The balance sheets as of March 31, 2017 and December 31, 2016, the statements of operations for the three months ended March 31, 2017 and 2016, statements of cash flows for the three months ending March 31, 2017 and 2016, follow. The unaudited condensed consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. All such adjustments are of a normal and recurring nature.
The accompanying notes are an integral part of the condensed consolidated financial statements.
The accompanying notes are an integral part of the condensed consolidated financial statements.
The accompanying notes are an integral part of the condensed consolidated financial statements.
NOTES TO UNAUDITED
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
TransBiotec, Inc. (“TransBiotec – DE”), formerly Imagine Media LTD., was incorporated August, 2007 in the State of Delaware. A corporation also named TransBiotec, Inc. (“TransBiotec – CA”) was formed in the state of California July 4, 2004. Effective September 19, 2011 TransBiotec - DE was acquired by TransBiotec - CA in a transaction classified as a reverse acquisition as the shareholders of TransBiotec - CA retained the majority of the outstanding common stock of TransBiotec - DE after the share exchange. The financial statements represent the activity of TransBiotec - CA from July 4, 2004 forward, and the consolidated activity of TransBiotec - DE and TransBiotec - CA from September 19, 2011 forward. TransBiotec - DE and TransBiotec - CA are hereinafter referred to collectively as the "Company". The Company has developed and plans to market and sell a non-invasive alcohol sensing system which includes an ignition interlock. The Company has not generated any revenues from its operations.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes thereto for the year ended December 31, 2016, included in the Company’s Annual Report on Form 10-K filed with the SEC on April 17, 2017.
Principles of consolidation
The accompanying unaudited consolidated financial statements include the accounts of the Company and its majority owned subsidiary, Transbiotec-CA. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of unaudited consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Specifically, such estimates were made by the Company for the valuation of derivative liability, stock compensation and beneficial conversion feature expenses. Actual results could differ from those estimates.
Cash
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company does not have any cash equivalents as of March 31, 2017 and December 31, 2016.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
Income tax
The Company accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company has not recorded any deferred tax assets or liabilities at March 31, 2017.
Net loss per share
The net loss per share is computed by dividing the net loss by the weighted average number of shares of common outstanding. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The Company has 12,746,121 stock options that can be converted to common stock if exercised.
Financial Instruments
Pursuant to ASC Topic 820,
Fair Value Measurements and Disclosures
and ASC 825,
Financial Instruments
, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 and 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 and 825 prioritizes the inputs into three levels that may be used to measure fair value:
Level
1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Level
2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets: quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist primarily of cash, accounts payable, accrued expenses, notes payable, related party payables, convertible debentures, and other payable. Pursuant to ASC 820 and 825, the fair value of our cash and cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The following table presents assets and liabilities that are measured and recognized at fair value as of March 31, 2017 and December 2016 on a recurring basis:
March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Derivative liabilities
|
|
|
-
|
|
|
|
(539,327
|
)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(539,327
|
)
|
|
|
-
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
$
|
|
|
$
|
|
|
$
|
|
Derivative liabilities
|
|
|
-
|
|
|
|
(180,038
|
)
|
|
|
-
|
|
|
|
|
-
|
|
|
|
(180,038
|
)
|
|
|
-
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Beneficial Conversion Features
From time to time, the Company may issue convertible notes that may contain an embedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
Derivative Instruments
The fair value of derivative instruments is recorded and shown separately under current liabilities. Changes in fair value are recorded in the consolidated statement of income under other income (expenses).
The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option and warrants at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into warrant agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy in accordance with ASC 815-40-35-12 whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors.
The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instruments are initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses a weighted average Black-Sholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.
Stock based compensation
The Company has share-based compensation plans under which employees, consultants, suppliers and directors may be granted restricted stock, as well as options and warrants to purchase shares of Company common stock at the fair market value at the time of the grant. Stock-based compensation cost to employees is measured by the Company at the grant date, based on the fair value of the award, over the requisite service period under ASC718. For options issued to employees, the Company recognizes stock compensation costs utilizing the fair value methodology over the related period of benefit. Grants of stock to non-employees and other parties are accounted for in accordance with the ASC 505.
Minority interest (Noncontrolling interest)
A subsidiary of the Company has minority members, representing ownership interests of 1.38% at March 31, 2017. The Company accounts for these minority, or noncontrolling interests pursuant to ASC 810-10-65 whereby gains and losses in a subsidiary with a noncontrolling interest are allocated to the noncontrolling interest based on the ownership percentage of the noncontrolling interest, even if that allocation results in a deficit noncontrolling interest balance.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 2. GOING CONCERN
The Company has suffered recurring losses from operations and has a working capital deficit and stockholders' deficit, and in all likelihood, will be required to make significant future expenditures in connection with continuing marketing efforts along with general administrative expenses. As of March 31, 2017, the accumulated deficit is $17,551,920. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company may raise additional capital through the sale of its equity securities, through an offering of debt securities, or through borrowings from financial institutions or others. By doing so, the Company hopes to generate revenues from sales of its alcohol sensing and ignition lock systems. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern.
NOTE 3. RELATED PARTY TRANSACTIONS
As of March 31, 2017 and December 31, 2016, the Company had payables due to officers, for accrued compensation and services of $1,166,799 and $1,111,754 respectively.
On December 3, 2014, as part of a related party note payable agreement, the company agreed to convert 50% of certain outstanding accounts payable to common stock at a price of .09 per share. Per this agreement as of March 31, 2017 and the year ended December 31, 2016, approximately $164,044 of accounts payable is convertible into 1,822,707 shares and $147,633 is convertible into 1,640,365 shares, respectively.
On July 1, 2015, the Company amended a note payable agreement with Lanphere Law Group, the company’s largest shareholder, which forgave $108,000 of the principal balance. The original principal balance on the note was $214,335 and the new principal balance on the note after the debt forgiveness is $106,335.
On February 10, 2017, a related party irrevocably elected to exercise options in order to acquire 32,248,932 shares of the Company’s common stock in exchange for an aggregate exercise price of $112,871 which was used for the deduction of the principal and accrued interest of a related party note payable. The balance of the note after the debt deduction is $31,661.76.
The Company entered into a lease agreement with Lanphere Law Group, whereas the Company is the tenant and is paying monthly rent of $4,100.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 4. NOTES PAYABLE
|
|
December 31,
2016
|
|
|
March 31,
2017
|
|
Note payable to related party, unsecured, due 8/3/2012, interest rate 0%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
1,950
|
|
|
$
|
1,950
|
|
|
|
|
|
|
|
|
|
|
Notes payable to related party, unsecured, due 12/31/2012, interest rate 0%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
11,810
|
|
|
$
|
11,810
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, $731,763, 5-years at 0% simple interest, due 7/1/2016, payment amounts vary each month, various late penalties. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
180,001
|
|
|
$
|
180,001
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 2/8/12, quarterly interest due, convertible at holder’s option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 11/8/12, quarterly interest due, convertible at holder’s option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to non-related party, unsecured, due 2/17/12, quarterly interest due, convertible at holder’s option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 2/18/12, quarterly interest due, convertible at holder’s option at $0.3235688 per TBT - DE share, interest rate 30%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 2/8/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE share, interest rate 18%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
750
|
|
|
$
|
750
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 2/8/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE share, interest rate 18%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
6,875
|
|
|
$
|
6,875
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 2/15/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to non-related party, unsecured, due 2/20/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
3,750
|
|
|
$
|
3,750
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 2/21/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE. share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
2,625
|
|
|
$
|
2,625
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 3/20/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
5,433
|
|
|
$
|
5,433
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to non-related party, unsecured, due 3/22/13, annual interest due, convertible at holder’s option at $0.3235688 per TBT-DE share, interest rate 12%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
3,203
|
|
|
$
|
3,203
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 08/29/2013, simple interest 8% convertible at holder’s option at $.249 per TBT-CA share. Currently in default. Principal balance including interest to be paid upon receipt of equity funding and/or sales revenue.
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 03/01/2013, simple interest 9%. Currently in default. Principal balance including interest to be paid upon receipt of equity funding and/or sales revenue.
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 01/31/2013, simple interest 18%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
3,938
|
|
|
$
|
3,938
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 01/23/2014, simple interest 9% convertible at holder’s option at $.08 per TBT-DE share Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to related party, unsecured, due 07/02/2014, simple interest 9% convertible at holder’s option at $.04 per TBT-DE share Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 10/25/2013, simple interest 18% convertible at holder’s option at $.016 per TBT-DE share Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
2,000
|
|
|
$
|
2,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 12/27/2013, simple interest 9% quarterly, Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 9/11/2014, simple interest 10% yearly. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
5,000
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 11/12/2014, simple interest 9% convertible at holder’s option at $0.04 per TBT-DE share, currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
11,000
|
|
|
$
|
11,000
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to related party, unsecured, due 4/08/2015, simple interest 7% convertible at holder’s option at $0.0072 per TBT-DE share. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 8/05/2015, simple interest 7%, default interest 10%. Currently in default. Note contains a stock option.
|
|
$
|
10,000
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party unsecured, due 12/02/2015, simple interest 7%, default interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.
|
|
$
|
106,334
|
|
|
$
|
31,662
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 3/26/2016, simple interest 8%, convertible at holder’s option at $0.0017 per TBT-DE share. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to related party, unsecured, due 4/11/2016, simple interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.
|
|
$
|
13,000
|
|
|
$
|
13,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 11/11/2015, simple interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.
|
|
$
|
45,000
|
|
|
$
|
45,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to non-related party, unsecured, due 11/11/2015, simple interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 12/26/2015, simple interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Currently in default.
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due on demand, simple interest 10%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
15,277
|
|
|
$
|
15,277
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 7/23/2016, simple interest 10%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue.
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to related party, unsecured, due 5/1/2017, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
3,750
|
|
|
$
|
3,750
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 11/9/2016, simple interest 7%. Currently in default. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
15,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 7/26/2017, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
3,900
|
|
|
$
|
3,900
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 8/03/2017, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 9/28/2017, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Note payable to related party, unsecured, due 10/05/2017, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
20,000
|
|
|
$
|
20,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 11/15/2017, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 01/16/2018, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
-
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 02/06/2018, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
-
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Note payable to related party, unsecured, due 03/12/2018, simple interest 7%. Principal balance including interest to be paid upon the receipt of equity funding and/or sales revenue. Note contains a stock option.
|
|
$
|
-
|
|
|
$
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
790,596
|
|
|
$
|
755,924
|
|
|
|
|
|
|
|
|
|
|
Less current - related parties
|
|
|
(627,022
|
)
|
|
|
(592,350
|
)
|
|
|
|
|
|
|
|
|
|
Less current – non-related parties
|
|
|
(163,574
|
)
|
|
|
(163,574
|
)
|
|
|
|
|
|
|
|
|
|
Long-term – related parties
|
|
$
|
-
|
|
|
$
|
-
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Required principal payments from March 31, 2017 forward are as follows:
2017
|
|
$
|
715,924
|
|
2018
|
|
$
|
40,000
|
|
2019
|
|
$
|
-
|
|
2020
|
|
$
|
-
|
|
2021
|
|
$
|
-
|
|
|
|
$
|
755,924
|
|
Interest expense under notes payable for the years ended March 31, 2017 and March 31, 2016 was $23,568 and $28,490 respectively.
During the years ended March 31, 2017 and March 31, 2016 the Company recognized a beneficial conversion feature expense on borrowing from convertible notes of $(3,500) and $6,250, respectively.
Interest payments of $234,592 on the Company’s borrowings with a principal amount of $592,792 was overdue as of March 31, 2017. The principal and interest balances on the notes in default are expected to be settled/paid upon the receipt of funds from operating or financial activities.
NOTE 5. DERIVATIVE LIABILITY
The Company determined approximately 12,746,121 stock options for common shares that were granted, notes convertible of 22,137,880 common shares, and a share purchase for 3,571,429 common shares totaling 38,455,430 common shares at March 31, 2017 were in excess of the Company’s authorized shares amount of 100,000,000 which carries an embedded derivative and are therefore accounted for at fair value under ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments. Utilizing Level 1 Inputs, the Company recorded fair market value adjustments for the 38,455,430 common shares over the Company’s 100,000,000 authorized shares amount for year ended March 31, 2017 and December 31, 2016 of $539,327 and $180,038, respectively. The fair market value adjustments were calculated utilizing the Black-Sholes method using the following assumptions: risk free rates ranging between 0.10% - 1.06%, dividend yield of 0%, expected life of 1 year, volatility between 134% - 408%.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
A summary of the activity of the derivative liability is shown below:
Balance at December 31, 2015
|
|
|
-
|
|
Derivative loss due to new issuances
|
|
|
(113,180
|
)
|
Derivative loss due to mark to market adjustments
|
|
|
(66,858
|
)
|
Balance at December 31, 2016
|
|
|
(180,038
|
)
|
Derivative change due to reclassifications to equity
|
|
|
154,049
|
|
Derivative change due to new issuances
|
|
|
(199,919
|
)
|
Derivative loss due to mark to market adjustment
|
|
|
(313,419
|
)
|
Balance at March 31, 2017
|
|
|
(539,327
|
)
|
NOTE 6. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur. The balance of deferred tax assets and deferred tax liabilities are none and none, respectively at March 31, 2017.
NOTE 7. STOCK OPTIONS AND SUBSCRIPTIONS PAYABLE
The Company accounts for employee and non-employee stock options under ASC 718 and ASC 505, whereby option costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. Unless otherwise provided for, the Company covers option exercises by issuing new shares.
The Company’s stock option activity is described below.
Non-employee stock options
At the beginning of 2012, the Company had 22,500 options outstanding for shares in Transbiotec – CA. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 2.67%, dividend yield of 0%, expected life of five years, volatility of 100%. During the year ended December 31, 2012 no options were exercised or expired, leaving a December 31, 2012 outstanding balance of 22,500 non-employee stock options, exercisable at prices from $0.10 - $0.15 per share with the option terms expiring from January 2012 through January 2015. All of these options are for the stock of TransBiotec - CA. During the year ended December 31, 2014, 20,000 options were exercised, leaving a December 31, 2014 outstanding balance of 2,500 non-employee stock options, exercisable at $0.10 per share with the option terms expiring in January 2015. During the year ended December 31, 2015, none of these options were exercised as all outstanding options expired in January 2015 leaving no outstanding balance of non-employee stock options in the stock of Transbiotec-CA at December 31, 2015. During the three months ended March 31, 2017, no options were exercised as all outstanding options expired in January 2015 leaving no outstanding balance of non-employee stock options in the stock of Transbiotec-CA at March 31, 2017.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Beginning on December 12, 2012, Michael A. Lanphere began loaning the Company money for a variety of purposes, some for working capital and some to allow the Company to pay outstanding obligations. Each of these loans was made pursuant to the terms of a Loan Agreement with Promissory Note and Stock Fee (the “Agreements”). Under the terms of Agreements, Mr. Lanphere was not only entitled to repayment of the principal amount loaned to us, with interest, but also what was termed in the Agreements as a “Stock Fee” that the parties are interpreting as a stock option, which permits Mr. Lanphere to acquire shares of our common stock in exchange for an exercise price that was estimated based on the date of the loan agreement. The number of shares to be issued to Mr. Lanphere as a Stock Fee under each Agreement was an estimate and varied based on the loan amount and the price of our common stock on the day of the loan and was calculated by this formula: sixty percent (60%) of the loan amount divided by the Company’s stock price on the day of the loan, but at a price per share no higher than two and one-half cents ($0.025). Each Stock Fee is fully vested immediately and expires five (5) years from the date of the loan. Although the Stock Fee could be taken by Mr. Lanphere as a stock grant or a stock option, due to the fully vested nature of the Stock Fee, Mr. Lanphere is deemed to beneficially own those shares on the date of each Agreement.
During 2012 the Company granted 29,678 stock options, that were vested immediately, for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate of 0.8%, dividend yield of 0%, expected life of five years, volatility of 189%. None of these options were exercised or expired, leaving a December 31, 2012 outstanding balance of 29,678 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $4,042 in 2012. During the three months ended March 31, 2017, 29,678 options were exercised leaving no outstanding balance of non-employee stock options in the stock of Transbiotec-DE granted in 2012 at March 31, 2017.
During 2013 the Company granted 5,321,735 stock options, that were vested immediately, for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rates between 7% - 14%, dividend yield of 0%, expected life of five years, volatility between 179% - 186%. None of these options were exercised or expired, leaving a December 31, 2013 outstanding balance of 5,351,413 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $145,997 in 2013. During the three months ended March 31, 2017, 5,321,735 options were exercised leaving no outstanding balance of non-employee stock options in the stock of Transbiotec-DE granted in 2013 at March 31, 2017.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
During 2014 the Company granted 8,403,633 stock options, that were vested immediately, for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rates between 1.55% - 1.77%, dividend yield of 0%, expected life of five years, volatility between 147% - 178%. No options were exercised or expired, leaving a December 31, 2014 outstanding balance of 13,755,046 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $69,886 in 2014. During the three months ended March 31, 2017, 7,016,388 of these options were exercised leaving an outstanding balance of non-employee stock options in the stock of Transbiotec – DE granted in 2014 of 1,387,245 at March 31, 2017.
During the year ended December 31, 2015, the Company granted 16,282,995 stock options, that were vested immediately, for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between 1.37% - 1.68%, dividend yield of 0%, expected life of five years, a volatility range of 172% - 174%. No options were exercised or expired, leaving a December 31, 2015 outstanding balance of 30,038,041 options for Transbiotec – DE. The Company incurred and recorded compensation expense under these stock option grants of $27,731 during the year ended December 31, 2015. During the three months ended March 31, 2017, all of the 16,282,995 options were exercised leaving no outstanding balance of non-employee stock options in the stock of Transbiotec - DE granted in 2015 at March 31, 2017.
During the year ended December 31, 2016, the Company granted 11,346,435 stock options, that were vested immediately, for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between 1.03% - 1.30%, dividend yield of 0%, expected life of five at a December 31, 2016. None of these options were exercised or expired at December 31, 2016 leaving an outstanding balance of 41,384,476 options for Transbiotec - DE. The Company incurred and recorded compensation expense under these stock option grants of $17,983 and $3,603 during the three months ended March 31, 2017 and during the year ended December 31, 2016, respectively. During the three months ended March 31, 2017, 3,598,136 options were exercised leaving a stock options outstanding balance of non-employee stock options in the stock of Transbiotec – DE granted in 2016 of 6,429,110 at March 31, 2017.
During the three months ended March 31, 2017, the Company granted 3,610,577 stock options, that were vested immediately, for shares in Transbiotec - DE. The fair value of the option grants was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk free interest rate between .08% - 1.30%, dividend yield of 0%, expected life of five years, a volatility rate between 321% - 362%. None of these options were exercised or expired at March 31, 2017. Since these stock options if exercised would be in excess of the 100,000,000 authorized shares, no stock compensation expense was recorded as the options were treated as a derivative liability at March 31, 2017.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
The total outstanding balance of all non-employee stock options in Transbiotec – DE is 12,746,121 at March 31, 2017.
A summary of stock option activity for California is as follows:
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2016
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Outstanding at March 31, 2017
|
|
|
-
|
|
|
$
|
-
|
|
A summary of stock option activity for Delaware is as follows:
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2016
|
|
|
41,384,476
|
|
|
$
|
.0119
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3,610,577
|
|
|
|
.0066
|
|
Exercised
|
|
|
32,248,932
|
|
|
|
.0035
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Outstanding at March 31, 2017
|
|
|
12,746,121
|
|
|
$
|
.0092
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Following is a summary of the status of options for Delaware outstanding at March 31, 2017:
Exercise
Price
|
|
|
Number
of Shares
|
|
|
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise
Price
|
|
|
Exercised at
March 31,
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.0035
|
|
|
|
29,678
|
|
|
1 year
|
|
|
0.0035
|
|
|
|
29,678
|
|
$
|
0.0035
|
|
|
|
83,333
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
83,333
|
|
$
|
0.0035
|
|
|
|
27,778
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
27,778
|
|
$
|
0.0035
|
|
|
|
362,624
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
362,624
|
|
$
|
0.0035
|
|
|
|
80,914
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
80,914
|
|
$
|
0.0035
|
|
|
|
429,086
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
429,086
|
|
$
|
0.0035
|
|
|
|
38,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
38,000
|
|
$
|
0.0035
|
|
|
|
250,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
250,000
|
|
$
|
0.0035
|
|
|
|
1,625,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
1,625,000
|
|
$
|
0.0035
|
|
|
|
400,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
400,000
|
|
$
|
0.0035
|
|
|
|
75,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
75,000
|
|
$
|
0.0035
|
|
|
|
300,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
300,000
|
|
$
|
0.0035
|
|
|
|
300,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
300,000
|
|
$
|
0.0035
|
|
|
|
1,200,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
1,200,000
|
|
$
|
0.0035
|
|
|
|
150,000
|
|
|
2 years
|
|
|
0.0035
|
|
|
|
150,000
|
|
$
|
0.0035
|
|
|
|
1,200,000
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
1,200,000
|
|
$
|
0.0035
|
|
|
|
50,137
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
50,137
|
|
$
|
0.0035
|
|
|
|
140,000
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
140,000
|
|
$
|
0.0035
|
|
|
|
31,256
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
31,256
|
|
$
|
0.0035
|
|
|
|
167,702
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
167,702
|
|
$
|
0.0035
|
|
|
|
204,082
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
204,082
|
|
$
|
0.0035
|
|
|
|
75,000
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
75,000
|
|
$
|
0.0035
|
|
|
|
75,758
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
75,758
|
|
$
|
0.0035
|
|
|
|
165,915
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
165,915
|
|
$
|
0.0035
|
|
|
|
133,262
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
133,262
|
|
$
|
0.0035
|
|
|
|
79,787
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
79,787
|
|
$
|
0.0035
|
|
|
|
229,714
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
229,714
|
|
$
|
0.0190
|
|
|
|
50,000
|
|
|
3 years
|
|
|
0.0190
|
|
|
|
-
|
|
$
|
0.0035
|
|
|
|
42,283
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
42,283
|
|
$
|
0.0035
|
|
|
|
213,833
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
213,833
|
|
$
|
0.0035
|
|
|
|
48,649
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
48,649
|
|
$
|
0.0035
|
|
|
|
375,000
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
375,000
|
|
$
|
0.0098
|
|
|
|
612,245
|
|
|
3 years
|
|
|
0.0098
|
|
|
|
-
|
|
$
|
0.0035
|
|
|
|
61,224
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
61,224
|
|
$
|
0.2500
|
|
|
|
25,000
|
|
|
3 years
|
|
|
0.2500
|
|
|
|
-
|
|
$
|
0.0680
|
|
|
|
450,000
|
|
|
3 years
|
|
|
0.0680
|
|
|
|
-
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
$
|
0.0035
|
|
|
|
123,828
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
123,828
|
|
$
|
0.0035
|
|
|
|
375,000
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
375,000
|
|
$
|
0.0070
|
|
|
|
250,000
|
|
|
3 years
|
|
|
0.0070
|
|
|
|
-
|
|
$
|
0.0035
|
|
|
|
373,714
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
373,714
|
|
$
|
0.0035
|
|
|
|
850,244
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
850,244
|
|
$
|
0.0035
|
|
|
|
2,000,000
|
|
|
3 years
|
|
|
0.0035
|
|
|
|
2,000,000
|
|
$
|
0.0035
|
|
|
|
150,000
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
150,000
|
|
$
|
0.0035
|
|
|
|
7,625,544
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
7,625,544
|
|
$
|
0.0035
|
|
|
|
1,770,000
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
1,770,000
|
|
$
|
0.0035
|
|
|
|
400,782
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
400,782
|
|
$
|
0.0035
|
|
|
|
275,000
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
275,000
|
|
$
|
0.0035
|
|
|
|
1,764,706
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
1,764,706
|
|
$
|
0.0035
|
|
|
|
2,463,333
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
2,463,333
|
|
$
|
0.0035
|
|
|
|
285,714
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
285,714
|
|
$
|
0.0035
|
|
|
|
333,333
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
333,333
|
|
$
|
0.0035
|
|
|
|
1,083,333
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
1,083,333
|
|
$
|
0.0035
|
|
|
|
131,250
|
|
|
4 years
|
|
|
0.0035
|
|
|
|
131,250
|
|
$
|
0.0035
|
|
|
|
2,250,000
|
|
|
5 years
|
|
|
0.0035
|
|
|
|
2,250,000
|
|
$
|
0.0035
|
|
|
|
562,500
|
|
|
5 years
|
|
|
0.0035
|
|
|
|
562,500
|
|
$
|
0.0035
|
|
|
|
390,000
|
|
|
5 years
|
|
|
0.0035
|
|
|
|
390,000
|
|
$
|
0.0035
|
|
|
|
1,714,825
|
|
|
5 years
|
|
|
0.0035
|
|
|
|
395,636
|
|
$
|
0.0045
|
|
|
|
1,500,000
|
|
|
5 years
|
|
|
0.0045
|
|
|
|
-
|
|
$
|
0.0070
|
|
|
|
1,714,825
|
|
|
5 years
|
|
|
0.0070
|
|
|
|
-
|
|
$
|
0.0070
|
|
|
|
1,714,285
|
|
|
5 years
|
|
|
0.0070
|
|
|
|
|
|
$
|
0.0050
|
|
|
|
1,500,000
|
|
|
5 years
|
|
|
0.0050
|
|
|
|
|
|
$
|
0.0060
|
|
|
|
2,500,000
|
|
|
5 years
|
|
|
0.0060
|
|
|
|
|
|
$
|
0.0065
|
|
|
|
923,077
|
|
|
5 years
|
|
|
0.0065
|
|
|
|
-
|
|
$
|
0.0050
|
|
|
|
187,500
|
|
|
5 years
|
|
|
0.0050
|
|
|
|
-
|
|
Total
|
|
|
|
44,995,053
|
|
|
|
|
|
0.0092
|
|
|
|
32,248,932
|
|
Employee stock options
The parent company had no outstanding employee stock options.
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
Stock subscriptions received
At December 31, 2016 and March 31, 2017, the Company converted certain accounts payable into common shares which amounts to $28,067 for 87,084 common shares to be issued, and $53,067 for 3,658,513 common shares to be issued, respectively.
At December 31, 2016 and March 31, 2017, the Company converted certain notes payable into preferred shares which amounts to $14 for 1,388,575 preferred shares to be issued, and $14 for 1,388,575, respectively.
NOTE 8. COMMON STOCK
On January 21, 2016, the Company issued for $25,000 cash, 5,000,000 shares of its common stock, with a purchase price of $0.0050 per share.
On January 21, 2016, the Company converted $9,750 of its account payable into 2,500,000 issued shares of its common stock, with a purchase price of $0.0039 per share.
On March 13, 2017, the Company converted $112,871 of a related party note payable into 32,248,932 issued shares of its common stock at $0.0035 per share.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases its office space under a long-term operating lease expiring in June 2019. Rent expense under this lease was $12,300 and $13,105 for the three months ended March 31, 2017 and March 31, 2016, respectively.
As of December 31, 2016, future minimum annual payments under operating lease agreements for years ending December 31 are as follows.
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2021
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
36,900
|
|
|
|
49,200
|
|
|
|
24,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
110,700
|
|
|
|
$
|
36,900
|
|
|
$
|
49,200
|
|
|
$
|
24,600
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
110,700
|
|
TransBiotec, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2017
NOTE 10. SUBSEQUENT EVENTS
On March 28, 2017, the Company filed a preliminary information statement (Schedule PRE 14C) with the SEC, reporting that stockholders of the Company owning a majority of the Company’s outstanding voting securities have approved the following action (The “Action”) by written consent dated March 10, 2017, in lieu of a special meeting of a stockholders.
|
(1)
|
To elect (4) directors to serve until the next Annual Meeting of Shareholders and thereafter until their successors are elected and qualified.
|
|
|
|
|
(2)
|
To approve an amendment to the Company’s Articles of Incorporation to increase the authorized common stock from 100,000,000 shares, par value $0.00001 to 800,000,000 shares of common stock, par value of $0.00001.
|
|
|
|
|
(3)
|
Approval of the 2017 TransBiotec, Inc. Omnibus Stock Grant and Option Plan (the “Plan”) which authorized 10,000,000 shares of the Company’s common stock, a number equal to ten percent (10%) of the Company’s outstanding common stock on the date the Plan was approved by a majority of the Company’s stockholders, for issuance to Eligible Recipients.
|
The stockholders of the Company owning a majority of the Company’s outstanding voting securities believe this action will help increase the likelihood of raising funds for the Company, although there is no assurance this will occur.
The SEC had 10 days from the March 28, 2017 filing date to comment on the Information Statement. The Company did not receive any comments on the Information Statement from the SEC within the 10-day period; filed a definitive information statement (Schedule DEF 14C) with the SEC on April 21, 2017 and mailed on April 26, 2017 to all shareholders of record as of March 27, 2017 (as identified in the certified shareholders list received from the Company’s transfer agent). The action will go into effect 20 days from the April 26, 2017 mailing date or on May 16, 2017. To complete the action, after May 16, 2017, the Company will file its amendment to the Articles of Incorporation with the State of Delaware.