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Document and Entity Information - shares
3 Months Ended
Mar. 31, 2018
May 15, 2018
Document And Entity Information    
Entity Registrant Name FLEXPOINT SENSOR SYSTEMS INC  
Entity Central Index Key 0000925660  
Document Type 10-Q  
Document Period End Date Mar. 31, 2018  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   92,863,464
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2018  
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Current Assets    
Cash and cash equivalents $ 12,832
Accounts receivable, net of allowance for bad debts of $145,179 and $145,194 5,317 47,254
Deposits and prepaid expenses 18,532 10,144
Total Current Assets 23,849 70,230
Long-Term Deposits 6,550 6,550
Property and Equipment, net of accumulated depreciation of $589,566 and $589,006 8,024 8,584
Patents and Proprietary Technology, net of accumulated amortization of $922,889 and $925,790 40,156 48,295
Goodwill 4,896,917 4,896,917
Total Assets 4,975,496 5,030,576
Current Liabilities    
Accounts payable 276,977 227,680
Accrued liabilities 991,996 958,810
Due to related parties 20,000 20,000
Convertible notes payable, net of discount of $50,393 and $72,986 869,607 807,014
Convertible notes payable to related party, net of discount of $21,733 and $33,099 92,780 81,414
Derivative liabilities 255,380 363,680
Total liabilities 2,506,740 2,458,598
Stockholders' Equity    
Preferred stock - $0.001 par value; 1,000,000 shares authorized; no shares issued or outstanding
Common stock - $0.001 par value; 100,000,000 shares authorized; 92,863,464 shares and 92,863,464 shares issued and outstanding 92,863 92,863
Additional paid-in capital 29,785,568 29,785,568
Accumulated deficit (27,409,675) (27,306,453)
Total Stockholders' Equity 2,468,756 2,571,978
Total Liabilities and Stockholders' Equity $ 4,975,496 $ 5,030,576
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Statement of Financial Position [Abstract]    
Accounts receivable, allowance for bad debts $ 145,179 $ 145,194
Property and Equipment, accumulated depreciation 589,566 589,006
Patents and Proprietary Technology, accumulated amortization 922,889 925,790
Convertible notes payable, net of discount 50,393 72,986
Convertible notes payable to related party, discount $ 21,733 $ 33,099
Preferred stock, par value per share $ 0.001 $ 0.001
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value per share $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 92,863,464 92,863,464
Common stock, shares outstanding 92,863,464 92,863,464
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Income Statement [Abstract]    
Design, Contract and Testing Revenue $ 79,264 $ 61,065
Operating Costs and Expenses    
Amortization of patents and proprietary technology 8,139 18,423
Cost of revenue 18,241 4,136
Administrative and marketing expense 116,358 164,726
Research and development expense 81,877 79,366
Total Operating Costs and Expenses 224,615 266,651
Loss from Operations (145,351) (205,586)
Other Income and Expenses    
Interest expense (78,632) (101,610)
Interest income 12 12
Gain (loss) on change in fair value of derivative liabilities 120,749 15,687
Net Other Income (Expense) (42,129) (85,911)
Net Loss $ (103,222) $ (291,497)
Basic and Diluted Loss per Common Share $ (0.00) $ (0.00)
Basic and Diluted Weighted Average Common Shares Outstanding 92,863,464 78,363,464
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Cash Flows from Operating Activities:    
Net loss $ (103,222) $ (291,497)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation expense 3,154
Amortization of patents and proprietary technology 8,139 18,423
Amortization of discount on note payable 46,408
Depreciation 560 560
(Gain)/loss on change in fair value of derivative liabilities (120,749) (15,687)
Interest expense recognized for derivative liabilities 54,661
Changes in operating assets and liabilities:    
Accounts receivable 41,952 16,580
Prepaid expenses and other assets (8,403)
Accounts payable 49,297 6,668
Accounts payable - related parties (1,420)
Accrued liabilities 28,279 104,176
Net Cash Used in Operating Activities (57,439) (104,381)
Cash Flows from Investing Activities:    
Note receivable interest income
Net Cash Used in Investing Activities
Cash Flows from Financing Activities:    
Proceeds from bank overdraft 4,607
Repayments of bank overdrafts (14,621)
Proceeds from borrowings under convertible note payable 40,000 120,000
Net Cash Provided by Financing Activities 44,607 105,379
Net Change in Cash and Cash Equivalents (12,832) 998
Cash and Cash Equivalents at Beginning of Period 12,832
Cash and Cash Equivalents at End of Period 998
Supplemental Cash Flow Information:    
Cash paid for income taxes
Cash paid for interest
Supplemental Disclosure on Noncash Investing and Financing Activities    
Recognition of discounts on convertible notes payable $ 12,449
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Condensed Consolidated Interim Financial Statements – The accompanying unaudited condensed consolidated financial statements include the accounts of Flexpoint Sensor Systems, Inc. and its former subsidiaries (the “Company”). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual consolidated financial statements of Flexpoint Sensor Systems, Inc. and subsidiaries for the year ended December 31, 2017 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 17, 2018. In particular, the Company’s significant accounting principles were presented as Note 1 to the Consolidated Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018.


Nature of Operations – Flexpoint Sensor Systems, Inc. (the Company) is located in Draper, Utah. The Company’s activities to date have included acquiring equipment and enhancing technology, obtaining financing, limited production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing and selling sensor technology and equipment using flexible potentiometer technology. Through March 31, 2018 the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.


Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.


Cash and Cash Equivalents – Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less.


Fair Value MeasurementsThe fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

 

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

 

Level 1: Quoted market prices in active markets for identical assets or liabilities.

 

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

 

The Company has classified the inputs used in valuing its derivative liabilities as Level 3 inputs. The Company valued its derivatives using the binomial lattice model. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.


Accounts Receivable – Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design and development engineering generally require a deposit of 50% of the quoted price prior to the commencement of work. The deposit is considered deferred income until the entire project is completed and accepted by the customer, at which time the entire contract price is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on a historical experience and an analysis of risk associated with the account balances.  The balance in the allowance account was $145,179 and $145,194 in the periods ended March 31, 2018 and December 31, 2017, respectively.  


Property and Equipment Property and equipment are stated at cost.  Additions and major improvements are capitalized while maintenance and repairs are charged to operations.  Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from three to ten years.


Valuation of Long-lived Assets – The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. Under similar analysis no impairment charge was taken during the period ended March 31, 2018 and during the period ended December 31, 2017.  Impairment tests will be conducted on an annual basis and, should they indicate a carrying value in excess of fair value, additional impairment charges may be required.


Intangible Assets – Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology.  Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows.  Under similar analysis there was no impairment charge taken during the period ended March 31, 2018 and during year ended December 31, 2017.


Research and Development – Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable.


Goodwill – Goodwill represents the excess of the Company’s reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or at interim periods when a triggering event occurs using a fair value approach. According to Accounting Standards Codification (or “ASC”) 350-20 Intangibles – Goodwill and Other, a fair-value-based test is applied at the overall Company level. The test compares the fair value of the Company to the carrying value of its net assets. This test requires various judgments and estimates. The fair value of the Company is allocated to the Company’s assets and liabilities based upon their fair values with the excess fair value allocated to goodwill. An impairment of goodwill is measured as the excess of the carrying amount of goodwill over the determined fair value.


Revenue Recognition – The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled to exchange for those goods or services. The Company only applies the five step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer.  The following five steps are applied to achieve that core principle:


Step 1.  Identify the contract with the customer

Step 2.  Identify the performance obligations in the contract

Step 3.  Determine the transaction price

Step 4.  Allocate the transaction price to the performance obligations in the contract

Step 5.  Recognize revenue when the Company satisfied a performance obligation


Stock-Based Compensation – The Company recognizes the cost of employee services received in exchange for stock options and awards of equity instruments based on the grant-date fair value of such options and awards, over the period they vest.   All share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense in operations over the requisite service period. For the periods ended March 31, 2018 and 2017, the Company recognized expense for stock-based compensation of $0 and $3,154, respectively.


Basic and Diluted Loss Per Share – Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.  Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At March 31, 2018 there were outstanding common share equivalents (options and convertible notes payable) which amounted to 19,875,403 of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive, thereby decreasing loss per common share.


Concentrations and Credit Risk - The Company has a few major customers who represent a significant portion of revenue, accounts receivable and notes receivable.  During the three month period ended March 31, 2018, two customers represented 77% of sales and represented 9% of accounts receivable.  The Company has a strong ongoing relationship with this customer with scheduled delivery extending through the year and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies.  


Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards Board Accounting Codification (ASC) 740: Income Taxes.  Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized


Recent Accounting Pronouncements – Public law No. 115-97, known as the Tax Cuts and Jobs Act “the “Tax Act”). Enacted on December 22, 2017, reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. Also on December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act.  SAB 118 provides a measurement period of up to one year from the enactment date to complete the accounting.  Any adjustments during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense in the reporting period when such adjustments are determined.  As the Company has net operating loss carryforwards which will offset tax liability for the coming year or years, no adjustments for the effect of the income tax rate change is reflected in our financial statements.


In February 2018, the Financial Standards Accounting Board (“FASB”) issued Accounting Statement Update No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.”  This ASU allows a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for certain income tax effects stranded in AOCI as a result of the Tax Act.  The reclassification eliminates the stranded tax effects resulting from the Tax Act and is intended to improve the usefulness of information reported to financial statement users.  ASU No. 2018-02 is effective for reporting periods beginning on January 1, 2019; early adoption is permitted. The Company does not currently have amounts to be reclassified under this and therefore believes it will not have an impact on its financial statements and statements of operations.


The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

GOING CONCERN
3 Months Ended
Mar. 31, 2018
GOING CONCERN[Abstract]  
GOING CONCERN

NOTE 2 – GOING CONCERN


The Company continues to accumulate significant operating losses and has an accumulated deficit of $27,409,675 at March 31, 2018.  These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.


Management is seeking additional funding to provide operating capital for its operations until such time as revenues are sufficient to sustain our level of operations.  However, there is no assurance that additional funding will be available on acceptable terms, if at all.

DERIVATIVE INSTRUMENTS
3 Months Ended
Mar. 31, 2018
DERIVATIVE INSTRUMENTS [Abstract]  
DERIVATIVE INSTRUMENTS

NOTE 3 – DERIVATIVE INSTRUMENTS


The derivative liability as of March 31, 2018, in the amount of $255,380 has a Level 3 fair value classification.


The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of March 31, 2018 and December 31, 2017:

 

 

Total

 

Balance, December 31, 2016

 

76,295

 

Recognition of derivative liabilities upon initial valuation

 

226,651

 

Change in fair value of derivative liabilities

 

60,734

 

Conversions of derivative liabilities into equity instruments

 

 

 

Balance, December 31, 2017

 

363,680

 

Recognition of derivative liabilities upon initial valuation

 

12,449

 

Change in fair value of derivative liabilities

 

(120,749)

 

Conversions of derivative liabilities into equity instruments

 

 

 

Balance, March 31, 2018

 

255,380

 

 

During the year ended 2017 and the period ended March 31, 2018, the Company issued convertible promissory notes which are convertible into common stock. Due to the Company’s lack of authorized shares necessary to settle all convertible instruments, in accordance with ASC 815-40-25, the Company determined that the conversion features related to these notes are derivative instruments since we do not have control to increase the number of authorized shares to settle all convertible instruments.  The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of debenture and to fair value as of each subsequent reporting date.

 

At March 31, 2018, the Company marked to market the fair value of the derivatives and determined a fair value of $255,380. The Company recorded a gain from change in fair value of derivatives of $120,749 for the three month period ended March 31, 2018.  The fair value of the embedded derivatives was determined using binomial lattice model based on the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 92.26% to 94.39%, (3) weighted average risk-free interest rate of 1.73% to 2.09% (4) expected life of 0.33 to 1.00 years, and (5) the quoted market price of the Company’s common stock at each valuation date.

 

In accordance ASC 815-40, the Company has implemented a sequencing policy with respect to all outstanding convertible instruments. The Company evaluates its contracts based upon earliest issuance date.


As of March 31, 2018, liabilities measured at fair value on a recurring basis are summarized as follows:


 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Derivative Liabilities

 

 

-

 

 

 

-

 

 

 

255,380

 

 

 

255,380

Total

 

$

-

 

 

$

-

 

 

$

255,380

 

 

$

255,380


Convertible Notes Payable


At December 31, 2017 there are notes outstanding with principal balances which total $880,000. Of the notes, $840,000 are convertible notes bearing a 10% annual rate of interest (with a 15% default rate) and are convertible into shares of common stock at the rate of $0.06 to $0.07 per share.  The remaining $40,000 is a convertible note entered into on August 8, 2011 with a former Company Director.  That note was due on December 31, 2015, and bears a default interest rate of 10%.


On January 31, 2018, the Company entered into a convertible note for up to $100,000 from a third party.  The note has an annual interest rate of 10% and is secured by the Company’s equipment.  The note has a conversion feature for restricted common shares at $0.07 per share and a maturity date of July 31, 2018.  On February 23, 2018 the Company drew $40,000 against this note.


Convertible Note Payable Related Party


At December 31, 2017 there are notes outstanding with two directors of the Company with balances of $87,257 and $27,256, respectively.  The notes bear an 8% annual rate of interest with a 12% default rate.  There are $50,000 in notes to the first officer that had due dates of December 31, 2016 and December 31, 2017, and on which interest is being calculated at the default rate.  The remaining $37,257 and $27,256 notes have due dates of December 31, 2018. All of the convertible notes issued to directors are convertible into shares of common stock at the rate of $0.07 per share.

STOCK OPTION PLANS
3 Months Ended
Mar. 31, 2018
STOCK OPTION PLANS [Abstract]  
STOCK OPTION PLANS

NOTE 4 STOCK OPTION PLANS


On August 25, 2005, the Board of Directors of the Company approved and adopted the 2005 Stock Incentive Plan (the Plan). The Plan became effective upon its adoption by the Board and will continue in effect for ten years, unless terminated.  This plan was approved by the stockholders of the Company at their annual meeting of shareholders on November 22, 2005. Under the Plan, the exercise price for all options issued will not be less than the average quoted closing market price of the Company’s trading common stock for the thirty day period immediately preceding the grant date plus a premium of ten percent.  The maximum aggregate number of shares that may be awarded under the plan is 2,500,000 shares.  The Company continues to utilize the Black-Scholes option-pricing model for calculating the fair value of the options granted as defined by ASC Topic 718, which is an acceptable valuation approach under ASC 718. This model requires the input of subjective assumptions, including the expected price volatility of the underlying stock.


On August 24, 2015, the Board of Directors approved the issuance of options to purchase 2,185,000 shares of the Company’s common stock.  Of the total issued, 1,960,000 options were issued to replace options held by directors and employees which were to expire and 225,000 options were issued to new employees.  Of the options issued, 640,000 have an option price of $0.14 per share, 500,000 have an option price of $0.15 per share, 995,000 have an option price of $0.20 per share, and 50,000 have an option price of $0.25 per share.  Options issued as replacement shall have immediate vesting terms. Options which are not replacements shall vest over a two year four month period in equal installments on the last day of 2015, 2016 and 2017, respectively.  We relied on an exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act.


Projected data related to the expected volatility and expected life of stock options is based upon historical and other information, and notably, the Company's common stock has limited trading history. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of the Company's employee stock options.  Between August 25, 2005 and December 31, 2015, the Company granted options to employees to purchase an aggregate 3,096,000 shares of common stock at exercise prices ranging from $0.14 to $2.07 per share.  The options vest over three years and expire 10 years from the date of grant.  The Company used the following assumptions in estimating the fair value of the options granted:


·

Market value at the time of issuance – Range of $0.14 to 2.07

·

Expected term – Range of 3.7 years to 10.0 years

·

Risk-free interest rate – Range of 1.60% to 4.93%

·

Dividend yield – 0%

·

Expected volatility – 200% to 424%

·

Weighted-average fair value - $0.16 to $2.07



All of the options were fully vested at December 31, 2018. As a result there was no stock-based compensation expenses recorded for the three months ended March 31, 2018.  The Company recognized $3,154 in stock-based compensation expense for the three month period ended March 31, 2017. There were 2,185,000 and 2,185,000 employee stock options outstanding at March 31, 2018 and December 31, 2017, respectively.  


A summary of all employee options outstanding and exercisable under the plan as of March 31, 2018, and changes during the three months then ended is set forth below:


Options

Shares

Weighted Average Exercise Price

Weighted Average Remaining Contractual  Life (Years)

Aggregate Intrinsic Value

 

 

 

 

 

Outstanding at the beginning of

  period

         2,185,000

 $                0.17

             7.65

 $              --   

   Granted

--

--

                   --   

                 --   

   Expired

                     --

                             --

                   --   

                 --   

   Forfeited

--

--

                   --   

                --   

Outstanding at the end of Period

       2,185,000

 $                 0.17

             7.41

$               --   

Exercisable at the end of Period

2,185,000

 $                 0.17

             7.41

   $               --

CAPITAL STOCK
3 Months Ended
Mar. 31, 2018
CAPITAL STOCK [Abstract]  
CAPITAL STOCK

NOTE 5 – CAPITAL STOCK


Preferred Stock – There are 1,000,000 shares of preferred stock with a par value of $0.001 per share authorized.  At March 31, 2018 and December 31, 2017, there were no shares of preferred stock issued or outstanding.


Common Stock – There are 100,000,000 shares of common stock with a par value of $0.001 per share authorized.  No shares of stock were issued during the three months ended March 31, 2018.  

COMMITMENTS AND CONTINGENCIES
3 Months Ended
Mar. 31, 2018
COMMITMENTS AND CONTINGENCIES [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 6 – COMMITMENTS AND CONTINGENCIES


The Company currently occupies approximately 11,639 square feet of office and manufacturing space from American Covers, Inc., dba Handstands. In 2014 the Company extended the operating lease agreement for its manufacturing facility in Draper, Utah. Under the terms of a three year lease extension effective January 1, 2015, the monthly rent remained at $8,950 per month for 2015, increased to $9,300 per month for 2016 and to $9,600 per month for 2017. The lease further provides that on the expiration of the lease on December 31, 2017, the lease becomes a month-to-month lease at a rate of the current monthly lease rate ($9,600), plus an increase of 10%, (now $10,560), with a 10% increase on the anniversary date of each succeeding year. The building is located in a business park in Draper, Utah which consists primarily of high tech manufacturing firms and it is located adjacent to Utah’s main interstate highway.

RELATED PARTY TRANSACTIONS
3 Months Ended
Mar. 31, 2018
RELATED PARTY TRANSACTIONS [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 7 – RELATED PARTY TRANSACTIONS


At March 31, 2018 and December 31, 2017, the Company had amounts of $20,000 and $20,000 payable to its Chief Executive Office for funds loaned the Company to pay of various operating expenses of the business.

 

At March 31, 2018 and December 31, 2017, the Company had outstanding notes payable to an officer in the amount of $87,257 and an outstanding note payable to a director in the amount of $27,256.

SUBSEQUENT EVENTS
3 Months Ended
Mar. 31, 2018
SUBSEQUENT EVENTS [Abstract]  
SUBSEQUENT EVENTS

NOTE 8 – SUBSEQUENT EVENTS


On April 13, 2018 the Company drew $30,000 against the $100,000 line of credit provided by Capital Communications.


On April 2, 2018 and April 30, 2018 an officer of the Company made loans to the Company totaling $40,000.


In accordance with ASC 855-10 management reviewed all material events through the date of this report.  There are no material subsequent events to report other than those disclosed above.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
Condensed Consolidated Interim Financial Statements

Condensed Consolidated Interim Financial Statements – The accompanying unaudited condensed consolidated financial statements include the accounts of Flexpoint Sensor Systems, Inc. and its former subsidiaries (the “Company”). These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. Therefore, these statements should be read in conjunction with the most recent annual consolidated financial statements of Flexpoint Sensor Systems, Inc. and subsidiaries for the year ended December 31, 2017 included in the Company’s Form 10-K filed with the Securities and Exchange Commission on April 17, 2018. In particular, the Company’s significant accounting principles were presented as Note 1 to the Consolidated Financial Statements in that report. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the full year ending December 31, 2018.

Nature of Operations

Nature of Operations – Flexpoint Sensor Systems, Inc. (the Company) is located in Draper, Utah. The Company’s activities to date have included acquiring equipment and enhancing technology, obtaining financing, limited production and seeking long-term manufacturing contracts. The Company’s operations are in designing, engineering, manufacturing and selling sensor technology and equipment using flexible potentiometer technology. Through March 31, 2018 the Company continued to manufacture products and sensors to fill customer orders and provide engineering and design work.

Use of Estimates

Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

Cash and Cash Equivalents.

Cash and Cash Equivalents – Cash and cash equivalents are considered to be cash and highly liquid securities with original maturities of three months or less.

Fair Value Measurements

Fair Value MeasurementsThe fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the party’s own credit risk.

 

Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

 

Level 1: Quoted market prices in active markets for identical assets or liabilities.

 

Level 2: Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3: Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

 

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

 

The carrying value of the Company’s cash, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value because of their short-term maturity.

 

The Company has classified the inputs used in valuing its derivative liabilities as Level 3 inputs. The Company valued its derivatives using the binomial lattice model. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed below are that of volatility and market price of the underlying common stock of the Company.

Accounts Receivable

Accounts Receivable – Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. Contracts associated with design and development engineering generally require a deposit of 50% of the quoted price prior to the commencement of work. The deposit is considered deferred income until the entire project is completed and accepted by the customer, at which time the entire contract price is billed to the customer and the deposit applied. The Company has established an allowance for bad debts based on a historical experience and an analysis of risk associated with the account balances.  The balance in the allowance account was $145,179 and $145,194 in the periods ended March 31, 2018 and December 31, 2017, respectively.  

Property and Equipment.

Property and Equipment Property and equipment are stated at cost.  Additions and major improvements are capitalized while maintenance and repairs are charged to operations.  Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized. Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from three to ten years.

Valuation of Long-lived Assets

Valuation of Long-lived Assets – The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the projected discounted cash flows. Under similar analysis no impairment charge was taken during the period ended March 31, 2018 and during the period ended December 31, 2017.  Impairment tests will be conducted on an annual basis and, should they indicate a carrying value in excess of fair value, additional impairment charges may be required.

Intangible Assets

Intangible Assets – Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology.  Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 5 to 15 years.  An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows.  Under similar analysis there was no impairment charge taken during the period ended March 31, 2018 and during year ended December 31, 2017.

Research and Development

Research and Development – Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of a process is completed and the process has been determined to be commercially viable.

Goodwill

Goodwill – Goodwill represents the excess of the Company’s reorganization value over the fair value of net assets of the Company upon emergence from bankruptcy. Goodwill is not amortized, but is tested for impairment annually, or at interim periods when a triggering event occurs using a fair value approach. According to Accounting Standards Codification (or “ASC”) 350-20 Intangibles – Goodwill and Other, a fair-value-based test is applied at the overall Company level. The test compares the fair value of the Company to the carrying value of its net assets. This test requires various judgments and estimates. The fair value of the Company is allocated to the Company’s assets and liabilities based upon their fair values with the excess fair value allocated to goodwill. An impairment of goodwill is measured as the excess of the carrying amount of goodwill over the determined fair value.

Revenue Recognition

Revenue Recognition – The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled to exchange for those goods or services. The Company only applies the five step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer.  The following five steps are applied to achieve that core principle:


Step 1.  Identify the contract with the customer

Step 2.  Identify the performance obligations in the contract

Step 3.  Determine the transaction price

Step 4.  Allocate the transaction price to the performance obligations in the contract

Step 5.  Recognize revenue when the Company satisfied a performance obligation

Stock-Based Compensation

Stock-Based Compensation – The Company recognizes the cost of employee services received in exchange for stock options and awards of equity instruments based on the grant-date fair value of such options and awards, over the period they vest.   All share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense in operations over the requisite service period. For the periods ended March 31, 2018 and 2017, the Company recognized expense for stock-based compensation of $0 and $3,154, respectively.

Basic and Diluted Loss Per Share

Basic and Diluted Loss Per Share – Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.  Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. At March 31, 2018 there were outstanding common share equivalents (options and convertible notes payable) which amounted to 19,875,403 of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive, thereby decreasing loss per common share.

Concentrations and Credit Risk

Concentrations and Credit Risk - The Company has a few major customers who represent a significant portion of revenue, accounts receivable and notes receivable.  During the three month period ended March 31, 2018, two customers represented 77% of sales and represented 9% of accounts receivable.  The Company has a strong ongoing relationship with this customer with scheduled delivery extending through the year and does not believe this concentration poses a significant risk, as their products are based entirely on the Company’s technologies.  

Income Taxes

Income Taxes - The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards Board Accounting Codification (ASC) 740: Income Taxes.  Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized

Recent Accounting Pronouncements

Recent Accounting Pronouncements – Public law No. 115-97, known as the Tax Cuts and Jobs Act “the “Tax Act”). Enacted on December 22, 2017, reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. Also on December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act.  SAB 118 provides a measurement period of up to one year from the enactment date to complete the accounting.  Any adjustments during this measurement period will be included in net earnings from continuing operations as an adjustment to income tax expense in the reporting period when such adjustments are determined.  As the Company has net operating loss carryforwards which will offset tax liability for the coming year or years, no adjustments for the effect of the income tax rate change is reflected in our financial statements.


In February 2018, the Financial Standards Accounting Board (“FASB”) issued Accounting Statement Update No. 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.”  This ASU allows a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for certain income tax effects stranded in AOCI as a result of the Tax Act.  The reclassification eliminates the stranded tax effects resulting from the Tax Act and is intended to improve the usefulness of information reported to financial statement users.  ASU No. 2018-02 is effective for reporting periods beginning on January 1, 2019; early adoption is permitted. The Company does not currently have amounts to be reclassified under this and therefore believes it will not have an impact on its financial statements and statements of operations.


The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its consolidated results of operation, financial position and cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings or operations.

DERIVATIVE INSTRUMENTS (Tables)
3 Months Ended
Mar. 31, 2018
Derivative Instruments Tables  
Schedule of Changes in Level 3 Financial Liabilities

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of March 31, 2018 and December 31, 2017:

 

 

Total

 

Balance, December 31, 2016

 

76,295

 

Recognition of derivative liabilities upon initial valuation

 

226,651

 

Change in fair value of derivative liabilities

 

60,734

 

Conversions of derivative liabilities into equity instruments

 

 

 

Balance, December 31, 2017

 

363,680

 

Recognition of derivative liabilities upon initial valuation

 

12,449

 

Change in fair value of derivative liabilities

 

(120,749)

 

Conversions of derivative liabilities into equity instruments

 

 

 

Balance, March 31, 2018

 

255,380

 

Schedule of Liabilities Measured at Fair Value on Recurring Basis

As of March 31, 2018, liabilities measured at fair value on a recurring basis are summarized as follows:


 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

Derivative Liabilities

 

 

-

 

 

 

-

 

 

 

255,380

 

 

 

255,380

Total

 

$

-

 

 

$

-

 

 

$

255,380

 

 

$

255,380

STOCK OPTION PLANS (Tables)
3 Months Ended
Mar. 31, 2018
STOCK OPTION PLANS [Abstract]  
Schedule of Stock Option Activity

A summary of all employee options outstanding and exercisable under the plan as of March 31, 2018, and changes during the three months then ended is set forth below:


Options

Shares

Weighted Average Exercise Price

Weighted Average Remaining Contractual  Life (Years)

Aggregate Intrinsic Value

 

 

 

 

 

Outstanding at the beginning of

  period

         2,185,000

 $                0.17

             7.65

 $              --   

   Granted

--

--

                   --   

                 --   

   Expired

                     --

                             --

                   --   

                 --   

   Forfeited

--

--

                   --   

                --   

Outstanding at the end of Period

       2,185,000

 $                 0.17

             7.41

$               --   

Exercisable at the end of Period

2,185,000

 $                 0.17

             7.41

   $               --

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
3 Months Ended
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Nature Of Business [Line Items]      
Accounts receivable, allowance for bad debts $ 145,179   $ 145,194
Stock-based compensation expense $ 3,154  
Anti-dilutive securities excluded from computation of earnings per share amount 19,875,403    
Sales [Member] | Customer One [Member]      
Nature Of Business [Line Items]      
Risk percentage 77.00%    
Accounts Receivable [Member] | Customer One [Member]      
Nature Of Business [Line Items]      
Risk percentage 9.00%    
Minimum [Member]      
Nature Of Business [Line Items]      
Property and equipment, useful lives P3Y    
Intangible assets, useful lives 5 years    
Maximum [Member]      
Nature Of Business [Line Items]      
Property and equipment, useful lives P10Y    
Intangible assets, useful lives 15 years    
GOING CONCERN (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Going Concern Details    
Accumulated deficit $ (27,409,675) $ (27,306,453)
DERIVATIVE INSTRUMENTS (Narrative) (Details) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 31, 2018
Mar. 31, 2018
Mar. 31, 2017
Dec. 31, 2017
Aug. 08, 2011
Derivative liabilities   $ 255,380      
Loss on change in fair value of derivative liabilities   120,749 $ 15,687    
Interest expense in connection with recognition of derivative liabilities        
Proceeds from borrowings under convertible note payable   $ 40,000 $ 120,000    
Convertible notes payable, principal amount outstanding       $ 880,000  
Derivative Classification [Member] | Minimum [Member]          
Expected volatility   92.26%      
Risk-free interest rate   1.73%      
Expected life   3 months 29 days      
Derivative Classification [Member] | Maximum [Member]          
Expected volatility   94.39%      
Risk-free interest rate   2.09%      
Expected life   1 year      
Convertible Debt [Member]          
Debt instrument, interest rate       10.00%  
Debt instrument, default rate       15.00%  
Convertible notes payable, principal amount outstanding       $ 840,000  
Convertible Notes Payable [Member]          
Debt instrument, maturity date       Dec. 31, 2015  
Debt instrument, default rate       10.00%  
Convertible Notes Payable [Member] | Director [Member]          
Debt instrument, face amount         $ 40,000
Debt instrument, interest rate         10.00%
Convertible notes payable, balance         $ 40,000
Convertible Notes Payable [Member] | Minimum [Member]          
Debt instrument, conversion price       $ 0.06  
Convertible Notes Payable [Member] | Maximum [Member]          
Debt instrument, conversion price       $ 0.07  
Convertible Notes Payable to Related Party [Member] | Director [Member]          
Debt instrument, interest rate       8.00%  
Debt instrument, default rate       12.00%  
Debt instrument, conversion price       $ 0.07  
Convertible Notes Payable to Related Party [Member] | One Director [Member]          
Debt instrument, maturity date       Dec. 31, 2016  
Convertible notes payable, principal amount outstanding       $ 87,257  
Convertible notes payable, balance       $ 37,257  
Convertible Notes Payable to Related Party [Member] | Two Director [Member]          
Debt instrument, maturity date       Dec. 31, 2017  
Convertible notes payable, principal amount outstanding       $ 27,256  
Convertible notes payable, balance       27,256  
Convertible Notes Payable to Related Party [Member] | Officer [Member]          
Convertible notes payable, balance       $ 50,000  
New Convertible Notes Payable [Member]          
Debt instrument, face amount $ 100,000        
Debt instrument, maturity date Jul. 31, 2018        
Debt instrument, interest rate 10.00%        
Proceeds from borrowings under convertible note payable $ 40,000        
Debt instrument, conversion price $ 0.07        
DERIVATIVE INSTRUMENTS (Schedule of Changes in Level 3 Financial Liabilities) (Details) - Derivative Financial Instruments, Liabilities [Member] - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
Balance $ 363,680 $ 76,295
Recognition of derivative liabilities upon initial valuation 12,449 226,651
Change in fair value of derivative liabilities (120,749) 60,734
Conversions of derivative liabilities into equity instruments
Balance $ 255,380 $ 363,680
DERIVATIVE INSTRUMENTS (Schedule of Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring [Member]
Mar. 31, 2018
USD ($)
Liabilities, fair value $ 255,380
Derivative Financial Instruments, Liabilities [Member]  
Liabilities, fair value 255,380
Level 1 [Member]  
Liabilities, fair value
Level 1 [Member] | Derivative Financial Instruments, Liabilities [Member]  
Liabilities, fair value
Level 2 [Member]  
Liabilities, fair value
Level 2 [Member] | Derivative Financial Instruments, Liabilities [Member]  
Liabilities, fair value
Level 3 [Member]  
Liabilities, fair value 255,380
Level 3 [Member] | Derivative Financial Instruments, Liabilities [Member]  
Liabilities, fair value $ 255,380
STOCK OPTION PLANS (Narrative) (Details) - USD ($)
3 Months Ended 124 Months Ended
Aug. 24, 2015
Mar. 31, 2018
Dec. 31, 2015
Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Options granted during period      
Option pricing assumptions        
Weighted-average fair value of options granted      
Options outstanding   2,185,000   2,185,000
Unrecognized compensation cost related to employee stock options   $ 3,154    
2005 Stock Incentive Plan [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Shares authorized   2,500,000    
2005 Stock Incentive Plan [Member] | Stock Options [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 2,185,000      
Options granted during period     3,096,000  
Exercise price of stock options granted, minimum     $ 0.14  
Exercise price of stock options granted, maximum     $ 2.07  
Option vesting period 2 years 4 months   3 years  
Option expiration period     10 years  
Option pricing assumptions        
Dividend yield     0.00%  
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Minimum [Member]        
Option pricing assumptions        
Market value per share at time of issuance     $ 0.14  
Expected term     3 years 8 months 12 days  
Risk-free interest rate     1.60%  
Expected volatility     200.00%  
Weighted-average fair value of options granted     $ 0.16  
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Maximum [Member]        
Option pricing assumptions        
Market value per share at time of issuance     $ 2.07  
Expected term     10 years  
Risk-free interest rate     4.93%  
Expected volatility     424.00%  
Weighted-average fair value of options granted     $ 2.07  
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range One [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 640,000      
Exercise price of stock options granted $ 0.14      
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Two [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 500,000      
Exercise price of stock options granted $ 0.15      
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Three [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 995,000      
Exercise price of stock options granted $ 0.20      
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Exercise Price Range Four [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 50,000      
Exercise price of stock options granted $ 0.25      
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Employee [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 225,000      
2005 Stock Incentive Plan [Member] | Stock Options [Member] | Director [Member]        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Issuance of options for purchase of common shares 1,960,000      
STOCK OPTION PLANS (Schedule of Stock Option Activity) (Details)
3 Months Ended
Mar. 31, 2018
USD ($)
$ / shares
shares
Shares  
Outstanding at the beginning of period | shares 2,185,000
Granted | shares
Expired | shares
Forfeited | shares
Outstanding at the end of Period | shares 2,185,000
Exercisable at the end of the Period | shares 2,185,000
Weighted Average Exercise Price  
Outstanding at the beginning of period | $ / shares $ 0.17
Granted | $ / shares
Expired | $ / shares
Forfeited | $ / shares
Outstanding at the end of Period | $ / shares 0.17
Exercisable at the end of Period | $ / shares $ 0.17
Weighted Average Remaining Contractual Life (Years)  
Outstanding at the beginning of period 7 years 7 months 24 days
Outstanding at the end of Period 7 years 4 months 28 days
Exercisable at the end of Period 7 years 4 months 28 days
Outstanding at the beginning of period | $
Granted | $
Expired | $
Forfeited | $
Outstanding at the end of Period | $
Exercisable at the end of the Period | $
CAPITAL STOCK (Details) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2018
Dec. 31, 2017
CAPITAL STOCK [Abstract]    
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, par value per share $ 0.001 $ 0.001
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, shares authorized 100,000,000 100,000,000
Common stock, par value per share $ 0.001 $ 0.001
Stock issued 0 0
COMMITMENTS AND CONTINGENCIES (Details)
3 Months Ended
Mar. 31, 2018
USD ($)
COMMITMENTS AND CONTINGENCIES [Abstract]  
Operating lease expiration period Dec. 31, 2017
Lease, monthly payment in 2015 $ 8,950
Lease, monthly payment in 2016 9,300
Lease, monthly payment in 2017 9,600
Lease, monthly payment in 2018 $ 10,560
Increase lease rate percentage 10.00%
RELATED PARTY TRANSACTIONS (Details) - USD ($)
Mar. 31, 2018
Dec. 31, 2017
Related Party Transaction [Line Items]    
Due to related parties $ 20,000 $ 20,000
Chief Executive Officer [Member]    
Related Party Transaction [Line Items]    
Accounts payable - related party 20,000 20,000
Officer [Member]    
Related Party Transaction [Line Items]    
Outstanding notes payable amount $ 87,257  
Director [Member]    
Related Party Transaction [Line Items]    
Outstanding notes payable amount   $ 27,256
SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - USD ($)
Apr. 02, 2018
Apr. 13, 2018
Officer [Member]    
Subsequent Event [Line Items]    
Proceeds from related party debt $ 40,000  
Capital Communications [Member]    
Subsequent Event [Line Items]    
Maximum borrowing capacity   $ 100,000
Amount drawn against note   $ 30,000
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