Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 02, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | SAVE THE WORLD AIR INC | ||
Entity Central Index Key | 1103795 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 181,338,244 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 | ||
Entity Public Float | $150,143,818 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash | $2,247,557 | $4,137,068 |
Other current assets | 72,225 | 56,930 |
Total current assets | 2,319,782 | 4,193,998 |
Property and Equipment, net of accumulated depreciation of $47,180 and $33,355 at December 31, 2014 and December 31, 2013, respectively | 21,946 | 35,771 |
Other assets | 5,830 | 5,830 |
Total assets | 2,347,558 | 4,235,599 |
Current liabilities | ||
Accounts payable-license agreements | 405,313 | 185,450 |
Accounts payable and accrued expenses | 175,228 | 312,805 |
Accrued expenses and accounts payable-related parties | 259,507 | 662,028 |
Convertible debentures, net of discounts of $105,542 and $0 at December 31, 2014 and December 31, 2013, respectively | 139,098 | 0 |
Total current liabilities | 979,146 | 1,160,283 |
Commitments and contingencies | ||
Stockholder's equity (deficiency) | ||
Common stock, $.001 par value: 300,000,000 shares authorized 181,028,244 and 176,242,817 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively | 181,028 | 176,243 |
Additional paid-in capital | 98,232,582 | 95,937,936 |
Accumulated deficit | -97,045,198 | -93,038,863 |
Total stockholders' equity | 1,368,412 | 3,075,316 |
Total liabilities and stockholders' equity | $2,347,558 | $4,235,599 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $47,180 | $33,355 |
Discounts on convertible debentures | $105,542 | $0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 181,028,244 | 176,242,817 |
Common stock, shares outstanding | 181,028,244 | 176,242,817 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | |||
Revenues | $240,000 | $0 | $0 |
Operating expenses | 3,284,666 | 11,884,775 | 7,187,970 |
Research and development expenses | 893,452 | 2,011,486 | 963,184 |
Loss before other income (expense) | -3,938,118 | -13,896,261 | -8,151,154 |
Other income (loss) | -28,598 | -23,895 | 24,723 |
Interest and financing expense | -39,619 | -260 | -3,627,732 |
Change in fair value of derivative liabilities | 0 | -220,614 | -4,023,094 |
Gain on extinguishment of derivative liabilities | 0 | 3,441,752 | 2,445,095 |
Gain on disposition of equipment | 0 | 41,923 | 0 |
Settlement of litigation and debt | 0 | 346 | 239,775 |
Net loss | ($4,006,335) | ($10,657,009) | ($13,092,387) |
Net loss per common share, basic and diluted | ($0.02) | ($0.07) | ($0.10) |
Weighted average common shares outstanding, basic and diluted | 180,386,712 | 160,958,284 | 128,667,391 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (USD $) | Common Stock | Additional Paid-In Capital | Deficit Accumulated | Total |
Beginning balance, value at Dec. 31, 2011 | $114,274 | $66,069,911 | ($69,289,467) | ($3,105,282) |
Beginning balance, shares at Dec. 31, 2011 | 114,273,470 | |||
Common stock issued upon exercise of warrants and options, shares issued | 12,563,944 | |||
Common stock issued upon exercise of warrants and options, amount | 12,564 | 3,669,317 | 3,681,881 | |
Common stock issued for convertible debt, shares issued | 14,305,156 | |||
Common stock issued for convertible debt, value | 14,305 | 3,775,329 | 3,789,634 | |
Common stock issued for services, shares issued | 2,525,000 | |||
Common stock issued for services, value | 2,525 | 1,225,725 | 1,228,250 | |
Fair value of options and warrants issued as compensation | 2,712,173 | 2,712,173 | ||
Fair value of warrants and beneficial conversion feature of issued convertible notes | 1,888,211 | 1,888,211 | ||
Fair value of warrants issued to settle payables | 0 | |||
Net loss | -13,092,387 | -13,092,387 | ||
Ending balance, value at Dec. 31, 2012 | 143,668 | 79,340,666 | -82,381,854 | -2,897,520 |
Ending balance, shares at Dec. 31, 2012 | 143,667,570 | |||
Common stock issued upon exercise of warrants and options, shares issued | 29,152,389 | |||
Common stock issued upon exercise of warrants and options, amount | 29,152 | 8,448,066 | 8,477,218 | |
Common stock issued for convertible debt, value | 0 | |||
Common stock issued for services, shares issued | 50,000 | |||
Common stock issued for services, value | 50 | 48,950 | 49,000 | |
Common stock issued to employees and directors as compensation, shares issued | 325,455 | |||
Common stock issued to employees and directors as compensation, value | 325 | 369,788 | 370,113 | |
Common stock issued as settlement, shares issued | 3,047,403 | |||
Common stock issued as settlement, value | 3,048 | 3,105,299 | 3,108,347 | |
Fair value of options and warrants issued as compensation | 4,495,545 | 4,495,545 | ||
Fair value of warrants and beneficial conversion feature of issued convertible notes | 0 | |||
Fair value of warrants issued to settle payables | 129,622 | 129,622 | ||
Net loss | -10,657,009 | -10,657,009 | ||
Ending balance, value at Dec. 31, 2013 | 176,243 | 95,937,936 | -93,038,863 | 3,075,316 |
Ending balance, shares at Dec. 31, 2013 | 176,242,817 | |||
Common stock issued upon exercise of warrants and options, shares issued | 4,710,947 | |||
Common stock issued upon exercise of warrants and options, amount | 4,711 | 1,408,573 | 1,413,284 | |
Common stock issued for convertible debt, shares issued | 74,480 | |||
Common stock issued for convertible debt, value | 74 | 35,676 | 35,750 | |
Fair value of options and warrants issued as compensation | 730,726 | 730,726 | ||
Fair value of warrants and beneficial conversion feature of issued convertible notes | 119,671 | 119,671 | ||
Fair value of warrants issued to settle payables | 0 | |||
Net loss | -4,006,335 | -4,006,335 | ||
Ending balance, value at Dec. 31, 2014 | $181,028 | $98,232,582 | ($97,045,198) | $1,368,412 |
Ending balance, shares at Dec. 31, 2014 | 181,028,244 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities | |||
Net Loss | ($4,006,335) | ($10,657,009) | ($13,092,387) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Settlement of litigation and debt | 0 | -346 | -239,775 |
Share based compensation expense | 730,726 | 4,865,658 | 2,712,173 |
Issuance of common stock for services | 0 | 49,000 | 1,228,250 |
Issuance of common stock as settlement | 3,108,347 | ||
Amortization of debt issuance costs and original issue debt discounts including beneficial conversion feature | 39,619 | 0 | 3,620,092 |
Change in fair value of derivative liability | 0 | 220,614 | 4,023,094 |
Gain on extinguishment of derivative liability | 0 | -3,441,752 | -2,445,095 |
Gain on disposition of assets | 0 | -41,923 | 0 |
Depreciation and amortization | 13,825 | 15,399 | 36,077 |
Changes in operating assets and liabilities: | |||
Prepaid expenses and other current assets | -15,295 | 10,202 | 37,775 |
Other assets | 0 | 4,500 | 0 |
Accounts payable and accrued expenses | -107,577 | -43,408 | -192,796 |
Accounts payable - license agreements | 219,863 | -130,400 | 137,725 |
Accounts payable and accrued expenses - related parties | -402,521 | 128,750 | -342,718 |
Net cash used in operating activities | -3,527,695 | -5,912,368 | -4,517,585 |
Cash flows from investing activities | |||
Purchase of equipment | 0 | -7,573 | -16,142 |
Proceeds from sale of equipment | 0 | 27,000 | 0 |
Net cash provided by (used in) investing activities | 0 | 19,427 | -16,142 |
Cash flows from financing activities | |||
Net proceeds from issuance of convertible notes and warrants | 254,900 | 0 | 1,835,840 |
Net proceeds from exercise of warrants and options | 1,383,284 | 8,428,218 | 3,681,881 |
Net cash provided by financing activities | 1,638,184 | 8,428,218 | 5,517,721 |
Net (decrease) increase in cash | -1,889,511 | 2,535,277 | 983,994 |
Cash, beginning of period | 4,137,068 | 1,601,791 | 617,797 |
Cash, end of period | 2,247,557 | 4,137,068 | 1,601,791 |
Supplemental disclosures of cash flow information | |||
Cash paid during the year for: Interest | 0 | 260 | 7,640 |
Cash paid during the year for: Income taxes | 0 | 0 | 0 |
Non-cash investing and financing activities | |||
Conversion of accounts payable and accrued expenses to convertible debentures | 0 | 0 | 52,371 |
Conversion of convertible debentures to common stock | 35,750 | 0 | 3,789,634 |
Exercise of options and warrants applied to accounts payable | 30,000 | 49,000 | 0 |
Fair value of warrants issued to settle payables | 0 | 129,622 | 0 |
Receivable from sale of equipment | 0 | 27,000 | 0 |
Fair value of warrants and beneficial conversion feature associated with issued convertible notes | $119,671 | $0 | $1,888,211 |
1_Description_of_Business
1. Description of Business | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. Description of Business | Description of Business |
Save The World Air, Inc. (“STWA”, “Company”) was incorporated on February 18, 1998, as a Nevada Corporation under the name Mandalay Capital Corporation. The Company changed its name to Save the World Air, Inc. on February 11, 1999. The Company’s common stock is quoted under the symbol “ZERO” on the Over-the-Counter Bulletin Board. More information including the Company’s fact sheet, logos and media articles are available at our corporate website, www.stwa.com. | |
Save The World Air, Inc. develops and commercializes energy efficiency technologies that assist in meeting increasing global energy demands, improving the economics of oil extraction and transport, and reducing greenhouse gas emissions. The Company's intellectual property portfolio includes 47 domestic and international patents and patents pending, a substantial portion of which have been developed in conjunction with and exclusively licensed from Temple University of Philadelphia, PA (“Temple”). STWA's primary technology is called Applied Oil Technology™ (AOT™), a commercial-grade crude oil pipeline transportation flow-assurance product. AOT™ has been proven in U.S. Department of Energy tests to increase the energy efficiency of oil pipeline pump stations. The AOT product has transitioned from the research and development stage to initial commercial production for the midstream pipeline marketplace. | |
In 2014, the Company began commercial development of a suite of products based around the Joule Heat technology. The Company began fabrication of prototype equipment to be operated under a joint development agreement with a commercial entity in the fourth quarter, 2014. This prototype equipment is scheduled for delivery under the joint development agreement in March, 2015, with testing to begin shortly thereafter. The Company filed two additional provisional patents related to the technology’s method and apparatus in the second quarter and fourth quarter of 2013, respectively. The first of the two provisional patents was finalized and submitted to non-provisional status on April 29, 2014. The second of the two provisional patents was finalized and submitted to non-provisional status at the end of the third quarter 2014. | |
The Company was considered a development stage company through March 31, 2014. In June 2014, as discussed in Note 2, the Financial Accounting Standards Board (FASB) issued new guidance that removed incremental financial reporting requirements from generally accepted accounting principles in the United States of America for development stage entities. The Company adopted this new guidance, and as a result, all inception-to-date financial information and disclosures have been omitted from this report. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
2. Summary of Significant Accounting Policies | Consolidation Policy |
The accompanying consolidated financial statements of Save the World Air, Inc. include the accounts of Save the World Air, Inc. (the Parent) and its wholly owned subsidiary STWA Asia Pte. Limited, incorporated on January 17, 2006. Intercompany transactions and balances have been eliminated in consolidation. | |
Reclassification | |
Certain financial results in prior years of Research and Development Expenses and Operating Expenses have been reclassified to conform to the current year presentation. Such reclassification did not change the reported net loss during those periods. | |
In presenting the Company’s statement of operations for the twelve-month periods ended December 31, 2013 and 2012, the Company reclassified certain salary and consulting expenses in the aggregate of $270,000 and $188,500 respectively that were previously reflected as operating expenses to research and development expenses. | |
Going Concern | |
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has not yet generated significant revenues and incurred recurring net losses. During the year ended December 31, 2014, the Company incurred a net loss of $4,006,335 and used cash in operations of $3,527,695. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |
At December 31, 2014, the Company had cash on hand in the amount of $2,247,557. Management estimates that the current funds on hand will be sufficient to continue operations through December 2015. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business, including without limitation the expenses it will incur in connection with the license and research and development agreements with Temple; costs associated with product development and commercialization of the AOT and Joule Heat technologies; costs to manufacture and ship the products; costs to design and implement an effective system of internal controls and disclosure controls and procedures; costs of maintaining our status as a public company by filing periodic reports with the SEC and costs required to protect our intellectual property. In addition, as discussed below, the Company has substantial contractual commitments, including without limitation salaries to our executive officers pursuant to employment agreements, certain payments to a former officer and consulting fees, during the remainder of 2015 and beyond. | |
No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing. | |
Revenue Recognition Policy | |
The Company recognizes lease revenue upon commencement of the lease. Revenue on future product sales will be recognized upon meeting the following criteria: persuasive evidence of an arrangement exists; delivery has occurred or services rendered; the seller’s price to the buyer is fixed or determinable; and collectability is reasonably assured. | |
In addition to intellectual properties developed by the Company, STWA co-develops with, and licenses from, intellectual property as a joint-agreement with Temple University. The Company’s business model is to contract with suppliers and manufacturers of oilfield equipment to sell into the oilfield pipeline market. The Company negotiates an initial contract with the customer fixing the terms of the sale and then receive a letter of credit or full payment in advance of shipment. Upon shipment and acceptance of our products, the Company will recognize the revenue associated with the sale and lease of the products to the customer. | |
Property and Equipment and Depreciation | |
Property and equipment are stated at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally ranging from three to ten years. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. | |
Impairment of Long-lived Assets | |
Our long-lived assets, such as property and equipment, are reviewed for impairment at least annually, or when events and circumstances indicate that depreciable or amortizable long lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current value. | |
We use various assumptions in determining the current fair value of these assets, including future expected cash flows and discount rates, as well as other fair value measures. Our impairment loss calculations require us to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows. | |
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results. Based upon management’s annual review, no impairments were recorded for the years ended December 31, 2014, 2013 and 2012. | |
Loss per Share | |
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. | |
For the years ended December 31, 2014, 2013 and 2012, the dilutive impact of outstanding stock options of 21,052,030, 20,309,908 and 27,278,098; outstanding warrants of 5,692,087, 11,763,966 and 42,205,507; and notes convertible into 509,667, -0- and -0- shares of our common stock, respectively, have been excluded because their impact on the loss per share is anti-dilutive. | |
Income Taxes | |
Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s consolidated financial statements or tax returns. A valuation allowance is provided when it is more likely than not that some portion or entire deferred tax asset will not be realized. | |
Stock-Based Compensation | |
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | |
The fair value of the Company's stock options and warrants grant is estimated using the Black-Scholes Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes Option Pricing model could materially affect compensation expense recorded in future periods. | |
Accounting for Derivatives | |
The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses probability weighted average series Black-Scholes Option Pricing models to value the derivative instruments at inception and on subsequent valuation dates. | |
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. | |
The Company had derivative liabilities up to January 2013 relating to adjustments on the exercise price of warrants issued in 2009 and 2010 in conjunction with the Company’s convertible note offering. These warrants were exercised to common stock or expired in January 2013 thus eliminating the derivate liabilities. | |
Business and Credit Concentrations | |
The Company’s cash balances in financial institutions at times may exceed federally insured limits. As of December 31, 2014 and 2013, before adjustments for outstanding checks and deposits in transit, the Company had $2,247,198 and $4,143,367, respectively, on deposit with two banks. The deposits are federally insured up to $250,000 at each bank. | |
The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions. | |
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to assumptions used in valuing equity instruments and derivative liabilities. Actual results could differ from those estimates. | |
Fair Value of Financial Instruments | |
Effective January 1, 2008, fair value measurements are determined by the Company's adoption of authoritative guidance issued by the FASB, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities as permitted. The adoption of the authoritative guidance did not have a material impact on the Company's fair value measurements. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: | |
Level 1—Quoted prices in active markets for identical assets or liabilities. | |
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly. | |
Level 3—Unobservable inputs based on the Company's assumptions. | |
The Company is required to use of observable market data if such data is available without undue cost and effort. | |
The recorded accounts payable, accrued expenses and convertible debentures approximate its fair value due to its short term nature. | |
Research and Development Costs | |
Costs incurred for research and development are expensed as incurred. Purchased materials that do not have an alternative future use are also expensed. Furthermore, costs incurred in the construction of prototypes with no certainty of any alternative future use and established commercial uses are also expensed. | |
For the years ended December 31, 2014, 2013 and 2012 for research and development costs incurred were $893,542, $2,011,486 and $963,184, respectively. | |
Patent Costs | |
Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and any related patent applications, all patent costs, including patent-related legal and filing fees, are expensed as incurred. Patent costs were $103,434, $144,326 and $104,150 for the years ended December 31, 2014, 2013 and 2012 respectively. Patent costs are included in operating expenses in the Company’s consolidated statements of operations. | |
Recent Accounting Pronouncements | |
In November 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2014-16 on the Company’s financial statement presentation and disclosures | |
In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted. | |
In February, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted. | |
On August 27, 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted | |
On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10 (ASU 2014-10), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 eliminates the requirement to present inception-to-date information about income statement line items, cash flows, and equity transactions, and clarifies how entities should disclosure the risks and uncertainties related to their activities. ASU 2014-10 also eliminates an exception provided to development stage entities in Consolidations (ASC Topic 810) for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The presentation and disclosure requirements in Topic 915 will no longer be required for interim and annual reporting periods beginning after December 15, 2014, and the revised consolidation standards will take effect in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted the provisions of ASU 2014-10 effective for its financial statements for the interim period ended June 30, 2014, and accordingly, is no longer presenting the inception-to-date financial information and disclosures formerly required. | |
On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company does not expect the adoption of this guidance to have any impact on the Company’s consolidated financial statement presentation or disclosures. | |
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company does not expect the adoption of this guidance to have any impact on the Company’s consolidated financial statement presentation or disclosures. | |
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statement presentation or disclosures. |
3_Certain_Relationships_and_Re
3. Certain Relationships and Related Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
3. Certain Relationships and Related Transactions | Accrued Expenses and Accounts Payable - Related Parties |
As of December 31, 2014 and December 31, 2013, the Company had accounts payable to related parties in the amount of $80,814 and $85,869, respectively. These amounts are unpaid Directors Fees and unpaid Company expenses incurred by Officers and Directors. | |
As of December 31, 2014 and December 31, 2013, the Company accrued the unpaid salaries, unused vacation and the corresponding payroll taxes of Officers in the aggregate of $178,693 and $576,159, respectively. Included in these accruals are the unpaid salaries of the former Chief Executive Officer (CEO) of the Company of $0 and $306,250, respectively pursuant to November 2013 settlement agreement, and a former President and current member of the Company’s Board of Directors of $135,429 and $195,429, respectively. The Company agreed to a monthly payment of $5,000 the current Board member until his unpaid salary is fully settled. | |
Bonus Paid to Officers | |
General and administrative expenses for the year ended December 31, 2013 include a bonus in the aggregate of $150,000 paid to officers of the Company. There were no such bonuses paid in 2014 or 2012. | |
Consulting Fees Paid to Related Party | |
During the year ended December 31, 2014 and 2013, the Company incurred consulting fees of $60,000 to a consulting firm controlled by a member of our Board of Directors. There were no such costs in 2012. |
4_Property_and_Equipment
4. Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
4. Property and Equipment | At December 31, 2014 and 2013, property and equipment consists of the following: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Office equipment | $ | 65,051 | $ | 65,051 | |||||
Furniture and fixtures | 4,075 | 4,075 | |||||||
Subtotal | 69,126 | 69,126 | |||||||
Less accumulated depreciation | (47,180 | ) | (33,355 | ) | |||||
Total | $ | 21,946 | $ | 35,771 | |||||
Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $13,825, $15,399 and $36,077, respectively. |
5_Convertible_Notes_and_Warran
5. Convertible Notes and Warrants | 12 Months Ended |
Dec. 31, 2014 | |
Debt Disclosure [Abstract] | |
5. Convertible Notes and Warrants | 2014 |
In 2014, the Company issued its convertible notes in the aggregate of $280,390 for total cash consideration of $254,900, resulting in an original issue discount of $25,490. The notes do not bear any interest, however, the Company used an implied interest rate of 10%, are unsecured, will mature in one year after issuance and are convertible to 584,147 shares of common stock at a conversion price of $0.48 per share. Furthermore, each of the investors in the offering received, for no additional consideration, warrants to purchase a total of 146,037 shares of common stock. Each warrant is exercisable on a cash basis only at a price of $0.48, and is exercisable immediately upon issuance and will expire one (1) year from the date of issuance. | |
The aggregate relative fair value of the warrants issued in the 2014 offerings were valued at $24,826 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.17%; dividend yield of 0%; volatility rate of 64% based upon the Company’s historical stock price; and an expected life of one year (statutory term). The Company also determined that the notes contained a beneficial conversion feature of $94,845 since the market price of the Company’s common stock were higher than the conversion price of the notes when they were issued. The value of the 2014 Offering Warrants, the beneficial conversion feature and the original issue discount in the aggregate of $145,161 was considered as debt discount and is being amortized as interest over the term of the notes or in full upon the conversion of the corresponding notes. | |
During the year ended December 31, 2014, the Company converted $35,750 of these notes to 74,480 shares of common stock and amortized to interest expense $39,619 of the corresponding note discount. As of December 31, 2014 the balance due to this note was $244,640 and unamortized note discount of $105,542 or a net balance of $139,098. | |
2011 and 2012 | |
In 2011 and 2012, the Company issued its convertible notes in the aggregate of $8,302,153 and warrants to purchase a total of 32,355,232 shares of common stock. | |
The value of the 2011 and 2012 offering warrants, the beneficial conversion feature of the convertible notes, and the original issue discount in the aggregate of $8,302,153 was considered as debt discount to be amortized over the term of the notes or in full upon the conversion of the corresponding notes. | |
During the year ended December 31, 2012, the Company amortized to interest expense $3,620,092 of the note discount. These notes were all converted to shares of common stock and there was no balance due to these notes as of December 31, 2012. |
6_Research_and_development
6. Research and development | 12 Months Ended |
Dec. 31, 2014 | |
Research and Development [Abstract] | |
6. Research and Development | The Company constructs, develops and tests the AOT and Joule Heat technologies with internal resources and through the assistance of various third party entities. Costs incurred and expensed include fees such as patent fees, U.S. Department of Energy testing fees, purchase of test equipment, pipeline pumping equipment, crude oil tank batteries, viscometers, SCADA systems, computer equipment, payroll and other related equipment and various logistical expenses for the purposes of evaluating and testing the Company’s AOT prototypes. |
Total expenses incurred during the years ended December 31, 2014, 2013 and 2012 on Research and Development were $893,452, $2,011,486 and $963,184, respectively. | |
AOT and Joule Heat Product Development and Testing | |
The Company constructs, develops and tests the AOT and Joule Heat technologies with internal resources and through the assistance of various third party entities. Costs incurred and expensed include fees such as U.S. Department of Energy testing fees, purchase of test equipment, pipeline pumping equipment, crude oil tank batteries, viscometers, SCADA systems, computer equipment, payroll and other related equipment and various logistical expenses for the purposes of evaluating and testing the Company’s AOT and Joule Heat prototypes. | |
Total expenses incurred during the years ended December 31, 2014, 2013 and 2012 on AOT and Joule Heat product development and testing amounted to $73,937, $676,287 and $588,584 respectively and has been reflected as part of Research and Development expenses on the accompanying consolidated statement of operations. | |
AOT Prototypes | |
In 2013, the Company entered into a lease agreement with TransCanada Keystone Pipeline, L.P. for the manufacture and delivery of our AOT Prototype Equipment. In 2014, the Company entered into another lease agreement with Kinder Morgan Crude & Condensate, LLC for the manufacture and delivery of our AOT Prototype Equipment. See Note 7 for further discussion. | |
During the year ended December 31, 2014 and 2013, the Company incurred total expenses of $502,720 and $1,029,143, respectively, in the manufacture and delivery of the AOT prototype equipment. These expenses have been reflected as part of Research and Development expenses on the accompanying consolidated statement of operations. The Company incurred no such expenses in the year ended December 31, 2012. | |
Temple University Licensing Agreement | |
On August 1, 2011, the Company and Temple University (“Temple”) entered into two (2) Exclusive License Agreements (collectively, the “License Agreements”) relating to Temple’s patent applications, patents and technical information pertaining to technology associated with an electric and/or magnetic field assisted fuel injector system (the “First Temple License”), and to technology to reduce crude oil viscosity (the “Second Temple License”). The License Agreements are exclusive and the territory licensed to the Company is worldwide and replace previously issued License Agreements. | |
Pursuant to the two licensing agreements, the Company agreed to pay Temple the following: (i) non-refundable license maintenance fee of $300,000; (ii) annual maintenance fees of $187,500; (iii) royalty fee ranging from 4% up to 7% from revenues generated from the licensing agreements; and (iv) 25% of all revenues generated from sub-licensees to secure or maintain the sub-license or option thereon. Temple also agreed to defer $37,500 of the amount due if the Company agrees to fund at least $250,000 in research or development of Temple’s patent rights licensed to the Company. The term of the licenses commenced in August 2011 and will expire upon the expiration of the patents. The agreement can also be terminated by either party upon notification under terms of the licensing agreements or if the Company ceases the development of the patent or failure to commercialize the patent rights. | |
Total expenses recognized during each year ended December 31, 2014, 2013 and 2012 pursuant to these two agreements amounted to $187,500 and has been reflected in Research and Development expenses on the accompanying consolidated statement of operations. | |
As of December 31, 2014 and 2013, total unpaid fees due to Temple pursuant to these agreements amounted to $340,625 and $153,125, respectively, which are included as part of Accounts Payable – licensing agreement in the accompanying consolidated balance sheets. | |
In 2014, the Company recognized revenues of $240,000 as a result of these two licenses. No royalty payment was due to Temple as the reported revenues did not meet the threshold at which the Company would pay royalties in addition to the annual maintenance agreement. There were no revenues generated from these two licenses during the years ended December 31, 2013 and 2012. | |
Temple University Sponsored Research Agreement | |
On March 19, 2012, the Company entered into a Sponsored Research Agreement (“Research Agreement”) with Temple University (“Temple”), whereby Temple, under the direction of Dr. Rongjia Tao, will perform ongoing research related to the Company’s AOT device (the “Project”), for the period April 1, 2012, through April 1, 2014. All rights and title to intellectual property resulting from Temple’s work related to the Project shall be subject to the Exclusive License Agreements between Temple and the Company, dated August 1, 2011. In exchange for Temple’s research efforts on the Project, the Company has agreed to pay Temple $500,000, payable in quarterly installments of $62,500. | |
In August 2013, the Company and Temple amended the Research Agreement. Under the amended agreement, parties agreed that total cost for Phase 1 of the agreement was $241,408 and total cost for Phase 2 of the agreement was $258,592 payable beginning September 1, 2013 in eight quarterly installments of $32,324. | |
During the year ended December 31, 2014, 2013 and 2012, the Company recognized a total expense of $129,295, $118,556 and $187,500, respectively, pursuant to this agreement and has been reflected in Research and Development expenses on the accompanying consolidated statement of operations. | |
As of December 31, 2014 and 2013, total unpaid fees due to Temple pursuant to this agreement amounted to $64,688 and $32,325 which are included as part of Accounts Payable – licensing agreement in the accompanying consolidated balance sheets. |
7_Leases
7. Leases | 12 Months Ended |
Dec. 31, 2014 | |
Leases [Abstract] | |
7. Leases | TransCanada Keystone Pipeline, L.P. Lease |
On August 1, 2013, the Company entered into an Equipment Lease/Option to Purchase Agreement (“Lease”) with TransCanada Keystone Pipeline, L.P. by its agent TC Oil Pipeline Operations, Inc. ("TransCanada") which agreed to lease and test the effectiveness of the Company’s AOT technology and equipment on one of TransCanada’s operating pipelines. The initial term of the lease was for six months at an amount of $60,000 per month. During the initial term, either the Company or TransCanada had the right to terminate the Agreement for any reason on 90 days written notice. TransCanada had an option to purchase the equipment during the term of the lease for approximately $4.3 million. | |
In June 2014, the equipment was accepted by TransCanada and the lease commenced. TransCanada installed and tested four AOT Midstream pressure vessels with a cumulative maximum flow capacity of 20,000 gallons per minute and a steal pipe header system which diverts oil from TransCanada’s pipeline through the AOT Midstream pressure vessels. The Company’s costs for the equipment leased to TransCanada totaled approximately $1.4 million, and represent costs associated with testing of a pre-production prototype and therefore were considered research and development costs (see Note 6 above). | |
The Company accounted the TransCanada Lease as an operating lease, and recognized total lease revenue of $240,000 from June 2014 up to October 2014. No such revenues were recorded in the years ended December 2013 or 2012. | |
In July 2014, TransCanada terminated the lease agreement effective October 15, 2014. In accordance with terms of the Lease, in December 2014, the AOT Equipment was returned to us by TransCanada at its own expense, free and clear of oil and in good working condition. | |
Kinder Morgan Crude & Condensate, LLC Lease | |
On July 15, 2014, the Company entered into an Equipment Lease/Option to Purchase Agreement (“Lease”) with Kinder Morgan Crude & Condensate, LLC (“Kinder Morgan”). In accordance with the terms and conditions of the agreement, Kinder Morgan agreed to lease and test the effectiveness of the Company’s AOT technology and equipment on one of Kinder Morgan’s operating pipelines. Equipment provided under the Lease includes a single AOT Midstream pressure vessel with a maximum flow capacity of 5,000 gallons per minute. The Lease provides for the Company to deliver the equipment to a location designated by Kinder Morgan and installed and placed in operation by Kinder Morgan, at Kinder Morgan’s expense. | |
The initial term (“Initial Term”) of the Lease is four months, with an option to extend the Lease for up to a maximum of 84 months. During the Initial Term, either the Company or Kinder Morgan may terminate the Agreement for any reason on 45 days’ written notice. Lease payments shall be $20,000 per month; provided however, that in the event the Equipment is removed from service at its initial location during the Initial Term, the monthly lease payments shall be reduced to $5,000 until the Equipment is placed back in service at its new location, at which time the Lease payments shall resume at $20,000 per month. The agreement further provides that Kinder Morgan shall have an option to purchase the Equipment during the term of the Lease for a fixed price of between $600,000 and $1,200,000, depending upon the date of purchase. | |
Under terms of the Lease, Kinder Morgan and the Company will collaboratively share and analyze performance data collected by sensors attached to the AOT equipment and at several locations along Kinder Morgan’s pipeline. Data collected is protected by a mutual nondisclosure agreement. | |
The AOT equipment was delivered to Kinder Morgan in the fourth quarter of 2014. Pursuant to the agreement, the equipment was originally scheduled for acceptance by Kinder Morgan by December 31, 2014, however, it was extended to March 2015. Installation, testing and final acceptance of the equipment is scheduled for March 2015, at which time the Lease and testing is scheduled to commence. The Company will account for the lease with Kinder Morgan as an operating lease once the AOT equipment is accepted. |
8_Derivative_liability
8. Derivative liability | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Derivative Liability [Abstract] | |||||||||
8. Derivative liability | In 2009 and 2010, in connection with certain convertible note offerings, the Company granted warrants to purchase an aggregate of 8,522,500 shares of the Company’s common stock. The warrants are initially exercisable at $0.30 per share with exercise prices that may fluctuate based on the occurrence of future offerings or events. | ||||||||
Pursuant to current accounting pronouncements, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The FASB’s guidance requires the fair value of these liabilities be re-measured at the end of every reporting period. As a result, these warrants were not considered indexed to the Company’s own stock. The Company characterized the fair value of these warrants as derivative liabilities upon issuance and re-measured every reporting period with the change in value reported in the accompanying statement of operations. | |||||||||
During the year ended December 31, 2012, the Company recorded a loss of $4,023,094 due to the change in the fair value of the derivatives. Furthermore, approximately 4 million warrants expired or were exercised and as a result, the Company recognized a gain of $2,445,095 due to the extinguishment of the derivative liabilities resulting from the expiration or exercise of these warrants. At December 31, 2012, a total of 4.4 million warrants remained outstanding with a fair value of $3,221,138. | |||||||||
In January 2013, the remaining 4.4 million warrants expired or were exercised at which time the warrants had a fair value of $3,441,752, which resulted in a loss of $220,614 due to the change in the fair value of the derivative liability. Furthermore, as a result of the exercise and expiration of these warrants, the Company recorded a gain of $3,441,752 due to the extinguishment of the corresponding derivative liability. There were no similar instruments issued or outstanding in 2014. | |||||||||
The derivative liabilities were valued using a probability weighted average series of Black-Scholes Option Pricing models as a valuation technique, which approximates the Monte Carlo and other binominal valuation techniques with the following assumptions: | |||||||||
Derivative Liabilities, Fair Value of Warrants | |||||||||
15-Jan | December 31, | ||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.12% | 0.02% | |||||||
Expected volatility | 92% | 165% | |||||||
Expected life (in years) | 0.75 - 1.00 | 0.04 | |||||||
Expected dividend yield | 0% | 0% | |||||||
Fair Value: | |||||||||
2009 Warrants | 3,441,752 | 3,221,138 | |||||||
Total Fair Value | $ | 3,441,752 | $ | 3,221,138 | |||||
The risk-free interest rate is based on the yield available on U.S. Treasury securities. The Company estimates volatility based on the historical volatility of its common stock. The expected life warrants are based on the expiration date of the related warrants. The expected dividend yield was based on the fact that the Company has not paid dividends to stockholders in the past nor is it expected to pay any dividends in the foreseeable future. |
9_Common_Stock_Transactions
9. Common Stock Transactions | 12 Months Ended | ||
Dec. 31, 2014 | |||
Stockholders' Equity Note [Abstract] | |||
9. Common Stock Transactions | 2014 | ||
During the year ended December 31, 2014, the Company issued an aggregate of 4,785,427 shares of its common stock as follows: | |||
● | The Company issued 74,480 shares of its common stock in exchange for conversion of $35,750 of Convertible Notes pursuant to the convertible notes conversion price of $0.48 per share. | ||
● | The Company issued 4,710,947 shares of its common stock for exercise of options and warrants at price of $0.30 per share and valued at $1,413,284, of which, $30,000 was applied to an existing accounts payable and $1,383,284 was received in cash. | ||
2013 | |||
During the year ended December 31, 2013, the Company issued an aggregate of 32,575,247 shares of its common stock as follows: | |||
· | The Company issued 29,152,389 shares of its common stock upon exercise of options and warrants at a price of $0.25 up to $0.98 with proceeds of $8,477,218, net of direct costs in the amount of $78,521 in commissions and foreign exchange fees paid on warrants exercised by foreign (non-U.S.) investors. Furthermore, included in the exercise was issuance of 50,000 shares of common stock valued at $49,000 pursuant to an exercise of options and accounted for as partial settlement of unpaid fees recorded in prior years. As a result, the aggregate net proceeds received amounted to $8,428,218. | ||
● | The Company issued 375,455 shares of its common stock with a fair value of $419,113 or $1.12/share to employees, officers and members of the Board of Directors of the Company and a consultant for service rendered. The shares were valued at market at the date of the agreement. | ||
● | In December 2013, the Company issued 3,047,403 shares of common stock with a fair value of $3,108,347 pursuant to a settlement with CEDE & Co (see Note 13). The shares were valued at market at the date of issuance. | ||
In December 2013, the Company’s stockholders agreed to increase the authorized shares of common stock of the Company from 200,000,000 to 300,000,000. | |||
2012 | |||
During the year ended December 31, 2012, the Company issued an aggregate of 29,394,100 shares of its common stock as follows: | |||
● | The Company issued 14,305,156 shares of its common stock in exchange for conversion of $3,789,634 of Convertible Notes pursuant to the convertible notes conversion prices of $0.25 up to $0.40 per share. | ||
● | The Company issued 12,563,944 shares of its common stock for exercise of options and warrants at a price of $0.25 up to $0.40 per share with an aggregate net proceeds of $3,681,881. | ||
● | The Company issued 2,525,000 shares of our common stock for services valued in the aggregate at $1,228,250. We valued the shares at market prices at the date of the agreements ranging from $0.30 to $1.07 per share. | ||
10_Stock_Options_and_Warrants
10. Stock Options and Warrants | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||||||||||||||
10. Stock Options and Warrants | The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. Options and warrants vest and expire according to terms established at the grant date. | ||||||||||||||
Options | |||||||||||||||
The Company currently issues stock options to employees, directors and consultants under its 2004 Stock Option Plan (the Plan). The Company could issue options under the Plan to acquire up to 7,000,000 shares of common stock as amended in May 2006. | |||||||||||||||
From the Plan’s inception in 2004 up to December 31, 2014, the Company granted options to purchase 9,943,937 shares under the Plan, of which 4,383,574 shares were subsequently cancelled or forfeited and made available for grants under the Plan. In years ending December 31, 2014, 2013 and 2012, the Company granted options to purchase shares under the plan to employees and directors totaling 852,122 shares, 207,819 shares and 858,000 shares, respectively, and prior grants were cancelled or forfeited totaling 871,127 shares, 21,009 shares and 90,000 shares, respectively. As of December 31, 2014, options to purchase 4,292,030 shares granted under the Plan remain outstanding and 1,439,637 shares were available to be granted under the Plan. | |||||||||||||||
From the Company’s inception in February 1998 up to December 31, 2014, options to purchase a total of 37,050,000 shares were granted outside of the Plan, of which, 2,860,000 shares were exercised and 17,430,000 shares were subsequently cancelled or forfeited. During the year ended December 31, 2012, 4,000,000 shares were granted outside the Plan. There were no such grants or forfeitures outside of the Plan in 2014 and 2013. During the year ended December 31, 2013, prior grants outside of the plan were forfeited totaling 7,040,000 shares. No such prior grants outside of the plan were forfeited or canceled in 2012 and 2014. As of December 31, 2014, options granted outside of the Plan to purchase 16,760,000 shares remain outstanding. | |||||||||||||||
Employee options vest according to the terms of the specific grant and expire from 5 to 10 years from date of grant. Non-employee option grants vest upon issuance up to 2 years. The weighted-average, remaining contractual life of employee and Non-employee options outstanding at December 31, 2014 was 7.1 years. Stock option activity for the period January 1, 2012 to December 31, 2014, was as follows: | |||||||||||||||
Weighted Avg. | Weighted Avg. | ||||||||||||||
Options | Exercise Price | ||||||||||||||
Options, December 31, 2011 | 24,067,892 | $ | 0.3 | ||||||||||||
Options granted | 4,858,000 | 0.3 | |||||||||||||
Options exercised | (776,667 | ) | 0.47 | ||||||||||||
Options forfeited | (871,127 | ) | 0.98 | ||||||||||||
Options, December 31, 2012 | 27,278,098 | $ | 0.27 | ||||||||||||
Options granted | 207,819 | 1.17 | |||||||||||||
Options exercised | (115,000 | ) | 0.6 | ||||||||||||
Options forfeited | (7,061,009 | ) | 0.25 | ||||||||||||
Options, December 31, 2013 | 20,309,908 | $ | 0.28 | ||||||||||||
Options granted | 852,122 | 0.8 | |||||||||||||
Options exercised | (20,000 | ) | 0.3 | ||||||||||||
Options forfeited | (90,000 | ) | 0.91 | ||||||||||||
Options, December 31, 2014 | 21,052,030 | $ | 0.3 | ||||||||||||
The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest under the Plan as of December 31, 2014 were as follows: | |||||||||||||||
Outstanding Options | Exercisable Options | ||||||||||||||
Option | Shares | Life | Weighted | Shares | Weighted | ||||||||||
Exercise Price | (Years) | Average Exercise | Average Exercise | ||||||||||||
Per Share | Price | Price | |||||||||||||
$ 0.21 - $ 0.99 | 20,788,801 | 6.1 | $0.29 | 18,229,381 | $0.28 | ||||||||||
$ 1.00 - $ 1.99 | 263,229 | 5.2 | $1.22 | 263,229 | $1.28 | ||||||||||
21,052,030 | $0.30 | 18,492,610 | $0.29 | ||||||||||||
As of December 31, 2014 the market price of the Company’s stock was $0.47 per share. At December 31, 2014 the aggregate intrinsic value of the options outstanding was $4,107,750. Future unamortized compensation expense on the unvested outstanding options at December 31, 2014 is approximately $474,000. | |||||||||||||||
2014 | |||||||||||||||
· | In February 2014, options to purchase 20,000 shares of common stock were exercised resulting in proceeds of $6,000. | ||||||||||||||
· | From January up to October 2014, the Company issued options to purchase a total of 852,122 shares of common stock to employee, officers and members of the Board of Directors with an estimated fair value of approximately $454,499 using the Black-Scholes Option Pricing model. The options are exercisable from $0.65 up to $0.99 per share, vesting within two years and expire in two and ten years from the date of grant. During the year ended December 31, 2014, the Company recognized compensation costs of $295,884 based on the fair value of options that vested. | ||||||||||||||
· | During year ended December 31, 2014, the Company amortized $376,247 of compensation cost based on the vesting of the options granted to employees, directors and consultants in prior years. | ||||||||||||||
2013 | |||||||||||||||
· | From April up to September 2013, options to purchase 115,000 shares of common stock were exercised resulting in net proceeds of $19,500. Included in the exercise was issuance of 50,000 shares of common stock valued at $49,000 pursuant to an exercise of options and accounted for as partial settlement of a liability recorded in prior years. | ||||||||||||||
· | From July up to September 2013, the Company issued options to purchase 207,819 shares of common stock to consultants, employees, officers and members of the Board of Directors with a fair value of approximately $201,000 using the Black-Scholes Option Pricing model. The options are exercisable at $1.09/share up to $1.71/share, vest over a period of one year and expire in two years and ten years from the date of grant. During the year ended December 31, 2013, the Company recognized compensation costs of $101,157 based on the fair value of options that vested. | ||||||||||||||
· | In November 2013, pursuant to separation agreement with an Officer of the Company, the Company cancelled unvested option to purchase 7,040,000 shares of common stock at $0.25 and modified the vesting period of unvested option to purchase 3,520,000 shares of common stock at $0.25, both granted 2011 (see Note 14). | ||||||||||||||
· | During year ended December 31, 2013, the Company amortized $403,127 of compensation cost based on the vesting of the options granted to employees, directors and consultants in prior years. | ||||||||||||||
2012 | |||||||||||||||
· | From November up to December 2012, options to purchase 776,667 shares of common stock were exercised resulting in net proceeds of $364,700. | ||||||||||||||
· | From February 2012 up to October 2012, the Company issued 4,858,000 options to employees and an officer of the Company, valued at $1,456,007 using Black-Scholes Option Pricing model. The options have an exercise price of $0.25 to $0.83 per share, vest over a period of up to four years, and expire ten years from date of grant. During the year ended December 31, 2012, the Company recognized compensation costs of $538,037 based upon its vesting. | ||||||||||||||
· | During year ended December 31, 2012, the Company amortized $1,366,846 of compensation cost based on the vesting of the options granted to employees, directors and consultants in prior years | ||||||||||||||
Black-Scholes Option Pricing | |||||||||||||||
During the years ended December 31, 2014, 2013 and 2012, the Company used the following average assumptions in its calculation using the Black-Scholes Option Pricing model: | |||||||||||||||
2014 | 2013 | 2012 | |||||||||||||
Expected life (years) | 1.5 – 5.5 | 1.5 – 5.5 | 5.0 – 7.0 | ||||||||||||
Risk free interest rate | 0.12 – 1.70% | 0.34 – 1.65% | 0.62 – 1.27% | ||||||||||||
Volatility | 123 – 135% | 127 – 130% | 125 – 140% | ||||||||||||
Expected dividend yield | 0% | 0% | 0% | ||||||||||||
The expected life warrants are based on the expiration date of the related options. The risk-free interest rate is based on the yield available on U.S. Treasury securities. The Company estimates volatility based on the historical volatility of its common stock. The expected dividend yield was based on the fact that the Company has not paid dividends to stockholders in the past nor is it expected to pay any dividends in the foreseeable future. | |||||||||||||||
The weighted average fair value for options granted in 2013, 2012 and 2011 were $0.96, $0.30 and $0.37, respectively. | |||||||||||||||
Warrants | |||||||||||||||
The following table summarizes certain information about the Company’s stock purchase warrants. | |||||||||||||||
Warrants | Weighted Avg. | ||||||||||||||
Exercise Price | |||||||||||||||
Warrants outstanding, December 31, 2011 | 49,106,280 | $ | 0.32 | ||||||||||||
Warrants granted | 9,273,316 | 0.31 | |||||||||||||
Warrants exercised | (12,039,846 | ) | 0.29 | ||||||||||||
Warrants cancelled | (4,134,243 | ) | 0.49 | ||||||||||||
Warrants outstanding, December 31, 2012 | 42,205,507 | $ | 0.31 | ||||||||||||
Warrants granted | 150,000 | 0.3 | |||||||||||||
Warrants exercised | (29,037,389 | ) | 0.29 | ||||||||||||
Warrants cancelled | (1,554,152 | ) | 0.33 | ||||||||||||
Warrants outstanding, December 31, 2013 | 11,763,966 | $ | 0.34 | ||||||||||||
Warrants granted | 761,037 | 0.71 | |||||||||||||
Warrants exercised | (4,690,947 | ) | 0.3 | ||||||||||||
Warrants cancelled | (2,141,969 | ) | 0.46 | ||||||||||||
Warrants outstanding, December 31, 2014 | 5,692,087 | $ | 0.38 | ||||||||||||
At December 31, 2014 the price of the Company’s common stock was $0.47 per share and the aggregate intrinsic value of the warrants outstanding was $715,174. Future unamortized compensation expense on the unvested outstanding warrants at December 31, 2014 is approximately $66,000. | |||||||||||||||
Outstanding Warrants | Exercisable Warrants | ||||||||||||||
Warrant | Shares | Life | Weighted | Shares | Weighted | ||||||||||
Exercise Price Per Share | (Years) | Average Exercise | Average Exercise | ||||||||||||
Price | Price | ||||||||||||||
$ 0.25 - $ 0.99 | 5,572,087 | 3 | $0.36 | 5,177,087 | $0.34 | ||||||||||
$ 1.00 - $ 1.99 | 120,000 | 1 | $1.01 | 120,000 | $1.01 | ||||||||||
5,692,087 | $0.38 | 5,297,087 | $0.35 | ||||||||||||
2014 | |||||||||||||||
· | In January and February 2014, warrants to acquire 4,690,947 shares of common stock were exercised resulting in gross proceeds of $1,407,284. Furthermore, included in the exercise was issuance of 100,000 shares of common stock valued at $30,000 pursuant to an exercise of warrants and accounted for as partial settlement of unpaid fees recorded in prior years. As a result, the aggregate net proceeds received amounted to $1,377,284. | ||||||||||||||
· | From January up to October 2014, the Company granted consultants warrants to purchase a total of 315,000 shares with an average exercise price of $0.84 per share, vesting in six months up to two years and expiring in two years up to ten years from the date of grant. The fair value of the warrants upon vesting amounted to $20,950 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.89%; dividend yield of 0%; volatility of 66%; and an expected life of twenty nine months. During the year ended December 31, 2014, the Company recognized an amortized expense of $20,950 based on the fair value of options that vested. | ||||||||||||||
· | In May 2014, the Company granted a consultant warrants to purchase 300,000 shares over eighteen months at the rate of 50,000 shares every three months, with an exercise price of equal to the closing stock price on the date of vesting, and expiring two years from the date of grant. The fair value of the warrants vested at December 31, 2014 amounted to $21,000 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.50%; dividend yield of 0%; volatility of 65%; and an expected life of 18 months. During the year ended December 31, 2014, the Company recognized an amortized expense of $21,000 based on the fair value of options that vested. | ||||||||||||||
· | In October through December 2014, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 146,037 shares with an exercise price of $0.48 per share, vesting immediately upon grant and expiring one year from the date of grant. See Note 5 for further discussion. | ||||||||||||||
· | During year ended December 31, 2014, the Company amortized $16,645 of compensation cost based on the vesting of the warrants granted to employees, directors and consultants in prior years. | ||||||||||||||
2013 | |||||||||||||||
· | In March 2013, pursuant to a settlement of debt agreement, the Company granted a consultant a warrant to purchase 150,000 shares of its common stock with an exercise price of $0.30 per share, vesting immediately and expiring in two years from grant date. The fair value of the warrant amounted to $129,622 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.26%; dividend yield of 0%; volatility of 132%; and an expected life of two years. | ||||||||||||||
· | During the year ended December 31, 2013, warrants to acquire 29,037,389 shares of common stock were exercised resulting in proceeds of $8,408,718, net of direct costs incurred of $78,521. | ||||||||||||||
· | During year ended December 31, 2013, the Company recorded $52,314 of compensation cost based on the vesting of the warrants granted to employees, directors and consultants in prior years. | ||||||||||||||
2012 | |||||||||||||||
· | During the year ended December 31, 2012, the Company granted warrants to consultants to purchase 1,850,000 shares of its common stock. The warrants have an exercise price of $0.30 per share, fully vested and will expire in two to three years from grant date. Total fair value of the warrant amounted to $517,777 using the Black-Scholes Option Pricing model with the following average assumptions: risk-free interest rate of 0.23% to 0.39%; dividend yield of 0%; volatility of 111%; and an expected life of three years. | ||||||||||||||
· | During the year ended December 31, 2012, the Company granted 7,423,316 warrants to acquire share of its common stock in connection of its issuance of convertible notes. The warrants have an average exercise price of $0.29 per share, fully vested, and will expire in two to three years from date of grant. See Note 5 for further discussion. | ||||||||||||||
· | During the year ended December 31, 2012, the Company recognized amortization expense of $289,513 based upon its vesting of warrants granted in prior years. | ||||||||||||||
11_Commitments_and_Contingenci
11. Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
11. Commitments and Contingencies | There is no current or pending litigation of any significance with the exception of the matters that have arisen under, and are being handled in, the normal course of business. | ||||
Leases | |||||
On August 1, 2013, the Company terminated its previous lease, and entered into a new non-cancellable lease with a 5-year term, expiring July 31, 2018 at a monthly rent of $13,075. On February 1, 2014, the Company amended its lease of office space in Santa Barbara, California, in order to reduce the leased area as well as the monthly lease from $13,750 per month to $5,830 per month. | |||||
Total rent expense under these leases in effect during the years ended December 31, 2014, 2013 and 2012, was $82,376, $201,500, and $210,635, respectively which are included as part of Operating Expenses in the attached consolidated statements of operations. Remaining lease commitments under the non-cancellable office lease at December 31, 2014 were $250,690 through the end of 2018. The following is a schedule by years of future minimum rental payments required under the non-cancellable office leases as of December 31, 2014. | |||||
Year ending | Non-cancellable | ||||
December 31, | Office Leases | ||||
2015 | $ | 69,960 | |||
2016 | 69,960 | ||||
2017 | 69,960 | ||||
2018 | 40,810 | ||||
2019 | – | ||||
Total | $ | 250,690 | |||
Beginning July 2013, the Company subleased a portion of the second floor office space under its Santa Barbara office lease on a month-to-month basis. Total rents collected under these sublease agreements in the year ended December 31, 2014 and 2013 were $795 and $11,085, respectively, which were included as an offset to Operating Expenses in the attached consolidated statements of operations. The rent expense for the Santa Barbara facility net of sublease rents collected for the year ended December 31, 2014 and 2013 was $81,851 and $160,535, respectively. |
12_Income_Taxes
12. Income Taxes | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
12. Income Taxes | The Company did not record an income tax provision for 2014, 2013 and 2012, other than $800 for the minimum state tax provision. A reconciliation of income taxes with the amounts computed at the statutory federal rate follows: | ||||||||||||
December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
Computed tax provision (benefit) at federal statutory rate (34%) | $ | (1,133,000 | ) | $ | (1,993,000 | ) | $ | (1,434,000 | ) | ||||
State income taxes, net of federal benefit | (295,000 | ) | (518,000 | ) | (373,000 | ) | |||||||
Permanent items | 0 | 0 | 0 | ||||||||||
Valuation allowance | 1,428,000 | 2,511,000 | 1,807,000 | ||||||||||
Income tax provision | $ | – | $ | – | $ | – | |||||||
The deferred tax assets and deferred tax liabilities recorded on the balance sheet are as follows: | |||||||||||||
December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
Net operating loss carry forwards | $ | 19,600,000 | $ | 18,400,000 | |||||||||
Valuation allowance | (19,600,000 | ) | (18,400,000 | ) | |||||||||
Total deferred taxes net of valuation allowance | $ | – | $ | – | |||||||||
As of December 31, 2014, the Company had net operating losses available for carry forward for federal tax purposes of approximately $48 million expiring beginning in 2019. These carry forward benefits may be subject to annual limitations due to the ownership change limitations imposed by the Internal Revenue Code and similar state provisions. The annual limitation, if imposed, may result in the expiration of net operating losses before utilization. | |||||||||||||
As of December 31, 2014, the Company recorded valuation allowance of $19,700,000 for its deferred tax assets the Company believes that such assets did not meet the more likely than not criteria to be recoverable through projected future profitable operations in the foreseeable future | |||||||||||||
Effective January 1, 2007, the Company adopted FASB guidance that addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The FASB also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2014, 2013 and 2012, the Company does not have a liability for unrecognized tax benefits. | |||||||||||||
The Company files income tax returns in the U.S. federal jurisdiction and the state of California. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2002. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these net operating losses and tax credit carry forwards may be utilized in future periods, they remain subject to examination. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2014, the Company has no accrued interest or penalties related to uncertain tax positions. The Company believes that it has not taken any uncertain tax positions that would impact its consolidated financial statements as of December 31, 2014, 2013 or 2012. |
13_Settlement_with_CEDE_Co
13. Settlement with CEDE & Co. | 12 Months Ended |
Dec. 31, 2014 | |
Settlement With Cede Co. | |
13. Settlement with CEDE & Co. | In 2001, a total of 3,047,403 shares of common stock of the Company that were held in street (nominee) name by Cede & Co. of the Depository Trust Co. (the “Cede Shares”) were ordered cancelled by a federal district court relating to litigation initiated by the Securities and Exchange Commission against the Company and its former Chief Executive Officer (CEO). Either before or after the court’s order (the timing of which is unknown to the Company), the Cede Shares, at that time were held directly or indirectly by the former CEO and were placed with Cede & Co. in nominee name. In furtherance of the court’s order, the physical certificates relating to the Cede Shares should have been returned to the Company’s stock transfer agent, NATCO, for cancellation. This did not occur. Rather, Cede & Co. retained the stock certificates representing the Cede Shares and continued to treat the Cede Shares as outstanding and free trading shares of the Company. Notwithstanding the foregoing, NATCO, in furtherance of then Company counsel’s instructions, cancelled the Cede Shares on the Company’s books and records in 2005, and, in furtherance thereof, reduced the Company’s outstanding shares of common stock by 3,047,403. |
In 2013, Cede & Co. has requested, in effect, that, inasmuch as the Cede Shares continue to be within its system, the Cede Shares be reinstated on the Company’s books and records and that the outstanding shares of the Company be increased by 3,047,403. Although the Company believes Cede & Co.’s request is misplaced, particularly since it appears that Cede & Co. had prior notice of the court’s order cancelling the Cede Shares, the Company has elected to avoid litigation with Cede & Co. and instead has elected to reinstate the Cede Shares. | |
In December 2013, the Company approved the reinstatement of 3,047,403 shares of common stock of the Company with a fair value of $3,108,347 and recorded as part of Operating Expenses in 2013 in the accompanying consolidated Statement of Operations. The fair value of the shares was determined based on the trading price of the Company’s shares on December 16, 2013, the date of the Company’s Board of Directors approved such reinstatement. |
14_Settlement_with_Former_Offi
14. Settlement with Former Officer | 12 Months Ended |
Dec. 31, 2014 | |
Settlement With Former Officer | |
14. Settlement with Former Officer | On November 15, 2013, Cecil Kyte voluntarily resigned as a Director, Chairman of the Board, a member of the Nominating and Corporate Governance Committee, and CEO. Subject to terms of Mr. Kyte’s separation agreement, Kyte received a severance pay equal to one-year’s salary of $350,000 paid in 24 equal installments of $14,853, subject to all applicable tax withholdings, beginning November 30, 2013 through November 15, 2014. As a result, the Company recognized expense of $350,000 for severance pay plus $14,315 in corresponding payroll taxes for a total of $364,315. As of December 31, 2013, the outstanding severance pay balance amounted to $305,441 and deferred payroll tax balance of $13,318 and are reported in the Company’s balance sheet as part of Accrued Expense and Accounts Payable – Related Parties |
In 2014, the Company paid all the remaining severance pay and deferred payroll taxes of $318,759. | |
At the time of separation, Mr. Kyte held unvested options which had been granted in January 2011 to purchase 10,560,000 shares of common stock at $0.25 per share, of which 3,520,000 shares were due to vest in January 2014 and 7,040,000 shares were due to fully vest by January 2016. Under terms of the separation agreement, the Company accelerated the vesting of the 3,520,000 options due to vest in January 2014 to November 15, 2013 while the remaining options to purchase 7,040,000 shares were forfeited. | |
Pursuant to current accounting guidelines, the Company recognized an expense related to the accelerated vesting in the amount of $3,809,325 the fair value of which was determined using a Black-Scholes Option Pricing model with the following: risk-free interest rate of 2.06%; dividend yield of 0%; volatility of 130%; and an expected life of 7 years. Previously recorded compensation recorded in 2013 related to the original vesting schedule of the 3,520,000 options was reversed, and the total of $3,809,325 is recorded in Operating Expenses in the accompanying consolidated Statement of Operations for 2013. | |
Mr. Kyte also held additional unvested options which had been granted as board compensation in September 2013 to purchase 21,009 shares of common stock at $1.19 per share. These options were forfeited pursuant to the separation agreement. |
15_Quarterly_Information
15. Quarterly Information | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
15. Quarterly Information | First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
Year Ended December 31, 2014: | |||||||||||||||||
Revenues | $ | – | $ | 60,000 | $ | 180,000 | $ | – | |||||||||
Gross profit | $ | – | $ | 60,000 | $ | 180,000 | $ | – | |||||||||
Net loss | $ | (1,403,474 | ) | $ | (1,008,392 | ) | $ | (715,774 | ) | $ | (878,695 | ) | |||||
Income per share, Basic and Diluted (1) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
First | Second | Third | Fourth | ||||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
Year Ended December 31, 2013: | |||||||||||||||||
Revenues | $ | – | $ | – | $ | – | $ | – | |||||||||
Gross profit | $ | – | $ | – | $ | – | $ | – | |||||||||
Net income (loss) | $ | 1,582,800 | $ | (1,920,950 | ) | $ | (1,445,125 | ) | $ | (8,873,734 | ) | ||||||
Basic income per share (1) | $ | 0.01 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.07 | ) | ||||||
Diluted income per share (1) | $ | 0.01 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.07 | ) | ||||||
(1) Per share data was computed independently for each of the quarters presented. Therefore, the sum of the quarterly per share information may not equal the annual income per share. |
16_Contractual_Obligations
16. Contractual Obligations | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Contractual Obligations | |||||||||||||||||
16. Contractual Obligations | The Company has certain contractual commitments for future periods, including office leases, minimum guaranteed compensation payments and other agreements as described in the following table and associated footnotes: | ||||||||||||||||
Research and | |||||||||||||||||
Year ending | Office | License | Compensation | Total | |||||||||||||
December 31, | Lease (1) | Agreements (2) | Agreements (3) | Obligations | |||||||||||||
2015 | $ | 69,960 | $ | 252,148 | $ | 84,167 | $ | 406,275 | |||||||||
2016 | 69,960 | 187,500 | 60,000 | 317,460 | |||||||||||||
2017 | 69,960 | 187,500 | 15,429 | 272,889 | |||||||||||||
2018 | 40,810 | 187,500 | – | 228,310 | |||||||||||||
2019 | – | 187,500 | – | 187,500 | |||||||||||||
Total | $ | 250,690 | $ | 1,002,148 | $ | 159,596 | $ | 1,412,434 | |||||||||
________________________________ | |||||||||||||||||
-1 | Consists of rent for the Company’s Santa Barbara Facility expiring on July 31, 2018. | ||||||||||||||||
-2 | Consists of license maintenance fees to Temple University in the amount of $187,500 paid annually through the life of the underlying patents or until otherwise terminated by either party, and research fees paid to Temple University in the amount of $32,324 paid quarterly through June 1, 2015. | ||||||||||||||||
-3 | Consists of base salary and certain contractually-provided benefits, to an executive officer, pursuant to an employment agreement that expires on January 30, 2015 in the amount of $24,167 and a severance agreement of a former officer in the amount of $135,429. | ||||||||||||||||
17_Subsequent_events
17. Subsequent events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
17. Subsequent events | Increase in Outstanding Shares of Common Stock and Outstanding Options |
From January 1, 2015 up to March 2, 2015, the Company issued an aggregate of 310,000 shares of its common stock (i) upon the conversion of our notes payable for 110,000 shares of its common stock, and (ii) 200,000 shares of its common stock upon the exercise of warrants aggregate proceeds of $102,800. | |
In January 2015, the Company granted options under Company’s 2004 Stock Option Plan to members of the Company’s Board of Directors to purchase 738,552 shares with an estimated fair value of $285,000. The stock options are exercisable at $0.46 to $0.48 per share, vesting over a period of up to one year and expire ten years from the date of grant. |
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Description of business | Description of Business |
Save The World Air, Inc. (“STWA”, “Company”) was incorporated on February 18, 1998, as a Nevada Corporation under the name Mandalay Capital Corporation. The Company changed its name to Save the World Air, Inc. on February 11, 1999. The Company’s common stock is quoted under the symbol “ZERO” on the Over-the-Counter Bulletin Board. More information including the Company’s fact sheet, logos and media articles are available at our corporate website, www.stwa.com. | |
Save The World Air, Inc. develops and commercializes energy efficiency technologies that assist in meeting increasing global energy demands, improving the economics of oil extraction and transport, and reducing greenhouse gas emissions. The Company's intellectual property portfolio includes 47 domestic and international patents and patents pending, a substantial portion of which have been developed in conjunction with and exclusively licensed from Temple University of Philadelphia, PA (“Temple”). STWA's primary technology is called Applied Oil Technology™ (AOT™), a commercial-grade crude oil pipeline transportation flow-assurance product. AOT™ has been proven in U.S. Department of Energy tests to increase the energy efficiency of oil pipeline pump stations. The AOT product has transitioned from the research and development stage to initial commercial production for the midstream pipeline marketplace. | |
In 2014, the Company began commercial development of a suite of products based around the Joule Heat technology. The Company began fabrication of prototype equipment to be operated under a joint development agreement with a commercial entity in the fourth quarter, 2014. This prototype equipment is scheduled for delivery under the joint development agreement in March, 2015, with testing to begin shortly thereafter. The Company filed two additional provisional patents related to the technology’s method and apparatus in the second quarter and fourth quarter of 2013, respectively. The first of the two provisional patents was finalized and submitted to non-provisional status on April 29, 2014. The second of the two provisional patents was finalized and submitted to non-provisional status at the end of the third quarter 2014. | |
The Company was considered a development stage company through March 31, 2014. In June 2014, as discussed in Note 2, the Financial Accounting Standards Board (FASB) issued new guidance that removed incremental financial reporting requirements from generally accepted accounting principles in the United States of America for development stage entities. The Company adopted this new guidance, and as a result, all inception-to-date financial information and disclosures have been omitted from this report. | |
Consolidation policy | Consolidation Policy |
The accompanying consolidated financial statements of Save the World Air, Inc. include the accounts of Save the World Air, Inc. (the Parent) and its wholly owned subsidiary STWA Asia Pte. Limited, incorporated on January 17, 2006. Intercompany transactions and balances have been eliminated in consolidation. | |
Reclassification | Reclassification |
Certain financial results in prior years of Research and Development Expenses and Operating Expenses have been reclassified to conform to the current year presentation. Such reclassification did not change the reported net loss during those periods. | |
In presenting the Company’s statement of operations for the twelve-month periods ended December 31, 2013 and 2012, the Company reclassified certain salary and consulting expenses in the aggregate of $270,000 and $188,500 respectively that were previously reflected as operating expenses to research and development expenses. | |
Going concern | Going Concern |
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, the Company has not yet generated significant revenues and incurred recurring net losses. During the year ended December 31, 2014, the Company incurred a net loss of $4,006,335 and used cash in operations of $3,527,695. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. | |
At December 31, 2014, the Company had cash on hand in the amount of $2,247,557. Management estimates that the current funds on hand will be sufficient to continue operations through December 2015. Management is currently seeking additional funds, primarily through the issuance of debt and equity securities for cash to operate our business, including without limitation the expenses it will incur in connection with the license and research and development agreements with Temple; costs associated with product development and commercialization of the AOT and Joule Heat technologies; costs to manufacture and ship the products; costs to design and implement an effective system of internal controls and disclosure controls and procedures; costs of maintaining our status as a public company by filing periodic reports with the SEC and costs required to protect our intellectual property. In addition, as discussed below, the Company has substantial contractual commitments, including without limitation salaries to our executive officers pursuant to employment agreements, certain payments to a former officer and consulting fees, during the remainder of 2015 and beyond. | |
No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing. | |
Revenue Recognition Policy | Revenue Recognition Policy |
The Company recognizes lease revenue upon commencement of the lease. Revenue on future product sales will be recognized upon meeting the following criteria: persuasive evidence of an arrangement exists; delivery has occurred or services rendered; the seller’s price to the buyer is fixed or determinable; and collectability is reasonably assured. | |
In addition to intellectual properties developed by the Company, STWA co-develops with, and licenses from, intellectual property as a joint-agreement with Temple University. The Company’s business model is to contract with suppliers and manufacturers of oilfield equipment to sell into the oilfield pipeline market. The Company negotiates an initial contract with the customer fixing the terms of the sale and then receive a letter of credit or full payment in advance of shipment. Upon shipment and acceptance of our products, the Company will recognize the revenue associated with the sale and lease of the products to the customer. | |
Property and Equipment and Depreciation | Property and Equipment and Depreciation |
Property and equipment are stated at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally ranging from three to ten years. Expenditures for major renewals and improvements that extend the useful lives of property and equipment are capitalized. Expenditures for repairs and maintenance are charged to expense as incurred. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. | |
Impairment of Long-Lived Assets | Impairment of Long-lived Assets |
Our long-lived assets, such as property and equipment, are reviewed for impairment at least annually, or when events and circumstances indicate that depreciable or amortizable long lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current value. | |
We use various assumptions in determining the current fair value of these assets, including future expected cash flows and discount rates, as well as other fair value measures. Our impairment loss calculations require us to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows. | |
If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results. Based upon management’s annual review, no impairments were recorded for the years ended December 31, 2014, 2013 and 2012. | |
Loss per Share | Loss per Share |
Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding options and warrants are exercised and the proceeds are used to purchase common stock at the average market price during the period. Options and warrants may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. | |
For the years ended December 31, 2014, 2013 and 2012, the dilutive impact of outstanding stock options of 21,052,030, 20,309,908 and 27,278,098; outstanding warrants of 5,692,087, 11,763,966 and 42,205,507; and notes convertible into 509,667, -0- and -0- shares of our common stock, respectively, have been excluded because their impact on the loss per share is anti-dilutive. | |
Income Taxes | Income Taxes |
Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets are recognized for the future tax consequences of transactions that have been recognized in the Company’s consolidated financial statements or tax returns. A valuation allowance is provided when it is more likely than not that some portion or entire deferred tax asset will not be realized. | |
Stock-Based Compensation | Stock-Based Compensation |
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | |
The fair value of the Company's stock options and warrants grant is estimated using the Black-Scholes Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes Option Pricing model could materially affect compensation expense recorded in future periods. | |
Accounting for Derivatives | Accounting for Derivatives |
The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. For stock-based derivative financial instruments, the Company uses probability weighted average series Black-Scholes Option Pricing models to value the derivative instruments at inception and on subsequent valuation dates. | |
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. | |
The Company had derivative liabilities up to January 2013 relating to adjustments on the exercise price of warrants issued in 2009 and 2010 in conjunction with the Company’s convertible note offering. These warrants were exercised to common stock or expired in January 2013 thus eliminating the derivate liabilities. | |
Business and Credit Concentrations | Business and Credit Concentrations |
The Company’s cash balances in financial institutions at times may exceed federally insured limits. As of December 31, 2014 and 2013, before adjustments for outstanding checks and deposits in transit, the Company had $2,247,198 and $4,143,367, respectively, on deposit with two banks. The deposits are federally insured up to $250,000 at each bank. | |
The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions. | |
Estimates | 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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to assumptions used in valuing equity instruments and derivative liabilities. Actual results could differ from those estimates. | |
Fair value of financial instruments | Fair Value of Financial Instruments |
Effective January 1, 2008, fair value measurements are determined by the Company's adoption of authoritative guidance issued by the FASB, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities as permitted. The adoption of the authoritative guidance did not have a material impact on the Company's fair value measurements. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: | |
Level 1—Quoted prices in active markets for identical assets or liabilities. | |
Level 2—Inputs, other than the quoted prices in active markets, are observable either directly or indirectly. | |
Level 3—Unobservable inputs based on the Company's assumptions. | |
The Company is required to use of observable market data if such data is available without undue cost and effort. | |
The recorded accounts payable, accrued expenses and convertible debentures approximate its fair value due to its short term nature. | |
Research and Development Costs | Research and Development Costs |
Costs incurred for research and development are expensed as incurred. Purchased materials that do not have an alternative future use are also expensed. Furthermore, costs incurred in the construction of prototypes with no certainty of any alternative future use and established commercial uses are also expensed. | |
For the years ended December 31, 2014, 2013 and 2012 for research and development costs incurred were $893,542, $2,011,486 and $963,184, respectively. | |
Patent costs | Patent Costs |
Due to the significant uncertainty associated with the successful development of one or more commercially viable products based on the Company’s research efforts and any related patent applications, all patent costs, including patent-related legal and filing fees, are expensed as incurred. Patent costs were $103,434, $144,326 and $104,150 for the years ended December 31, 2014, 2013 and 2012 respectively. Patent costs are included in operating expenses in the Company’s consolidated statements of operations. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
In November 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-16, Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2014-16 on the Company’s financial statement presentation and disclosures | |
In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted. | |
In February, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Company’s consolidated financial statements. Early adoption is permitted. | |
On August 27, 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted | |
On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10 (ASU 2014-10), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 eliminates the requirement to present inception-to-date information about income statement line items, cash flows, and equity transactions, and clarifies how entities should disclosure the risks and uncertainties related to their activities. ASU 2014-10 also eliminates an exception provided to development stage entities in Consolidations (ASC Topic 810) for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The presentation and disclosure requirements in Topic 915 will no longer be required for interim and annual reporting periods beginning after December 15, 2014, and the revised consolidation standards will take effect in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted the provisions of ASU 2014-10 effective for its financial statements for the interim period ended June 30, 2014, and accordingly, is no longer presenting the inception-to-date financial information and disclosures formerly required. | |
On May 28, 2014, the FASB issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company does not expect the adoption of this guidance to have any impact on the Company’s consolidated financial statement presentation or disclosures. | |
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company does not expect the adoption of this guidance to have any impact on the Company’s consolidated financial statement presentation or disclosures. | |
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statement presentation or disclosures. | |
4_Property_and_Equipment_Table
4. Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Property and equipment | December 31, | ||||||||
2014 | 2013 | ||||||||
Office equipment | $ | 65,051 | $ | 65,051 | |||||
Furniture and fixtures | 4,075 | 4,075 | |||||||
Subtotal | 69,126 | 69,126 | |||||||
Less accumulated depreciation | (47,180 | ) | (33,355 | ) | |||||
Total | $ | 21,946 | $ | 35,771 |
8_Derivative_liability_Tables
8. Derivative liability (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Derivative Liability [Abstract] | |||||||||
Schedule of derivative liabilities | Derivative Liabilities, Fair Value of Warrants | ||||||||
15-Jan | December 31, | ||||||||
2013 | 2012 | ||||||||
Risk-free interest rate | 0.12% | 0.02% | |||||||
Expected volatility | 92% | 165% | |||||||
Expected life (in years) | 0.75 - 1.00 | 0.04 | |||||||
Expected dividend yield | 0% | 0% | |||||||
Fair Value: | |||||||||
2009 Warrants | 3,441,752 | 3,221,138 | |||||||
Total Fair Value | $ | 3,441,752 | $ | 3,221,138 |
10_Stock_Options_and_Warrants_
10. Stock Options and Warrants (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2014 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||||||||||||||
Stock options outstanding | Weighted Avg. | Weighted Avg. | |||||||||||||
Options | Exercise Price | ||||||||||||||
Options, December 31, 2011 | 24,067,892 | $ | 0.3 | ||||||||||||
Options granted | 4,858,000 | 0.3 | |||||||||||||
Options exercised | (776,667 | ) | 0.47 | ||||||||||||
Options forfeited | (871,127 | ) | 0.98 | ||||||||||||
Options, December 31, 2012 | 27,278,098 | $ | 0.27 | ||||||||||||
Options granted | 207,819 | 1.17 | |||||||||||||
Options exercised | (115,000 | ) | 0.6 | ||||||||||||
Options forfeited | (7,061,009 | ) | 0.25 | ||||||||||||
Options, December 31, 2013 | 20,309,908 | $ | 0.28 | ||||||||||||
Options granted | 852,122 | 0.8 | |||||||||||||
Options exercised | (20,000 | ) | 0.3 | ||||||||||||
Options forfeited | (90,000 | ) | 0.91 | ||||||||||||
Options, December 31, 2014 | 21,052,030 | $ | 0.3 | ||||||||||||
Options outstanding by Per Share Price | Outstanding Options | Exercisable Options | |||||||||||||
Option | Shares | Life | Weighted | Shares | Weighted | ||||||||||
Exercise Price | (Years) | Average Exercise | Average Exercise | ||||||||||||
Per Share | Price | Price | |||||||||||||
$ 0.21 - $ 0.99 | 20,788,801 | 6.1 | $0.29 | 18,229,381 | $0.28 | ||||||||||
$ 1.00 - $ 1.99 | 263,229 | 5.2 | $1.22 | 263,229 | $1.28 | ||||||||||
21,052,030 | $0.30 | 18,492,610 | $0.29 | ||||||||||||
Assumptions | 2014 | 2013 | 2012 | ||||||||||||
Expected life (years) | 1.5 – 5.5 | 1.5 – 5.5 | 5.0 – 7.0 | ||||||||||||
Risk free interest rate | 0.12 – 1.70% | 0.34 – 1.65% | 0.62 – 1.27% | ||||||||||||
Volatility | 123 – 135% | 127 – 130% | 125 – 140% | ||||||||||||
Expected dividend yield | 0% | 0% | 0% | ||||||||||||
Warrants outstanding | Warrants | Weighted Avg. | |||||||||||||
Exercise Price | |||||||||||||||
Warrants outstanding, December 31, 2011 | 49,106,280 | $ | 0.32 | ||||||||||||
Warrants granted | 9,273,316 | 0.31 | |||||||||||||
Warrants exercised | (12,039,846 | ) | 0.29 | ||||||||||||
Warrants cancelled | (4,134,243 | ) | 0.49 | ||||||||||||
Warrants outstanding, December 31, 2012 | 42,205,507 | $ | 0.31 | ||||||||||||
Warrants granted | 150,000 | 0.3 | |||||||||||||
Warrants exercised | (29,037,389 | ) | 0.29 | ||||||||||||
Warrants cancelled | (1,554,152 | ) | 0.33 | ||||||||||||
Warrants outstanding, December 31, 2013 | 11,763,966 | $ | 0.34 | ||||||||||||
Warrants granted | 761,037 | 0.71 | |||||||||||||
Warrants exercised | (4,690,947 | ) | 0.3 | ||||||||||||
Warrants cancelled | (2,141,969 | ) | 0.46 | ||||||||||||
Warrants outstanding, December 31, 2014 | 5,692,087 | $ | 0.38 | ||||||||||||
Warrants outstanding by Per Share Price | Outstanding Warrants | Exercisable Warrants | |||||||||||||
Warrant | Shares | Life | Weighted | Shares | Weighted | ||||||||||
Exercise Price Per Share | (Years) | Average Exercise | Average Exercise | ||||||||||||
Price | Price | ||||||||||||||
$ 0.25 - $ 0.99 | 5,572,087 | 3 | $0.36 | 5,177,087 | $0.34 | ||||||||||
$ 1.00 - $ 1.99 | 120,000 | 1 | $1.01 | 120,000 | $1.01 | ||||||||||
5,692,087 | $0.38 | 5,297,087 | $0.35 |
11_Commitments_and_Contingenci1
11. Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Commitments and Contingencies Disclosure [Abstract] | |||||
Future minimum rental payments | Year ending | Non-cancellable | |||
December 31, | Office Leases | ||||
2015 | $ | 69,960 | |||
2016 | 69,960 | ||||
2017 | 69,960 | ||||
2018 | 40,810 | ||||
2019 | – | ||||
Total | $ | 250,690 |
12_Income_Taxes_Tables
12. Income Taxes (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||
Reconciliation of income tax provision | December 31, | ||||||||||||
2014 | 2013 | 2012 | |||||||||||
Computed tax provision (benefit) at federal statutory rate (34%) | $ | (1,133,000 | ) | $ | (1,993,000 | ) | $ | (1,434,000 | ) | ||||
State income taxes, net of federal benefit | (295,000 | ) | (518,000 | ) | (373,000 | ) | |||||||
Permanent items | 0 | 0 | 0 | ||||||||||
Valuation allowance | 1,428,000 | 2,511,000 | 1,807,000 | ||||||||||
Income tax provision | $ | – | $ | – | $ | – | |||||||
Net operating loss carryforwards | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Net operating loss carry forwards | $ | 19,600,000 | $ | 18,400,000 | |||||||||
Valuation allowance | (19,600,000 | ) | (18,400,000 | ) | |||||||||
Total deferred taxes net of valuation allowance | $ | – | $ | – |
15_Quarterly_Information_Table
15. Quarterly Information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||
Quarterly information | First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
Year Ended December 31, 2014: | |||||||||||||||||
Revenues | $ | – | $ | 60,000 | $ | 180,000 | $ | – | |||||||||
Gross profit | $ | – | $ | 60,000 | $ | 180,000 | $ | – | |||||||||
Net loss | $ | (1,403,474 | ) | $ | (1,008,392 | ) | $ | (715,774 | ) | $ | (878,695 | ) | |||||
Income per share, Basic and Diluted (1) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |||||
First | Second | Third | Fourth | ||||||||||||||
Quarter | Quarter | Quarter | Quarter | ||||||||||||||
Year Ended December 31, 2013: | |||||||||||||||||
Revenues | $ | – | $ | – | $ | – | $ | – | |||||||||
Gross profit | $ | – | $ | – | $ | – | $ | – | |||||||||
Net income (loss) | $ | 1,582,800 | $ | (1,920,950 | ) | $ | (1,445,125 | ) | $ | (8,873,734 | ) | ||||||
Basic income per share (1) | $ | 0.01 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.07 | ) | ||||||
Diluted income per share (1) | $ | 0.01 | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.07 | ) |
16_Contractual_Obligations_Tab
16. Contractual Obligations (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Contractual Obligations Tables | |||||||||||||||||
Contractual Obligations | Research and | ||||||||||||||||
Year ending | Office | License | Compensation | Total | |||||||||||||
December 31, | Lease (1) | Agreements (2) | Agreements (3) | Obligations | |||||||||||||
2015 | $ | 69,960 | $ | 252,148 | $ | 84,167 | $ | 406,275 | |||||||||
2016 | 69,960 | 187,500 | 60,000 | 317,460 | |||||||||||||
2017 | 69,960 | 187,500 | 15,429 | 272,889 | |||||||||||||
2018 | 40,810 | 187,500 | – | 228,310 | |||||||||||||
2019 | – | 187,500 | – | 187,500 | |||||||||||||
Total | $ | 250,690 | $ | 1,002,148 | $ | 159,596 | $ | 1,412,434 |
2_Summary_of_Significant_Accou2
2. Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Net loss | ($878,695) | ($715,774) | ($1,008,392) | ($1,403,474) | ($8,873,734) | ($1,445,125) | ($1,920,950) | $1,582,800 | ($4,006,335) | ($10,657,009) | ($13,092,387) | |
Negative cash flow from operations | -3,527,695 | -5,912,368 | -4,517,585 | |||||||||
Cash on Hand | 2,247,557 | 4,137,068 | 2,247,557 | 4,137,068 | 1,601,791 | 617,797 | ||||||
Impairment on long-lived assets | 0 | 0 | ||||||||||
Research and development expenses | 893,452 | 2,011,486 | 963,184 | |||||||||
Patent costs | $103,434 | $144,326 | $104,150 | |||||||||
Options | ||||||||||||
Antidilutive shares excluded from loss per share | 21,052,030 | 20,309,908 | 27,278,098 | |||||||||
Warrants | ||||||||||||
Antidilutive shares excluded from loss per share | 5,692,087 | 11,763,966 | 42,205,507 | |||||||||
Convertible Notes | ||||||||||||
Antidilutive shares excluded from loss per share | 509,667 | 0 | 0 |
3_Certain_Relationships_and_Re1
3. Certain Relationships and Related Transactions (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Accounts payable to related parties | $259,507 | $662,028 | |
Accrued unpaid salaries, vacation and payroll taxes | 178,693 | 576,159 | |
Bonus paid to officers | 0 | 150,000 | 0 |
Consulting fees | 60,000 | 60,000 | 0 |
Officer and Directors [Member] | |||
Accounts payable to related parties | 80,814 | 85,869 | |
Former CEO | |||
Accrued unpaid salaries, vacation and payroll taxes | 0 | 306,250 | |
Former President | |||
Accrued unpaid salaries, vacation and payroll taxes | $135,429 | $195,429 |
4_Property_and_Equipment_Detai
4. Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property and equipment, gross | $69,126 | $69,126 |
Less: accumulated depreciation | -47,180 | -33,355 |
Property and equipment, net | 21,946 | 35,771 |
Office equipment | ||
Property and equipment, gross | 65,051 | 65,051 |
Furniture and fixtures | ||
Property and equipment, gross | $4,075 | $4,075 |
4_Property_and_Equipment_Detai1
4. Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $13,825 | $15,399 | $36,077 |
5_Convertible_Notes_and_Warran1
5. Convertible Notes and Warrants (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Debt Disclosure [Abstract] | |||
Convertible notes issued | $280,390 | $8,302,153 | |
Conversion description | Convertible into 584,147 shares of common stock and warrants to purchase a total of 147,037 shares of common stock. | ||
Conversion price | $0.48 | ||
Warrants to purchase common stock issued | 32,355,232 | ||
Interest expense amortized | 39,619 | 0 | 3,620,092 |
Beneficial conversion feature | 94,845 | ||
Total debt discount | 145,161 | ||
Debt converted during year | 35,750 | ||
Debt converted, shares issued | 74,480 | ||
Convertible note gross | 244,640 | ||
Unamortized discount | 105,542 | 0 | |
Convertible notes balance | $139,098 | $0 |
6_Research_and_Development_Det
6. Research and Development (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||||||||
Research and development expenses incurred | $893,452 | $2,011,486 | $963,184 | ||||||||
Revenues generated | 0 | 180,000 | 60,000 | 0 | 0 | 0 | 0 | 0 | 240,000 | 0 | 0 |
AOT Testing | |||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||||||||
Research and development expenses incurred | 73,937 | 676,287 | 588,584 | ||||||||
AOT Prototype | |||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||||||||
Research and development expenses incurred | 502,720 | 1,029,143 | |||||||||
Temple University License Agreements | |||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||||||||
Research and development expenses incurred | 187,500 | 187,500 | 187,500 | ||||||||
Revenues generated | 240,000 | ||||||||||
Temple University Sponsored Research Agreement | |||||||||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||||||||
Research and development expenses incurred | $129,295 | $118,556 | $187,500 |
6_Research_and_Development_Det1
6. Research and Development (Details Narrative 2) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Unpaid research fees included in accounts payable | $405,313 | $185,450 |
Temple University License Agreements | ||
Unpaid research fees included in accounts payable | 340,625 | 153,125 |
Temple University Sponsored Research Agreement | ||
Unpaid research fees included in accounts payable | $64,688 | $32,325 |
7_Leases_Details_Narrative
7. Leases (Details Narrative) (TransCanada Keystone, USD $) | 12 Months Ended |
Dec. 31, 2014 | |
TransCanada Keystone | |
Lease revenue | $240,000 |
8_Derivative_Liability_Details
8. Derivative Liability (Details) (Warrants, USD $) | 0 Months Ended | 12 Months Ended |
Jan. 15, 2013 | Dec. 31, 2012 | |
Warrants | ||
Risk-free interest rate | 0.12% | 0.02% |
Expected volatility | 92.00% | 165.00% |
Expected life (in years) | 0.75 - 1.00 | 0.04 |
Expected dividend yield | 0.00% | 0.00% |
Total Fair Value | $3,441,752 | $3,221,138 |
8_Derivative_Liability_Details1
8. Derivative Liability (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Derivative Liability [Abstract] | |||
Change in fair value of derivative liability | $0 | ($220,614) | ($4,023,094) |
Gain on extinguishment of derivative liability | 0 | 3,441,752 | 2,445,095 |
Warrants outstanding, shares | 0 | 0 | 4,400,000 |
Warrants outstanding, value | 3,221,138 | ||
Warrants expired or exercised | 4,400,000 | ||
Gain on extinguishment of derivative | $0 | $3,441,752 | $2,445,095 |
10_Stock_Options_and_Warrants_1
10. Stock Options and Warrants (Details-Options Outstanding) (Options, USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Options | |||
Beginning Balance | 20,309,908 | 27,278,098 | 24,067,892 |
Granted | 852,122 | 207,819 | 4,858,000 |
Exercised | -20,000 | -115,000 | -776,667 |
Forfeited | -90,000 | -7,061,009 | -871,127 |
Ending Balance | 21,052,030 | 20,309,908 | 27,278,098 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $0.28 | $0.27 | $0.30 |
Weighted Average Exercise Price, Granted | $0.80 | $1.17 | $0.30 |
Weighted Average Exercise Price, Exercised | $0.30 | $0.60 | $0.47 |
Weighted Average Exercise Price, Forfeited | $0.91 | $0.25 | $0.98 |
Weighted Average Exercise Price, Outstanding Ending Balance | $0.30 | $0.28 | $0.27 |
10_Stock_Options_and_Warrants_2
10. Stock Options and Warrants (Details-Options by Exercise Price Per Share) (Options, USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Outstanding Options | ||||
Shares | 21,052,030 | 20,309,908 | 27,278,098 | 24,067,892 |
Weighted Average Exercise Price | $0.30 | $0.28 | $0.27 | $0.30 |
Exercisable Options | ||||
Shares | 18,492,610 | |||
Weighted Average Exercise Price | $0.29 | |||
$ 0.21 - $ 0.99 | ||||
Outstanding Options | ||||
Shares | 20,788,801 | |||
Life (Years) | 6 years 1 month 6 days | |||
Weighted Average Exercise Price | $0.29 | |||
Exercisable Options | ||||
Shares | 18,229,381 | |||
Weighted Average Exercise Price | $0.28 | |||
$ 1.00 - $ 1.99 | ||||
Outstanding Options | ||||
Shares | 263,229 | |||
Life (Years) | 5 years 2 months 12 days | |||
Weighted Average Exercise Price | $1.22 | |||
Exercisable Options | ||||
Shares | 263,229 | |||
Weighted Average Exercise Price | $1.28 |
10_Stock_Options_and_Warrants_3
10. Stock Options and Warrants (Details-Assumptions (Options) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Options | |||
Expected life (years) | 1.5 to 5.5 years | 1.5 to 5.5 years | 5.0 to 7.0 years |
Risk free interest rate-minimum | 0.12% | 0.34% | 0.62% |
Risk free interest rate-maximum | 1.70% | 1.65% | 1.27% |
Volatility-miminum | 123.00% | 127.00% | 125.00% |
Volatility-maximum | 135.00% | 130.00% | 140.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
10_Stock_Options_and_Warrants_4
10. Stock Options and Warrants (Details-Warrants Outstanding) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Ending Balance | 0 | 0 | 4,400,000 |
Warrants | |||
Beginning Balance | 11,763,966 | 42,205,507 | 49,106,280 |
Granted | 761,037 | 150,000 | 9,273,316 |
Exercised | -4,690,947 | -29,037,389 | -12,039,846 |
Cancelled | -2,141,969 | -1,554,152 | -4,134,243 |
Ending Balance | 5,692,087 | 11,763,966 | 42,205,507 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $0.34 | $0.31 | $0.32 |
Weighted Average Exercise Price, Granted | $0.71 | $0.30 | $0.31 |
Weighted Average Exercise Price, Exercised | $0.30 | $0.29 | $0.29 |
Weighted Average Exercise Price, Cancelled | $0.46 | $0.33 | $0.49 |
Weighted Average Exercise Price, Outstanding Ending Balance | $0.38 | $0.34 | $0.31 |
10_Stock_Options_and_Warrants_5
10. Stock Options and Warrants (Details-Warrant Exercise Price per Share) (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Outstanding Warrants | ||||
Shares | 0 | 0 | 4,400,000 | |
Warrants | ||||
Outstanding Warrants | ||||
Shares | 5,692,087 | 11,763,966 | 42,205,507 | 49,106,280 |
Weighted Average Exercise Price | $0.38 | |||
Exercisable Warrants | ||||
Shares | 5,297,087 | |||
Weighted Average Exercise Price | $0.35 | |||
Warrants | $ 0.25 - $ 0.99 | ||||
Outstanding Warrants | ||||
Shares | 5,572,087 | |||
Weighted Average Exercise Price | $0.36 | |||
Exercisable Warrants | ||||
Shares | 5,177,087 | |||
Weighted Average Exercise Price | $0.34 | |||
Warrants | $1.00 - $1.99 | ||||
Outstanding Warrants | ||||
Shares | 120,000 | |||
Life (Years) | 1 year | |||
Weighted Average Exercise Price | $1.01 | |||
Exercisable Warrants | ||||
Shares | 120,000 | |||
Weighted Average Exercise Price | $1.01 | |||
Warrants | $ 0.25 - $ 0.99 [Member] | ||||
Outstanding Warrants | ||||
Life (Years) | 3 years |
Recovered_Sheet1
10. Stock options and warrants (Details Narrative) (USD $) | 12 Months Ended | 203 Months Ended | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2011 | |
Outside the Plan | |||||
Options granted | 4,000,000 | 37,050,000 | |||
Options cancelled or forfeited | 7,040,000 | 17,430,000 | |||
Options exercised | 2,860,000 | ||||
Options outstanding | 16,760,000 | 16,760,000 | |||
Options | |||||
Option shares available for grant | 1,439,637 | 1,439,637 | |||
Options to purchase shares granted | 4,292,030 | 4,292,030 | |||
Options granted | 207,819 | 4,858,000 | 852,122 | ||
Options cancelled or forfeited | 7,061,009 | 871,127 | 90,000 | ||
Options exercised | 115,000 | 776,667 | 20,000 | ||
Options outstanding | 20,309,908 | 27,278,098 | 21,052,030 | 21,052,030 | 24,067,892 |
Aggregate intrinsic value of options outstanding | 474,000 | $474,000 | |||
Proceeds from exercise of options | 19,500 | 364,700 | 6,000 | ||
Compensation costs recognized | 295,884 | ||||
Compensation costs amortized | 376,247 | ||||
Weighted average fair value for options granted | 0.3 | 0.37 | $0.96 | ||
Options | Employees and Directors | |||||
Options granted | 207,819 | 858,000 | 852,122 | ||
Options cancelled or forfeited | 21,009 | 90,000 | 871,127 | ||
Compensation costs recognized | 101,157 | 538,037 | |||
Compensation costs amortized | 403,127 | 1,366,846 | |||
Warrants | |||||
Compensation costs recognized | 52,314 | 16,645 | |||
Compensation costs amortized | 289,513 | 41,950 | |||
Aggregate intrinsic value of warrants outstanding | 715,174 | 715,174 | |||
Future unamortized compensation expense on unvested warrants | 66,000 | 66,000 | |||
Warrants exercised | 29,037,389 | 12,039,846 | 4,690,947 | ||
Proceeds from warrants exercised | 8,408,718 | $1,377,284 | |||
Warrants granted | 150,000 | 9,273,316 | 761,037 |
11_Commitments_and_Contingenci2
11. Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
Commitments and Contingencies Disclosure [Abstract] | |
Remaining lease commitment 2015 | $69,960 |
Remaining lease commitment 2016 | 69,960 |
Remaining lease commitment 2017 | 69,960 |
Remaining lease commitment 2018 | 40,810 |
Remaining lease commitment 2019 | 0 |
Remaining lease commitment total | $250,690 |
11_Commitments_and_Contingenci3
11. Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Rent expense | $82,376 | $201,500 | $210,635 |
Sublease income | 795 | 11,085 | |
Rent expense net of sublease income | $81,851 | $160,535 |
12_Income_Taxes_DetailsReconci
12. Income Taxes (Details-Reconciliation of Income Tax) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | |||
Computed tax provision (benefit) at federal statutory rate (34%) | ($1,133,000) | ($1,993,000) | ($1,434,000) |
State income taxes, net of federal benefit | -295,000 | -518,000 | -373,000 |
Permanent items | 0 | 0 | 0 |
Valuation allowance | 1,428,000 | 2,511,000 | 1,807,000 |
Income tax provision | $0 | $0 | $0 |
12_Income_Taxes_DetailsDeferre
12. Income Taxes (Details-Deferred tax assets) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $19,600,000 | $18,400,000 |
Valuation allowance | -19,600,000 | -18,400,000 |
Total deferred taxes net of valuation allowance | $0 | $0 |
12_Income_Taxes_Details_Narrat
12. Income Taxes (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforward | $48,000,000 |
Carryforward expiration date | 31-Dec-19 |
15_Quarterly_Information_Detai
15. Quarterly Information (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||
Revenues | $0 | $180,000 | $60,000 | $0 | $0 | $0 | $0 | $0 | $240,000 | $0 | $0 | ||||||||
Gross profit | 0 | 180,000 | 60,000 | 0 | 0 | 0 | 0 | 0 | |||||||||||
Net income (loss) | ($878,695) | ($715,774) | ($1,008,392) | ($1,403,474) | ($8,873,734) | ($1,445,125) | ($1,920,950) | $1,582,800 | ($4,006,335) | ($10,657,009) | ($13,092,387) | ||||||||
Basic income per share (1) | ($0.07) | [1] | ($0.01) | [1] | $0 | [1] | $0.01 | [1] | |||||||||||
Diluted income per share (1) | ($0.07) | [1] | ($0.01) | [1] | $0 | [1] | $0.01 | [1] | |||||||||||
Income per shares, Basic and Diluted (1) | $0 | [1] | $0 | [1] | $0 | [1] | ($0.01) | [1] | ($0.02) | ($0.07) | ($0.10) | ||||||||
[1] | Per share data was computed independently for each of the quarters presented. Therefore, the sum of the quarterly per share information may not equal the annual income per share. |
16_Contractual_Obligations_Det
16. Contractual Obligations (Details) (USD $) | Dec. 31, 2014 |
Year ending 2015 | $406,275 |
Year ending 2016 | 317,460 |
Year ending 2017 | 272,889 |
Year ending 2018 | 228,310 |
Year ending 2019 | 187,500 |
Total obligations | 1,412,434 |
Office lease | |
Year ending 2015 | 69,960 |
Year ending 2016 | 69,960 |
Year ending 2017 | 69,960 |
Year ending 2018 | 40,810 |
Year ending 2019 | 0 |
Total obligations | 250,690 |
Research and License Agreements | |
Year ending 2015 | 252,148 |
Year ending 2016 | 187,500 |
Year ending 2017 | 187,500 |
Year ending 2018 | 187,500 |
Year ending 2019 | 187,500 |
Total obligations | 1,002,148 |
Compensation Agreements | |
Year ending 2015 | 84,167 |
Year ending 2016 | 60,000 |
Year ending 2017 | 15,429 |
Year ending 2018 | 0 |
Year ending 2019 | 0 |
Total obligations | $159,596 |