Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 13, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'ENVIRO VORAXIAL TECHNOLOGY INC | ' |
Entity Central Index Key | '0001043894 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 33,464,497 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS: | ' | ' |
Cash and cash equivalents | $260,221 | $135,954 |
Accounts receivable | 85,153 | 123,072 |
Inventory, net | 239,519 | 218,027 |
Prepaid expenses | 5,825 | ' |
Total current assets | 590,718 | 477,053 |
FIXED ASSETS, NET | 60,799 | 77,763 |
OTHER ASSETS | 10,026 | 10,026 |
Total assets | 661,543 | 564,842 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable and accrued expenses | 578,487 | 374,612 |
Accrued Expenses related party | 1,057,718 | 852,006 |
Total liabilities | 1,636,205 | 1,226,618 |
COMMITMENTS AND CONTINGENCIES (See note G) | ' | ' |
SHAREHOLDERS' DEFICIT : | ' | ' |
Common stock, $.001 par value, 42,750,000 shares authorized; 33,464,497 and 33,464,497 shares issued and outstanding as of September 30, 2014 and December 31, 2013 | 33,465 | 33,465 |
Additional paid-in capital | 14,948,943 | 14,817,875 |
Accumulated deficit | -15,957,070 | -15,513,116 |
Total shareholders' deficit | -974,662 | -661,776 |
Total liabilities and shareholders' deficit | $661,543 | $564,842 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common Stock Par value (per shares) | $0.00 | $0.00 |
Common Stock Shares Authorized (In shares) | 42,750,000 | 42,750,000 |
Common Stock Shares Issued (In shares) | 33,464,497 | 33,464,497 |
Common Stock Shares Outstanding (In shares) | 33,464,497 | ' |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenue Net | $25,150 | $149,838 | $511,757 | $1,130,440 |
Cost of goods sold | 2,550 | 16,725 | 140,762 | 422,549 |
Gross profit (loss) | 22,600 | 133,113 | 370,995 | 707,891 |
Costs and expenses: | ' | ' | ' | ' |
General and administrative | 206,716 | 154,660 | 394,799 | 423,552 |
Consulting expense | ' | ' | 5,714 | 39,986 |
Payroll expense | 138,046 | 121,317 | 403,538 | 340,662 |
Total costs and expenses | 344,762 | 275,977 | 804,051 | 804,200 |
Loss from operations | -322,162 | -142,864 | -433,056 | -96,309 |
Other expenses: | ' | ' | ' | ' |
Interest expense | -3,610 | -2,882 | -10,898 | -6,728 |
Total other expense | -3,610 | -2,882 | -10,898 | -6,728 |
Net (Loss) before provisions for income taxes | -325,772 | -145,746 | -443,954 | -103,037 |
Provisions for income taxes | 0 | 0 | 0 | 0 |
NET (LOSS) | ($325,772) | ($145,746) | ($443,954) | ($103,037) |
Weighted average number of common shares outstanding-basic and diluted | 33,464,497 | 33,464,497 | 33,464,497 | 33,464,497 |
(loss) per common share - basic and diluted | ($0.01) | $0 | ($0.01) | $0 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS DEFICIT (Unaudited) (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Begining Balance at Dec. 31, 2013 | $33,465 | $14,817,875 | ($15,513,116) | ($661,776) |
Begining Balance Shares at Dec. 31, 2013 | 33,464,497 | ' | ' | ' |
Options issued to employees | ' | 5,714 | ' | 5,714 |
Repricing of stock options | ' | 125,354 | ' | 125,354 |
Net loss | ' | ' | -443,954 | -443,954 |
Ending Balance at Sep. 30, 2014 | $33,465 | $14,948,943 | ($15,957,070) | ($974,662) |
Ending Balance Shares at Sep. 30, 2014 | 33,464,497 | ' | ' | 33,464,497 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash Flows From Operating Activities: | ' | ' |
Net loss | ($443,954) | ($103,037) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ' | ' |
Depreciation | 16,963 | 16,963 |
Stock Compensation and option expense | 131,068 | 39,985 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | 37,919 | -125,590 |
Inventory | -21,492 | 97,728 |
Prepaid expense | -5,825 | ' |
Accounts payable and accrued expenses | 203,876 | -262,208 |
Accrued expenses related party | 205,712 | 144,500 |
Net cash provided by (used in) operating activities | 124,267 | -191,659 |
Cash Flows From Investing Activities: | ' | ' |
Cash Flows From Financing Activities: | ' | ' |
Net increase (decrease) in cash and cash equivalents | 124,267 | -191,659 |
Cash and cash equivalents, beginning of period | 135,954 | 425,309 |
Cash and cash equivalents, end of period | 260,221 | 233,650 |
Supplemental Disclosures | ' | ' |
Cash paid during the period for interest | 10,898 | 6,728 |
Cash paid during the period for taxes | ' | ' |
ORGANIZATION_AND_OPERATIONS
ORGANIZATION AND OPERATIONS | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
ORGANIZATION AND OPERATIONS | ' |
NOTE A - ORGANIZATION AND OPERATIONS | |
Organization | |
Enviro Voraxial Technology, Inc. (the "Company") is a provider of environmental and industrial separation technology. The Company has developed, and now manufactures and sells its patented technology, the Voraxial® Separator, a technology that efficiently separates liquid/liquid, liquid/solid or liquid/liquid/solid fluid streams with distinct specific gravities. Current and potential commercial applications and markets include oil exploration and production, oil refineries, mining, manufacturing, waste-to-energy and food processing industry. | |
Florida Precision Aerospace, Inc. (FPA) is the wholly-owned subsidiary of the Company and is used to manufacture, assemble and test the Voraxial Separator. |
GOING_CONCERN
GOING CONCERN | 9 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | ' |
GOING CONCERN | ' |
NOTE B - GOING CONCERN | |
The Company has experienced recurring net losses and a working capital deficiency as of September 30, 2014. There is no assurance that the Company's sales and marketing efforts will be successful enough to achieve a level of revenue sufficient to provide cash inflows to sustain operations; however, the Company is experiencing an increase in customer interest and forecast revenues to continue increasing in 2014. While the Company anticipates an increase in sales of the Voraxial Separator during the fourth quarter 2014 and in 2015, the Company may continue to require the infusion of capital until operations become profitable. As a result of the above, there is a substantial doubt about our ability to continue as a going concern and the accompanying condensed unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Accounting Policies [Abstract] | ' | |||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||
Interim Financial Statements | ||||||
The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the Company’s annual financial statements, notes and accounting policies included in the Company’s annual report on Form 10-K for the year ended December 31, 2013, as filed with the SEC. In the opinion of management, all adjustments which are necessary to provide a fair presentation of financial position as of September 30, 2014 and the related operating results and cash flows for the interim period presented have been made. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the year. | ||||||
Principles of Consolidation | ||||||
The consolidated financial statements include the accounts of the parent company, Enviro Voraxial Technology, Inc., and its wholly-owned subsidiary, Florida Precision Aerospace, Inc. All significant intercompany accounts and transactions have been eliminated. | ||||||
Estimates | ||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ. Significant estimates include allowance for doubtful accounts, allowance for inventory obsolescence and valuation of stock-based compensation. | ||||||
Revenue Recognition | ||||||
The Company derives its revenue from the sale and short-term rental of the Voraxial Separator. The Company presents revenue in accordance with FASB new codification of "Revenue Recognition in Financial Statements". Under Revenue Recognition in Financial Statements, revenue is realized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. | ||||||
Revenues that are generated from sales of equipment are typically recognized upon shipment. Our standard agreements generally do not include customer acceptance or post shipment installation provisions. However, if such provisions have been included or there is an uncertainty about customer order, revenue is deferred until we have evidence of customer order and all terms of the agreement have been complied with. There were no agreements with such provisions as of September 30, 2014. | ||||||
The Company recognizes revenue from the short term rental of equipment, ratably over the life of the agreement, which is usually one to twelve months. | ||||||
Fair Value of Instruments | ||||||
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, inventory, accounts payable and accrued expenses at September 30, 2014, approximate their fair value because of their relatively short-term nature. | ||||||
“Disclosures about Fair Value of Financial Instruments,” requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation. | ||||||
The company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value is observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: | ||||||
Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. We have no Level 1 instruments as of September 30, 2014. | ||||||
Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities. We have no Level 2 instruments as of September 30, 2014. | ||||||
Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. We have no Level 3 instruments as of September 30, 2014. | ||||||
Cash and Cash Equivalents | ||||||
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash balances with various financial institutions. Balances at these institutions may at times exceed the Federal Deposit Insurance Corporate (“FDIC”) limits. As of September 30, 2014, we had balances of $10,221 that exceeded the FIDC limits. | ||||||
Inventory | ||||||
Inventory consists of components for the Voraxial Separator and is priced at lower of cost or market. Inventory may include units being rented on a short term basis or components held by third parties in connection with pilot programs as part of the continuing evaluation by such third parties as to the effectiveness and usefulness of the service to be incorporated into their respective operations. The third parties do not have a contractual obligation to purchase the equipment. The Company maintains the title and risk of loss. Therefore, these units are included in the inventory of the Company. As of September 30, 2014 and December 31, 2013; | ||||||
2014 | 2013 | |||||
Raw materials | $ | 154,232 | $ | 175,232 | ||
Work in process | 34,042 | 6,795 | ||||
Finished goods | 51,245 | 36,000 | ||||
Total | $ | 239,519 | $ | 218,027 | ||
Fixed Assets | ||||||
Fixed assets are stated at cost less accumulated depreciation. The cost of maintenance and repairs is expensed to operations as incurred. Depreciation is computed by the straight-line method over the estimated economic useful life of the assets (5-10 years). Gains and losses recognized from the sales or disposal of assets is the difference between the sales price and the recorded cost less accumulated depreciation less costs of disposal. | ||||||
Net Loss Per Share | ||||||
In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. | ||||||
Since the Company reflected a net loss for the three and nine months ended September 30, 2014 and 2013, the effect of 13,465,000 and 12,965,000 options, respectively, is anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented. | ||||||
Income Taxes | ||||||
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | ||||||
Business Segments | ||||||
The Company operates in one segment and therefore segment information is not presented. | ||||||
Research and Development Expenses | ||||||
Research and development costs, which includes travel expenses, consulting fees, subcontractors and salaries are expensed as incurred. | ||||||
Advertising Costs | ||||||
Advertising costs are expensed as incurred and are included in general and administrative expenses. | ||||||
Stock-Based Compensation | ||||||
The Company adopted ASC Topic 718 formerly Statement of Financial Account Standard (SFAS) No. 123(R) effective January 1, 2006. This statement requires compensation expense relating to share-based payments to be recognized in net income using a fair-value measurement method. Under the fair value method, the estimated fair value of awards is charged to income on a straight-line basis over the requisite service period, which is generally the vesting period. | ||||||
Reclassifications | ||||||
Certain amounts from prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on the Company’s net loss or cashflows. | ||||||
Recent Accounting Pronouncements | ||||||
“In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. As of September 30, 2014, we have adopted the provisions of this ASU.” | ||||||
Recent accounting pronouncements issued by the FASB, the AICPA and the SEC, did not, or are not believed by management, to have a material impact on the Company’s present or future financial statements. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
NOTE E - RELATED PARTY TRANSACTIONS | |
For the nine months ended September 30, 2014 and 2013, the Company incurred salary expenses from the Chief Executive Officer of the Company of $208,950 and $228,750, respectively. Of these amounts, $42,800 and $17,000 has been paid for the nine months ended September 30, 2014 and 2013. The total unpaid balance as of September 30, 2014 is $1,057,718 and is included in accrued expenses – related party. |
CAPITAL_TRANSACTIONS
CAPITAL TRANSACTIONS | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Equity [Abstract] | ' | |||||
CAPITAL TRANSACTIONS | ' | |||||
NOTE F - CAPITAL TRANSACTIONS | ||||||
Warrants and Stock Options | ||||||
The Company follows the provisions of ASC Topic 718, “Compensation – Stock Compensation.” ASC Topic 718 establishes standards surrounding the accounting for transactions in which an entity exchanges its equity instruments for goods or services. ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. | ||||||
The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options. The risk free interest rate is based upon quoted market yields for United States Treasury debt securities with a term similar to the expected term. The expected dividend yield is based upon the Company’s history of having never issued a dividend and management’s current expectation of future action surrounding dividends. Expected volatility was based on historical data for the trading of our stock on the open market. The expected lives for such grants were based on the simplified method for employees and officers. | ||||||
Information with respect to options outstanding and exercisable at September 30, 2014 is as follows: | ||||||
Number | Exercise | Number | ||||
Outstanding | Price | Exercisable | ||||
Balance, December 31, 2013 | 13,465,000 | $0.05 | 13,265,000 | |||
Issued | - | - | - | |||
Expired | - | - | - | |||
Forfeited | - | - | - | |||
Balance, September 30, 2014 | 13,465,000 | $0.05 | 13,265,000 | |||
The following table summarizes information about the stock options outstanding at September 30, 2014: | ||||||
Exercise | Number Outstanding at September 30, 2014 | Weighted Average Remaining Contractual Life | Weighted Average | Number Exercisable at | Weighted Average | |
Price | Exercise Price | 30-Sep-14 | Exercise Price | |||
0.05 | 13,465,000 | 9.13 | 0.05 | 13,265,000 | 0.05 | |
Total | 13,465,000 | - | - | 13,265,000 | - | |
In September 2014, the Company extended the exercisable life and reduced the exercise price of options issued to employees and consultants to purchase an aggregate of 13,465,000 shares of common stock issued since 2002. The options now expire in November 2023 and the exercise price is $0.05 per share. The Company calculated the fair value of the extended options by using the Black-Scholes option-pricing model with the following weighted average assumptions: no dividend yield for all the years; expected volatility of 187%; risk-free interest rates of 0.08% - 2.04% and expected lives of 240 days to six years. The Company recorded a charge of $125,354 related to the option repricing for the three and nine months ended September 30, 2014. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE G – COMMITMENTS AND CONTINGENCIES | |
Litigation | |
On or about November 17, 2011, a claim was filed in the Broward County Circuit Court in Fort Lauderdale, Florida against the company by Raw Energy Tech, LLC. The plaintiff alleges oral contract between the parties for the alleged design, fabrication and construction of a prototype power pack. Amount of damages sought are approximately $58,000. We have moved to dismiss the complaint and intend to vigorously defend this action as we believe this claim is without merit. We have accrued an amount in the financial statements to cover our legal expenses as of September 30, 2014. |
MAJOR_CUSTOMERS
MAJOR CUSTOMERS | 9 Months Ended |
Sep. 30, 2014 | |
Risks and Uncertainties [Abstract] | ' |
MAJOR CUSTOMERS | ' |
NOTE H – MAJOR CUSTOMERS | |
During the nine months ended September 30, 2014, we recorded 67% of our revenue from Customer A and 22% from Customer B. As of September 30, 2014, 71% of our accounts receivable was due from Customer C and 29% was due from customer B. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Accounting Policies [Abstract] | ' | |||||
Interim Financial Statements | ' | |||||
Interim Financial Statements | ||||||
The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the Company’s annual financial statements, notes and accounting policies included in the Company’s annual report on Form 10-K for the year ended December 31, 2013, as filed with the SEC. In the opinion of management, all adjustments which are necessary to provide a fair presentation of financial position as of September 30, 2014 and the related operating results and cash flows for the interim period presented have been made. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the year. | ||||||
Principles of Consolidation | ' | |||||
Principles of Consolidation | ||||||
The consolidated financial statements include the accounts of the parent company, Enviro Voraxial Technology, Inc., and its wholly-owned subsidiary, Florida Precision Aerospace, Inc. All significant intercompany accounts and transactions have been eliminated. | ||||||
Estimates | ' | |||||
Estimates | ||||||
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ. Significant estimates include allowance for doubtful accounts, allowance for inventory obsolescence and valuation of stock-based compensation. | ||||||
Revenue Recognition | ' | |||||
Revenue Recognition | ||||||
The Company derives its revenue from the sale and short-term rental of the Voraxial Separator. The Company presents revenue in accordance with FASB new codification of "Revenue Recognition in Financial Statements". Under Revenue Recognition in Financial Statements, revenue is realized when persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable and collectability is reasonably assured. | ||||||
Revenues that are generated from sales of equipment are typically recognized upon shipment. Our standard agreements generally do not include customer acceptance or post shipment installation provisions. However, if such provisions have been included or there is an uncertainty about customer order, revenue is deferred until we have evidence of customer order and all terms of the agreement have been complied with. There were no agreements with such provisions as of September 30, 2014. | ||||||
The Company recognizes revenue from the short term rental of equipment, ratably over the life of the agreement, which is usually one to twelve months. | ||||||
Fair Value of Instruments | ' | |||||
Fair Value of Instruments | ||||||
The carrying amounts of the Company's financial instruments, including cash and cash equivalents, inventory, accounts payable and accrued expenses at September 30, 2014, approximate their fair value because of their relatively short-term nature. | ||||||
“Disclosures about Fair Value of Financial Instruments,” requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation. | ||||||
The company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value is observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: | ||||||
Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. We have no Level 1 instruments as of September 30, 2014. | ||||||
Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities. We have no Level 2 instruments as of September 30, 2014. | ||||||
Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. We have no Level 3 instruments as of September 30, 2014. | ||||||
Cash and Cash Equivalents | ' | |||||
Cash and Cash Equivalents | ||||||
The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash balances with various financial institutions. Balances at these institutions may at times exceed the Federal Deposit Insurance Corporate (“FDIC”) limits. As of September 30, 2014, we had balances of $10,221 that exceeded the FIDC limits. | ||||||
Inventory | ' | |||||
Inventory | ||||||
Inventory consists of components for the Voraxial Separator and is priced at lower of cost or market. Inventory may include units being rented on a short term basis or components held by third parties in connection with pilot programs as part of the continuing evaluation by such third parties as to the effectiveness and usefulness of the service to be incorporated into their respective operations. The third parties do not have a contractual obligation to purchase the equipment. The Company maintains the title and risk of loss. Therefore, these units are included in the inventory of the Company. As of September 30, 2014 and December 31, 2013; | ||||||
2014 | 2013 | |||||
Raw materials | $ | 154,232 | $ | 175,232 | ||
Work in process | 34,042 | 6,795 | ||||
Finished goods | 51,245 | 36,000 | ||||
Total | $ | 239,519 | $ | 218,027 | ||
Fixed Assets | ' | |||||
Fixed Assets | ||||||
Fixed assets are stated at cost less accumulated depreciation. The cost of maintenance and repairs is expensed to operations as incurred. Depreciation is computed by the straight-line method over the estimated economic useful life of the assets (5-10 years). Gains and losses recognized from the sales or disposal of assets is the difference between the sales price and the recorded cost less accumulated depreciation less costs of disposal. | ||||||
Net Loss Per Share | ' | |||||
Net Loss Per Share | ||||||
In accordance with the accounting guidance now codified as FASB ASC Topic 260, “Earnings per Share” basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. | ||||||
Since the Company reflected a net loss for the three and nine months ended September 30, 2014 and 2013, the effect of 13,465,000 and 12,965,000 options, respectively, is anti-dilutive. A separate computation of diluted earnings (loss) per share is not presented. | ||||||
Income Taxes | ' | |||||
Income Taxes | ||||||
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | ||||||
Business Segments | ' | |||||
Business Segments | ||||||
The Company operates in one segment and therefore segment information is not presented. | ||||||
Research and Development Expenses | ' | |||||
Research and Development Expenses | ||||||
Research and development costs, which includes travel expenses, consulting fees, subcontractors and salaries are expensed as incurred. | ||||||
Advertising Costs | ' | |||||
Advertising Costs | ||||||
Advertising costs are expensed as incurred and are included in general and administrative expenses. | ||||||
Stock-Based Compensation | ' | |||||
Stock-Based Compensation | ||||||
The Company adopted ASC Topic 718 formerly Statement of Financial Account Standard (SFAS) No. 123(R) effective January 1, 2006. This statement requires compensation expense relating to share-based payments to be recognized in net income using a fair-value measurement method. Under the fair value method, the estimated fair value of awards is charged to income on a straight-line basis over the requisite service period, which is generally the vesting period. | ||||||
Reclassifications | ' | |||||
Reclassifications | ||||||
Certain amounts from prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on the Company’s net loss or cashflows. | ||||||
Recent Accounting Pronouncements | ' | |||||
Recent Accounting Pronouncements | ||||||
“In August 2014, the FASB issued Accounting Standards Update “ASU” 2014-15 on “Presentation of Financial Statements Going Concern (Subtopic 205-40) - Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016. Early adoption is permitted. As of September 30, 2014, we have adopted the provisions of this ASU.” | ||||||
Recent accounting pronouncements issued by the FASB, the AICPA and the SEC, did not, or are not believed by management, to have a material impact on the Company’s present or future financial statements. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Accounting Policies [Abstract] | ' | |||||
Schedule of Inventory | ' | |||||
Inventory | ||||||
Inventory consists of components for the Voraxial Separator and is priced at lower of cost or market. Inventory may include units being rented on a short term basis or components held by third parties in connection with pilot programs as part of the continuing evaluation by such third parties as to the effectiveness and usefulness of the service to be incorporated into their respective operations. The third parties do not have a contractual obligation to purchase the equipment. The Company maintains the title and risk of loss. Therefore, these units are included in the inventory of the Company. As of September 30, 2014 and December 31, 2013; | ||||||
2014 | 2013 | |||||
Raw materials | $ | 154,232 | $ | 175,232 | ||
Work in process | 34,042 | 6,795 | ||||
Finished goods | 51,245 | 36,000 | ||||
Total | $ | 239,519 | $ | 218,027 |
CAPITAL_TRANSACTIONS_Tables
CAPITAL TRANSACTIONS (Tables) | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Equity [Abstract] | ' | |||||
Schedule of Stock Options Outstanding and Exercisable | ' | |||||
Information with respect to options outstanding and exercisable at September 30, 2014 is as follows: | ||||||
Number | Exercise | Number | ||||
Outstanding | Price | Exercisable | ||||
Balance, December 31, 2013 | 13,465,000 | $0.05 | 13,265,000 | |||
Issued | - | - | - | |||
Expired | - | - | - | |||
Forfeited | - | - | - | |||
Balance, September 30, 2014 | 13,465,000 | $0.05 | 13,265,000 | |||
Schedule of Stock Options Outstanding | ' | |||||
The following table summarizes information about the stock options outstanding at September 30, 2014: | ||||||
Exercise | Number Outstanding at September 30, 2014 | Weighted Average Remaining Contractual Life | Weighted Average | Number Exercisable at | Weighted Average | |
Price | Exercise Price | 30-Sep-14 | Exercise Price | |||
0.05 | 13,465,000 | 9.13 | 0.05 | 13,265,000 | 0.05 | |
Total | 13,465,000 | - | - | 13,265,000 | - |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textuals) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earning Per Share | 13,465,000 | 12,965,000 |
Cash Balances with Financial Institutions | $10,221 | ' |
Minimum [Member] | ' | ' |
Estimated useful life of assets | '5 years | ' |
Maximum [Member] | ' | ' |
Estimated useful life of assets | '10 years | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials | $154,232 | $175,232 |
Work in Progress | 34,042 | 6,795 |
Finished Goods | 51,245 | 36,000 |
Total | $239,519 | $218,027 |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details Textuals) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
John DiBella - CEO | John DiBella - CEO | |||
Salary expenses incurred | ' | ' | $208,950 | $228,750 |
Salaries paid | ' | ' | 42,800 | 17,000 |
Accrued Salaries | $1,057,718 | $852,006 | $1,057,718 | ' |
CAPITAL_TRANSACTIONS_Details_T
CAPITAL TRANSACTIONS (Details Textuals) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Dec. 31, 2013 | |
Outstanding Number | 13,465,000 | 13,465,000 |
Exercise price | $0.05 | $0.05 |
Expected volatility | 187.00% | ' |
Expected Lives | '240 days to six years | ' |
Option Model | 'Black-Scholes option-pricing model | ' |
Share Based Charge | $125,354 | ' |
Minimum [Member] | ' | ' |
Risk-free interest rate | 0.08% | ' |
Maximum [Member] | ' | ' |
Risk-free interest rate | 2.04% | ' |
CAPITAL_TRANSACTIONS_Details_1
CAPITAL TRANSACTIONS (Details 1) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Capital Transactions Details 3 | ' |
Balance | 13,465,000 |
Issued | 0 |
Expired | 0 |
Forfeited | 0 |
Balance | 13,465,000 |
Range of Exercise Price | ' |
Balance | $0.05 |
Issued | $0 |
Expired | $0 |
Forfeited | $0 |
Balance | $0.05 |
Number Exercisable | ' |
Balance | 13,265,000 |
Issued | 0 |
Expired | 0 |
Forfeited | 0 |
Balance | 13,265,000 |
CAPITAL_TRANSACTIONS_Details_2
CAPITAL TRANSACTIONS (Details 2) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Number exercisable at September 30, 2014 | 13,265,000 |
Exercise Price One Member | ' |
Exercise Price | $0.05 |
Number Outstanding at September 30, 2014 | 13,465,000 |
Weighted Average Remaining Contractual Life | '9 years 1 month 17 days |
Outstanding Weighted Average Exercise price | $0.05 |
Number exercisable at September 30, 2014 | 13,265,000 |
Exercisable Weighted Average Exercise Price | $0.05 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Value of damages sought | $58,000 |
Description of Damages Sought | ' |
On or about November 17, 2011, a claim was filed in the Broward County Circuit Court in Fort Lauderdale, Florida against the company by Raw Energy Tech, LLC. The plaintiff alleges oral contract between the parties for the alleged design, fabrication and construction of a prototype power pack. Amount of damages sought are approximately $58,000. We have moved to dismiss the complaint and intend to vigorously defend this action as we believe this claim is without merit. We have accrued an amount in the financial statements to cover our legal expenses as of September 30, 2014. |
MAJOR_CUSTOMERS_Details
MAJOR CUSTOMERS (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Customer A | ' |
Percentage of revenue from Major customer (as a percent) | 67.00% |
Customer B | ' |
Percentage of accounts receivable (as a percent) | 29.00% |
Percentage of revenue from Major customer (as a percent) | 22.00% |
Customer C | ' |
Percentage of accounts receivable (as a percent) | 71.00% |