated from the debt host contract, referred to as the Derivative Liability, which resulted in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes Payable. The unamortized discount is amortized to interest expense using the effective interest method over the life of the Notes. The embedded derivative feature includes the conversion feature within the notes and an early redemption option. The compound embedded derivatives within the convertible notes have been recorded at fair value at the date of issuance; and are marked-to-market each reporting period with changes in fair value recorded to the Company’s statement of operations as Change in fair value of derivative liabilities.
The 5% Convertible Note Payable and the 8% Convertible Notes Payable and the 9% convertible note payable are valued at September 30,2018. The following assumptions were used for the valuation of the embedded derivative:
- The post reverse split (1,000:1) stock price of $0.40 increased to $0.525 in this period (basis for the variable conversion price) would fluctuate with the Company projected volatility;
- An event of default for the Convertible Note would occur 0% of the time, increasing 1.00% per month to a maximum of 5.0%;
- Alternative financing for the Convertible Note would be initially available to redeem the note 0% of the time and increase monthly by 1% to a maximum of 10%;
- Capital raising events (a single financing at 1 month from the valuation date) are a factor for the VV Convertible Note. The full reset events projected to occur based on future stock issuance (single event) resulting in a reset exercise price.
- The monthly trading volume would average $478,108 (rounded) as of 9/30/2018 and would increase at 5% per month;ownership limits conversion across LG’s notes based on 4.99% with shares outstanding increasing monthly by 1%.
- The variable conversion price of 50% to 58% over 3 to 20 trading days would have effective rates of 41.52% to 56.23%;
- The Note Holders would automatically convert the notes early (and not hold to maturity) with variable conversion prices and full ratchet resets if the registration was effective and not in default;
- The projected annual volatility for each valuation period was based on the historical volatility of the company:
| 6/30/2018 | 173 | % | 8/21/2018 | 334 | % | |||||
| 7/25/2018 | 392 | % | 8/27/2018 | 338 | % | |||||
| 7/27/2018 | 439 | % | 8/30/2018 | 326 | % | |||||
| 7/31/2018 | 295 | % | 9/6/2018 | 340 | % | |||||
| 7/31/2018 | 485 | % | 9/18/2018 | 337 | % | |||||
| 8/6/2018 | 610 | % | 9/20/2018 | 337 | % | |||||
| 8/21/2018 | 334 | % | 9/24/2018 | 337 | % | |||||
| 9/30/2018 | 340 | % |
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuation.
16
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
The Company’s derivative liabilities on convertible notes payable are presented at market value in the financial statements at September 30, 2018 as follows:
| 9/30/2018 | Quarter | Quarter | Ended | Quarter | Quarter | Ended | Quarter | Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative | Ended | Ended | March 31, | Derivative | Ended | Ended | June 30, | Derivative | Ended | September 30, | Derivative | |||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible | Derivative Treatment | Maturity | Principal Note | Original Derivative | Valuation December 31, | March 31, 2018 | March 31, 2018 | 2018 Mark-to- | Valuation March 31, | June 30, 2018 | June
30, | 2018 Mark-to- | Valuation June 30, | September 30, 2018 | 2018 Mark-to- | Valuation September 30, | ||||||||||||||||||||||||||||||||||||||||||||
| Note | Date | Date | Amount | Valuation | 2017 | Issuances | Conversions | Market | 2018 | Issuances | Conversions | Market | 2018 | Conversions | Market | 2018 | ||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Note Payable- issued 5/2/2016 | 10/1/2016 | 5/2/2017 | $ | 57,750 | $ | 58,355 | $ | 24,925 | $ | (26,745 | ) | $ | 5,123 | $ | 3,303 | $ | (665 | ) | $ | 2,638 | $ | (2,740 | ) | $ | 102 | $ | - | |||||||||||||||||||||||||||||||||
| 5 % Convertible Note- Payable - issued 6/12/2015 | 4/12/2016 | 1/7/2017 | 35,863 | 37,827 | $ | 832 | $ | - | 305 | $ | 1,137 | (233 | ) | $ | 904 | 211 | $ | 1,115 | ||||||||||||||||||||||||||||||||||||||||||
| 9% Convertible Notes Payable- issued 10/01/2016 | 3/26/2017 | 3/27/2018 | 157,895 | 56,956 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued January 7, 2016 | 1/7/2016 | 1/7/2017 | 105,000 | 87,287 | - | $ | - | $ | - | $ | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued January 7, 2016 | 1/7/2016 | 1/7/2017 | 50,000 | 15,803 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued March 7, 2016 | 3/7/2016 | 3/7/2017 | 50,000 | 87,538 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued March 7, 2016 | 3/7/2016 | 1/7/2017 | 46,803 | 82,115 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued May 1, 2016 | 10/28/2017 | 5/1/2018 | 131,250 | 103,294 | $ | 52,989 | $ | (31,013 | ) | 8,541 | $ | 30,517 | $ | (9,148 | ) | 17,439 | $ | 38,808 | $ | (1,605 | ) | (11,075 | ) | $ | 26,128 | |||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued June 7, 2016 | 12/4/2017 | 6/7/2018 | 125,000 | 90,596 | $ | 64,458 | (14,452 | ) | $ | 50,006 | 55,818 | $ | 105,824 | (75,201 | ) | $ | 30,623 | |||||||||||||||||||||||||||||||||||||||||||
| 10% Convertible Notes Payable- issued March 8, 2016 | 9/15/2017 | 9/8/2018 | 150,000 | 167,164 | $ | 108,682 | $ | (19,359 | ) | 23,426 | $ | 112,749 | $ | (26,895 | ) | 44,802 | $ | 130,656 | $ | (17,872 | ) | (70,817 | ) | $ | 41,967 | |||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued August 15, 2017 | 4/1/2018 | 8/15/2018 | 125,000 | 108,878 | $ | - | $ | - | 108,878 | (3,760 | ) | $ | 105,118 | (74,541 | ) | $ | 30,577 | |||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued July 10, 2017 | 4/1/2018 | 7/10/2018 | 125,000 | 108,061 | $ | - | $ | - | 108,061 | 3,092 | $ | 111,153 | (80,625 | ) | $ | 30,528 | ||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued January 25, 2018 | 4/1/2018 | 1/25/2019 | 78,750 | 65,896 | $ | - | $ | - | 65,896 | 135 | $ | 66,031 | (44,217 | ) | $ | 21,814 | ||||||||||||||||||||||||||||||||||||||||||||
| 8% Convertible Notes Payable- issued June 4, 2017 | 6/4/2018 | 6/4/2018 | 52,500 | 42,755 | $ | - | $ | - | 42,755 | 532 | $ | 43,287 | (14,084 | ) | $ | 29,203 | ||||||||||||||||||||||||||||||||||||||||||||
| $ | 1,290,811 | $ | 1,112,525 | $ | 251,886 | $ | - | $ | (77,117 | ) | $ | 22,943 | $ | 197,712 | $ | 325,590 | $ | (36,043 | ) | $ | 117,160 | $ | 604,419 | $ | (22,217 | ) | $ | (370,247 | ) | $ | 211,955 | |||||||||||||||||||||||||||||
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Medifirst Solutions,
Inc.
Notes to Consolidated Financial Statements
September 30, 2018
The Company’s mark-to-market fair value adjustment ((income)/expense) for the quarter ended September 30, 2018 totaled ($370,247).
Note 7. STOCKHOLDERS’ EQUITY
Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented. As a result of the aforementioned reverse stock split, additional paid-in-capital was increased by $140,169 and $84,861 as of September 30, 2018 and December 31, 2017 respectively on the balance sheet with a corresponding decrease in the par value of common stock issued as of the same dates.
The Company has authorized 4,000,000,000 shares of common stock with a par value of $0.0001 per share. Effective September 19, 2017, the Company amended its Articles of Incorporation to increase its authorized Common Stock to 4,000,000,000 shares. There were 2,464,881 and 849,437 shares of common stock issued and outstanding at September 30, 2018 and December 31, 2017, respectively.
The Company has authorized 1,000,000 shares of Series A preferred stock with a par value of $0.0001 per share. At September 30, 2018 and December 31, 2017, there were 500,000 shares of Series A preferred stock issued and outstanding respectively. The preferred stock has preferential voting rights of 2,000 votes per outstanding share.
The Company has authorized 50,000 shares of Series B convertible preferred stock with a par value of $0.0001 per share. At December 31, 2016 there were 39,000 shares issued of which 12,900 shares of Series B preferred were converted into common stock in accordance with the terms of the Series B Preferred stock. Therefore; there were 26,100 shares outstanding at December 31, 2016. The Series B preferred stock has no voting rights. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred shares were converted into common stock in accordance with the terms of the Series B preferred stock. As of result there were 8,000 shares of Series B preferred shares outstanding at September 30, 2018. The holders of the Series B convertible preferred stock have the right to convert the same into Common Stock of the Corporation at the ratio of one (1) share of Series B Convertible Preferred for five hundred (500) shares of Common Stock.
During the quarter ended March 31, 2017, the Company issued an aggregate 43,000 shares of common stock at prices ranging from $0.0028 to $0.0094 per share for services provided to the Company.
18
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
During the quarter ended March 31, 2017, the Company issued an aggregate 112,498 shares of common stock at prices ranging from $0.0001 to $0.0028 per share as partial conversion of notes.
During the quarter ended March 31, 2017, the Company issued an aggregate 9,050 shares of common stock for conversion of 18,100 shares of Preferred Series B stock.
During the quarter ended June 30, 2017, the Company issued an aggregate 33,000 shares of common stock at prices ranging from $0.0022 to $0.0028 per share for services provided to the Company.
During the quarter ended June 30, 2017, the Company issued an aggregate 177,072 shares of common stock at prices ranging from $0.0001 to $0.0028 per share as partial conversion of notes and accrued interest.
During the quarter ended June 30, 2017, the Company issued an aggregate 450,000 shares of Preferred Series A stock at par of $.0001.
During the quarter ended September 30, 2017, the Company issued an aggregate 41,000 shares of common stock at prices ranging from $0.0002 to $0.0021 per share for services provided to the Company.
During the quarter ended September 30, 2017, the Company issued an aggregate 62,196 shares of common stock at prices ranging from $0.00065 to $0.00099 per share as partial conversion of notes and accrued interest.
During the quarter ended December 31, 2017, the Company issued an aggregate 71,000 shares of common stock at prices ranging from $0.0006 to $0.0011 per share for services provided to the Company.
During the quarter ended December 31, 2017, the Company issued an aggregate 74,772 shares of common stock at prices ranging from $0.0004 to $0.0006 per share as partial conversion of notes and accrued interest.
During the quarter ended March 31, 2018, the Company issued an aggregate 18,000 shares of common stock at prices ranging from $0.0006 to $0.0011 per share for services provided to the Company.
During the quarter ended March 31, 2018, the Company issued an aggregate 376,111 shares of common stock at prices ranging from $0.0004 to $0.0006 per share as partial conversion of notes and accrued interest.
During the quarter ended June 30, 2018, the Company issued an aggregate 67,500 shares of common stock at prices ranging from $0.0004 to $0.0004 per share for services provided to the Company.
During the quarter ended June 30, 2018, the Company issued an aggregate 92,015 shares of common stock at prices ranging from $0.000174 to $0.00025 per share as partial conversion of notes and accrued interest.
During the quarter ended September 30, 2018, the Company issued an aggregate 634,053 shares of common stock at prices ranging from $0.0525 to $0.18 per share for services provided to the Company.
During the quarter ended September 30, 2018, the Company issued an aggregate 427,755 shares of common stock at prices ranging from $0.0190 to $0.1173 per share as partial conversion of notes and accrued interest.
Note 8. COMMITMENTS AND CONTINGENCIES
The Company currently has three office locations. It rents offices on a month-to-month basis from the Company’s President and stockholder for $525 per month which amounted to $1,575 or the quarter ended September 30, 2018. The Company also has ready-to-go office space available to be used for meetings etc. at a nominal cost of approximately $100 per month with no commitment. The cost of this space for the quarter ended September 30, 2018 was $297. On September 12th 2016 the Company entered into a commercial lease agreement for office premises at an original cost of $650 per month for a one-year term with the option to renew for one extended term of three years. In July 2017 the Company leased additional space at this location thereby increasing the monthly rent to $1,550. The cost of this space for the quarter ended September 30, 2018 was $4,650. A new lease was signed in March 2018 for the same space. The following are the minimum required lease payments under the lease for the next four years:
| 2018 | 17,900 | |||
| 2019 | 24,600 | |||
| 2020 | 24,600 | |||
| 2021 | 4,100 |
19
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
Total rent expense for the nine months ended September 30, 2018 and 2017 was $18,866 and $13,866 respectively.
The Company has agreements with consultants for ongoing services to be rendered with the following commitments:
| Commitment | Term | |||
| Consultant - FDA requirements and compliance | $2,000 per month | 12 Months | ||
| Consultant - capital formation and market services | Various equity percentage issuances of restricted stock for fundings | 6 Months | ||
| Consultant - tradeshow attendence, strategy and collaboration, cordination regarding FDA compliance, manuafacturing operations, sales and marketing, other related services | $10,000 per month (payable quarterly in cash or common stock from the 2016/2017 Equity Incentive Plan) | 12 Months |
Note 9. INCOME TAXES
The Company accounts for income taxes under the asset and liability approach. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
The Company’s deferred tax asset consists primarily of carryforward net operating losses (NOLs). The Company believes that, at this time, it is more likely than not that the benefit of the NOLs will not be realized. As of September 30, 2018, the Company had provided a valuation allowance to fully reserve its net operating loss carryforwards and other items giving rise to deferred tax assets, primarily as a result of anticipated net losses for income tax purposes and has therefore recorded a full valuation allowance.
Note 10. RELATED PARTY TRANSACTIONS
In August 2015, the Company acquired 100% of the issued and outstanding common stock of Medical Lasers Manufacturer, Inc. (“MLM”) from a stockholder and officer of the Company for 20,000 common shares which were valued at $0.001 per share. All intercompany transactions were eliminated during consolidation.
As more fully described in Notes 3 and 4 to the Consolidated Financial Statements, the Company owed the following amounts to related parties as of the following:
| September 30 | December 31 | |||||||
| 2018 | 2017 | |||||||
| Due to Related Party | $ | 8,921 | $ | 8,921 | ||||
| Due to officer/stockholder | 8,955 | 8,398 | ||||||
| Due to other stockholders | 3,100 | 6,790 | ||||||
| Total Related Party Obligations | $ | 20,976 | $ | 24,109 | ||||
The company has entered into an employment agreement with its Chief Executive Officer (CEO) for the five year period beginning January 1, 2012. The agreement provides for base compensation, annual bonus, benefits, vacation and reimbursements. Under this agreement, the base compensation of the Company’s CEO is $100,000 per annum which has been accrued for the years ended December 31, 2015 and 2014. In mid-year 2016 the Company commenced payroll and is paying the CEO for current wages in this manner. During the year ended December 31, 2016, $18,974 in accrued compensation was paid. Accrued compensation in the amount of $30,000 was converted to shares of common stock during 2015. In the quarter ended June 30, 2017, $45 in accrued CEO compensation was converted to Series A Preferred shares. During the quarter ended September 30, 2017, $25,500 in accrued compensation was paid to the CEO. Effective October 1, 2017, the employement agreement between the Company and it’s CEO was amended to increase the annual salary to $150,000. During the quarter ended December 31, 2017 $44,673 in accrued compensation was paid to the CEO. As of September 30, 2018, the company owes accrued compensation to it’s CEO in the amount of $390,283.
In August 2015, MLM acquired a trademark from the son of the Company’s President for $20,000 due 90 days from the date of acquisition. During the quarter ended June 30, 2016, the Company issued 3,400 shares of Preferred Series B stock as settlement on this liability. Due to the uncertainty of future cash flows from the trademark management has deemed it to be impaired and recorded an impairment expense of $20,000 at September 30, 2015.
In August 2015, subsequent to the date the Company acquired MLM, MLM purchased $50,000 in inventory from the son of the Company’s President. The inventory consisted of 20 hand-held laser devices. During the quarter-ended March 31, 2016, 10,000 shares of Series B Preferred stock were issued in settlement of this liability.
20
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
As more fully described in Note 1-Intangible Asset-Licensing Agreement, on March 8th 2016 (with an effective date of October 1, 2015) the Company entered into a Licensing Agreement with a Florida Corporation (Licensor) that is owned by a related party. The Company issued 25,000 shares of Series B Preferred stock to the Licensor as partial consideration for the Licensing agreement plus a $150,000 promissory note to the Licensor for the balance of the consideration. During the quarter-ended March 31, 2016, 3,400 shares of Series B Preferred stock were converted into 1,700 shares of common stock in accordance with the terms of the Series B Preferred stock. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred stock was converted into 9,050 shares of common stock in accordance with the terms of the Series B Preferred stock.
As more fuly described in Note 1 and Note 5 to the financial statements, $18,986 in accrued interest on the $150,000 note was satisfied through the issuance of 17,273 shares of the Company’s common stock.On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. At such time the Note was valued with it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock. During the quarter ended March 31, 2018, $15,000 in principal on this note was satisfied by the conversion into 60,000 shares of the Company’s common stock. During the quarter ended June 30, 2018, $7,500 in principal on this note was satisfied by the conversion into 30,000 shares of the Company’s common stock. During the quarter ended June 30, 2018 the original related-party noteholder sold $20,000 in principal on this note to an unrelated third party investor thereby leaving $80,250 in principal balance due to the related party original noteholder and $20,000 in principal due to the unrelated third-party investor. During the quarter-ended September 30, 2018 the Company made cash paydowns on the note in the amount of $11,550 and in addition, the noteholder converted $2,660 in principal balance into 140,000 shares of common stock. The ending principal balnce on this note at September 30, 2018 is $68,040 to the original noteholder. During the quarter-ended September 30, 2018 the unrelated third-party noteholder converted $2,100 in principal balance into 70,000 shares of the Company’s common stock thereby leaving a principal balance to this unrealted noteholder in the amount of $17.900.
Note 11. BASIS OF REPORTING - GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.
The Company has incurred losses from inception of approximately $4,436,137 which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plans to raise additional capital from the sale of stock and to receive additional financing and to commence sales of it’s flagship product and create revenue. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern. Management believes the Company’s present cash and cash equivalents will not enable it to meet its obligations for twelve months from the date these financial statements are available to be issued unless the Company received additional funding.
Note 12. STOCK COMPENSATION - EQUITY INCENTIVE PLAN
In July 2016, the Company adopted the Medifirst Solutions, Inc. 2016 Equity Incentive Plan (the “Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 20,000,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.
On December 6th, 2016 the company amended the terms of the Plan and filed an S-8 Registration Statement with the Securities and Exchange Commission (“SEC”) increasing the number of shares permitted to be issued under the Plan to 32,000.
During the quarter ended March 31, 2017, the Company issued from the Plan a total of 27,100 shares of common stock to non-employees for services rendered. As of March 31, 2017 there is a balance of -0- shares available for future issuance under the Medifirst Solutions, Inc. 2016 Equity Incentive Plan.
In May 2017, the Company adopted the Medifirst Solutions, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 125,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company. During the year ended December 31, 2017, the Company issued from the Plan 108,000 shares to non-employees for services rendered. As of December 31, 2017 there is a balance of 17,000 shares available for future issuance under the Medifirst Solutions, Inc. 2017 Equity Incentive Plan.
In January 2018, the Company adopted the Medifirst Solutions, Inc. 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 175,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.
During the quarter ended March 31, 2018, the Company issued from the 2018 Plan a total of 4,000 shares of common stock to non-employees for services rendered. As of March 31, 2018 there is a balance of 188,000 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.
21
Medifirst Solutions, Inc.
Notes to Consolidated Financial Statements
September 30, 2018
During the quarter ended June 30, 2018, the Company issued from the 2018 Plan a total of 17,500 shares of common stock to non-employees for services rendered. As of June 30, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.
During the quarter ended September 30, 2018, there were no issuances from the 2018 Plan and therefore as of September 30, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.
Note 13. SUBSEQUENT EVENTS
Subsequent to the quarter ended September 30, 2018 the Company issued an aggregate 424,970 shares of Common Stock upon conversions of an aggregate principal amount equal to $8,010 outstanding convertible promissory notes and $478 in accrued interest.
On October 5, 2018, the Company entered into a Securities Purchase Agreement with an investor to issue a convertible promissory note in the amount of $58,000. The note pays 8% interest per annum and matures on April 1, 2020. After six months from the date of the note, the investor may convert the principal balance into common stock of the Company. On October 5th 2018, the cash funding was received by the Company and the convertible note was issued.
Designation and Issuance of Series C Preferred Stock:
On October 12, 2018, the Company with the State of Nevada a certificate of designation (the “Certificate of Designation”) pursuant to which the Company designated a new class of preferred stock as the Company’s Series C Convertible Preferred Stock (“Series C Preferred”) having a $100.00 stated value per share (“Stated Value”). The Company designated 5,000 shares of Series C Preferred. Subject to a beneficial ownership limitation equal to 4.99%, each share of Series C Preferred is convertible into 25,000 shares of the Common Stock. Holders of Series C Preferred are not entitled to receive dividends. In the event of any liquidation, dissolution or winding up of the Company, holders of Series C Preferred are entitled to distributions from the assets in an amount equal to, or if less, on a prorated basis, the Stated Value per share of Series C Preferred held by such holders. Holders of Series C Preferred are entitled to vote, on an as-converted basis, together with holders of Common Stock on all actions to be taken by the shareholder of the Company.
On October 12, 2018, the Company satisfied various obligations owed to the Company’s medical director, Dr. Rubin, by issuing fifteen shares of Series C Preferred to Dr. Rubin.
22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
In this report, unless the context indicates otherwise, the terms “Medifirst,” “Company,” “we,” “us,” and “our” refer to Medifirst Solutions, Inc., a Nevada corporation, and its subsidiaries, Medical Lasers Manufacturer, Inc., a Nevada corporation, and Concierge Concepts Rx (CCRx), a New Jersey corporation.
Forward-Looking Statements
The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.
The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.
Plan of Operation
Medifirst Solutions, Inc. was incorporated in Nevada in November 2010. Our principal executive office is located at 4400 U.S. 9 South, Suite 1000, Freehold NJ, 07726, and our telephone number is (732) 786-8044. Our website address is www.medifirstsolutions.com. The Company began as a development stage company focused on developing products within the healthcare market for both consumer and professional applications. In 2015, the Company made a strategic decision to add laser technology to its health and wellness division and discontinue its efforts with its light therapy and water generator products. Management believed that it was in the best interest of the Company and its shareholders to narrow its focus and business to developing its laser technology, which lasers are expected to target professionals that treat pain and inflammation, as well as cosmetic and skincare related conditions. In connection with the changed focus, the Company began to develop a product that if successfully cleared by the U.S. Food and Drug Administration, was the first in a series of proprietary medical devices for the Company.
Medifirst, through its wholly-owned subsidiary Medical Laser Manufacturer, Inc., entered into an exclusive manufacturing agreement to produce what is now its hand-held mobile laser system known as “The Time Machine Program” for which the Company purchased the registered trademark. In addition, it entered into a Product and Know-How License Agreement (the “License Agreement”) with Laser Lab Corp to license the use of various intellectual property in connection with seeking regulatory approval for and marketing, distributing and selling The Time Machine Series Lasers (“TTM Series”). Although the License is not exclusive, Laser Lab Corp may not license the know-how or inventions to a third party and may only directly, or through its wholly-owned subsidiary, use the know-how and inventions. In addition to the license granted to the Company, the License Agreement provides for an option to license other fields of use of the infrared laser in the TTM Series, as well as additional wavelengths and colors, allowing the Company to develop a broader range of product offerings in the future.
On July 8, 2016, we received clearance from the FDA to market its infrared Time Machine TTML-8102000 Laser Thermal Therapeutic Device. The FDA does not give advance notice or define a timeline during their evaluation for 510(k) clearance. Generally, when 510(k) clearance is granted, an early stage medical device company, such as Medifirst, is required to put together an infrastructure, including (i) new office space, (ii) instituting FDA controls and procedures, (iii) fine-tuning manufacturing, (iv) building and executing on a sales strategies, (v) producing custom-made cases and packaging for the medical device, and (vi) aligning all staffing, consulting and personnel needs. As Medifirst was aware that the FDA time frame was unknown and 510(k) clearance was not guaranteed, we intentionally delayed the aggressive expansion of our operations and production before successfully receiving clearance to begin sales. Since receiving clearance, we presented our laser and established business relationships in Morocco, China, Asia, Mid-East and other international countries and markets. The international markets, although requiring complicated registration processes and ground work, offer the opportunity for large bulk sales which would be very beneficial for the Company’s growth. Medifirst believes it has made significant progress in setting up a sales and corporate infrastructure and continues to advance these efforts.
23
On April 18, 2018, the Company incorporated a Concierge Concepts Rx (CCRx), in the State of New Jersey, as an 80% majority-owned subsidiary. In consideration for his contribution of know-how, CCRx’s co-founder, Walter Molokie, CCRx has agreed to issue a 20% minority interest in CCRx to Mr. Molokie and/or his designees.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve (12) months. Our auditors’ opinion is based on the uncertainty of our ability to establish profitable operations. The opinion results from the fact that we have not generated significant revenues. Accordingly, we must raise cash from operations or from investments by others in the Company to continue our operations. Our sole officer and director is responsible for our managerial and organizational structure, which will include preparation of disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When these controls are implemented, he will be responsible for the administration of the controls. Should he not have sufficient experience, he may be incapable of creating and implementing the controls which may cause us to be subject to sanctions and fines by the SEC which ultimately could cause you to lose your investment.
Recent Developments
On July 23, 2018, the Company completed a 1-for-1,000 reverse stock split of its issued and outstanding common stock.
Medifirst recently launched Concierge Concepts Rx, a new division focused on the pharmaceutical industry. Concierge Concepts Rx (CCRx) provides unique specialty drug consulting and niche billing services to independent pharmacies and retail pharmacy chains. Specialty drugs can greatly increase revenue for pharmacies that are struggling to maintain profitability. Our services of pharmacy consulting and revenue stream management, utilizing of over 60 years of combined specialty pharmacy and infusion therapy experience, will look to increase profits for these pharmacies. CCRx offers its clients a suite of services that include: clinical review, expedited medical insurance verification and authorization, training for drug dispensing, insurance billing, collections, and reconciliation. The billing services will address any denials and include appeals and re-submissions. CCRx will provide key services to undervalued clients by securing reimbursement of overlooked revenue within the ever-expanding specialty drug segment of the pharmacy market.
Medifirst plans to launch a division called US Pharma, focused on the production, marketing, licensing and white-labeling all natural organic products. The company is currently evaluating products containing the active ingredient cannabidiol oil (CBD) which has been widely reported and shown to have effective medicinal usages. There has been a strong movement to make CBD products legal in all 50 states. The Farm Bill which would make CBD and Hemp legal, we believe, is expected to pass by the end of 2018.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2018 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2017
Revenues
During the three months ended September 30, 2018 and 2017, the Company’s revenue from the sale of its products was equal to $-0- and $20,000 respectively. The Company had $11,500 in consulting revenue for the three months ended September 30, 2018. The Company is still in developmental stage and does not generate significant revenue.
24
Expenses
For the three months ended September 30, 2018 and 2017, expenses were $148,588 and $197,727, respectively. The reason for the decrease in expenses was primarily due to substantial decreases in advertising and promotion expenses and consulting fees.
Legal, Accounting, Consulting and Professional Fees
For the three months ended September 30, 2018 and 2017 professional and consulting fees were a combined $73,968 and $111,223, respectively. The decrease was due to reduced consulting and professional fees incurred during the quarter.
Other Income/(Expense)
For the three months ended September 30, 2018 and 2017, other income was $382,023 and $8,920, respectively, and other expenses were ($285,047) and ($63,116), respectively. These changes were all due to the changes in fair value of derivatives for the quarter and interest expense on debt, interest income on investor notes receivable, amortization of original issue discount, amortization of deferred financing costs, derivative discount amortization and gain on debt settlement.
Net Income/(Loss)
For the three months ended September 30, 2018 and 2017 the Company had a net loss of ($40,112) and ($232,628).
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2017
Revenues
During the nine months ended September 30, 2018 and 2017, the Company’s revenue from the sale of its products was equal to $4,550 and $29,995, respectively. The Company had $11,500 in consulting revenue for the three nine months ended September 30, 2018. The Company is still in developmental stage and does not generate significant revenue.
Expenses
For the nine months ended September 30, 2018 and 2017, expenses were $452,718 and $785,901, respectively. The reason for the decrease in expenses was primarily due to substantial decreases in: advertising and promotions costs, consulting fees, and professional fees.
Legal, Accounting, Consulting and Professional Fees
For the nine months ended September 30, 2018 and 2017 professional fees and consulting fees were a combined $233,165 and $548,743 respectively. The decrease was due to a substantial reduction in consulting and professional fees for the quarter.
Other Income/(Expense)
For the nine months ended September 30, 2018 and 2017, other income was $241,291 and $11,441, respectively, and other expenses were ($575,882) and ($630,538), respectively. These changes were all due to the changes in fair value of derivatives for the quarter and interest expense on debt, interest income on investor notes receivable, amortization of original issue discount, amortization of deferred financing costs, derivative discount amortization and gain on debt settlement.
25
Net Income/(Loss)
For the nine months ended September 30, 2018 and 2017 the Company had a net loss of ($771,008) and ($1,376,061).
Liquidity and Capital Resources
Since incorporation, we have financed our operations through the private placement of our common stock to selected investors and periodic borrowings from our stockholders. At September 30, 2018 and December 31, 2017, our principal sources of liquidity included cash of $77,714 and $287,569, respectively.
As of September 30, 2018, we did not have any significant commitments for capital expenditures.
If we do not generate sufficient cash flow to support our operations over the next twelve (12) months, in order to continue as a going concern we may need to raise additional capital by issuing capital stock in exchange for cash. There are no formal or informal agreements to attain such financing. The Company’s ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: investors’ perception of, and demand for, securities of companies in our industry; conditions of the U.S. and other capital markets in which we may seek to raise funds; future results of operations, financial condition and cash flow. Therefore, the Company’s management cannot assure that financing will be available in amounts or on terms acceptable to the Company, or if at all. Any failure by the Company’s management to raise additional funds on terms favorable to the Company could have a material adverse effect on the Company’s liquidity and financial condition.
Critical Accounting Policies
Our significant accounting policies are summarized in Note 1 of our consolidated financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.
Off Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
Recently Adopted Accounting Pronouncements
Please see Note 1 of our consolidated financial statements that describe the impact, if any, from the adoption of Recent Accounting Pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company is a smaller reporting company, as defined by Rule 229.10(f)(1) and is not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our principal executive and financial officers concluded that, as of the end of the period covered by this report, due to the inadequate recordation of certain transactions and communication of those transactions to those integral to our disclosure procedures, our disclosure controls and procedures were not effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
During the 9-month period ended September 30, 2018, the Company issued 895,881 shares of Common Stock upon conversions of a principal amount equal to $109,224 of outstanding convertible promissory notes.
During the 9-month period ended September 30, 2018, the Company issued an aggregate of 719,553 shares of Common Stock for consulting services.
Subsequent to September 30, 2018, the Company issued 424,970 shares of Common Stock upon conversions of an aggregate principal amount of $8,010 of outstanding convertible promissory notes and $478 in accrued interest thereon.
Subsequent to September 30, 2018, the Company issued an aggregate of -0- shares of Common Stock for consulting services.
Each of the foregoing transactions was exempt from the registrations requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof. In the alternative, the common stock issued upon the exercise of conversion rights is an exempt security pursuant to Section 3(a) (9) of the Securities Act of 1933, as amended.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures
Not Applicable
Item 5. Other Information.
There have been no material changes to the procedures by which our security holders may recommend nominees to the board of directors.
Item 6. Exhibits.
| 31.1. | Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2. | Certification of the Chief Executive Officer and Principal Executive Officer Pursuant to 13a-14 and 15d-14 of the Securities Exchange Act of 1934. |
| 32.1. | Certification of the Chief Financial Officer and Principal Financial Officer Pursuant to 13a-14 and 15d-14 of the Securities Exchange Act of 1934. |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned hereunto duly authorized.
| November 19, 2018 | By: | /s/ Bruce Schoengood |
Bruce Schoengood Chief Executive Officer (Principal Executive Officer) |
| By: | /s/ Bruce Schoengood | |
Bruce Schoengood Chief Financial Officer | ||
| (Principal Financial Officer) |
28
Exhibit 31.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULES 13A-14 AND 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Bruce Schoengood, certify that:
| 1) | I have reviewed this quarterly report on Form 10-Q of MEDIFIRST SOLUTIONS, INC.; |
| 2) | Based on my knowledge, this quarterly 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 quarterly report; |
| 3) | Based on my knowledge, the financial statements and other financial information included in this quarterly 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 quarterly report; |
| 4) | The registrant’s other certifying officer 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 quarterly 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 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and |
| d. | Disclosed in this quarterly report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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) 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 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 19, 2018 | /s/ Bruce Schoengood |
| Bruce Schoengood | |
| Chief Executive Officer and President | |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULES 13A-14 AND 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Bruce Schoengood, certify that:
| 1) | I have reviewed this quarterly report on Form 10-Q of MEDIFIRST SOLUTIONS, INC.; |
| 2) | Based on my knowledge, this quarterly 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 quarterly report; |
| 3) | Based on my knowledge, the financial statements and other financial information included in this quarterly 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 quarterly report; |
| 4) | The registrant’s other certifying officer 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 quarterly 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 quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this quarterly report based on such evaluation; and |
| d. | Disclosed in this quarterly report any changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter 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) 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 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 19, 2018 | /s/ Bruce Schoengood |
| Bruce Schoengood | |
| Chief Financial Officer | |
| (Principal Financial Officer) |
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 MEDIFIRST SOLUTIONS, INC. (“Company”) on Form 10-Q for the quarter ending September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (“Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his 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. |
| Date: November 19, 2018 | By: | /s/ Bruce Schoengood |
| Bruce Schoengood | ||
| Chief Executive Officer | ||
|
(Principal Executive Officer) (Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Nov. 19, 2018 |
|
| Document and Entity Information [Abstract] | ||
| Entity Registrant Name | Medifirst Solutions, Inc. | |
| Entity Central Index Key | 0001522704 | |
| Trading Symbol | MFSTD | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Document Type | 10-Q | |
| Document Period End Date | Sep. 30, 2018 | |
| Document Fiscal Year Focus | 2018 | |
| Document Fiscal Period Focus | Q3 | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | true | |
| Entity Ex Transition Period | false | |
| Entity Common Stock, Shares Outstanding | 2,889,851 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Common stock, par value | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 4,000,000,000 | 4,000,000,000 |
| Common stock, shares issued | 2,464,881 | 849,437 |
| Common stock, shares outstanding | 2,464,881 | 849,437 |
| Series A preferred stock | ||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
| Preferred stock, shares issued | 500,000 | 500,000 |
| Preferred stock, shares outstanding | 500,000 | 500,000 |
| Series B convertible preferred stock | ||
| Preferred stock, par value | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized | 50,000 | 50,000 |
| Preferred stock, shares issued | 8,000 | 8,000 |
| Preferred stock, shares outstanding | 8,000 | 8,000 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Statements of Operations [Abstract] | ||||
| Product sales, net | $ 20,000 | $ 4,550 | $ 29,995 | |
| Consulting Income | 11,500 | 11,500 | ||
| Total Revenues | 11,500 | 20,000 | 16,050 | 29,995 |
| Cost of goods sold | 705 | 379 | 1,058 | |
| Gross income | 11,500 | 19,295 | 15,671 | 28,937 |
| Expenses: | ||||
| Officer's compensation | 37,500 | 25,000 | 112,500 | 75,000 |
| Advertising and promotion | 940 | 35,503 | 3,533 | 61,385 |
| Computer and internet | 327 | 668 | 706 | 3,310 |
| Consulting fees | 51,084 | 87,400 | 133,287 | 350,600 |
| Professional fees | 22,884 | 23,823 | 99,878 | 198,143 |
| Rent | 6,522 | 6,222 | 18,866 | 13,866 |
| Travel | 1,337 | 642 | 6,776 | 9,823 |
| Lab testing | 8,175 | |||
| Dues and subscriptions | 478 | 1,186 | 1,938 | 3,450 |
| Other | 27,516 | 17,283 | 75,234 | 62,149 |
| Total Expenses | 148,588 | 197,727 | 452,718 | 785,901 |
| Net loss from Operations before other income, expenses | (137,088) | (178,432) | (437,047) | (756,964) |
| Other income and (expense) | ||||
| Interest expense | (285,047) | (62,003) | (575,882) | (337,154) |
| Interest income | 1 | 8,920 | 2 | 11,441 |
| Gain on extinguishment of debt | 11,775 | 11,775 | ||
| Change in fair value -derivatives | 370,247 | (1,113) | 230,144 | (293,384) |
| Net loss before provision for income tax | (40,112) | (232,628) | (771,008) | (1,376,061) |
| Provision for income taxes | ||||
| Net Loss | $ (40,112) | $ (232,628) | $ (771,008) | $ (1,376,061) |
| Loss per common share - Basic and fully diluted | $ (0.02) | $ (0.37) | $ (0.56) | $ (2.85) |
| Weighted average number of shares outstanding - Basic and fully diluted | 1,828,726 | 630,071 | 1,379,162 | 482,717 |
Nature of Operations and Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Nature of Operations and Summary of Significant Accounting Policies [Abstract] | |
| NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Medifirst Solutions, Inc. (“MSI” or the “Company”) was incorporated in Nevada in November 2010. The Company has not generated significant sales to date. The Company intends to have a diverse product line of consumer products. Since inception, the Company has been engaged in business planning activities, including researching the industry, identifying target markets for the Company’s products, developing the Company’s models and financial forecasts, performing due diligence regarding potential geographic locations most suitable for establishing the Company’s offices and identifying future sources of capital. At the present time, the Company is building products and affiliations in and related to the cosmetic healthcare industry. The company has started to hire a salesforce and sign distribution agreements in anticipation of future sales.
In July 2016, Medifirst, in response to its Premarket Notification 510(k) submission for “The Time Machine” Series Laser, received clearance from the U.S. Food and Drug Administration (“FDA”) to market its infrared Time Machine TTML-8102000 Laser Thermal Therapeutic Device.The Company is actively putting together a sales and distribution team to offer our lasers in the US and foreign markets.
Pursuant to a sale and purchase agreement dated August 19, 2015 between the Company and the Company’s president, the Company acquired 100% of the equity interests in Medical Lasers Manufacturer, Inc. (“MLM”) with the total purchase price of 20,000 shares of the Company’s common stock at $0.001 per share (or $20). The fair value of the acquired entity was $20.
The transaction was considered as a business acquisition and accordingly the acquisition method of accounting has been applied. MLM had no assets at the date of the business combination.
On April 18, 2018, the Company incorporated Concierge Concepts Rx (CCRx), in the State of New Jersey, to be an 80% majority-owned subsidiary. In consideration for his contribution of know-how, CCRx’s co-founder, Walter Molokie, CCRx has agreed to issue a 20% minority interest in CCRx to Mr. Molokie and/or his designees.On July 1, 2018 the Company acquired 100% of the equity interest in Concierge Concepts Rx, Inc. (“CCRx”) with the total purchase price of $20. The fair value of the acquired entity was $20 since the entity was just recently formed and had no identifiable assets or liabilities.The $20 cash payment is for the purchase of CCRx common stock upon acquisition. Medifirst launched Concierge Concepts Rx, a new division focused on the pharmaceutical industry.CCRx that provides unique specialty drug consulting and niche billing services to independent pharmacies and retail pharmacy chains. This division commenced operations in the quarter ended September 30, 2018 with limited activity and is included in the accompanying consolidated financial statements.
The Consolidated financial statements include the accounts of MSI and its wholly owned subsidiaries, MLM and CCRx. All material intercompany balances and transactions have been eliminated in consolidation.
The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s current technology.
Basis of Presentation
The unaudited interim consolidated financial statements include the accounts of Medifirst Solutions Inc. and its wholly owned subsidiary (Medical Laser Manufactures, Inc., (collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial position of the Company as of September 30, 2018, the consolidated results of its operations for the three-month period ended September 30, 2017 and 2018 and and nine-month period ended September 30, 2017 and 2018, and the consolidated cash flows for the nine-month periods ended September 30, 2017 and 2018 . The results of operations for the three-month period ended September 30, 2018 are not necessarily indicative of the operating results for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K for the year then ended.
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.
Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented.
Revenue Recognition
In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:
Revenue is recognized at the time the product is delivered or services are performed. Provision for sales returns are estimated based on the Company’s historical return experience. Revenue is presented net of returns.
Accounts Receivable
The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management’s estimate of the amount of receivables that will actually be collected. The Company has not recorded an allowance for doubtful accounts as of September 30, 2018 or December 31, 2017. There are no customer account receivables as of September 30, 2018 or December 31, 2017.
Inventory
Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. Finished goods inventory includes hand held laser devices, their carrying cases and goggles.
Equipment
Equipment, consisting of computer equipment, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, of five years.
Long-Lived Assets
The Company reviews long-lived assets, such as equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment loss will be recorded by the amount the carrying value exceeds the fair value of the asset.
Intangible Asset- Licensing Agreement
On March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The license provides with respect to the Technology, Licensor hereby grants to Licensee an irrevocable, nontransferable, royalty-bearing license, with a right of sublicense (the “License”), throughout the Territory in the Field of Use, whether or not under the Licensed Patent, to:
-use or submit or deliver the Technology and/or any Product to any regulatory body throughout the Territory for purposes of obtaining approval to make, Sell, offer for Sale, import, export and distribute the Technology or Products; and
- use or copy the Technology and/or any Product; and
- market, make, have made, Sell, offer for Sale, import and distribute Products; and
- sublicense the Technology; and
- prepare, or have prepared on its behalf, modifications, enhancements and/or derivative works of the Technology.
In connection with the license granted, Licensor hereby grants to Licensee a license to the Licensed Patents, whether now existing or hereafter acquired.
The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000,000 shares of the Company’s common stock. On January 31, 2018, $7,500 in principal on this note was satisfied by the conversion into 30,000,000 shares of the Company’s common stock. On March 2, 2018, another $7,500 in principal on this note was satisfied by the conversion into 30,000,000 shares of the Company’s common stock During the quarter ended June 30, 2018, the original noteholder assigned $20,000 in principal to an unrelated third-party. The principal balance on this note as of September 30, 2018 is $68,040 to the original noteholder and $17,900 in principal balance to the new unrelated third-party noteholder. Various principal paydowns and conversions to common stock took place on these two notes during the quarted ended September 30, 2018.
The last part of the consideration in this license agreement is the royalty payments which have not taken effect yet since they are based on sales for which the company has had only minimum thus far.
The licensing agreement is for a ten year period effective from October 1, 2015. The cost of the licensing agreement is being amortized over it’s ten-year period and charged to income on a straight-line basis.
Debt Issue Costs and Debt Discount
The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts are immediately expensed. Beginning in 2015, the Company adopted ASU 2015-03: Simplifying the Presentation of Debt Issuance Costs and has reflected the deferred financing costs as a direct reduction of the related debt (See table included in Note 5 to Consolidated Financial Statements).
Original Issue Discount
For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt.
Derivative Liabilities
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. The Company assessed its securities for purposes of determining the proper accounting treatment and valuation as set forth in the Statement of Financial Accounting Standard ASC 820–10–35–37 Fair Value in Financial Instruments; Statement of Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging Activities; and Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05.
In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once the derivative liabilities are determined, they are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Financial Instruments
The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and other accrued liabilities approximate their fair values.
Segment Information
The Company follows Accounting Standards Codification (“ASC”) 280, “Segment Reporting”. The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As described in Note 5 to the financial statements, as of September 30, 2018, convertible debt can be converted into approximately 768,596 shares of common stock.
Income Taxes
The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.
The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of September\ 30, 2018, and does not expect this to change significantly over the next 12 months.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date.
Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At June 30, 2018, the Company had $77,714 in cash equivalents.
Recent Pronouncements
In May 2014, FASB and IASB issued a new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principle of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Company to annual reporting periods beginning after December 15, 2017 (that is, a public organization is required to apply the new revenue standard beginning in the first interim period within the year of adoption). Additionally, the Board decided to permit public organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after December 15, 2016). A public organization should apply the new revenue standard to all interim reporting periods within the year of adoption.The Company has evaluated the impact of this ASU on the consolidated financial statements and has determined, at this time, the ASU’s implementation would not have a material impact on revenue recognition. See below - Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing
In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 is not expected to have any impact on the Company’s financial statement presentation or disclosures.
In April 2016, the FASB issued Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)”. The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
Company is currently an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act and the extended transition period applies to all aforementioned ASUs, until such time as the Company is no longer an “emerging growth company”. |
Property, Plant and Equipment (Net) |
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| PROPERTY, PLANT AND EQUIPMENT (NET) | Note 2. PROPERTY, PLANT AND EQUIPMENT (NET)
Equipment is recorded at cost and consisted of the following at September 30, 2018 and December 31, 2017:
Depreciation expense was $480 and $480, for the nine months ended September 30, 2018 and 2017 respectively. |
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Due to Related Party |
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| Due to Related Party [Abstract] | |
| DUE TO RELATED PARTY | Note 3. DUE TO RELATED PARTY
The Company was indebted to a related party through common management in the amount of $8,921 at September 30, 2018 and December 31, 2017, respectively. The loan bears no interest and is payable on demand. See Note 10 for additional related party transactions. |
Loans Payable - Stockholders |
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Sep. 30, 2018 | |
| Loans Payable - Stockholders [Abstract] | |
| LOANS PAYABLE - STOCKHOLDERS | Note 4. LOANS PAYABLE - STOCKHOLDERS
During the periods ended September 30, 2018 and 2017 a stockholder of the Company advanced the Company $-0- and $-0- respectively. The loan has a balance of $8,955 at September 30, 2018 and December 31, 2017, respectively. The loan bears no interest and is payable on demand.
In December 2012, the Company issued a promissory note to a stockholder in the amount of $5,000 with interest at 10% per annum. Principal and interest were due and payable on June 2, 2013. In April 2014, the note was amended to provide the note holder with the option to convert the note to the Company’s common stock at $0.0001 per share. Subsequently, in 2014, in a private transactions, the note holder transferred $2,500 of note principal to third parties and the new holders converted their holdings into 2,500 shares of the Company’s common stock. During 2015, the original note holder transferred an additional $2,400 of note principal to third parties who converted their holdings into 2,400 shares of the Company’s common stock. At September 30, 2018 and December 31, 2017, the loan balance was $100 and $100, respectively.
At September 30, 2018 and December 31, 2017, the Company was indebted to a stockholder in the amount of $1,000 and $1,500, respectively. The loan has an interest rate of 26.7%. In February 2017 the note was sold to another investor and that noteholder converted $500 in principal into 5,000 shares of common stock. Principal and accrued interest were due and payable on January 1, 2014.
In February 2016, the Company issued a promissory note to a stockholder in the amount of $7,000 with interest at the rate of 6% per annum. On September 6, 2016 the note holder converted the entire principal balance and accrued interest into common stock and therefore at September 30, 2018 there is no principal balance remaining on the note. |
Convertible Notes Payable |
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| CONVERTIBLE NOTES PAYABLE | Note 5. CONVERTIBLE NOTES PAYABLE
Note Payable-BS
In March 2011, the Company issued $800 aggregate principal amount of 6% convertible notes due in January 2012. Interest on the notes accrue at the rate of 6% per annum and are payable when the notes mature. The notes matured prior to conversion but have not been repaid. Interest continues to accrue at the rate of 6% per annum.
The holder of one of the notes converted $110 of note principal into 1,100 shares of common stock as follows:
In August 2013, in a private transaction, the same note holder transferred $330 of the remaining note principal plus $55 in accrued interest to a third party.
In August 2013, in a private transaction, the new note holder transferred $5 of the remaining note principal to a third party who then converted the note into 50 shares of common stock.
In September 2013, the new note holder converted $100 of note principal into 1,000 shares of common stock.
In September 2013, in a private transaction, the new note holder transferred $35 of the remaining note principal to a third party who then converted the note into 350 shares of common stock.
In November and December 2013, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows:
In March and April 2014, the new note holder converted an additional $90 of note principal into 900,000 shares of common stock as follows:
Subsequent to these conversions there remains $125 in note principal outstanding at September 30, 2018.
Note Payable-SF
In July 2013, the holder of the second note converted $240 of note principal into 400 shares of the Company’s common stock at $0.0006 per share. At September 30, 2018 and December 31 2017, the note had a remaining principal balance of $60 and $60, respectively.
At any time on or after the maturity date, the holders of the notes, have the option of converting any of the unpaid principal and interest into the Company’s common stock. The notes plus any accrued but unpaid interest are convertible at the rate of $0.0001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 246,242 shares at September 30, 2018 and 84,859 shares at December 31, 2017.
Note Payable-RK
In May 2012, the Company issued a $25,000 6% per annum note that matured in November 2012. In December 2012 the note was amended to be a convertible note. Interest on the note accrues interest at 6% per annum and is payable when the note matures.
The holder of the $25,000 note had the option of converting it at any time prior to maturity. The note plus any accrued but unpaid interest were convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock.
The holder of the note converted $1,010 of note principal into 1,010 shares of common stock as follows:
In July 2013, the Company retired $14,000 of note principal in payment for consulting services provided to the note holder.
In July 2013, the note holder converted $300 of note principal into 300 shares of the Company’s common stock.
In July 2013, in a private transaction, the note holder transferred the remaining note principal balance of $9,690 to a third party (See Note Payable-NW below).
Note Payable-NW
After receiving the transfer of the principal balance of $9,690 in July 2013 in the private transaction noted in Note Payable-RK above, in August 2013, in a private transaction, the new note holder of the aforementioned note transferred $4,475 of principal to a stockholder of the company.
In October 2013, the note holder converted $400 of note principal into 400 shares of the Company’s common stock at $0.001 per share.
In October 2014, the note holder converted $1,100 of note principal into 1,100 of the Company’s common stock.The note holder has the option of converting the balance at any time with the approval of the Board of Directors. The note plus any accrued but unpaid interest are convertible at the rate of $0.001 per share at the time of conversion up to a maximum of 9.99% of the then issued and outstanding common stock, or 246,242 shares at September 30, 2018 and 84,858,757 shares at December 31, 2017.
In August 2016, the note holder converted $3,000 of note principal into 3,000,000 shares of the Company’s common stock. At September 30, 2018 and December 31, 2017, the remaining principal balance on this portion of the note is $715 and $715 respectively.
Note Payable-MC #2
In April 2015, the Company issued a $3,000 8% per annum note that matures in October 2015. The holder of the note has the right to convert the principal into shares of the Company’s common stock at any time 180 days after the closing date at $0.0001 per share. Interest on the note accrues interest at 8% per annum and is payable when the note matures. During January 2017, the current noteholder converted $1,100 in principal balance into 11,000 shares of common stock. During the same period, the current noteholder transfered $600 of the remaining principal balance to another investor who then converted the entire principal balance he received into 6,000 shares of common stock. During April 2017, the current notholder converted $410 of remaining principal into 6,000 shares of common stock. There remains $890 in principal balance at September 30, 2018 with the current noteholder and $890 in principal balance with the original noteholder at December 31, 2017.
Convertible Note Payable-LGC (8%)
On January 7 2016, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of convertible redeemable notes in aggregate principal amount of $251,803. On January 7, 2016, the Company and the Investor conducted the first closing under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $105,000 containing an original issue discount of $20,000 (the “$105K Note”); and (ii) a convertible redeemable note in principal amount of $50,000 (the “$50K Note” and together with the $105K Note, the “Notes”). Under the Purchase Agreement, on March 15, 2016 and June 15, 2016, the Company and the Investor conducted additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $50,000 and $46, 803, respectively (see Convertible Notes Payable-LGC (8%) BEN below). During the quarter ended March 31, 2017 the noteholder converted the entire principal balance into 62,068 shares of common stock and therefore there is no principle balance outstanding at September 30, 2018 and December 31, 2017.
Convertible Notes Payable-LGC (8%) BEN
In consideration for the issuance of the $105K Note, on January 13, 2016, the Company received net proceeds (after deducting the original issue discount and legal fees) in the amount of $75,697. In consideration for the issuance of the $50K Note, the Investor issued to the Company a $50,000 fully-collateralized secured promissory note (the “Investor Note”), pursuant to which the Investor agreed to pay the Company $50,000 on or before April 30, 2016. The Notes, which are due on January 7, 2017, bear interest at the rate of 8% per annum. Subject to a beneficial ownership limitation equal to 9.99%, principal and interest on the Notes is convertible into shares of the Company’s common stock (“Common Stock”) at a conversion price equal to 55% of the lowest trading price of Common Stock during the 20 trading day period prior to conversion.
In accordance with the terms of the Purchase Agreement, the investor and the Company closed on the two outstanding notes ($50,000 and $46,803) in May and June 2016 when the Company received the cash funding. During April 2017 the noteholder converted the entire principal balance of the $50,000 note into common stock of the Company. During June 2017 the noteholder converted $16,000 of the remaining principal of the $46,803 note into common stock of the Company. In July and September 2017 the noteholder converted the remaining $30,803 of the note’s principal balance into common stock. As a result, there is no principal balance remaining on either note as of September 30, 2018 and December 31, 2017.
Convertible Notes Payable-SO (8%)
On May 2, 2016, the Company issued to an Investor a convertible redeemable note in the principal amount of $57,750 (“the Note”). The Note, which matures on May 2, 2017, pays interest at the rate of 8% per annum. The note contains a 10% original issue discount. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 55% of the lowest trading price for the twenty prior trading days including the date of conversion. During the quarter ended March 31, 2017 the noteholder converted $32,298 of the principle balance into 23,490 shares of common stock thereby leaving a principal balance of $25,452 on the note at December 31, 2017. During the first quarter of 2018, the noteholder converted $23,000 of the principle balance into 122,727 shares of common stock thereby leaving a principal balance of $2,452 on the note at June 30, 2018. During the quarter ended September 30, 2018, the noteholder converted the remaing balance of the note into 148,316 shares on common leaving no balance due on the note as of September 30, 2018. There is $12,896 in accrued interest and penalty assessments on this note as of September 30, 2018 which is included in accrued expenses payable on the balance sheet,
Convertible Notes Payable-BBCG (9%)
On October 11, 2016, the Company issued to an Investor a convertible note in the principal amount of $157,895 (“the Note”). The Note, which matures on March 27, 2018, pays interest at the rate of 9% per annum. The note contains an original issue discount in the amount of $7,895. The holder of the note is entitled, at its option beginning on the 6 month anniversary, to convert all or any of the principal face amount of the Note then outstanding into shares of the Company’s common stock at the price equal to 57.5% of the lowest trading price for the twenty prior trading days including the date of conversion. During April and June of 2017, the noteholder converted the entire remaining principal balance of the note into common stock of the Company. There is no principal balance remaining on the note as of September 30, 2018 and December 31, 2017.
Convertible Notes Payable - Funding (8%)
On May 1 2017 ,the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an accredited investor (the “Investor”) for the sale of 8 convertible redeemable notes in aggregate principal amount of $1,012,500. On May 1st, 2017 and June 2, 2017, the Company and the Investor conducted the first two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor (i) a convertible redeemable note in principal amount of $131,250 (the “$131K Note”) ; and (ii) a convertible redeemable note in principal amount of $125,000 (the “$125K Note”). On July 10, 2017 and August 7, 2017, the Company and the Investor conducted the second two closings under the Purchase Agreement, pursuant to which the Company issued to the Investor two convertible redeemable notes each in the principal amount of $125,000; Under the Purchase Agreement, on January 1, 2018, February 2, 2018, March 10 ,2018 and April 7, 2018 the Company and the Investor expected to conduct additional closings for the sale and purchase of additional notes having the same terms as the Notes in principal amounts equal to $131,250, $125,000, $125,000 and $125,000 respectively (the “back-end notes”). However, all these “back-end notes” were cancelled in early 2018 and will not fund. Accordingly, all the “back-end” notes were removed from the books at December 31, 2017 along with the associated investor notes receivable. In addition, all previously accrued interest expense and interest income as been removed on these “back-end notes” for the period ended December 31, 2017.
In consideration for the issuance of the $131K Note and the $125K Note, on May 1, 2017 and June 2, 2017 and for the two $125k Notes on July 10, 2017 and August 7, 2017, the Company received net proceeds (after deducting $25,000 in legal fees) in the amount of $481,250. In consideration for the issuance of the $131K and the three $125k Notes, the Investor issued to the Company a $131,250 fully-collateralized secured promissory note and three $125,000 fully-collateralized secured promissory notes (the “Investor Notes”), pursuant to which the Investor agreed to pay the Company $131,250 and $375,000 on or before January 1, 2018, February 2, 2018, March 10, 2018 and April 7, 2018 respectively. These Notes (often referred to as “back-end Notes”), bear interest at the rate of 8% per annum. However, all these “back-end notes” were cancelled in early 2018 and will not fund. According, all the “back-end” notes were removed from the books at December 31, 2017 along with the associated investor notes receivable. In addition, all previously accrued interest expense and interest income as been removed on these “back-end notes” for the period ended December 31, 2017.
The two notes issued May 1,2017 ($131,250) and June 2, 2017 ($125,000) became convertible on October 28, 2017 and December 4, 2017 respectively and required derivative treatment at that time. The embedded derivative was bifurcated and accounted for separately along with the derivative discount. The derivative liability is marked-to-market each quarter with the resulting gain or loss valuation being reported in the statement of operations.
During the quarter ended December 31, 2017 (after the six-month waiting period) the holder of the original note in the principal amount of $131,250 converted $21,500 and $15,350 of the note’s principal balance into 35,058 and 39,714 shares of the Company’s common stock, respectively. The principal balance remaining on this convertible note is $94,400 as of December 31,2017. During the quarter ended March 31, 2018 the holder of the original note converted, through four separate conversion transactions, a total of $38,870 of the note’s principal balance into total of 193,384 shares of the Company’s common stock. During the quarter ended June 30, 2018 the holder of the original note converted $10,030 of the note’s principal balance into total of 62,015 shares of the Company’s common stock.During the quarter ended September 30, 2018 the holder of the original note converted $2,200 of the note’s principal balance into total of 69,439 shares of the Company’s common stock.The principal balance remaining on this convertible note is $43,300 as of September 30,2018.
Convertible Notes Payable - JR (5%)
On August 2, 2017 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $50,000 . The note matures on August 2, 2018 and bears interest at 5%. The note holder has has the right at any time on or after the day that is six months from August 2, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock at a fixed price of .003 per share. The entire principal balance of $50,000 is outstanding as of September 30, 2018 and December 31, 2017
Convertible Notes Payable - MLM (10%)
As more fuly described in Note 1 to the financial statements, on March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. During the quarter-ended June 30, 2017, $18,986 in accrued interest was satisfied through the issuance of 17,273 shares of the Company’s common stock. On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. At such time the Note was valued with it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock leaving a balance on the note of $133,750 at December 31, 2017. During the quarter-ended March 31, 2018, $15,000 in principal on this note was satisfied by the conversion into 60,000 shares of the Company’s common stock. During the quarter-ended June 30, 2018, $7,500 in principal on this note was converted into 30,000 shares of the company’s common stock. In addition, on May 26, 2018, the original note holder sold $20,000 in principal to an unrelated third-party investor with the sames terms as the original note thereby leaving a balance on the original note of $80,250 at June 30, 2018 and a balance of $20,000 to the new third-party noteholder. During the nine months-ended September 30, 2018 the Company made cash paydowns on the note in the amount of $11,550 and in addition, the noteholder converted $2,660 in principal balance into 140,000 shares of common stock. The ending principal balnce on this note at September 30, 2018 is $68,040 to the original noteholder. During the quarter-ended September 30, 2018 the unrelated third-party noteholder converted $2,100 in principal balance into 70,000 shares of the Company’s common stock thereby leaving a principal balance to this unrealted noteholder in the amount of $17.900.
Convertible Notes Payable - LG (8%) (Notes 5 & 6)
On January 25, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $78,750. The note matures on January 25, 2019 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from January 25, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $78,750 is outstanding as of September 30, 2018. The embedded derivative and related derivative discount on this convertible note, although not convertible during the six months ended June 30, 2018, has nonetheless been valued and recorded on the books as of April 1, 2018 in accordance with ASC 815.
On June 4, 2018 the Company issued a convertible note payable (promissory note) to an investor in the principal amount of $52,500. The note matures on June 4, 2019 and bears interest at 8%. The note holder has has the right at any time on or after the day that is six months from June 4, 2018 to convert any part or all of the outstanding unpaid principal balance into shares of the Company’s common stock. The entire principal balance of $52,500 is outstanding as of September 30, 2018. The embedded derivative and related derivative discount on this convertible note, although not convertible during the six months ended June 30, 2018, has nonetheless been valued and recorded on the books as of June 4, 2018 in accordance with ASC 815.
The Company’s convertible notes payable and the related derivative liabilities, derivative discount, deferred financing costs and original-issue discount are presented in the financial statements at September 30, 2018 as follows:
As of September 30, 2018, the convertible notes payable can be converted into approximately 768,596 shares of common stock. |
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| Derivatives and Fair Value Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVES AND FAIR VALUE INSTRUMENTS | Note 6. DERIVATIVES AND FAIR VALUE INSTRUMENTS
The Company applied paragraph 815-10-05-4 of the FASB Accounting Standards Codification to the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016, the 9% Convertible Note payable issued October 1, 2016 and the 8% Convertible Notes Payable issued January 25, 2018 and June 4, 2018. Based on the guidance in paragraph 815-10-05-4 of the FASB Accounting Standards Codification the Company concluded these instruments were required to be accounted for as derivatives on issuance date. The Company records the fair value of the Convertible Notes Payable and certain warrants that are classified as derivatives on issuance date and the fair value changes on each reporting date reflected in the consolidated statements of operations as “Change in Fair Value - derivatives.” These derivative instruments are not designated as hedging instruments under paragraph 815-10-05-4 of the FASB Accounting Standards Codification and are disclosed on the balance sheet under Derivative Liabilities.
The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 Pricing inputs that are generally unobservable inputs and not corroborated by market data.
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepayments and other current assets, accounts payable, and accrued expenses, approximate their fair values because of the short maturity of these instruments.
The Company’s Level 3 financial liabilities consist of the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016 and May 1, 2017 and June 2, 2017 and July 10, 2017 and August 15, 2017, the 9% Convertible Note payable issued October 1, 2016, The 8% Convertible note payable issued January 25, 2018 and the 8% Convertible note payable issued June 4, 2018 for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. We have valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation consultant, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financings, volatility, and holder behavior as of issuance and June 30, 2018. The primary assumptions include: projected annual volatility of 145%-240%; the follow-on securities purchase option; the conversion feature as a percentage of Market; automatic/conditional conversions; market price trigger events.
As of September 30, 2018 the Company’s derivative financial instruments included:
1) Embedded derivatives associated with certain of the Company’s unsecured convertible notes payable. The Company’s 5% convertible notes payable and 8% convertible notes payable and 9% convertible note payable issued to unrelated investors is a hybrid instrument, which warrants separate accounting as a derivative instrument. The embedded derivative feature has been bifurcated from the debt host contract, referred to as the Derivative Liability, which resulted in a reduction of the initial carrying amount (as unamortized discount) of the Convertible Notes Payable. The unamortized discount is amortized to interest expense using the effective interest method over the life of the Notes. The embedded derivative feature includes the conversion feature within the notes and an early redemption option. The compound embedded derivatives within the convertible notes have been recorded at fair value at the date of issuance; and are marked-to-market each reporting period with changes in fair value recorded to the Company’s statement of operations as Change in fair value of derivative liabilities.
The 5% Convertible Note Payable and the 8% Convertible Notes Payable and the 9% convertible note payable are valued at September 30,2018. The following assumptions were used for the valuation of the embedded derivative:
- The post reverse split (1,000:1) stock price of $0.40 increased to $0.525 in this period (basis for the variable conversion price) would fluctuate with the Company projected volatility;
- An event of default for the Convertible Note would occur 0% of the time, increasing 1.00% per month to a maximum of 5.0%;
- Alternative financing for the Convertible Note would be initially available to redeem the note 0% of the time and increase monthly by 1% to a maximum of 10%;
- Capital raising events (a single financing at 1 month from the valuation date) are a factor for the VV Convertible Note. The full reset events projected to occur based on future stock issuance (single event) resulting in a reset exercise price.
- The monthly trading volume would average $478,108 (rounded) as of 9/30/2018 and would increase at 5% per month;ownership limits conversion across LG’s notes based on 4.99% with shares outstanding increasing monthly by 1%.
- The variable conversion price of 50% to 58% over 3 to 20 trading days would have effective rates of 41.52% to 56.23%;
- The Note Holders would automatically convert the notes early (and not hold to maturity) with variable conversion prices and full ratchet resets if the registration was effective and not in default;
- The projected annual volatility for each valuation period was based on the historical volatility of the company:
The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuation.
The Company’s derivative liabilities on convertible notes payable are presented at market value in the financial statements at September 30, 2018 as follows:
The Company’s mark-to-market fair value adjustment ((income)/expense) for the quarter ended September 30, 2018 totaled ($370,247). |
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Stockholders' Equity |
9 Months Ended |
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Sep. 30, 2018 | |
| Stockholders' Equity [Abstract] | |
| STOCKHOLDERS' EQUITY | Note 7. STOCKHOLDERS’ EQUITY
Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented. As a result of the aforementioned reverse stock split, additional paid-in-capital was increased by $140,169 and $84,861 as of September 30, 2018 and December 31, 2017 respectively on the balance sheet with a corresponding decrease in the par value of common stock issued as of the same dates.
The Company has authorized 4,000,000,000 shares of common stock with a par value of $0.0001 per share. Effective September 19, 2017, the Company amended its Articles of Incorporation to increase its authorized Common Stock to 4,000,000,000 shares. There were 2,464,881 and 849,437 shares of common stock issued and outstanding at September 30, 2018 and December 31, 2017, respectively.
The Company has authorized 1,000,000 shares of Series A preferred stock with a par value of $0.0001 per share. At September 30, 2018 and December 31, 2017, there were 500,000 shares of Series A preferred stock issued and outstanding respectively. The preferred stock has preferential voting rights of 2,000 votes per outstanding share.
The Company has authorized 50,000 shares of Series B convertible preferred stock with a par value of $0.0001 per share. At December 31, 2016 there were 39,000 shares issued of which 12,900 shares of Series B preferred were converted into common stock in accordance with the terms of the Series B Preferred stock. Therefore; there were 26,100 shares outstanding at December 31, 2016. The Series B preferred stock has no voting rights. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred shares were converted into common stock in accordance with the terms of the Series B preferred stock. As of result there were 8,000 shares of Series B preferred shares outstanding at September 30, 2018. The holders of the Series B convertible preferred stock have the right to convert the same into Common Stock of the Corporation at the ratio of one (1) share of Series B Convertible Preferred for five hundred (500) shares of Common Stock.
During the quarter ended March 31, 2017, the Company issued an aggregate 43,000 shares of common stock at prices ranging from $0.0028 to $0.0094 per share for services provided to the Company.
During the quarter ended March 31, 2017, the Company issued an aggregate 112,498 shares of common stock at prices ranging from $0.0001 to $0.0028 per share as partial conversion of notes.
During the quarter ended March 31, 2017, the Company issued an aggregate 9,050 shares of common stock for conversion of 18,100 shares of Preferred Series B stock.
During the quarter ended June 30, 2017, the Company issued an aggregate 33,000 shares of common stock at prices ranging from $0.0022 to $0.0028 per share for services provided to the Company.
During the quarter ended June 30, 2017, the Company issued an aggregate 177,072 shares of common stock at prices ranging from $0.0001 to $0.0028 per share as partial conversion of notes and accrued interest.
During the quarter ended June 30, 2017, the Company issued an aggregate 450,000 shares of Preferred Series A stock at par of $.0001.
During the quarter ended September 30, 2017, the Company issued an aggregate 41,000 shares of common stock at prices ranging from $0.0002 to $0.0021 per share for services provided to the Company.
During the quarter ended September 30, 2017, the Company issued an aggregate 62,196 shares of common stock at prices ranging from $0.00065 to $0.00099 per share as partial conversion of notes and accrued interest.
During the quarter ended December 31, 2017, the Company issued an aggregate 71,000 shares of common stock at prices ranging from $0.0006 to $0.0011 per share for services provided to the Company.
During the quarter ended December 31, 2017, the Company issued an aggregate 74,772 shares of common stock at prices ranging from $0.0004 to $0.0006 per share as partial conversion of notes and accrued interest.
During the quarter ended March 31, 2018, the Company issued an aggregate 18,000 shares of common stock at prices ranging from $0.0006 to $0.0011 per share for services provided to the Company.
During the quarter ended March 31, 2018, the Company issued an aggregate 376,111 shares of common stock at prices ranging from $0.0004 to $0.0006 per share as partial conversion of notes and accrued interest.
During the quarter ended June 30, 2018, the Company issued an aggregate 67,500 shares of common stock at prices ranging from $0.0004 to $0.0004 per share for services provided to the Company.
During the quarter ended June 30, 2018, the Company issued an aggregate 92,015 shares of common stock at prices ranging from $0.000174 to $0.00025 per share as partial conversion of notes and accrued interest.
During the quarter ended September 30, 2018, the Company issued an aggregate 634,053 shares of common stock at prices ranging from $0.0525 to $0.18 per share for services provided to the Company.
During the quarter ended September 30, 2018, the Company issued an aggregate 427,755 shares of common stock at prices ranging from $0.0190 to $0.1173 per share as partial conversion of notes and accrued interest. |
Commitments and Contingencies |
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| Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | Note 8. COMMITMENTS AND CONTINGENCIES
The Company currently has three office locations. It rents offices on a month-to-month basis from the Company’s President and stockholder for $525 per month which amounted to $1,575 or the quarter ended September 30, 2018. The Company also has ready-to-go office space available to be used for meetings etc. at a nominal cost of approximately $100 per month with no commitment. The cost of this space for the quarter ended September 30, 2018 was $297. On September 12th 2016 the Company entered into a commercial lease agreement for office premises at an original cost of $650 per month for a one-year term with the option to renew for one extended term of three years. In July 2017 the Company leased additional space at this location thereby increasing the monthly rent to $1,550. The cost of this space for the quarter ended September 30, 2018 was $4,650. A new lease was signed in March 2018 for the same space. The following are the minimum required lease payments under the lease for the next four years:
Total rent expense for the nine months ended September 30, 2018 and 2017 was $18,866 and $13,866 respectively.
The Company has agreements with consultants for ongoing services to be rendered with the following commitments:
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Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Income Taxes [Abstract] | |
| INCOME TAXES | Note 9. INCOME TAXES
The Company accounts for income taxes under the asset and liability approach. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
The Company’s deferred tax asset consists primarily of carryforward net operating losses (NOLs). The Company believes that, at this time, it is more likely than not that the benefit of the NOLs will not be realized. As of September 30, 2018, the Company had provided a valuation allowance to fully reserve its net operating loss carryforwards and other items giving rise to deferred tax assets, primarily as a result of anticipated net losses for income tax purposes and has therefore recorded a full valuation allowance. |
Related Party Transactions |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | Note 10. RELATED PARTY TRANSACTIONS
In August 2015, the Company acquired 100% of the issued and outstanding common stock of Medical Lasers Manufacturer, Inc. (“MLM”) from a stockholder and officer of the Company for 20,000 common shares which were valued at $0.001 per share. All intercompany transactions were eliminated during consolidation.
As more fully described in Notes 3 and 4 to the Consolidated Financial Statements, the Company owed the following amounts to related parties as of the following:
The company has entered into an employment agreement with its Chief Executive Officer (CEO) for the five year period beginning January 1, 2012. The agreement provides for base compensation, annual bonus, benefits, vacation and reimbursements. Under this agreement, the base compensation of the Company’s CEO is $100,000 per annum which has been accrued for the years ended December 31, 2015 and 2014. In mid-year 2016 the Company commenced payroll and is paying the CEO for current wages in this manner. During the year ended December 31, 2016, $18,974 in accrued compensation was paid. Accrued compensation in the amount of $30,000 was converted to shares of common stock during 2015. In the quarter ended June 30, 2017, $45 in accrued CEO compensation was converted to Series A Preferred shares. During the quarter ended September 30, 2017, $25,500 in accrued compensation was paid to the CEO. Effective October 1, 2017, the employement agreement between the Company and it’s CEO was amended to increase the annual salary to $150,000. During the quarter ended December 31, 2017 $44,673 in accrued compensation was paid to the CEO. As of September 30, 2018, the company owes accrued compensation to it’s CEO in the amount of $390,283.
In August 2015, MLM acquired a trademark from the son of the Company’s President for $20,000 due 90 days from the date of acquisition. During the quarter ended June 30, 2016, the Company issued 3,400 shares of Preferred Series B stock as settlement on this liability. Due to the uncertainty of future cash flows from the trademark management has deemed it to be impaired and recorded an impairment expense of $20,000 at September 30, 2015.
In August 2015, subsequent to the date the Company acquired MLM, MLM purchased $50,000 in inventory from the son of the Company’s President. The inventory consisted of 20 hand-held laser devices. During the quarter-ended March 31, 2016, 10,000 shares of Series B Preferred stock were issued in settlement of this liability.
As more fully described in Note 1-Intangible Asset-Licensing Agreement, on March 8th 2016 (with an effective date of October 1, 2015) the Company entered into a Licensing Agreement with a Florida Corporation (Licensor) that is owned by a related party. The Company issued 25,000 shares of Series B Preferred stock to the Licensor as partial consideration for the Licensing agreement plus a $150,000 promissory note to the Licensor for the balance of the consideration. During the quarter-ended March 31, 2016, 3,400 shares of Series B Preferred stock were converted into 1,700 shares of common stock in accordance with the terms of the Series B Preferred stock. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred stock was converted into 9,050 shares of common stock in accordance with the terms of the Series B Preferred stock.
As more fuly described in Note 1 and Note 5 to the financial statements, $18,986 in accrued interest on the $150,000 note was satisfied through the issuance of 17,273 shares of the Company’s common stock.On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. At such time the Note was valued with it’s embedded derivative and discount. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000 shares of the Company’s common stock. During the quarter ended March 31, 2018, $15,000 in principal on this note was satisfied by the conversion into 60,000 shares of the Company’s common stock. During the quarter ended June 30, 2018, $7,500 in principal on this note was satisfied by the conversion into 30,000 shares of the Company’s common stock. During the quarter ended June 30, 2018 the original related-party noteholder sold $20,000 in principal on this note to an unrelated third party investor thereby leaving $80,250 in principal balance due to the related party original noteholder and $20,000 in principal due to the unrelated third-party investor. During the quarter-ended September 30, 2018 the Company made cash paydowns on the note in the amount of $11,550 and in addition, the noteholder converted $2,660 in principal balance into 140,000 shares of common stock. The ending principal balnce on this note at September 30, 2018 is $68,040 to the original noteholder. During the quarter-ended September 30, 2018 the unrelated third-party noteholder converted $2,100 in principal balance into 70,000 shares of the Company’s common stock thereby leaving a principal balance to this unrealted noteholder in the amount of $17.900. |
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Basis of Reporting - Going Concern |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Basis of Reporting - Going Concern [Abstract] | |
| BASIS OF REPORTING - GOING CONCERN | Note 11. BASIS OF REPORTING - GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.
The Company has incurred losses from inception of approximately $4,436,137 which, among other factors, raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon management’s plans to raise additional capital from the sale of stock and to receive additional financing and to commence sales of it’s flagship product and create revenue. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern. Management believes the Company’s present cash and cash equivalents will not enable it to meet its obligations for twelve months from the date these financial statements are available to be issued unless the Company received additional funding. |
Stock Compensation - Equity Incentive Plan |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Stock Compensation - Equity Incentive Plan [Abstract] | |
| STOCK COMPENSATION - EQUITY INCENTIVE PLAN | Note 12. STOCK COMPENSATION - EQUITY INCENTIVE PLAN
In July 2016, the Company adopted the Medifirst Solutions, Inc. 2016 Equity Incentive Plan (the “Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 20,000,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.
On December 6th, 2016 the company amended the terms of the Plan and filed an S-8 Registration Statement with the Securities and Exchange Commission (“SEC”) increasing the number of shares permitted to be issued under the Plan to 32,000.
During the quarter ended March 31, 2017, the Company issued from the Plan a total of 27,100 shares of common stock to non-employees for services rendered. As of March 31, 2017 there is a balance of -0- shares available for future issuance under the Medifirst Solutions, Inc. 2016 Equity Incentive Plan.
In May 2017, the Company adopted the Medifirst Solutions, Inc. 2017 Equity Incentive Plan (the “2017 Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 125,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company. During the year ended December 31, 2017, the Company issued from the Plan 108,000 shares to non-employees for services rendered. As of December 31, 2017 there is a balance of 17,000 shares available for future issuance under the Medifirst Solutions, Inc. 2017 Equity Incentive Plan.
In January 2018, the Company adopted the Medifirst Solutions, Inc. 2018 Equity Incentive Plan (the “2018 Plan”) pursuant to which the Company may grant stock options, restricted stock purchase offers and other equity-based awards up to an aggregate of 175,000 shares of common stock. The Plan is designed to retain directors, executives and selected employees and consultants and reward them for making contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company.
During the quarter ended March 31, 2018, the Company issued from the 2018 Plan a total of 4,000 shares of common stock to non-employees for services rendered. As of March 31, 2018 there is a balance of 188,000 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.
During the quarter ended June 30, 2018, the Company issued from the 2018 Plan a total of 17,500 shares of common stock to non-employees for services rendered. As of June 30, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan.
During the quarter ended September 30, 2018, there were no issuances from the 2018 Plan and therefore as of September 30, 2018 there is a balance of 170,500 shares available for future issuance under the Medifirst Solutions, Inc. 2018 Equity Incentive Plan. |
Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | Note 13. SUBSEQUENT EVENTS
Subsequent to the quarter ended September 30, 2018 the Company issued an aggregate 424,970 shares of Common Stock upon conversions of an aggregate principal amount equal to $8,010 outstanding convertible promissory notes and $478 in accrued interest.
On October 5, 2018, the Company entered into a Securities Purchase Agreement with an investor to issue a convertible promissory note in the amount of $58,000. The note pays 8% interest per annum and matures on April 1, 2020. After six months from the date of the note, the investor may convert the principal balance into common stock of the Company. On October 5th 2018, the cash funding was received by the Company and the convertible note was issued.
Designation and Issuance of Series C Preferred Stock:
On October 12, 2018, the Company with the State of Nevada a certificate of designation (the “Certificate of Designation”) pursuant to which the Company designated a new class of preferred stock as the Company’s Series C Convertible Preferred Stock (“Series C Preferred”) having a $100.00 stated value per share (“Stated Value”). The Company designated 5,000 shares of Series C Preferred. Subject to a beneficial ownership limitation equal to 4.99%, each share of Series C Preferred is convertible into 25,000 shares of the Common Stock. Holders of Series C Preferred are not entitled to receive dividends. In the event of any liquidation, dissolution or winding up of the Company, holders of Series C Preferred are entitled to distributions from the assets in an amount equal to, or if less, on a prorated basis, the Stated Value per share of Series C Preferred held by such holders. Holders of Series C Preferred are entitled to vote, on an as-converted basis, together with holders of Common Stock on all actions to be taken by the shareholder of the Company.
On October 12, 2018, the Company satisfied various obligations owed to the Company’s medical director, Dr. Rubin, by issuing fifteen shares of Series C Preferred to Dr. Rubin. |
Nature of Operations and Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Nature of Operations and Summary of Significant Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation
The unaudited interim consolidated financial statements include the accounts of Medifirst Solutions Inc. and its wholly owned subsidiary (Medical Laser Manufactures, Inc., (collectively referred to as the “Company”). All material intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial position of the Company as of September 30, 2018, the consolidated results of its operations for the three-month period ended September 30, 2017 and 2018 and and nine-month period ended September 30, 2017 and 2018, and the consolidated cash flows for the nine-month periods ended September 30, 2017 and 2018 . The results of operations for the three-month period ended September 30, 2018 are not necessarily indicative of the operating results for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K for the year then ended.
Some items in the prior year financial statements were reclassified to conform to the current presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.
Effective July 23, 2018, the Company effected a 1-for-1,000 reverse stock split of its issued and outstanding common stock. The number of shares of common stock issued and outstanding post- reverse stock split is 1,404,073. All fractional shares have been rounded up to the next whole share. There is no reduction in the number of the Company’s shareholders of record. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the reverse stock split as if such reverse stock split occurred on the first day of the first period presented. |
| Revenue Recognition | Revenue Recognition
In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:
Revenue is recognized at the time the product is delivered or services are performed. Provision for sales returns are estimated based on the Company’s historical return experience. Revenue is presented net of returns. |
| Accounts Receivable | Accounts Receivable
The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers, maintaining an allowance for potential credit losses. Accounts receivable is reported net of the allowance for doubtful accounts. The allowance is based on management’s estimate of the amount of receivables that will actually be collected. The Company has not recorded an allowance for doubtful accounts as of September 30, 2018 or December 31, 2017. There are no customer account receivables as of September 30, 2018 or December 31, 2017. |
| Inventory | Inventory
Inventory consists of finished goods and is stated at the lower of cost (first-in, first-out) or market value. Finished goods inventory includes hand held laser devices, their carrying cases and goggles. |
| Equipment | Equipment
Equipment, consisting of computer equipment, is stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, of five years. |
| Long-Lived Assets | Long-Lived Assets
The Company reviews long-lived assets, such as equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment loss will be recorded by the amount the carrying value exceeds the fair value of the asset. |
| Intangible Asset- Licensing Agreement | Intangible Asset- Licensing Agreement
On March 8th 2016 (with an effective date of October 1, 2015), the company, through it’s sole wholly-owned subsidiary (“Licensee”), entered into a Product and Know-How License Agreement (“Agreement”) with a Florida Corporation (“Licensor”) which is owned by a related party - the son of the Company’s CEO. The license provides with respect to the Technology, Licensor hereby grants to Licensee an irrevocable, nontransferable, royalty-bearing license, with a right of sublicense (the “License”), throughout the Territory in the Field of Use, whether or not under the Licensed Patent, to:
-use or submit or deliver the Technology and/or any Product to any regulatory body throughout the Territory for purposes of obtaining approval to make, Sell, offer for Sale, import, export and distribute the Technology or Products; and
- use or copy the Technology and/or any Product; and
- market, make, have made, Sell, offer for Sale, import and distribute Products; and
- sublicense the Technology; and
- prepare, or have prepared on its behalf, modifications, enhancements and/or derivative works of the Technology.
In connection with the license granted, Licensor hereby grants to Licensee a license to the Licensed Patents, whether now existing or hereafter acquired.
The consideration for the licensing agreement consisted of the issuance of 25,000 Series B Preferred stock shares to the Licensor (at par) plus a $150,000 promissory note issued by the Company to the licensor. On September 15, 2017 the Note was amended to include provisions to allow coversion of the Note into common stock of the Company. On September 25, 2017, $16,250 in principal on this note was satisfied by the conversion into 25,000,000 shares of the Company’s common stock. On January 31, 2018, $7,500 in principal on this note was satisfied by the conversion into 30,000,000 shares of the Company’s common stock. On March 2, 2018, another $7,500 in principal on this note was satisfied by the conversion into 30,000,000 shares of the Company’s common stock During the quarter ended June 30, 2018, the original noteholder assigned $20,000 in principal to an unrelated third-party. The principal balance on this note as of September 30, 2018 is $68,040 to the original noteholder and $17,900 in principal balance to the new unrelated third-party noteholder. Various principal paydowns and conversions to common stock took place on these two notes during the quarted ended September 30, 2018.
The last part of the consideration in this license agreement is the royalty payments which have not taken effect yet since they are based on sales for which the company has had only minimum thus far.
The licensing agreement is for a ten year period effective from October 1, 2015. The cost of the licensing agreement is being amortized over it’s ten-year period and charged to income on a straight-line basis. |
| Debt Issue Costs and Debt Discount | Debt Issue Costs and Debt Discount
The Company may pay debt issue costs, and record debt discounts in connection with raising funds through the issuance of convertible debt. These costs are amortized over the life of the debt to interest expense. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts are immediately expensed. Beginning in 2015, the Company adopted ASU 2015-03: Simplifying the Presentation of Debt Issuance Costs and has reflected the deferred financing costs as a direct reduction of the related debt (See table included in Note 5 to Consolidated Financial Statements). |
| Original Issue Discount | Original Issue Discount
For certain convertible debt issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded to debt discount, reducing the face amount of the note and is amortized to interest expense over the life of the debt. |
| Derivative Liabilities | Derivative Liabilities
Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. The Company assessed its securities for purposes of determining the proper accounting treatment and valuation as set forth in the Statement of Financial Accounting Standard ASC 820–10–35–37 Fair Value in Financial Instruments; Statement of Financial Accounting Standard ASC 815 Accounting for Derivative Instruments and Hedging Activities; and Emerging Issues Task Force (“EITF”) Issue No. 00–19 and EITF 07–05.
In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.
Once the derivative liabilities are determined, they are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. |
| Use of Estimates | Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the condensed consolidated balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
| Financial Instruments | Financial Instruments
The carrying amounts reported in the balance sheets for cash, accounts receivable, accounts payable, and other accrued liabilities approximate their fair values. |
| Segment Information | Segment Information
The Company follows Accounting Standards Codification (“ASC”) 280, “Segment Reporting”. The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations. |
| Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share based on the authoritative guidance. Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As described in Note 5 to the financial statements, as of September 30, 2018, convertible debt can be converted into approximately 768,596 shares of common stock. |
| Income Taxes | Income Taxes
The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.
The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of September\ 30, 2018, and does not expect this to change significantly over the next 12 months. |
| Stock-Based Compensation | Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on the fair value on the issuance date.
Equity instruments granted to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant disincentive for non-performance. |
| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. At June 30, 2018, the Company had $77,714 in cash equivalents. |
| Recent Pronouncements | Recent Pronouncements
In May 2014, FASB and IASB issued a new joint revenue recognition standard that supersedes nearly all GAAP guidance on revenue recognition. The core principle of the standard is that revenue recognition should depict the transfer of goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new standard is effective for the Company to annual reporting periods beginning after December 15, 2017 (that is, a public organization is required to apply the new revenue standard beginning in the first interim period within the year of adoption). Additionally, the Board decided to permit public organizations to adopt the new revenue standard early, but not before the original public organization effective date (that is, annual periods beginning after December 15, 2016). A public organization should apply the new revenue standard to all interim reporting periods within the year of adoption.The Company has evaluated the impact of this ASU on the consolidated financial statements and has determined, at this time, the ASU’s implementation would not have a material impact on revenue recognition. See below - Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing
In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Revenue from Contracts with Customers (Topic 606). ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company will adopt the provisions of ASU 2018-07 in the quarter beginning January 1, 2019. The adoption of ASU 2018-07 is not expected to have any impact on the Company’s financial statement presentation or disclosures.
In April 2016, the FASB issued Accounting Standards Update 2016-10 - Revenue from Contracts with Customers (Topic 606) Identifying Performance Obligations and Licensing. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to the performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. The amendments in this Update do not change the core principle of the guidance in Topic 606. Rather, the amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)”. The objective of the ASU is to allow a reclassification from accumulated comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The Company is currently evaluating the impact of this ASU on the consolidated financial statements.
Company is currently an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act and the extended transition period applies to all aforementioned ASUs, until such time as the Company is no longer an “emerging growth company”. |
Property, Plant and Equipment (Net) (Tables) |
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Convertible Notes Payable (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of derivative liabilities |
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| Notes converted $110 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible note conversion |
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| New note holder converted an additional $90 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible note conversion |
|
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| New note holder converted an additional $90 one [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible note conversion |
|
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| Note converted $1,010 [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible note conversion |
|
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Derivatives and Fair Value Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives and Fair Value Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of projected annual volatility for each valuation period |
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| Summary of derivative liabilities on convertible notes payable |
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Commitments and Contingencies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||
| Commitments and Contingencies [Abstract] | |||||||||||||||||||||||||||||||
| Schedule of minimum required lease payments |
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| Schedule of agreements with consultants for ongoing services for commitments |
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of owed amounts to related parties |
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Property, Plant and Equipment (Net) (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Property, Plant and Equipment (Net) [Abstract] | ||
| Computer equipment | $ 8,956 | $ 8,956 |
| Less: accumulated depreciation | (8,205) | (7,725) |
| Total | $ 752 | $ 1,232 |
Property, Plant and Equipment (Net) (Details Textual) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Property, Plant and Equipment (Net) (Textual) | ||
| Depreciation expense | $ 480 | $ 480 |
Due to Related Party (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Due to Related Party (Textual) | ||
| Due to related party | $ 8,921 | $ 8,921 |
Convertible Notes Payable (Details) - Notes converted $110 [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2018
USD ($)
$ / shares
shares
| |
| June 2013 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 70 |
| Conversion Rate | $ / shares | $ 0.0001 |
| Shares Received | shares | 700 |
| August 2013 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 40 |
| Conversion Rate | $ / shares | $ 0.0001 |
| Shares Received | shares | 400 |
Convertible Notes Payable (Details 1) - An additional $90 of note [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2018
USD ($)
$ / shares
shares
| |
| November 2013 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 40 |
| Conversion Rate | $ / shares | $ 0.0001 |
| Shares Received | shares | 400 |
| December 2013 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 50 |
| Conversion Rate | $ / shares | $ 0.0001 |
| Shares Received | shares | 500 |
Convertible Notes Payable (Details 2) - An additional $90 of note [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2018
USD ($)
$ / shares
shares
| |
| March 2014 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 50 |
| Conversion Rate | $ / shares | $ 0.0001 |
| Shares Received | shares | 500 |
| April 2014 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 40 |
| Conversion Rate | $ / shares | $ 0.0001 |
| Shares Received | shares | 400 |
Convertible Notes Payable (Details 3) - Note converted $1,010 [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2018
USD ($)
$ / shares
shares
| |
| December 2012 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 150 |
| Conversion Rate | $ / shares | $ 0.001 |
| Shares Received | shares | 150 |
| January 2013 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 660 |
| Conversion Rate | $ / shares | $ 0.001 |
| Shares Received | shares | 660 |
| March 2013 [Member] | |
| Summary of convertible note conversion detail | |
| Principal Amount Converted | $ | $ 200 |
| Conversion Rate | $ / shares | $ 0.001 |
| Shares Received | shares | 200 |
Derivatives and Fair Value Instruments (Details Textual) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2018 |
Sep. 30, 2017 |
Jul. 01, 2018 |
Apr. 18, 2018 |
Aug. 19, 2015 |
|
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Derivative, description | The 5% Convertible Note Payable and the 8% Convertible Notes Payable and the 9% convertible note payable are valued at September 30,2018. The following assumptions were used for the valuation of the embedded derivative: - The post reverse split (1,000:1) stock price of $0.40 increased to $0.525 in this period (basis for the variable conversion price) would fluctuate with the Company projected volatility; - An event of default for the Convertible Note would occur 0% of the time, increasing 1.00% per month to a maximum of 5.0%; - Alternative financing for the Convertible Note would be initially available to redeem the note 0% of the time and increase monthly by 1% to a maximum of 10%; - Capital raising events (a single financing at 1 month from the valuation date) are a factor for the VV Convertible Note. The full reset events projected to occur based on future stock issuance (single event) resulting in a reset exercise price. - The monthly trading volume would average $478,108 (rounded) as of 9/30/2018 and would increase at 5% per month;ownership limits conversion across LG's notes based on 4.99% with shares outstanding increasing monthly by 1%. - The variable conversion price of 50% to 58% over 3 to 20 trading days would have effective rates of 41.52% to 56.23%; - The Note Holders would automatically convert the notes early (and not hold to maturity) with variable conversion prices and full ratchet resets if the registration was effective and not in default; | |||||
| Description of embedded derivative | The Company's 5% convertible notes payable and 8% convertible notes payable and 9% convertible note payable issued to unrelated investors is a hybrid instrument, which warrants separate accounting as a derivative instrument. | |||||
| Equity method investment, ownership percentage | 4.99% | 4.99% | 100.00% | 80.00% | 100.00% | |
| Fair value adjustment ((income)/expense) | $ (370,247) | |||||
| Fair Value, Inputs, Level 3 [Member] | ||||||
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Fair value instrument, description | The Company's Level 3 financial liabilities consist of the 5% Convertible Notes Payable issued June 12th 2015 and the 8% Convertible Note payable issued June 25th 2015 and for the 8% Convertible Notes Payable issued January 7, 2016 and March 7, 2016 and May 1, 2017 and June 2, 2017 and July 10, 2017 and August 15, 2017, the 9% Convertible Note payable issued October 1, 2016, The 8% Convertible note payable issued January 25, 2018 and the 8% Convertible note payable issued June 4, 2018 for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. | |||||
| Maximum [Member] | ||||||
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Projected annual volatility | 240 | |||||
| Variable conversion rate | 58.00% | |||||
| Derivatives trading period | 20 days | |||||
| Derivatives effective rate | 57.18% | |||||
| Minimum [Member] | ||||||
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Projected annual volatility | 145 | |||||
| Variable conversion rate | 50.00% | |||||
| Derivatives trading period | 3 days | |||||
| Derivatives effective rate | 42.38% | |||||
| 5% Convertible Note Payable [Member] | ||||||
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Variable conversion rate | 5.00% | |||||
| 8% Convertible Notes Payable [Member] | ||||||
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Variable conversion rate | 8.00% | |||||
| 9% convertible note payable [Member] | ||||||
| Derivatives and Fair Value Instruments (Textual) | ||||||
| Variable conversion rate | 9.00% | |||||
Stockholders' Equity (Details Textual) - $ / shares |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 19, 2017 |
|
| Stockholders' Equity (Textual) | |||
| Common stock, shares authorized | 4,000,000,000 | 4,000,000,000 | |
| Common stock, par value | $ 0.0001 | $ 0.0001 | |
| Common stock, shares outstanding | 2,464,881 | 849,437 | |
| Common stock, shares issued | 2,464,881 | 849,437 | |
| Convertible preferred, stock description | At December 31, 2016 there were 39,000 shares issued of which 12,900 shares of Series B preferred were converted into common stock in accordance with the terms of the Series B Preferred stock. Therefore; there were 26,100 shares outstanding at December 31, 2016. The Series B preferred stock has no voting rights. During the quarter ended March 31, 2017, 18,100 shares of Series B preferred shares were converted into common stock in accordance with the terms of the Series B preferred stock. As of result there were 8,000 shares of Series B preferred shares outstanding at June 30, 2018. The holders of the Series B convertible preferred stock have the right to convert the same into Common Stock of the Corporation at the ratio of one (1) share of Series B Convertible Preferred for five hundred (500) shares of Common Stock. | ||
| Common Stock [Member] | |||
| Stockholders' Equity (Textual) | |||
| Common stock, shares authorized | 4,000,000,000 | ||
| Series A preferred stock [Member] | |||
| Stockholders' Equity (Textual) | |||
| Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | |
| Preferred stock, shares issued | 500,000 | 500,000 | |
| Preferred stock, shares outstanding | 500,000 | 500,000 | |
| Preferred stock has preferential voting rights | The preferred stock has preferential voting rights of 2,000 votes per outstanding share. | ||
| Series B Preferred Stock [Member] | |||
| Stockholders' Equity (Textual) | |||
| Preferred stock, shares authorized | 50,000 | 50,000 | |
| Preferred stock, par value | $ 0.0001 | $ 0.0001 | |
| Preferred stock, shares issued | 8,000 | 8,000 | |
| Preferred stock, shares outstanding | 8,000 | 8,000 |
Commitments and Contingencies (Details) |
Sep. 30, 2018
USD ($)
|
|---|---|
| Commitments and Contingencies [Abstract] | |
| 2018 | $ 17,900 |
| 2019 | 24,600 |
| 2020 | 24,600 |
| 2021 | $ 4,100 |
Commitments and Contingencies (Details 1) |
9 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Consultant - FDA requirements and compliance [Member] | |
| Commitments and Contingencies [Line Items] | |
| Commitment | $2,000 per month |
| Term | 12 months |
| Consultant - capital formation and market services [Member] | |
| Commitments and Contingencies [Line Items] | |
| Commitment | Various equity percentage issuances of restricted stock for fundings |
| Term | 6 months |
| Consultant - tradeshow attendence, strategy and collaboration, cordination regarding FDA compliance, manuafacturing operations, sales and marketing, other related services [Member] | |
| Commitments and Contingencies [Line Items] | |
| Commitment | $10,000 per month (payable quarterly in cash or common stock from the 2016/2017 Equity Incentive Plan) |
| Term | 12 months |
Commitments and Contingencies (Details Textual) - USD ($) |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
|---|---|---|---|---|---|---|
Sep. 12, 2016 |
Jul. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Commitments and Contingencies (Textual) | ||||||
| Current office space rate per month | $ 1,575 | $ 1,575 | ||||
| Commitments, description | The Company leased additional space at this location thereby increasing the monthly rent to $1,550. | The Company also has ready-to-go office space available to be used for meetings etc. at a nominal cost of approximately $100 per month with no commitment. | ||||
| Payments for rent | $ 4,650 | |||||
| Office premises cost | $ 650 | |||||
| Lease agreement renewal term | 3 years | |||||
| Office premises cost term | 1 year | |||||
| Total rent expense | 6,522 | $ 6,222 | 18,866 | $ 13,866 | ||
| Stockholder [Member] | ||||||
| Commitments and Contingencies (Textual) | ||||||
| Current office space rate per month | $ 525 | 525 | ||||
| Payments for rent | $ 297 | |||||
Related Party Transactions (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Owed amounts of related parties | ||
| Due to Related Party | $ 8,921 | $ 8,921 |
| Due to officer/stockholder | 8,955 | 8,398 |
| Due to other stockholders | 3,100 | 6,790 |
| Total Related Party Obligations | $ 20,976 | $ 24,109 |
Basis of Reporting - Going Concern (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
|---|---|---|
| Basis of Reporting - Going Concern (Textual) | ||
| Losses from inception | $ (4,436,137) | $ (3,665,129) |
Stock Compensation - Equity Incentive Plan (Details) - shares |
1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
|---|---|---|---|---|---|---|---|---|---|
Dec. 06, 2016 |
Jan. 31, 2018 |
May 31, 2017 |
Jul. 31, 2016 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Mar. 31, 2017 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
| 2016 Equity Incentive Plan [Member] | |||||||||
| Stock Compensation - Equity Incentive Plan (Textual) | |||||||||
| Aggregate of shares of common stock | 20,000,000 | ||||||||
| Common stock to non-employees for services rendered | 27,100 | ||||||||
| Issuance of common shares | 32,000 | 0 | |||||||
| 2017 Equity Incentive Plan [Member] | |||||||||
| Stock Compensation - Equity Incentive Plan (Textual) | |||||||||
| Aggregate of shares of common stock | 125,000 | ||||||||
| Common stock to non-employees for services rendered | 108,000 | ||||||||
| Issuance of common shares | 17,000 | ||||||||
| 2018 Equity Incentive Plan [Member] | |||||||||
| Stock Compensation - Equity Incentive Plan (Textual) | |||||||||
| Aggregate of shares of common stock | 175,000 | ||||||||
| Common stock to non-employees for services rendered | 17,500 | 4,000 | |||||||
| Issuance of common shares | 170,500 | 188,000 | 170,500 | ||||||
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