Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 13, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | QS ENERGY, INC. | |
Entity Central Index Key | 1,103,795 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 251,448,515 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 | |
Entity Small Business | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 493,000 | $ 204,000 |
Prepaid expenses and other current assets | 32,000 | 38,000 |
Total current assets | 525,000 | 242,000 |
Property and equipment, net of accumulated depreciation of $68,000 and $51,000 at June 30, 2018 and December 31, 2017, respectively | 29,000 | 46,000 |
Other assets | 2,000 | 2,000 |
Total assets | 556,000 | 290,000 |
Current liabilities: | ||
Accounts payable-license agreements | 974,000 | 852,000 |
Accounts payable and accrued expenses | 735,000 | 748,000 |
Accrued expenses and accounts payable-related parties | 43,000 | 31,000 |
Convertible debentures, net of discounts of $47,000 and $47,000 at June 30, 2018 and December 31, 2017, respectively | 576,000 | 533,000 |
Total current liabilities | 2,328,000 | 2,164,000 |
Stockholders' deficit | ||
Common stock, $.001 par value: 500,000,000 shares authorized, 251,448,515 and 234,076,907 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 251,448 | 234,077 |
Additional paid-in capital | 109,543,552 | 108,000,923 |
Accumulated deficit | (111,567,000) | (110,109,000) |
Total stockholders' deficit | (1,772,000) | (1,874,000) |
Total liabilities and stockholders' deficit | $ 556,000 | $ 290,000 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 68,000 | $ 51,000 |
Discounts on convertible debentures | $ 47,000 | $ 47,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 251,448,515 | 234,076,907 |
Common stock, shares outstanding | 251,448,515 | 234,076,907 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 50,000 |
Costs and Expenses | ||||
Operating expenses | 462,000 | 580,000 | 956,000 | 1,838,000 |
Research and development expenses | 48,000 | 56,000 | 95,000 | 120,000 |
Loss before other expense | (510,000) | (636,000) | (1,051,000) | (1,908,000) |
Other expense | ||||
Interest and financing expense | (248,000) | (1,210,000) | (407,000) | (1,422,000) |
Net loss | $ (758,000) | $ (1,846,000) | $ (1,458,000) | $ (3,330,000) |
Net loss per common share, basic and diluted | $ 0 | $ (0.01) | $ (0.01) | $ (0.02) |
Weighted average common shares outstanding, basic and diluted | 242,994,163 | 207,419,243 | 238,825,606 | 203,362,641 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED) - 6 months ended Jun. 30, 2018 - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, shares at Dec. 31, 2017 | 234,076,907 | |||
Beginning balance, value at Dec. 31, 2017 | $ 234,077 | $ 108,000,923 | $ (110,109,000) | $ (1,874,000) |
Common stock issued on exercise of warrants and options, shares | 12,697,483 | |||
Common stock issued on exercise of warrants and options, value | $ 12,697 | 634,303 | 647,000 | |
Common stock issued on conversion of notes payable, shares issued | 4,624,125 | |||
Common stock issued on conversion of notes payable, value | $ 4,624 | 332,376 | 337,000 | |
Fair value of warrants and beneficial conversion feature of issued convertible notes | 319,000 | 319,000 | ||
Fair value of options and warrants issued as compensation | 245,000 | 245,000 | ||
Common stock issued for services, shares | 50,000 | |||
Common stock issued for services, value | $ 50 | 11,950 | 12,000 | |
Net loss | (1,458,000) | (1,458,000) | ||
Ending balance, shares at Jun. 30, 2018 | 251,448,515 | |||
Ending balance, value at Jun. 30, 2018 | $ 251,448 | $ 109,543,552 | $ (111,567,000) | $ (1,772,000) |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities | ||
Net Loss | $ (1,458,000) | $ (3,330,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation expense | 245,000 | 535,000 |
Issuance of common stock for services | 12,000 | 0 |
Amortization of debt discount and accrued interest | 381,000 | 1,402,000 |
Depreciation and amortization | 17,000 | 4,000 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 6,000 | (8,000) |
Accounts payable and accrued expenses | (13,000) | 640,000 |
Accounts payable - license agreements | 122,000 | 113,000 |
Accounts payable and accrued expenses - related parties | 12,000 | (116,000) |
Deposits and other current liabiilities | 0 | (5,000) |
Net cash used in operating activities | (676,000) | (765,000) |
Cash flows from investing activities | ||
Purchase of equipment | 0 | (21,000) |
Net cash used in investing activities | 0 | (21,000) |
Cash flows from financing activities | ||
Net proceeds from issuance of convertible notes and warrants | 318,000 | 1,469,000 |
Net proceeds from exercise of warrants | 647,000 | 61,000 |
Net cash provided by financing activities | 965,000 | 1,530,000 |
Net increase (decrease) in cash | 289,000 | 744,000 |
Cash, beginning of period | 204,000 | 136,000 |
Cash, end of period | 493,000 | 880,000 |
Supplemental disclosures of cash flow information | ||
Cash paid during the year for: Interest | 0 | 0 |
Cash paid during the year for: Income taxes | 1,600 | 1,600 |
Non-cash investing and financing activities | ||
Conversion of convertible debentures to common stock | 337,000 | 1,247,000 |
Fair value of warrants and beneficial conversion feature associated with issued convertible notes | $ 319,000 | $ 1,469,000 |
1. Description of Business
1. Description of Business | 6 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | 1. Description of Business QS Energy, Inc. (“QS Energy”, “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. Effective August 11, 2015, the Company changed its name to QS Energy, Inc. The Company’s common stock is quoted under the symbol “QSEP” 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.qsenergy.com. QS Energy 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 properties include a portfolio of 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”). QS Energy's primary technology is called Applied Oil Technology (AOT), a commercial-grade crude oil pipeline transportation flow-assurance product. Engineered specifically to reduce pipeline pressure loss, increase pipeline flow rate and capacity, and reduce shippers’ reliance on diluents and drag reducing agents to meet pipeline maximum viscosity requirements, AOT is a 100% solid-state system that reduces crude oil viscosity by applying a high intensity electrical field to crude oil feedstock while in transit. The AOT product has transitioned from the research and development stage to initial production for continued testing in advance of our goal of seeking acceptance and adoption by the midstream pipeline marketplace. The Company commenced, but has suspended for now, commercial development of a suite of products based on the direct application of an electrical current crude oil; a process known as Joule Heat. The Company built and tested its first Joule Heat unit in 2015. Though the test unit was functional, changes to the prototype configuration will be required to determine commercial effectiveness of this technology. In December 2015, we suspended Joule Heat development activities to focus Company resources on finalizing commercial development of the AOT. We plan to resume Joule Heat development in the future depending on the availability of sufficient capital and other resources. Basis of Presentation The accompanying condensed consolidated financial statements are unaudited. These unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2017 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including notes, required by GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal year-end results. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Consolidation Policy The accompanying consolidated financial statements of QS Energy Inc. include the accounts of QS Energy Inc. (the Parent) and its wholly owned subsidiaries, QS Energy Pool, Inc. and STWA Asia Pte. Limited. Intercompany transactions and balances have been eliminated in consolidation. 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, during the six-months ended June 30, 2018, the Company incurred a net loss of $1,458,000, used cash in operations of $676,000 and had a stockholders’ deficit of $1,772,000 as of that date. 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. In addition, the Company's independent registered public accounting firm, in its report on the Company's December 31, 2017 financial statements, has raised substantial doubt about the Company's ability to continue as a going concern. At June 30, 2018, the Company had cash on hand in the amount of $493,000. Management estimates that the current funds on hand will be sufficient to continue operations through November 2018. 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 agreements with Temple; costs associated with product development and commercialization of the AOT 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 2018 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 stockholders in case of equity financing. Basic and Diluted Income (loss) per share Our computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (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 income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (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. Potential common shares that have an antidilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted (loss) per common share is the same for periods in which the Company reported an operating loss because all warrants and stock options outstanding are anti-dilutive. At June 30, 2018 and 2017, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive. June 30, June 30, Options 37,301,300 35,313,541 Warrants 5,006,355 21,507,270 Common stock issuable upon conversion of notes payable 5,287,502 9,968,933 Total 47,595,157 66,789,744 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 accruals for potential liabilities, assumptions used in valuing equity instruments issued for financing and services and realization of deferred tax assets, among others. Actual results could differ from those estimates. Revenue Recognition Policy In September 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (ASU No. 2014-09) regarding revenue recognition. The new standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services. The ASU became effective January 1, 2018. The Company’s commercialization of our energy efficiency technologies that would assist in meeting increasing global energy demands, improving the economics of oil extraction and transport, and reducing greenhouse gas emission have not yet reached the market and therefore; have not generated considerable revenue. Due to the nature of the products leased by the Company and the stage of development in which the products reside the adoption of the new standard has had no quantitative effect on the financial statements. Under the new guidance, revenue is recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those leased products and ancillary services. The Company will review its lease transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products/services are delivered to the customer’s control and performance obligations are satisfied. 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 six-month periods ended June 30, 2018 and 2017 research and development costs were $95,000 and $120,000, respectively. Patent Costs Patent costs consist of patent-related legal and filing fees. Due to the uncertainty associated with the successful development of our AOT and Joule Heat products, all patent costs are expensed as incurred. During the six-month periods ended June 30, 2018 and 2017, patent costs were $12,000 and $24,000, respectively, and were included as part of operating expenses in the accompanying consolidated statements of operations. During the three-month periods ended June 30, 2018 and 2017, patent costs were $6,000 and $7,000, respectively, and were included as part of operating expenses in the accompanying consolidated statements of operations. Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 is to be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not currently expected to have any impact on the Company’s 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. Accrued Expenses and Account
3. Accrued Expenses and Accounts Payable | 6 Months Ended |
Jun. 30, 2018 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Accounts Payable | 3. Accrued Expenses and Accounts Payables Accrued Expenses On April 1, 2017, the Company executed a Separation Agreement and release effective with the Company’s former Chief Executive Officer (CEO). As part of the agreement, the Company agreed to pay the former CEO $580,000 in severance, payable in equal installment over 24 months. In addition, the Company also agreed to continue paying certain expenses for the CEO for 24 months with an estimated cost of $44,000. As a result, the Company accrued the entire $624,000 as of March 31, 2017 which was also reported as part of operating expenses in the accompanying 2017 consolidated statements of operations. As of June 30, 2018 and December 31, 2017, $377,000 and $390,000, respectively, was due to our former CEO which was reported as part of accrued expenses and accounts payable in the accompanying consolidated balance sheet. The Company began deferring payments under the Separation Agreement in January 2018 and is currently in arrears. The former CEO has made demands for all deferred payments and has proposed an amendment to the Separation Agreement that contained terms and conditions that are unacceptable to the Company, and has threatened litigation to recover the deferred payments, future payments due under the Separation Agreement, and damages. The Company has attempted to settle this matter with the former CEO. This matter has not yet been resolved. Accrued Expenses and Accounts Payable – Related Parties Accrued expense – related parties consists of accrued salaries due to officers and fees due to members of the Board of Directors. As of June 30, 2018, and December 31, 2017, accrued expenses and accounts payable to related parties amounted to $43,000 and $31,000, respectively. |
4. Property and Equipment
4. Property and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment At June 30, 2018 and December 31, 2017, property and equipment consists of the following: June 30, December 31, Office equipment $ 30,000 $ 30,000 Furniture and fixtures 5,000 5,000 Testing Equipment 37,000 37,000 Leasehold Improvements 25,000 25,000 Subtotal 97,000 97,000 Less accumulated depreciation (68,000 ) (51,000 ) Total $ 29,000 $ 46,000 Depreciation expense for the six-month periods ended June 30, 2018 and 2017 was $17,000 and $4,000, respectively. Depreciation expense for the three-month periods ended June 30, 2018 and 2017 was $9,000 and $2,000, respectively. |
5. Convertible Notes
5. Convertible Notes | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes | 5. Convertible Notes June 30, 2018 (unaudited) December 31 2017 Balance due on convertible notes $ 524,000 $ 509,000 Accrued interest 99,000 71,000 Subtotal 623,000 580,000 Convertible note discount (47,000 ) (47,000 ) Balance on convertible notes, net of note discounts $ 576,000 $ 533,000 As in the prior years, the Company continues to issue convertible notes in exchange for cash. The notes typically do not bear any interest, however, there is an implied interest rate of 10% since the notes are typically issued at a 10% discount. The notes are unsecured, and usually mature twelve months from issuance. The notes are convertible at the option of the note holder into the Company’s common stock at a conversion price stipulated in the conversion agreement. In addition, the note holders received warrants to purchase shares of common stock that are fully vested and will expire in one year from the date of issuance. As a result, the Company records a note discount to account for the relative fair value of the warrants, the notes’ beneficial conversion feature or BCF, and original issue discount of 10% (OID). The note discounts are amortized over the term of the notes or amortized in full upon its conversion to common stock. At December 31, 2017, total outstanding notes payable amounted to $509,000, accrued penalty interest of $71,000 and unamortized note discount of $47,000, or a net balance of $533,000. During the six-month period ending June 30, 2018, the Company issued similar convertible promissory notes in the aggregate of $350,000 for cash of $318,000 or a discount of $32,000. The notes do not bear any interest, however, the implied interest rate used was 10% since the notes were issued at a price 10% less than its face value. The notes are unsecured, mature in twelve months from issuance and convertible at $0.08 per share. In addition, the Company also granted these note holders warrants to purchase 2,189,688 shares of the Company’ common stock. The warrants are fully vested, exercisable at $0.08 per share and will expire in one year. Upon issuance, the Company recorded a note discount of $350,000 to account for the relative fair value of the warrants, the notes’ BCF, and OID. The note discounts are being amortized over the term of the note or amortized in full upon the conversion to common stock. During the period ended June 30, 2018, a total of $336,000 notes payable was converted into 4,624,125 shares of common stock. In addition, note discount of $381,000 was amortized to interest expense, and interest of $28,000 was accrued. As of June 30, 2018, total outstanding notes payable amounted to $524,000, accrued interest of $99,000 and unamortized note discount of $47,000 for a net balance of $576,000. In addition, a total of eight notes amounting to $454,000 reached maturity and are past due. The Company is currently in negotiations with the noteholders to settle the matured notes payable. |
6. Research and Development
6. Research and Development | 6 Months Ended |
Jun. 30, 2018 | |
Research and Development [Abstract] | |
Research and Development | 6. Research and Development The Company constructs, develops and tests the AOT technologies with internal resources and through the assistance of various third-party entities. Costs incurred and expensed include fees such as license 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. 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 six-month periods ended June 30, 2018 and 2017, our research and development expenses were $95,000 and $120,000 respectively. For the three-month periods ended June 30, 2018 and 2017, our research and development expenses were $48,000 and $56,000, respectively. AOT Product Development and Testing The Company constructs, develops and tests the AOT technologies with internal resources and through the assistance of various third-party entities. Costs incurred and expensed include fees such as 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. During the six-month periods ended June 30, 2018 and 2017, the Company incurred total expenses of $1,000 and $26,000, respectively, in the manufacture, delivery and testing of the AOT prototype equipment. During the three-month periods ended June 30, 2018 and 2017, the Company incurred total expenses of $1,000 and $9,000, respectively. These expenses have been reflected as part of Research and Development expenses on the accompanying consolidated statements of operations. 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 agreed 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 six-month period ended June 30, 2018 and 2017 pursuant to these two agreements amounted to $94,000 and $96,000, respectively. Total expenses recognized during each three-month period ended June 30, 2018 and 2017 pursuant to these two agreements amounted to $47,000 in each year. These expenses have been reflected in Research and Development expenses on the accompanying consolidated statements of operations. As of December 31, 2016, total unpaid fees due to Temple pursuant to these agreements amounted to $726,000. In July 2017, the Company and Temple amended the Second Temple License agreement. Pursuant to the amendment, the Company paid Temple $62,000 and Temple agreed to defer payment of the remaining $135,000 in unpaid licensing fee until such time the Company generates revenues totaling $835,000 from the license. In addition, the unpaid balance of $135,000 will accrue interest of 9% per annum. As of June 30, 2018, and December 31, 2017, total unpaid fees due to Temple pursuant to these agreements amounted to $964,000 and $842,000, respectively, which are included as part of Accounts payable – licensing agreements in the accompanying consolidated balance sheets. With regards to the unpaid fees to Temple, a total of $68,000 are current, $405,000 are deferred until such time the Company achieves a revenue milestone of $835,000 or upon termination of the licensing agreements and the remaining $491,000 are deemed past due. The past due amount of $491,000 is owed pursuant to the First Temple License. The Company is currently in negotiations with Temple to settle or cure the past due balance. The Company generated $50,000 in revenue from the viscosity reduction license during the three-month period ended March 31, 2017. This amount is not sufficient to be subject to additional license fees under the license agreement. No revenues were earned from the two license agreements during the six-month period ended June 30, 2018. Temple University Sponsored Research Agreement From March 2012 through August 2015, the Temple University (“Temple”) provided research services at a fixed annual cost under a Sponsored Research Agreement (“Research Agreement”). The Research Agreement expired in August 2015. Temple University continues to perform laboratory tests on an as-needed basis; expenses are incurred on a per-test basis. As of June 30, 2018, and December 31, 2017, total unpaid fees due to Temple pursuant to the Research Agreement were $10,000, which are included as part of Accounts payable – licensing agreements in the accompanying consolidated balance sheets. As of June 30, 2018, the entire $10,000 is deemed past due. |
7. Common Stock
7. Common Stock | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 7. Common Stock During the six months ended June 30, 2018, the Company issued 17,371,608 shares of its common stock as follows: · The Company issued 4,624,125 shares of its common stock upon the conversion of $337,000 in convertible notes pursuant to the convertible notes conversion prices of $0.05 to $0.08 per share. · The Company issued 12,517,773 shares of its common stock upon the exercise of warrants for proceeds of $634,000 at exercise prices of $0.05 to $0.08 per share. · The Company issued 179,710 shares of its common stock upon the exercise of options for proceeds of $13,000 at exercise prices of $0.07 per share. · The Company issued 50,000 shares of common stock in exchange for services in aggregate value of $12,000. |
8. Stock Options and Warrants
8. Stock Options and Warrants | 6 Months Ended |
Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |
Stock Options and Warrants | 8. Stock Options and Warrants The Company periodically issues stock options and warrants to directors, employees, and non-employees in capital raising transactions, for services and for financing costs. Options vest and expire according to terms established at the grant date. Options Options vest according to the terms of the specific grant and expire from 2 to 10 years from date of grant. The weighted-average, remaining contractual life of employee and non-employee options outstanding at June 30, 2018 was 5.4 years. Stock option activity for the period January 1, 2018 up to June 30, 2018, was as follows: Options Weighted January 1, 2018 35,397,675 $ 0.23 Granted 2,083,335 0.18 Exercised (179,710 ) – Forfeited – – June 30, 2018 37,301,300 $ 0.22 The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of June 30, 2018 were as follows: Outstanding Options Exercisable Options Option Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.05 - $ 0.99 37,150,854 5.4 $ 0.22 33,809,187 $ 0.21 $ 1.00 - $ 1.99 150,446 5.1 $ 1.18 150,446 $ 1.18 37,301,300 5.4 $ 0.22 33,959,633 $ 0.22 During the six-month period ending June 30, 2018, and pursuant to the Company’s Board Compensation policy approved by the Board June 19, 2015, the Company granted options to purchase 2,083,335 shares of common stock to members of the Company’s Board of Directors. The options are exercisable at $0.18 per share, vest monthly over a twelve-month period, and expire ten years from the date granted. Total fair value of these options at grant date was $313,000 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 years; risk free interest rate of 1.7%; volatility of 118% and dividend yield of 0%. During the six-month periods ended June 30, 2018 and 2017, the Company recognized compensation costs based on the fair value of options that vested of $245,000 and $535,000 respectively, which is included in Operating expenses in the Company’s statement of operations. During the three-month periods ended June 30, 2018 and 2017, the Company recognized compensation costs based on the fair value of options that vested of $102,000 and $300,000 respectively, which is included in Operating expenses in the Company’s statement of operations. At June 30, 2018, the Company’s closing stock price was $0.12 per share. The aggregate intrinsic value of the options outstanding at June 30, 2018 was $520,000. Future unamortized compensation expense on the unvested outstanding options at June 30, 2018 is $209,000 to be recognized through May 2019. Warrants The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting January 1, 2018 up to June 30, 2018. Warrants Weighted Avg. January 1, 2018 17,622,437 $ 0.09 Granted 2,189,688 0.08 Exercised (12,517,773 ) 0.05 Cancelled (2,287,997 ) 0.05 June 30, 2018 5,006,355 $ 0.21 The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of June 30, 2018 were as follows: Outstanding Warrants Exercisable Warrants Warrant Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.05 - $ 0.99 5,006,355 2.1 $ 0.21 4,956,355 $ 0.21 $ 1.00 - $ 1.99 – – – – – 5,006,355 2.1 $ 0.21 4,956,355 $ 0.21 In the six-month period ending June 30, 2018, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 2,189,688 shares of common stock with an exercise price of $0.08 per share, vesting immediately upon grant and expiring one year from the date of grant (see Note 5). During the six-month period ended March 31, 2018, warrants to acquire 12,217,773 shares of common stock were exercised resulting in net proceeds to the Company of $634,000. At June 30, 2018, the aggregate intrinsic value of the warrants outstanding was $77,000. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. 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. |
10. Subsequent Events
10. Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events Issuance of Convertible Notes From July 1 up to July 31, 2018, the Company issued convertible notes in aggregate of $228,000 in exchange for cash of $208,000. The notes are unsecured, convertible into 4,565,000 shares of common stock of the Company at a conversion price of $0.05 per share and mature in one year. In connection with these notes, the Company also issued warrants to purchase 2,282,500 shares of common stock of the Company at an exercise price of $0.05 per share and expiring one year from the date of issuance. As a result, the Company will record a note discount of $228,000 to account for the relative fair value of the warrants, the notes’ beneficial conversion feature and original issue discount which will be amortized as interest expense over the life of the notes. Annual Meeting of Shareholders The Board, at its meeting on August 13, 2018, set the date for the Annual Meeting of Shareholders for November 9, 2018, and set September 10, 2018, as the Record Date for the meeting. |
2. Summary of Significant Acc17
2. Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Consolidation policy | Consolidation Policy The accompanying consolidated financial statements of QS Energy Inc. include the accounts of QS Energy Inc. (the Parent) and its wholly owned subsidiaries, QS Energy Pool, Inc. and STWA Asia Pte. Limited. Intercompany transactions and balances have been eliminated in consolidation. |
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, during the six-months ended June 30, 2018, the Company incurred a net loss of $1,458,000, used cash in operations of $676,000 and had a stockholders’ deficit of $1,772,000 as of that date. 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. In addition, the Company's independent registered public accounting firm, in its report on the Company's December 31, 2017 financial statements, has raised substantial doubt about the Company's ability to continue as a going concern. At June 30, 2018, the Company had cash on hand in the amount of $493,000. Management estimates that the current funds on hand will be sufficient to continue operations through November 2018. 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 agreements with Temple; costs associated with product development and commercialization of the AOT 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 2018 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 stockholders in case of equity financing. |
Basic and diluted income (loss) per share | Basic and Diluted Income (loss) per share Our computation of earnings per share (“EPS”) includes basic and diluted EPS. Basic EPS is measured as the income (loss) available to common stockholders divided by the weighted average common shares outstanding for the period. Diluted income (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 income (loss) of the Company as if they had been converted at the beginning of the periods presented, or issuance date, if later. In computing diluted income (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. Potential common shares that have an antidilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. Income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the respective periods. Basic and diluted (loss) per common share is the same for periods in which the Company reported an operating loss because all warrants and stock options outstanding are anti-dilutive. At June 30, 2018 and 2017, we excluded the outstanding securities summarized below, which entitle the holders thereof to acquire shares of common stock as their effect would have been anti-dilutive. June 30, June 30, Options 37,301,300 35,313,541 Warrants 5,006,355 21,507,270 Common stock issuable upon conversion of notes payable 5,287,502 9,968,933 Total 47,595,157 66,789,744 |
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 accruals for potential liabilities, assumptions used in valuing equity instruments issued for financing and services and realization of deferred tax assets, among others. Actual results could differ from those estimates. |
Revenue Recognition Policy | Revenue Recognition Policy In September 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-09 (ASU No. 2014-09) regarding revenue recognition. The new standard provides authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services. The ASU became effective January 1, 2018. The Company’s commercialization of our energy efficiency technologies that would assist in meeting increasing global energy demands, improving the economics of oil extraction and transport, and reducing greenhouse gas emission have not yet reached the market and therefore; have not generated considerable revenue. Due to the nature of the products leased by the Company and the stage of development in which the products reside the adoption of the new standard has had no quantitative effect on the financial statements. Under the new guidance, revenue is recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those leased products and ancillary services. The Company will review its lease transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and costs of sales are recognized once products/services are delivered to the customer’s control and performance obligations are satisfied. |
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 six-month periods ended June 30, 2018 and 2017 research and development costs were $95,000 and $120,000, respectively. |
Patent costs | Patent Costs Patent costs consist of patent-related legal and filing fees. Due to the uncertainty associated with the successful development of our AOT and Joule Heat products, all patent costs are expensed as incurred. During the six-month periods ended June 30, 2018 and 2017, patent costs were $12,000 and $24,000, respectively, and were included as part of operating expenses in the accompanying consolidated statements of operations. During the three-month periods ended June 30, 2018 and 2017, patent costs were $6,000 and $7,000, respectively, and were included as part of operating expenses in the accompanying consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases In July 2017, the FASB issued Accounting Standards Update No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 is to be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not currently expected to have any impact on the Company’s 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. |
2. Summary of Significant Acc18
2. Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Antidilutive shares | June 30, June 30, Options 37,301,300 35,313,541 Warrants 5,006,355 21,507,270 Common stock issuable upon conversion of notes payable 5,287,502 9,968,933 Total 47,595,157 66,789,744 |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | June 30, December 31, Office equipment $ 30,000 $ 30,000 Furniture and fixtures 5,000 5,000 Testing Equipment 37,000 37,000 Leasehold Improvements 25,000 25,000 Subtotal 97,000 97,000 Less accumulated depreciation (68,000 ) (51,000 ) Total $ 29,000 $ 46,000 |
5. Convertible Notes (Tables)
5. Convertible Notes (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes and Warrants | June 30, 2018 (unaudited) December 31 2017 Balance due on convertible notes $ 524,000 $ 509,000 Accrued interest 99,000 71,000 Subtotal 623,000 580,000 Convertible note discount (47,000 ) (47,000 ) Balance on convertible notes, net of note discounts $ 576,000 $ 533,000 |
8. Stock Options and Warrants (
8. Stock Options and Warrants (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |
Stock options outstanding | Options Weighted January 1, 2018 35,397,675 $ 0.23 Granted 2,083,335 0.18 Exercised (179,710 ) – Forfeited – – June 30, 2018 37,301,300 $ 0.22 |
Options outstanding by Per Share Price | Outstanding Options Exercisable Options Option Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.05 - $ 0.99 37,150,854 5.4 $ 0.22 33,809,187 $ 0.21 $ 1.00 - $ 1.99 150,446 5.1 $ 1.18 150,446 $ 1.18 37,301,300 5.4 $ 0.22 33,959,633 $ 0.22 |
Warrants outstanding | Warrants Weighted Avg. January 1, 2018 17,622,437 $ 0.09 Granted 2,189,688 0.08 Exercised (12,517,773 ) 0.05 Cancelled (2,287,997 ) 0.05 June 30, 2018 5,006,355 $ 0.21 |
Warrants outstanding by Per Share Price | Outstanding Warrants Exercisable Warrants Warrant Exercise Price Per Share Shares Life (Years) Weighted Average Exercise Price Shares Weighted Average Exercise Price $ 0.05 - $ 0.99 5,006,355 2.1 $ 0.21 4,956,355 $ 0.21 $ 1.00 - $ 1.99 – – – – – 5,006,355 2.1 $ 0.21 4,956,355 $ 0.21 |
2. Summary of Significant Acc22
2. Summary of Significant Accounting Policies (Details) - shares | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Antidilutive shares excluded from EPS | 47,595,157 | 66,789,744 |
Options [Member] | ||
Antidilutive shares excluded from EPS | 37,301,300 | 35,313,541 |
Warrants [Member] | ||
Antidilutive shares excluded from EPS | 5,006,355 | 21,507,270 |
Convertible Notes [Member] | ||
Antidilutive shares excluded from EPS | 5,287,502 | 9,968,933 |
2. Summary of Significant Acc23
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net loss | $ (758,000) | $ (1,846,000) | $ (1,458,000) | $ (3,330,000) | ||
Cash flow from operations | (676,000) | (765,000) | ||||
Stockholders' deficit | (1,772,000) | (1,772,000) | $ (1,874,000) | |||
Cash on Hand | 493,000 | 880,000 | 493,000 | 880,000 | $ 204,000 | $ 136,000 |
Research and development costs | 48,000 | 56,000 | 95,000 | 120,000 | ||
Operating expenses | 462,000 | 580,000 | 956,000 | 1,838,000 | ||
Patent Costs [Member] | ||||||
Operating expenses | $ 6,000 | $ 7,000 | $ 12,000 | $ 24,000 |
3. Accrued Expenses and Accou24
3. Accrued Expenses and Accounts Payable (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2018 | Dec. 31, 2017 | |
Accrued salaries of officers and fees due to members of the Board of Directors | $ 43,000 | $ 31,000 | |
Former CEO [Member] | |||
Severance expenses | $ 624,000 | ||
Severance payable | $ 377,000 | $ 390,000 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Property and equipment, gross | $ 97,000 | $ 97,000 |
Less: accumulated depreciation | (68,000) | (51,000) |
Property and equipment, net | 29,000 | 46,000 |
Office equipment [Member] | ||
Property and equipment, gross | 30,000 | 30,000 |
Furniture and fixtures [Member] | ||
Property and equipment, gross | 5,000 | 5,000 |
Testing equipment [Member] | ||
Property and equipment, gross | 37,000 | 37,000 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | $ 25,000 | $ 25,000 |
4. Property and Equipment (De26
4. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 9,000 | $ 2,000 | $ 17,000 | $ 4,000 |
5. Convertible Notes (Details)
5. Convertible Notes (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
Balance due on convertible notes | $ 524,000 | $ 509,000 |
Accrued Interest | 99,000 | 71,000 |
Convertible notes payable, gross | 623,000 | 580,000 |
Convertible note discount | (47,000) | (47,000) |
Balance on convertible notes, net of note discount | $ 576,000 | $ 533,000 |
5. Convertible Notes (Details N
5. Convertible Notes (Details Narrative) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |||
Convertible notes issued | $ 350,000 | ||
Proceeds from convertible notes | 318,000 | $ 1,469,000 | |
Discount on notes issued | $ 32,000 | ||
Warrants issued with notes, shares | 2,189,688 | ||
Discount on fair value of warrants, BCF and OID | $ 350,000 | ||
Notes payable balance | 524,000 | $ 509,000 | |
Unamortized discount | 47,000 | 47,000 | |
Debt converted during year | $ 336,000 | ||
Debt converted, shares issued | 4,624,125 | ||
Amortization of debt discount charged to interest expense | $ 381,000 | ||
Accrued interest payable | 99,000 | 71,000 | |
Convertible notes outstanding, net | 576,000 | $ 533,000 | |
Debt in default | $ 454,000 |
6. Research and Development (De
6. Research and Development (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | $ 48,000 | $ 56,000 | $ 95,000 | $ 120,000 | |
Accounts payable - licensing agreement | 974,000 | 974,000 | $ 852,000 | ||
License revenue generated | 0 | 0 | 0 | 50,000 | |
AOT Prototypes [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | 1,000 | 9,000 | 1,000 | 26,000 | |
Temple University License Agreements [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | 47,000 | $ 47,000 | 94,000 | 96,000 | |
Accounts payable - licensing agreement | 964,000 | 964,000 | 842,000 | ||
License revenue generated | 0 | 50,000 | |||
Temple University License Agreements [Member] | Penalty Interest [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | 16,000 | $ 20,000 | |||
Temple University License Agreements [Member] | Accounts payable current [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Accounts payable - licensing agreement | 68,000 | 68,000 | |||
Temple University License Agreements [Member] | Accounts payable deferred [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Accounts payable - licensing agreement | 405,000 | 405,000 | |||
Temple University License Agreements [Member] | Accounts payable past due [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Accounts payable - licensing agreement | 491,000 | 491,000 | |||
Temple University Sponsored Research Agreement [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Accounts payable - licensing agreement | 10,000 | 10,000 | $ 10,000 | ||
Temple University Sponsored Research Agreement [Member] | Accounts payable past due [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Accounts payable - licensing agreement | $ 10,000 | $ 10,000 |
7. Common Stock (Details Narrat
7. Common Stock (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Stock issued during period, shares | 17,371,608 | |
Debt converted, amount converted | $ 336,000 | |
Proceeds from exercise of warrants | 647,000 | $ 61,000 |
Common stock issued for services, value | $ 12,000 | |
Stock issued for services [Member] | ||
Common stock issued for services, shares issued | 50,000 | |
Common stock issued for services, value | $ 12,000 | |
Convertible Notes Payable [Member] | ||
Common stock issued on conversion of notes, shares | 4,624,125 | |
Debt converted, amount converted | $ 337,000 | |
Warrant Exercises [Member] | ||
Common stock issued upon exercise of warrants, shares issued | 12,517,773 | |
Proceeds from exercise of warrants | $ 634,000 | |
Options Exercises [Member] | ||
Common stock issued upon exercise of options, shares | 179,710 | |
Proceeds from exercise of options | $ 13,000 |
8. Stock Options and Warrants31
8. Stock Options and Warrants (Details-Options Outstanding) - Options [Member] | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Beginning Balance | shares | 35,397,675 |
Granted | shares | 2,083,335 |
Exercised | shares | (179,710) |
Forfeited | shares | 0 |
Ending Balance | shares | 37,301,300 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 0.23 |
Weighted Average Exercise Price, Granted | $ / shares | 0.18 |
Weighted Average Exercise Price, Exercised | $ / shares | |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 0.22 |
8. Stock Options and Warrants32
8. Stock Options and Warrants (Details-Options by Exercise Price Per Share) - Options [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Outstanding Options | ||
Options outstanding | 37,301,300 | 35,397,675 |
Life (Years), options outstanding | 5 years 4 months 24 days | |
Weighted Average Exercise Price, options outstanding | $ 0.22 | $ 0.23 |
Exercisable Options | ||
Options exercisable | 33,959,633 | |
Weighted Average Exercise Price, options exercisable | $ 0.22 | |
$0.05 - $0.99 [Member] | ||
Outstanding Options | ||
Options outstanding | 37,150,854 | |
Life (Years), options outstanding | 5 years 4 months 24 days | |
Weighted Average Exercise Price, options outstanding | $ 0.22 | |
Exercisable Options | ||
Options exercisable | 33,809,187 | |
Weighted Average Exercise Price, options exercisable | $ .21 | |
$1.00 - $1.99 [Member] | ||
Outstanding Options | ||
Options outstanding | 150,446 | |
Life (Years), options outstanding | 5 years 1 month 6 days | |
Weighted Average Exercise Price, options outstanding | $ 1.18 | |
Exercisable Options | ||
Options exercisable | 150,446 | |
Weighted Average Exercise Price, options exercisable | $ 1.18 |
8. Stock Options and Warrants33
8. Stock Options and Warrants (Details-Warrants Outstanding) - Warrants [Member] | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Warrants outstanding, beginning balance | shares | 17,622,437 |
Warrants granted | shares | 2,189,688 |
Warrants exercised | shares | (12,517,773) |
Warrants cancelled | shares | (2,287,997) |
Warrants outstanding, ending balance | shares | 5,006,355 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 0.09 |
Weighted Average Exercise Price, Granted | $ / shares | 0.08 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.05 |
Weighted Average Exercise Price, Cancelled | $ / shares | 0.05 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 0.21 |
8. Stock Options and Warrants34
8. Stock Options and Warrants (Details-Warrant Exercise Price per Share) - Warrants [Member] - $ / shares | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Outstanding Warrants | ||
Warrants outstanding | 5,006,355 | 17,622,437 |
Life (Years), warrants outstanding | 2 years 1 month 6 days | |
Weighted Average Exercise Price, warrants outstanding | $ 0.21 | |
Exercisable Warrants | ||
Warrants exercisable | 4,956,355 | |
Weighted Average Exercise Price, warrants exercisable | $ 0.21 | |
$0.05-$0.99 Price Per Share [Member] | ||
Outstanding Warrants | ||
Warrants outstanding | 5,006,355 | |
Life (Years), warrants outstanding | 2 years 1 month 6 days | |
Weighted Average Exercise Price, warrants outstanding | $ 0.21 | |
Exercisable Warrants | ||
Warrants exercisable | 4,956,355 | |
Weighted Average Exercise Price, warrants exercisable | $ 0.21 | |
$1.00-$1.99 Price Per Share [Member] | ||
Outstanding Warrants | ||
Warrants outstanding | 0 |
8. Stock options and Warrants35
8. Stock options and Warrants (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Valuation assumptions | ||||
Proceeds from exercise of warrants | $ 647,000 | $ 61,000 | ||
Options [Member] | ||||
Weighted average remaining contractual life | 5 years 4 months 24 days | |||
Options granted, shares | 2,083,335 | |||
Option exercisable price | $ 0.18 | $ 0.18 | ||
Valuation assumptions | ||||
Options vested, share based compensation expense | $ 300,000 | $ 102,000 | $ 245,000 | $ 535,000 |
Stock price | $ 0.13 | $ 0.13 | ||
Aggregate intrinsic value of options outstanding | $ 520,000 | $ 520,000 | ||
Future unamortized compensation expense on unvested outstanding options | 209,000 | $ 209,000 | ||
Options [Member] | Board of Directors [Member] | ||||
Options granted, shares | 2,083,335 | |||
Fair value of options at grant date | $ 313,000 | |||
Valuation assumptions | ||||
Expected life | 5 years | |||
Risk free interest rate | 1.70% | |||
Volatility | 118.00% | |||
Expected dividend yield | 0.00% | |||
Warrants [Member] | ||||
Valuation assumptions | ||||
Warrants granted | 2,189,688 | |||
Warrant exercise price | $ 0.08 | |||
Aggregate intrinsic value of warrants outstanding | $ 77,000 | $ 77,000 | ||
Stock issued for exercise of warrants, shares | 12,217,773 | |||
Proceeds from exercise of warrants | $ 634,000 |