Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 12, 2020 | |
Document and Entity Information: | ||
Entity Registrant Name | POWERVERDE, INC. | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Entity Central Index Key | 0000933972 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 31,750,106 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Current Reporting Status | Yes | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Interactive Data Current | Yes | |
Entity File Number | 000-27866 | |
Entity Incorporation, State or Country Code | NV |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash | $ 56,899 | $ 20,033 |
Accounts receivable | 22,000 | 6,000 |
Prepaid expenses | 15,751 | 11,460 |
Total Assets | 94,650 | 37,493 |
Current Liabilities: | ||
Accounts payable and accrued expenses | 155,019 | 101,131 |
Total Current Liabilities | 155,019 | 101,131 |
Long Term Liabilities | ||
Convertible notes payable, related parties, net of issuance costs | 401,186 | 306,254 |
Total Long Term Liabilities | 401,186 | 306,254 |
Total Liabilities | 556,205 | 407,385 |
Stockholders' Deficit | ||
Preferred stock: 50,000,000 shares authorized, 0 shares issued at March 31, 2020 and December 31, 2019 | 0 | 0 |
Common stock: 200,000,000 common shares authorized, par value $0.0001 per share, 40,300,106 common shares issued and 31,750,106 shares outstanding at December 31, 2019 and December 31, 2018, respectively | 3,981 | 3,981 |
Additional paid-in capital | 12,689,980 | 12,689,980 |
Treasury stock, 8,550,000 shares at cost | (491,139) | (491,139) |
Accumulated deficit | (12,664,377) | (12,572,714) |
Total Stockholders' Deficit | (461,555) | (369,892) |
Total Liabilities and Stockholders' Deficit | $ 94,650 | $ 37,493 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, par value | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 40,300,106 | 40,300,106 |
Common Stock, shares outstanding | 31,750,106 | 31,750,106 |
Treasury stock | 8,550,000 | 8,550,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues [Abstract] | ||
Revenue | $ 16,000 | $ 5,000 |
Operating Expenses | ||
Research and development | 34,939 | 35,059 |
General and administrative | 61,076 | 60,798 |
Total Operating Expenses | 96,015 | 95,857 |
Loss from Operations | (80,015) | (90,857) |
Other Expenses | ||
Interest expense | (11,648) | (4,294) |
Total Other Expenses | (11,648) | (4,294) |
Loss before Income Taxes | (91,663) | (95,151) |
Provision for Income Taxes | 0 | 0 |
Net Loss | $ (91,663) | $ (95,151) |
Net Loss per Share - Basic and Diluted | $ 0 | $ 0 |
Weighted Average Common Shares Outstanding - Basic and Diluted | 31,750,106 | 31,750,106 |
Condensed Consolidated Changes
Condensed Consolidated Changes in Stockholders' Deficit (Unaudited) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total |
Balance at Dec. 31, 2018 | $ 3,981 | $ 12,609,980 | $ (12,057,798) | $ (491,139) | $ 65,024 | |
Net loss | (95,151) | (95,151) | ||||
Balance at Mar. 31, 2019 | 3,981 | 12,609,980 | (12,152,949) | (491,139) | (30,127) | |
Balance at Dec. 31, 2019 | 3,981 | 12,689,980 | (12,572,714) | (491,139) | (369,892) | |
Net loss | (91,663) | (91,663) | ||||
Balance at Mar. 31, 2020 | $ 3,981 | $ 12,689,980 | $ (12,664,377) | $ (491,139) | $ (461,555) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows from Operating Activities | ||
Net Loss | $ (91,663) | $ (95,151) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 0 | 4,054 |
Amortization of loan costs | 2,932 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable, prepaid expenses and other assets | (20,291) | 292 |
Accounts payable and accrued expenses | 53,888 | 33,665 |
Cash Used In Operating Activities | (55,134) | (57,140) |
Cash Flows from Financing Activities | ||
Proceeds from notes payable, related parties | 100,000 | 290,000 |
Payments for debt issuance costs | (8,000) | (22,279) |
Cash provided by Financing Activities | 92,000 | 267,721 |
Net Change in Cash and Cash Equivalents | 36,866 | 209,661 |
Cash and Cash Equivalents at Beginning of Period | 20,033 | 8,482 |
Cash and Cash Equivalents at End of Period | $ 56,899 | $ 218,143 |
Condensed Consolidated Financia
Condensed Consolidated Financial Statements | 3 Months Ended |
Mar. 31, 2020 | |
Financial Statements | |
Condensed Consolidated Financial Statements | Note 1 – Condensed Consolidated Financial Statements The accompanying unaudited condensed consolidated financial statements prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Annual Report of PowerVerde, Inc. (“PowerVerde,” “we,” “us,” “our,” or the “Company”) as of and for the year ended December 31, 2019. The results of operations for the three months ended March 31, 2020, are not necessarily indicative of the results to be expected for the full year or for future periods. The condensed consolidated financial statements include the accounts of PowerVerde, Inc., formerly known as Vyrex Corporation (the “Company”), and PowerVerde Systems, Inc., formerly known as PowerVerde, Inc., its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation. |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2020 | |
Going Concern: | |
Going Concern | Note 2 – Going Concern We have financed our operations since inception through the sale of debt and equity securities and through Biotech IP licensing revenues which expired in March 2018. As of March 31, 2020, we had a working capital deficit of $60,368 compared to a working capital deficit of $63,638 at December 31, 2019. The Company has historically relied upon unrelated and related party debt and equity financing to fund its cash flow shortages and will require either additional debt or equity financing to sustain its operations. The Company’s revenues through 2018 were derived mainly from royalties under its biotech licensing agreement, which expired in March 2018. Those factors create substantial doubt about the Company’s ability to continue as a going concern. The Company continues to seek funding from private debt and equity investors, as it needs to promptly raise substantial additional capital in order to finance its plan of operations. There can be no assurance that the Company will be able to promptly raise the necessary additional funds on commercially acceptable terms, if at all. If the Company does not raise the necessary funds, it may be forced to cease operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Policy Text Block [Abstract] | |
Summary of Significant Accounting Policies | Note 3 – Summary of Significant Accounting Policies Nature of Business The Company is devoting substantially all of its present efforts to establish a new business involving the development and commercialization of clean energy electric power generation systems, and none of its planned principal operations have commenced. However, royalties from licenses unrelated to planned principal operations were recognized as revenue through March 2018, when the underlying license agreement terminated. No material revenues from this planned principal operation have been generated. Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Accounts Receivable Accounts receivable consist of balances due from assembly services. The Company monitors accounts receivable and provides allowances when considered necessary. At March 31, 2020, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided. Revenue Recognition Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the three months ended March 31, 2020 and 2019 Intellectual Property The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred. Impairment of Long-Lived Assets Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. As of June 2019, the Company recognized an impairment loss of $69,178. The intellectual property was fully amortized as of December 31, 2019. Stock-based Compensation The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. Common Stock Purchase Warrants The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company, or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of December 31, 2019 and March 31, 2020 were classified as equity. Accounting for Uncertainty in Income Taxes The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Research and Development Costs The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $34,939 and $35,059 for the three months ended March 31, 2020 and 2019, respectively. Earnings (Loss) Per Share Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 975,000 Financial instruments The Company carries cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable, at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature or market interest rates on interest bearing debt. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
Recent Accounting Prouncements | |
Recent Accounting Pronouncements | Note 4 – Recent Accounting Pronouncements There are several new accounting pronouncements issued or proposed by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s condensed consolidated financial position, operating results, or cash flow. |
Intellectual Property and Licen
Intellectual Property and License Agreement | 3 Months Ended |
Mar. 31, 2020 | |
Business Combinations [Abstract] | |
Intellectual Property | Note 5 – Intellectual Property and License Agreement On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC for total consideration of $100,000 to utilize the Helidyne intellectual property in the manufacturing of planetary rotor expanders and the incorporation of same in the Company’s distributed electric power generation systems. The license agreement also grants the Company an exclusive license to sell the expanders whether manufactured by Helidyne or by the Company. The Company’s royalty obligation begins on the earlier of the commercialization of the product or three years from the effective date of the agreement. Once the royalty obligation begins, the minimum annual royalty is $50,000 for each of the first six years, and $100,000, per commercial year, for the remainder of the agreement. Helidyne has defaulted under the agreement. Royalties would be payable only if Helidyne performs as required, or if the Company elects to produce its own expanders using Helidyne technology. During the year, management of the Company evaluated the continued default by Helidyne and determined that Helidyne will not be able to perform under the license agreement for the foreseeable future. The Company’s license agreement continues to be active and the Company may utilize the Helidyne intellectual property in marketing its own products. Under the terms of the license agreement, the Company has the right to develop a prototype utilizing the Helidyne technology at its own cost. Due to the continued default by Helidyne and the potential cost of developing its own prototype, the Company has determined that the intangible asset related to the above license agreement is impaired and recognized an impairment charge of $69,178 in the second quarter of 2019, which is 100% of the net carrying value. See Note 9. For the three months ended March 31, 2020 and 2019, amortization expense was $0 and $2,500 respectively. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2020 | |
Equity: | |
Stockholders' Deficit | Note 6 – Stockholders’ Deficit Warrants A summary of warrants issued, exercised and expired during the three months ended March 31, 2020 is as follows: Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balance at December 31, 2019 975,000 $ .11 $ — Issued — — — Expired — — — Balance at March 31, 2020 975,000 $ .11 $ 74,750 |
Stock Options
Stock Options | 3 Months Ended |
Mar. 31, 2020 | |
Stock Options | |
Stock Options | Note 7 – Stock Options Stock option activity for the quarter ended March 31, 2020, is summarized as follows: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Options outstanding at December 31, 2019 12,180,500 $ 0.21 5.59 Granted — — — Expired/forfeited — — — Options outstanding at March 31, 2020 12,180,500 $ 0.21 4.44 There was no stock option compensation for the three months ended March 31, 2020 and 2019 and no unrecognized compensation expense associated with the options. |
Convertible Notes Payable to Re
Convertible Notes Payable to Related Parties | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable to Related Parties | |
Convertible Notes Payable to Related Parties | Note 8 – Convertible Notes Payable to Related Parties In 2019, the Company issued Convertible Promissory Notes totaling $300,000 to stockholders. The notes are to be paid in one principal payment, along with any unpaid interest by December 31, 2021. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021. In December 2019, the Company issued a Convertible Promissory Note in the principal amount of $25,000 to a stockholder in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022. In March 2020, the Company issued a Convertible Promissory Note in the principal amount of $100,000 to a stockholder in connection with a loan in the same amount. The note is to be paid in one principal payment, along with any unpaid interest by December 31, 2022. Interest is payable semiannually at 10%. The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022. Consequently, Convertible Promissory Notes have been issued in an aggregate principal amount of $425,000 in 2019 and the first quarter of 2020. Convertible Notes Payable at March 31, 2020 consisted of the following: March 31, 2020 Note payable to stockholders $ 425,000 Less: Unamortized debt issuance costs 23,814 Total long-term debt $ 401,186 Amortization of the debt issuance costs is reported as interest expense in the income statement. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitment and Contingencies: | |
Commitments and Contingencies | Note 9 - Commitments and Contingencies On June 25, 2015, Company consultant Hank Leibowitz assigned to the Company a patent he obtained for a system and method for using high temperature sources in Rankine cycle power systems. The Company has agreed to pay Mr. Leibowitz a 2% royalty for any and all revenues of products and/or project sales by the Company based on the subject patent. On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in order to use Helidyne expanders in Powerverde systems and to sell Helidyne expanders. As part of the licensing agreement the Company committed to purchase two 50 kW expanders, at a price of $25,000 each, on or before the sixth month anniversary of the agreement. The $50,000 was payable in two monthly installments of $25,000 beginning October 2016. The Company had made payments totaling $38,750, towards the purchase of the expanders. Due to Helidyne’s failure to perform under the agreement, the Company has not made any further payments to Helidyne and does not intend to do so unless and until Helidyne performs as required. Helidyne has not objected to the Company’s position, and it is very unlikely that Helidyne will ever be able to perform. The Company agreed to pay Helidyne LLC a royalty of 3% of sales, subject to a minimum annual royalty of $50,000 beginning on the earlier of commercialization of the product or three years from the effective date of the agreement. This minimum royalty would be payable only if Helidyne performs as required, which is very unlikely, or if the Company elects to produce its own expanders using Helidyne technology. The Company does intend to produce these expanders directly or through a contract manufacturer in the future. See Note 5. On April 15, 2017, the Company entered into an assembly agreement with Liberty Plugins, Inc. (“Liberty”) to assemble Liberty’s Hydra electronic vehicle charging systems and ship completed Hydras to Liberty’s facility in Santa Barbara, California (the “Liberty Agreement”). Liberty has agreed to pay $1,000 for the first 10 Hydras assembled in a month, $750 per Hydra for the next 10 Hydras assembled per month and $500 per Hydra for each Hydra assembled above 20 per month. The Company has never assembled/shipped more than 10 Hydras in any month and does not expect to do so in the future. As of March 31, 2020, the Company has built and shipped 106 Hydras. Revenue of $16,000 and $5,000 for these products is reflected in the net revenue on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019, respectively. On September 1, 2019, the Company hired Daniel Bogar to serve as its President, reporting to the CEO. As compensation, Mr. Bogar received a fully-vested non-qualified option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $.10 per share, with an expiration date of June 30, 2026. In addition, Mr. Bogar will receive an annual salary of $90,000 beginning on the closing of a private financing with gross proceeds of at least $1,000,000; however, the Company will be permitted to defer the salary to the extent required to maintain solvency. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions | |
Related Party Transactions | Note 10 - Related Party Transactions Since July 2010, the accounting firm J.L. Hofmann & Associates, P.A. (“JLHPA”), whose principal is our CFO John L. Hofmann, has provided financial consulting and accounting services to the Company. In December 2017, J.L. Hofmann & Associates, P.A. merged with Kabat, Schertzer, De La Torre, Taraboulos & Co, LLC (“KSDT”). The Company paid $9,300 and $$9,614 for its services in the three months ended March 31, 2020 and 2019, respectively. The Company’s consultant and shareholder Hank Leibowitz receives compensation of $7,500 per month, totaling $22,500 for the three months ended March 31, 2020 and 2019. Mr. Leibowitz was owed accrued compensation of $68,327 and $30,000 as of March 31, 2020 and 2019, respectively. In connection with the convertible notes that were issued in 2019 and the first quarter of 2020, the Company accrued an 8% finder’s fee to its Chief Executive Officer, Richard Davis, totaling $34,000. Mr. Davis was owed accrued compensation of $9,000 and $5,200 as of March 31, 2020 and 2019, respectively. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11 – Subsequent Events None |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Policy Text Block [Abstract] | |
Nature of Business | Nature of Business The Company is devoting substantially all of its present efforts to establish a new business involving the development and commercialization of clean energy electric power generation systems, and none of its planned principal operations have commenced. However, royalties from licenses unrelated to planned principal operations were recognized as revenue through March 2018, when the underlying license agreement terminated. No material revenues from this planned principal operation have been generated. |
Cash Equivalents | Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
Accounts Receivables | Accounts Receivable Accounts receivable consist of balances due from assembly services. The Company monitors accounts receivable and provides allowances when considered necessary. At March 31, 2020, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided. |
Revenue Recognition | Revenue Recognition Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the three months ended March 31, 2020 and 2019 |
Intellectual Property | Intellectual Property The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. As of June 2019, the Company recognized an impairment loss of $69,178. The intellectual property was fully amortized as of December 31, 2019. |
Stock-based Compensation | Stock-based Compensation The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. |
Common Stock Purchase Warrants | Common Stock Purchase Warrants The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company, or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of December 31, 2019 and March 31, 2020 were classified as equity. |
Accounting for Uncertainty in Income Taxes | Accounting for Uncertainty in Income Taxes The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
Research and Development Costs | Research and Development Costs The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $34,939 and $35,059 for the three months ended March 31, 2020 and 2019, respectively. |
Earnings (Loss) Per Share | Earnings (Loss) Per Share Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 975,000 |
Financial instruments | Financial instruments The Company carries cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and notes payable, at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature or market interest rates on interest bearing debt. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expenses during the reporting period. Actual results could differ from those estimates. |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity: | |
Summary of warrants | A summary of warrants issued, exercised and expired during the three months ended March 31, 2020 is as follows: Shares Weighted Average Exercise Price Aggregate Intrinsic Value Balance at December 31, 2019 975,000 $ .11 $ — Issued — — — Expired — — — Balance at March 31, 2020 975,000 $ .11 $ 74,750 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Stock Options | |
Stock Option | Stock option activity for the quarter ended March 31, 2020, is summarized as follows: Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years) Options outstanding at December 31, 2019 12,180,500 $ 0.21 5.59 Granted — — — Expired/forfeited — — — Options outstanding at March 31, 2020 12,180,500 $ 0.21 4.44 |
Convertible Notes Payable to _2
Convertible Notes Payable to Related Parties (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable to Related Parties | |
Schedule of long-term debt | Convertible Notes Payable at March 31, 2020 consisted of the following: March 31, 2020 Note payable to stockholders $ 425,000 Less: Unamortized debt issuance costs 23,814 Total long-term debt $ 401,186 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Going Concern Details Narrative | ||
Working capital deficit | $ (60,368) | $ (63,638) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2019 | |
Allowance for doubtful accounts | $ 0 | $ 0 | ||
Revenue percentage | 100.00% | 100.00% | ||
Research and development cost | $ 34,939 | $ 35,059 | ||
Impairment charge | $ 69,178 | |||
Warrants | ||||
Antidilutive Excluded from Computation of Earnings Per Share, Amount | 975,000 | |||
Option | ||||
Antidilutive Excluded from Computation of Earnings Per Share, Amount | 12,180,500 |
Intellectual Property and Lic_2
Intellectual Property and License Agreement (Details Narrative) - USD ($) | Jun. 01, 2016 | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 |
Amortization expense | $ 0 | $ 2,500 | ||
Impairment charge | $ 69,178 | |||
Helidyne LLC [Member] | ||||
Commercial royalty obligation | $ 100,000 | |||
Annual royalty | $ 50,000 |
Stockholders' Deficit (Details)
Stockholders' Deficit (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Warrants term | |
Balance at beginning | shares | 975,000 |
Shares Issued | shares | 0 |
Shares Expired | shares | 0 |
Balance at end | shares | 975,000 |
Weighted Average Exercise Price Balance at beginning | $ 0.11 |
Weighted Average Exercise Price Issued | |
Weighted Average Exercise Price Expired | |
Weighted Average Exercise Price Balance at end | 0.11 |
Aggregate Intrinsic Value Balance at beginning | |
Aggregate Intrinsic Value Issued | |
Aggregate Intrinsic Value Expired | |
Aggregate Intrinsic Value Balance at end | $ 74,750 |
Stock Options (Details)
Stock Options (Details) | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Shares | |
Granted | 0 |
Expired/forfeited | 0 |
Employee Stock Option [Member] | |
Shares | |
Begining Balance | 12,180,500 |
Granted | 0 |
Expired/forfeited | 0 |
Ending Balance | 12,180,500 |
Weighted Average Exercise Price | |
Options Outstanding, Begining Balance, Weighted Average Exercise Price | $ / shares | $ 0.21 |
Granted | $ / shares | |
Expired/forfeited | $ / shares | |
Options Outstanding, Ending Balance, Weighted Average Exercise Price | $ / shares | $ 0.21 |
Weighted Average Remaining Contractual Life (Years) | |
Options outstanding Begining | 5 years 7 months 2 days |
Options outstanding Ending | 4 years 5 months 9 days |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-based compensation expense | $ 0 | $ 0 |
Unrecognized stock-based compensation | $ 0 |
Convertible Notes Payable to _3
Convertible Notes Payable to Related Parties (Details) | Mar. 31, 2020USD ($) |
Notes Payable to Related Parties | |
Note payable to stockholders | $ 425,000 |
Less: Unamortized debt issuance costs | 23,814 |
Total long-term debt | $ 401,186 |
Convertible Notes Payable to _4
Convertible Notes Payable to Related Parties (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2019 | |
Notes payable to stockholders | $ 425,000 | ||
Convertible Promissory Notes | |||
Notes payable to stockholders | $ 300,000 | $ 300,000 | |
Maturity date | Dec. 31, 2021 | ||
Interest rate | 10.00% | 10.00% | |
Notes payable description | The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021. | ||
Convertible Promissory Notes | |||
Notes payable to stockholders | $ 25,000 | $ 25,000 | |
Maturity date | Dec. 31, 2022 | ||
Interest rate | 10.00% | 10.00% | |
Notes payable description | The notes are convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022. | ||
Convertible Promissory Notes | |||
Notes payable to stockholders | $ 100,000 | ||
Maturity date | Dec. 31, 2022 | ||
Interest rate | 10.00% | ||
Notes payable description | The note is convertible into common stock at a price of $.20 per share through December 31, 2020, $.30 per share from January 1, 2021 through December 31, 2021, and $.40 per share from January 1, 2022 through the maturity date of December 31, 2022. |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Sep. 01, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Oct. 01, 2016 | Jun. 01, 2016 | Jun. 25, 2015 |
Royalty percentage | 2.00% | |||||
Company made payments | $ 38,750 | |||||
Two monthly installments | $ 25,000 | |||||
Revenue from product | $ 16,000 | $ 5,000 | ||||
Helidyne LLC [Member] | ||||||
Royalty percentage | 3.00% | |||||
Annual royalty | $ 50,000 | |||||
Two monthly installments | 50,000 | |||||
Committed to purchase price | $ 25,000 | |||||
Daniel Bogar | Chief Executive Officer [Member] | ||||||
Option Purchased | 1,000,000 | |||||
Exercise price | $ 0.10 | |||||
Option expiration date | Jun. 30, 2026 | |||||
Annual Salary | $ 90,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Payments to related party | $ 9,300 | $ 9,614 |
Hank Leibowitz | ||
Compensation | 22,500 | 22,500 |
Accrued compensation | 68,327 | 30,000 |
Richard Davis | ||
Compensation | 34,000 | |
Accrued compensation | $ 9,000 | $ 5,200 |