Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 13, 2019 | |
Cover [Abstract] | ||
Entity Registrant Name | QS Energy, Inc. | |
Entity Central Index Key | 0001103795 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 302,794,965 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 | |
Entity Small Business | true | |
Entity Emerging Growth | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV | |
Entity File Number | 000-29185 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 505,000 | $ 1,153,000 |
Prepaid expenses and other current assets | 245,000 | 34,000 |
Total current assets | 750,000 | 1,187,000 |
Property and equipment, net of accumulated depreciation of $78,000 and $73,000 at September 30, 2019 and December 31, 2018, respectively | 25,000 | 24,000 |
Other assets | 2,000 | 2,000 |
Total assets | 777,000 | 1,213,000 |
Current liabilities: | ||
Accounts payable-license agreements | 1,196,000 | 1,073,000 |
Accounts payable and accrued expenses | 500,000 | 658,000 |
Accrued expenses and accounts payable-related parties | 5,000 | 55,000 |
Convertible debentures, net of discounts of $238,000 and $1,100,000 at September 30, 2019 and December 31, 2018, respectively | 947,000 | 909,000 |
Total current liabilities | 2,648,000 | 2,695,000 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Common stock, $.001 par value: 500,000,000 shares authorized, 302,684,965 and 256,123,515 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 302,685 | 256,123 |
Additional paid-in capital | 115,722,315 | 111,429,877 |
Accumulated deficit | (117,896,000) | (113,168,000) |
Total stockholders' deficit | (1,871,000) | (1,482,000) |
Total liabilities and stockholders' deficit | $ 777,000 | $ 1,213,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Accumulated depreciation | $ 78,000 | $ 73,000 |
Discounts on convertible debentures | $ 238,000 | $ 1,100,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 302,684,965 | 256,123,515 |
Common stock, shares outstanding | 302,684,965 | 256,123,515 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 0 | $ 0 | $ 0 | $ 0 |
Costs and Expenses | ||||
Operating expenses | 493,000 | 431,000 | 1,626,000 | 1,387,000 |
Research and development expenses | 82,000 | 50,000 | 665,000 | 145,000 |
Loss before other expense | (575,000) | (481,000) | (2,291,000) | (1,532,000) |
Other expense | ||||
Interest and financing expense | (413,000) | (200,000) | (2,437,000) | (607,000) |
Net loss | $ (988,000) | $ (681,000) | $ (4,728,000) | $ (2,139,000) |
Net loss per common share, basic and diluted | $ 0 | $ 0 | $ (0.02) | $ (0.01) |
Weighted average common shares outstanding, basic and diluted | 298,834,404 | 251,732,417 | 286,120,559 | 243,167,707 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT (UNAUDITED) - 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 | 7,374,125 | |||
Common stock issued on conversion of notes payable, value | $ 7,374 | 466,626 | 474,000 | |
Fair value of warrants and beneficial conversion feature of issued convertible notes | 526,000 | 526,000 | ||
Fair value of options and warrants issued as compensation | 340,000 | 340,000 | ||
Common stock issued for services, shares | 50,000 | |||
Common stock issued for services, value | $ 50 | 11,950 | 12,000 | |
Net loss | (2,139,000) | (2,139,000) | ||
Ending balance, shares at Sep. 30, 2018 | 254,198,515 | |||
Ending balance, value at Sep. 30, 2018 | $ 254,198 | 109,979,802 | (112,248,000) | (2,014,000) |
Beginning balance, shares at Jun. 30, 2018 | 251,448,515 | |||
Beginning balance, value at Jun. 30, 2018 | $ 251,448 | 109,543,552 | (111,567,000) | (1,772,000) |
Common stock issued on conversion of notes payable, shares | 2,750,000 | |||
Common stock issued on conversion of notes payable, value | $ 2,750 | 134,250 | 137,000 | |
Fair value of warrants and beneficial conversion feature of issued convertible notes | 207,000 | 207,000 | ||
Fair value of options and warrants issued as compensation | 95,000 | 95,000 | ||
Net loss | (681,000) | (681,000) | ||
Ending balance, shares at Sep. 30, 2018 | 254,198,515 | |||
Ending balance, value at Sep. 30, 2018 | $ 254,198 | 109,979,802 | (112,248,000) | (2,014,000) |
Beginning balance, shares at Dec. 31, 2018 | 256,123,515 | |||
Beginning balance, value at Dec. 31, 2018 | $ 256,123 | 111,429,877 | (113,168,000) | (1,482,000) |
Common stock issued on exercise of warrants and options, shares | 4,039,690 | |||
Common stock issued on exercise of warrants and options, value | $ 4,040 | 287,960 | 292,000 | |
Common stock issued on conversion of notes payable, shares | 42,271,760 | |||
Common stock issued on conversion of notes payable, value | $ 42,272 | 2,311,728 | 2,354,000 | |
Fair value of warrants and beneficial conversion feature of issued convertible notes | 1,350,000 | 1,350,000 | ||
Fair value of options and warrants issued as compensation | 275,000 | 275,000 | ||
Common stock issued for services, shares | 250,000 | |||
Common stock issued for services, value | $ 250 | 67,750 | 68,000 | |
Net loss | (4,728,000) | (4,728,000) | ||
Ending balance, shares at Sep. 30, 2019 | 302,684,965 | |||
Ending balance, value at Sep. 30, 2019 | $ 302,685 | 115,722,315 | (117,896,000) | (1,871,000) |
Beginning balance, shares at Jun. 30, 2019 | 298,457,191 | |||
Beginning balance, value at Jun. 30, 2019 | $ 298,456 | 115,085,544 | (116,908,000) | (1,524,000) |
Common stock issued on exercise of warrants and options, shares | 362,500 | |||
Common stock issued on exercise of warrants and options, value | $ 363 | 18,637 | 19,000 | |
Common stock issued on conversion of notes payable, shares | 3,865,274 | |||
Common stock issued on conversion of notes payable, value | $ 3,866 | 305,134 | 309,000 | |
Fair value of warrants and beneficial conversion feature of issued convertible notes | 232,000 | 232,000 | ||
Fair value of options and warrants issued as compensation | 81,000 | 81,000 | ||
Net loss | (988,000) | (988,000) | ||
Ending balance, shares at Sep. 30, 2019 | 302,684,965 | |||
Ending balance, value at Sep. 30, 2019 | $ 302,685 | $ 115,722,315 | $ (117,896,000) | $ (1,871,000) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net Loss | $ (4,728,000) | $ (2,139,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Stock based compensation expense | 275,000 | 340,000 |
Issuance of common stock for services | 68,000 | 12,000 |
Amortization of debt discount and of interest expense | 2,392,000 | 567,000 |
Depreciation and amortization | 5,000 | 21,000 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | (211,000) | 0 |
Accounts payable and accrued expenses | (158,000) | (88,000) |
Accounts payable - license agreements | 123,000 | 171,000 |
Accounts payable and accrued expenses - related parties | (50,000) | 18,000 |
Deposits and other current liabilities | 0 | 0 |
Net cash used in operating activities | (2,284,000) | (1,098,000) |
Cash flows from investing activities | ||
Purchase of equipment | (6,000) | 0 |
Net cash used in investing activities | (6,000) | 0 |
Cash flows from financing activities | ||
Net proceeds from issuance of convertible notes and warrants | 1,350,000 | 526,000 |
Net proceeds from exercise of warrants | 292,000 | 647,000 |
Net cash provided by financing activities | 1,642,000 | 1,173,000 |
Net increase (decrease) in cash | (648,000) | 75,000 |
Cash, beginning of period | 1,153,000 | 204,000 |
Cash, end of period | 505,000 | 279,000 |
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 | 2,354,000 | 474,000 |
Fair value of warrants and beneficial conversion feature associated with issued convertible notes | $ 1,350,000 | $ 526,000 |
1. Description of Business
1. Description of Business | 9 Months Ended |
Sep. 30, 2019 | |
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 is seeking to transition 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. 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, 2018 filed with the SEC. The condensed consolidated balance sheet as of December 31, 2018 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 | 9 Months Ended |
Sep. 30, 2019 | |
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 nine-months ended September 30, 2019, the Company incurred a net loss of $4,728,000, used cash in operations of $2,284,000 and had a stockholders’ deficit of $1,871,000 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, 2018 financial statements, has raised substantial doubt about the Company's ability to continue as a going concern. At September 30, 2019, the Company had cash on hand in the amount of $505,000. Management estimates that the current funds on hand will be sufficient to continue operations through January 2020, or, subject to actual costs incurred implementing design modifications to our AOT demonstration project described in Part I, Item 2, October 2019. 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 2019 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 September 30, 2019 and 2018, 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. September 30, September 30, Options 39,450,603 35,351,300 Warrants 25,941,062 7,288,855 Common stock issuable upon conversion of notes payable 12,689,373 7,204,552 Total 78,081,038 49,844,707 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 Under its business plan, the Company anticipates the leasing of its primary technology. The Company will recognize lease revenue ratably over the life of the lease upon commencement of the lease. Revenue on future product sales will be recognized in accordance with Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that supersedes nearly all existing revenue recognition guidance under current U.S. GAAP and replaces it with a principle-based approach or 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. Research and Development Costs Research and development costs are expensed as incurred and consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s products. Certain research and development activities are incurred under contract. In those instances, research and development costs are charged to operations ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, or other information indicates that a different expensing schedule is more appropriate. Payments made pursuant to research and development contracts are initially recorded as advances on research and development contract services in the Company’s consolidated balance sheet and then charged to research and development costs in the Company’s consolidated statement of operations as those contract services are performed. In January 2019, the Company paid $500,000 as a deposit under terms of a work order for work to be performed by a pipeline operator. During the period ended September 30, 2019, the Company amortized $450,000 of such amount as a research and development cost based on the progress of work performed as required by the contract, and has reflected the $50,000 remaining In August 2019, the Company paid $67,000 as a deposit on equipment to be installed at the demonstration site. The Company plans to amortize the full amount of this deposit as a research and development cost upon receipt and acceptance of the equipment currently scheduled for delivery during the fourth quarter of 2019. For the nine-month periods ended September 30, 2019 and 2018 research and development costs were $665,000 and $145,000, respectively. For the three-month periods ended September 30, 2019 and 2018 research and development costs were $82,000 and $50,000, respectively. Patent Costs Patent costs consist of patent-related legal and filing fees. Due to the uncertainty associated with the development of our AOT, all patent costs are expensed as incurred. During the nine-month periods ended September 30, 2019 and 2018, patent costs were $2,000 and $15,000, respectively, which is included as part of operating expenses in the accompanying consolidated statements of operations. Recent Accounting Pronouncements 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 - Related Parties | 9 Months Ended |
Sep. 30, 2019 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Accounts Payable - Related Parties | 3. Accrued Expenses and Accounts Payable Accrued Expenses As of September 30, 2019 and December 31, 2018, the Company owed $237,000 and $327,000, respectively, pursuant to a separation agreement with a former executive officer effective April 1, 2017 as amended by letter agreements dated effective August 16, 2018 and March 31, 2019 which are included as part of Accrued expenses and accounts payable on the accompanying balance sheet. The amount to be paid at an amount of $10,000 per month. Accrued Expenses and Accounts Payable – Related Parties Accrued expense – related parties consists of accrued current salaries of officers and fees due to members of the Board of Directors. As of September 30, 2019, and December 31, 2018, accrued expenses and accounts payable to related parties amounted to $5,000 and $55,000, respectively. |
4. Property and Equipment
4. Property and Equipment | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment At September 30, 2019 and December 31, 2018, property and equipment consists of the following: September 30, December 31, Office equipment $ 36,000 $ 30,000 Furniture and fixtures 5,000 5,000 Testing Equipment 37,000 37,000 Leasehold Improvements 25,000 25,000 Subtotal 103,000 97,000 Less accumulated depreciation (78,000 ) (73,000 ) Total $ 25,000 $ 24,000 Depreciation expense for the nine-month periods ended September 30, 2019 and 2018 was $5,000 and $21,000, respectively. Depreciation expense for the three-month periods ended September 30, 2019 and 2018 was $2,000 and $4,000, respectively. |
5. Convertible Notes
5. Convertible Notes | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Notes | 5. Convertible Notes September 30, (unaudited) December 31, 2018 Balance due on convertible notes $ 1,025,000 $ 1,886,000 Accrued interest 160,000 123,000 Subtotal 1,185,000 2,009,000 Convertible note discount (238,000 ) (1,100,000 ) Balance on convertible notes, net of note discounts $ 947,000 $ 909,000 The Company issues 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 receive fully vested warrants to purchase shares of common stock of the Company 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. As of December 31, 2018, total outstanding notes payable amounted to $1,886,000 which are due in varying amounts through December 2019, accrued interest of $123,000 and unamortized note discount of $1,100,000. During the nine-month period ended September 30, 2019, the Company issued similar convertible promissory notes in the aggregate of $1,485,000 for cash of $1,350,000 or a discount of $135,000. The notes do not bear any interest; however, the implied interest rate used was 10% since the notes were issued 10% less than its face value. The notes are unsecured, mature in twelve months from issuance and convertible at $0.05 to $0.15 per share. In addition, the Company also granted these note holders warrants to purchase 10.8 million shares of the Company’s common stock. The warrants are fully vested, exercisable at $0.05 to $0.15 per share and will expire in one year. As a result, the Company recorded a note discount of $1,350,000 to account for the relative fair value of the warrants, the notes’ beneficial conversion feature (BCF), and original issue discount (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 nine-month period ended September 30, 2019 notes payable of $2,354,000 were converted into 42,271,760 shares of common stock. As of September 30, 2019, total outstanding notes payable amounted to $1,025,000, accrued interest of $160,000 and unamortized note discount of $238,000 for a net balance of $947,000. A total of nine notes in the aggregate of $484,000 have reached maturity and are past due. The remaining notes are due in varying amounts through September 2020. |
6. Research and Development
6. Research and Development | 9 Months Ended |
Sep. 30, 2019 | |
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, prototype equipment fabrication and installation, 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 nine-month periods ended September 30, 2019 and 2018, our research and development expenses were $665,000 and $145,000 respectively. For the three-month periods ended September 30, 2019 and 2018, our research and development expenses were $82,000 and $50,000 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 prototype equipment fabrication and installation, 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 nine-month periods ended September 30, 2019 and 2018, the Company incurred total expenses of $525,000 and $5,000, respectively, in the manufacture, delivery and testing of the AOT prototype equipment. During the three-month periods ended September 30, 2019 and 2018, the Company incurred total expenses of $36,000 and $4,000, respectively, in the manufacture, delivery and testing of the AOT prototype equipment. Included in this amount, were costs related to a $500,000 work order for work to be performed by a pipeline operator. During the period ended September 30, 2019, the Company amortized $450,000 of such amount as a research and development cost based on the progress of work performed as required by the contract, and has reflected the $50,000 remaining amount as Prepaid expenses and other current assets in the accompanying consolidated balance sheet as of September 30, 2019. There were no such expenses for the comparable period in 2018. 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 paid Temple a non-refundable license maintenance fee of $300,000 and agreed to pay (i) annual maintenance fees of $187,500; (ii) royalty fee ranging from 4% up to 7% from revenues generated from the licensing agreements; and (iii) 25% of all revenues generated from sub-licensees to secure or maintain the sub-license or option thereon. The term of the licenses commenced in August 2011 and will expire upon expiration of the patents. The agreements 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 fails to commercialize the patent rights. Total expenses recognized during each nine-month periods ended September 30, 2019 and 2018 pursuant to these two License Agreements amounted to $140,000 and $141,000, respectively. Total expenses recognized during each three-month periods ended September 30, 2019 and 2018 pursuant to these two License Agreements amounted to $47,000 and $47,000, respectively. Total expenses have been reflected in Research and Development expenses on the accompanying consolidated statements of operations. In the nine-month periods ended September 30, 2019 and 2018, the Company also recognized penalty interest on past-due balances of $45,000 and $40,000, respectively, which is included as part of interest and financing expense in the accompanying statements of operations. As of September 30, 2019 and December 31, 2018, total unpaid fees due to Temple pursuant to these agreements are $1,196,000 and $1,073,000, respectively, which are included as part of Accounts Payable – license agreements in the accompanying consolidated balance sheets. With regards to the unpaid fees to Temple, a total of $135,000 are deferred until such time the Company achieves a revenue milestone of $835,000 or upon termination of the licensing agreements and the remaining $1,061,000 are deemed past due. The Company has negotiated and anticipates it will continue to negotiate with Temple to settle or cure the past due balance. No revenues were earned from the two License Agreements during the nine-month periods ended September 30, 2019 and September 30, 2018. |
7. Common Stock
7. Common Stock | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 7. Common Stock During the nine months ended September 30, 2019, the Company issued 46,561,450 shares of its common stock as follows: · The Company issued 42,271,760 shares of its common stock upon the conversion of $ $2,354,000 in convertible notes pursuant to the convertible notes conversion prices of $0.05 to $0.48 per share. · The Company issued 3,501,493 shares of its common stock upon the exercise of warrants for proceeds of $221,000 at exercise prices of $0.05 to $0.18 per share. · The Company issued 538,197 shares of its common stock upon the exercise of options for proceeds of $71,000 at exercise prices of $0.08 to $0.18 per share. · The Company issued 250,000 shares of its common stock in exchange for $68,000 for services valued at $0.27 per share. |
8. Stock Options and Warrants
8. Stock Options and Warrants | 9 Months Ended |
Sep. 30, 2019 | |
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 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 September 30, 2019 was 5.0 years. Stock option activity for the period January 1, 2019 up to September 30, 2019, was as follows: Options Weighted January 1, 2019 35,301,300 $ 0.22 Granted 4,687,500 0.08 Exercised (538,197 ) 0.13 Forfeited – – September 30, 2019 39,450,603 $ 0.20 The weighted average exercise prices, remaining contractual lives for options granted, exercisable, and expected to vest as of September 30, 2019 were as follows: Outstanding Options Exercisable Options Option Shares Life Weighted Shares Weighted $0.05 - $0.24 17,915,553 7.8 $ 0.10 16,808,783 $ 0.10 $0.25 - $0.49 20,913,552 2.5 0.27 20,913,552 0.27 $0.50 - $0.99 471,052 4.6 0.85 471,052 0.85 $1.00 - $2.00 150,446 3.8 1.18 150,446 1.18 39,450,603 5.0 $ 0.20 38,343,833 $ 0.21 During the nine-month period ending September 30, 2019, and pursuant to the Company’s Board Compensation policy approved by the Board September 19, 2015, the Company granted options to purchase 4,687,500 shares of common stock to members of the Company’s Board of Directors. The options are exercisable at $0.08 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 $328,000 using the Black-Scholes Option Pricing model with the following assumptions: life of 5 years; risk free interest rate of 2.5%; volatility of 122% and dividend yield of 0%. During the nine-month periods ended September 30, 2019 and 2018, the Company recognized compensation costs based on the fair value of options that vested of $265,000 and $340,000 respectively. During the three-month periods ended September 30, 2019 and 2018, the Company recognized compensation costs based on the fair value of options that vested of $82,000 and $95,000 respectively. At September 30, 2019, the Company’s closing stock price was $0.10 per share. The aggregate intrinsic value of the options outstanding at September 30, 2019 was $453,000. Future unamortized compensation expense on the unvested outstanding options at September 30, 2019 is approximately $82,000 to be recognized through December 2019. Warrants The following table summarizes certain information about the Company’s stock purchase warrants activity for the period starting January 1, 2019 up to September 30, 2019. Warrants Weighted Avg. January 1, 2019 21,055,355 $ 0.09 Granted 10,922,062 0.07 Exercised (3,501,493 ) 0.06 Cancelled (2,534,862 ) 0.13 September 30, 2019 25,941,062 $ 0.08 The weighted average exercise prices, remaining contractual lives for warrants granted, exercisable, and expected to vest as of September 30, 2019 were as follows: Outstanding Warrants Exercisable Warrants Warrant Exercise Price Per Share Shares Life Weighted Shares Weighted $0.05 - $0.24 23,871,062 0.4 $ 0.06 23,871,062 $ 0.06 $0.25 - $0.49 2,000,000 2.1 0.30 2,000,000 0.30 $0.50 - $1.00 70,000 4.6 0.80 70,000 0.80 25,941,062 0.5 $ 0.08 25,941,062 $ 0.08 In the nine-month period ending September 30, 2019, pursuant to terms of convertible notes issued, the Company granted warrants to purchase 10,823,062 shares of common stock with an exercise price of $.05 to $0.18 per share, vesting immediately upon grant and expiring one year from the date of grant (see Note 5, above). In the nine-month period ending September 30, 2019, the Company issued warrants to purchase 99,999 shares of common stock with an exercise price of $0.24 per share, vesting over three months and expiring two years from the date of grant as compensation under an independent consulting agreement. Total fair value of the warrants at grant date was $17,000 using the Black-Scholes model with the following assumptions: life of 2.3 years; risk free interest rate of 1.75%; volatility of 153% and dividend yield of 0%. During the nine-month period ended September 30, 2019, warrants to acquire 3,501,493 shares of common stock were exercised resulting in net proceeds to the Company of $221,000. At September 30, 2019, the aggregate intrinsic value of the warrants outstanding was $1,060,000. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
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 | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 10. Subsequent Events Unregistered Sales of Equity Securities From September 23, 2019, through October 4, 2019, the Company issued and sold to accredited US investors an aggregate of $264,550 Convertible Promissory Notes (the “Notes”) and warrants to purchase an aggregate of 1,889,644 shares of common stock (the “Warrants”). The Company received proceeds from the closing of the private placement of $240,500, which funds were used, and are being used, for general corporate purposes and working capital. The Notes are due twelve (12) months from their respective issuance dates (the “Maturity Date”). The Notes do not bear interest and were issued in the face amount equal to 110% of the purchasers’ commitments. The Notes are convertible into shares of the Company’s common stock at a rate of $0.07 per share. If the Notes are not paid in full by the Maturity Date, the balance remaining on the Maturity Date shall be increased by 10% and the Company shall be required to pay interest at a rate of 10% per annum thereon until all sums thereunder are paid in full. The Warrants are exercisable into shares of the Company’s common stock for a term of one (1) year at an exercise price of $0.07 per share. The Warrants also contain provisions that protect the holders against dilution by adjustment of the conversion price in certain events involving a reduction or increase in the Company’s shares. The offering was made U.S. “accredited investors,” as the term is defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and were made without general advertising or solicitation. The securities sold in the offering were not registered under the Securities Act, or the securities laws of any state, and were offered and sold in reliance on exemptions from registration including the exemption from registration afforded by Section 4(a)(2) of the Securities Act and Regulation S promulgated under the Securities Act, and corresponding provisions of state securities law, which, respectively, exempt transactions by an issuer not involving any public offering or transactions with non-U.S. Investors. Conversion of Convertible Notes From October 1, 2019 up to November 13, 2019, Company issued 3,535,714 shares of common stock upon conversion of previously issued convertible notes in aggregate value of $247,500. Exercise of Warrants From October 1, 2019 up to November 13, 2019, Company issued 110,000 shares of common stock upon the exercise of previously issued warrants for aggregate cash proceeds of $5,500. Amendment to Employment Agreements Effective November 15, 2019, the Company amended the employment agreement of its President and Chief Executive Officer. Under this amendment the term of the agreement was extended for three months, expiring February 15, 2020, cash compensation was reduced to $0 per month, and the Company agreed to grant an option on the Effective Date to the employee to purchase 300,000 shares of Company restricted stock at an exercise price equal to the market closing price on the date of grant, vesting monthly at 100,000 shares per month, and expiring 10 years from the date of grant. The Company will value this option based upon market conditions on the date of grant at a value derived from the Black-Scholes Option Pricing model, which will be amortized over the three-month vesting period as a non-cash compensation expense. Effective November 15, 2020, the Company amended the employment agreement of its Chief Financial Officer. Under this amendment the term of the agreement is three months, expiring February 15, 2019. No other terms were modified under this amendment. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
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 nine-months ended September 30, 2019, the Company incurred a net loss of $4,728,000, used cash in operations of $2,284,000 and had a stockholders’ deficit of $1,871,000 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, 2018 financial statements, has raised substantial doubt about the Company's ability to continue as a going concern. At September 30, 2019, the Company had cash on hand in the amount of $505,000. Management estimates that the current funds on hand will be sufficient to continue operations through January 2020, or, subject to actual costs incurred implementing design modifications to our AOT demonstration project described in Part I, Item 2, October 2019. 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 2019 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 September 30, 2019 and 2018, 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. September 30, September 30, Options 39,450,603 35,351,300 Warrants 25,941,062 7,288,855 Common stock issuable upon conversion of notes payable 12,689,373 7,204,552 Total 78,081,038 49,844,707 |
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 Under its business plan, the Company anticipates the leasing of its primary technology. The Company will recognize lease revenue ratably over the life of the lease upon commencement of the lease. Revenue on future product sales will be recognized in accordance with Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that supersedes nearly all existing revenue recognition guidance under current U.S. GAAP and replaces it with a principle-based approach or 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. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and consist primarily of fees paid to consultants and outside service providers, and other expenses relating to the acquisition, design, development and testing of the Company’s products. Certain research and development activities are incurred under contract. In those instances, research and development costs are charged to operations ratably over the life of the underlying contracts, unless the achievement of milestones, the completion of contracted work, or other information indicates that a different expensing schedule is more appropriate. Payments made pursuant to research and development contracts are initially recorded as advances on research and development contract services in the Company’s consolidated balance sheet and then charged to research and development costs in the Company’s consolidated statement of operations as those contract services are performed. In January 2019, the Company paid $500,000 as a deposit under terms of a work order for work to be performed by a pipeline operator. During the period ended September 30, 2019, the Company amortized $450,000 of such amount as a research and development cost based on the progress of work performed as required by the contract, and has reflected the $50,000 remaining In August 2019, the Company paid $67,000 as a deposit on equipment to be installed at the demonstration site. The Company plans to amortize the full amount of this deposit as a research and development cost upon receipt and acceptance of the equipment currently scheduled for delivery during the fourth quarter of 2019. For the nine-month periods ended September 30, 2019 and 2018 research and development costs were $665,000 and $145,000, respectively. For the three-month periods ended September 30, 2019 and 2018 research and development costs were $82,000 and $50,000, respectively. |
Patent Costs | Patent Costs Patent costs consist of patent-related legal and filing fees. Due to the uncertainty associated with the development of our AOT, all patent costs are expensed as incurred. During the nine-month periods ended September 30, 2019 and 2018, patent costs were $2,000 and $15,000, respectively, which is included as part of operating expenses in the accompanying consolidated statements of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 Acc_3
2. Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Antidilutive shares | September 30, September 30, Options 39,450,603 35,351,300 Warrants 25,941,062 7,288,855 Common stock issuable upon conversion of notes payable 12,689,373 7,204,552 Total 78,081,038 49,844,707 |
4. Property and Equipment (Tabl
4. Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | September 30, December 31, Office equipment $ 36,000 $ 30,000 Furniture and fixtures 5,000 5,000 Testing Equipment 37,000 37,000 Leasehold Improvements 25,000 25,000 Subtotal 103,000 97,000 Less accumulated depreciation (78,000 ) (73,000 ) Total $ 25,000 $ 24,000 |
5. Convertible Notes (Tables)
5. Convertible Notes (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Notes and Warrants | September 30, (unaudited) December 31, 2018 Balance due on convertible notes $ 1,025,000 $ 1,886,000 Accrued interest 160,000 123,000 Subtotal 1,185,000 2,009,000 Convertible note discount (238,000 ) (1,100,000 ) Balance on convertible notes, net of note discounts $ 947,000 $ 909,000 |
8. Stock Options and Warrants (
8. Stock Options and Warrants (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |
Stock options outstanding | Options Weighted January 1, 2019 35,301,300 $ 0.22 Granted 4,687,500 0.08 Exercised (538,197 ) 0.13 Forfeited – – September 30, 2019 39,450,603 $ 0.20 |
Options outstanding by Per Share Price | Outstanding Options Exercisable Options Option Shares Life Weighted Shares Weighted $0.05 - $0.24 17,915,553 7.8 $ 0.10 16,808,783 $ 0.10 $0.25 - $0.49 20,913,552 2.5 0.27 20,913,552 0.27 $0.50 - $0.99 471,052 4.6 0.85 471,052 0.85 $1.00 - $2.00 150,446 3.8 1.18 150,446 1.18 39,450,603 5.0 $ 0.20 38,343,833 $ 0.21 |
Warrants outstanding | Warrants Weighted Avg. January 1, 2019 21,055,355 $ 0.09 Granted 10,922,062 0.07 Exercised (3,501,493 ) 0.06 Cancelled (2,534,862 ) 0.13 September 30, 2019 25,941,062 $ 0.08 |
Warrants outstanding by Per Share Price | Outstanding Warrants Exercisable Warrants Warrant Exercise Price Per Share Shares Life Weighted Shares Weighted $0.05 - $0.24 23,871,062 0.4 $ 0.06 23,871,062 $ 0.06 $0.25 - $0.49 2,000,000 2.1 0.30 2,000,000 0.30 $0.50 - $1.00 70,000 4.6 0.80 70,000 0.80 25,941,062 0.5 $ 0.08 25,941,062 $ 0.08 |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive shares excluded from EPS | 78,081,038 | 49,844,707 |
Options [Member] | ||
Antidilutive shares excluded from EPS | 39,450,603 | 35,351,300 |
Warrants [Member] | ||
Antidilutive shares excluded from EPS | 25,941,062 | 7,288,855 |
Convertible Notes [Member] | ||
Antidilutive shares excluded from EPS | 12,689,373 | 7,202,552 |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Net loss | $ (988,000) | $ (681,000) | $ (4,728,000) | $ (2,139,000) | ||||
Cash flow from operations | (2,284,000) | (1,098,000) | ||||||
Stockholders' deficit | (1,871,000) | (2,014,000) | (1,871,000) | (2,014,000) | $ (1,524,000) | $ (1,482,000) | $ (1,772,000) | $ (1,874,000) |
Cash on Hand | 505,000 | 279,000 | 505,000 | 279,000 | 1,153,000 | $ 204,000 | ||
Prepaid expenses and other current assets | 245,000 | 245,000 | $ 34,000 | |||||
Research and development costs | 82,000 | 50,000 | 665,000 | 145,000 | ||||
Operating expenses | 493,000 | $ 431,000 | 1,626,000 | 1,387,000 | ||||
Research And Development [Member] | Other Equipment [Member] | ||||||||
Payment for deposit | 67,000 | |||||||
Research And Development [Member] | Pipeline Operator [Member] | ||||||||
Payment for deposit | 500,000 | |||||||
Amortization of prepaid deposit | 450,000 | |||||||
Prepaid expenses and other current assets | $ 50,000 | 50,000 | ||||||
Patent Costs [Member] | ||||||||
Operating expenses | $ 2,000 | $ 15,000 |
3. Accrued Expenses and Accou_2
3. Accrued Expenses and Accounts Payable (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Accounts payable and accrued expenses | $ 500,000 | $ 658,000 |
Accrued salaries of officers and fees due to members of the Board of Directors | 5,000 | 55,000 |
Former Executive [Member] | Separation Agreement [Member] | ||
Accounts payable and accrued expenses | $ 237,000 | $ 327,000 |
4. Property and Equipment (Deta
4. Property and Equipment (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Property and equipment, gross | $ 103,000 | $ 97,000 |
Less: accumulated depreciation | (78,000) | (73,000) |
Property and equipment, net | 25,000 | 24,000 |
Office equipment [Member] | ||
Property and equipment, gross | 36,000 | 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 (De_2
4. Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 2,000 | $ 4,000 | $ 5,000 | $ 21,000 |
5. Convertible Notes (Details)
5. Convertible Notes (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Balance due on convertible notes | $ 1,025,000 | $ 1,886,000 |
Accrued Interest | 160,000 | 123,000 |
Convertible notes payable, gross | 1,185,000 | 2,009,000 |
Convertible note discount | (238,000) | (1,100,000) |
Balance on convertible notes, net of note discount | $ 947,000 | $ 909,000 |
5. Convertible Notes (Details N
5. Convertible Notes (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |||
Notes payable balance | $ 1,025,000 | $ 1,886,000 | |
Unamortized discount | 238,000 | 1,100,000 | |
Convertible notes, face amount | 1,485,000 | ||
Proceeds from convertible notes | 1,350,000 | $ 526,000 | |
Discount on notes issued | 135,000 | ||
Discount on fair value of warrants, BCF and OID | 1,350,000 | ||
Debt converted, amount converted | $ 2,354,000 | ||
Debt converted, shares issued | 42,271,760 | ||
Accrued penalty interest | $ 160,000 | 123,000 | |
Convertible notes outstanding, net | 947,000 | $ 909,000 | |
Debt in default | $ 484,000 |
6. Research and Development (De
6. Research and Development (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | $ 82,000 | $ 50,000 | $ 665,000 | $ 145,000 | |
Accounts payable - licensing agreement | 1,196,000 | 1,196,000 | $ 1,073,000 | ||
License revenue generated | 0 | 0 | 0 | 0 | |
Interest and financing expense | 413,000 | 200,000 | 2,437,000 | 607,000 | |
AOT Prototypes [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | 36,000 | 4,000 | 525,000 | 5,000 | |
Amortization of prepaid deposit | 450,000 | ||||
Prepaid expenses | 50,000 | 50,000 | |||
Temple University License Agreements [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Research and development expenses | 47,000 | $ 47,000 | 140,000 | 141,000 | |
Accounts payable - licensing agreement | 1,196,000 | 1,196,000 | $ 1,073,000 | ||
Interest and financing expense | 45,000 | $ 40,000 | |||
Temple University License Agreements [Member] | Accounts payable deferred [Member] | |||||
Research and Development Arrangement, Contract to Perform for Others [Line Items] | |||||
Accounts payable - licensing agreement | 135,000 | 135,000 | |||
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 | $ 1,061,000 | $ 1,061,000 |
7. Common Stock (Details Narrat
7. Common Stock (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Debt converted, shares issued | 42,271,760 | |
Debt converted, amount converted | $ 2,354,000 | |
Proceeds from warrant exercises | 292,000 | $ 647,000 |
Stock issued for services, value | $ 68,000 | $ 12,000 |
Stock issued for services [Member] | ||
Stock issued for services, shares issued | 250,000 | |
Stock issued for services, value | $ 68,000 | |
Convertible Notes Payable [Member] | ||
Debt converted, shares issued | 42,271,760 | |
Debt converted, amount converted | $ 2,354,000 | |
Warrant Exercises [Member] | ||
Stock issued upon the exercise of options or warrants, shares issued | 3,501,493 | |
Proceeds from warrant exercises | $ 221,000 | |
Options Exercises [Member] | ||
Stock issued upon the exercise of options or warrants, shares issued | 538,197 | |
Proceeds from options exercised | $ 71,000 |
8. Stock Options and Warrants_2
8. Stock Options and Warrants (Details-Options Outstanding) - Options [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Beginning Balance | shares | 35,301,300 |
Granted | shares | 4,687,500 |
Exercised | shares | (538,197) |
Forfeited | shares | 0 |
Ending Balance | shares | 39,450,603 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 0.22 |
Weighted Average Exercise Price, Granted | $ / shares | 0.08 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.13 |
Weighted Average Exercise Price, Forfeited | $ / shares | |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 0.20 |
8. Stock Options and Warrants_3
8. Stock Options and Warrants (Details-Options by Exercise Price Per Share) - Options [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Outstanding Options | ||
Options outstanding | 39,450,603 | 35,301,300 |
Life (Years), options outstanding | 3 months | |
Weighted Average Exercise Price, options outstanding | $ 0.20 | $ 0.22 |
Exercisable Options | ||
Options exercisable | 38,343,833 | |
Weighted Average Exercise Price, options exercisable | $ 0.21 | |
$0.05 - $0.24 [Member] | ||
Outstanding Options | ||
Options outstanding | 17,915,553 | |
Life (Years), options outstanding | 7 years 9 months 18 days | |
Weighted Average Exercise Price, options outstanding | $ 0.10 | |
Exercisable Options | ||
Options exercisable | 16,808,783 | |
Weighted Average Exercise Price, options exercisable | $ 0.10 | |
$0.25 - $0.49 [Member] | ||
Outstanding Options | ||
Options outstanding | 20,913,552 | |
Life (Years), options outstanding | 2 years 6 months | |
Weighted Average Exercise Price, options outstanding | $ 0.27 | |
Exercisable Options | ||
Options exercisable | 20,913,552 | |
Weighted Average Exercise Price, options exercisable | $ 0.27 | |
$0.50 - $0.99 [Member] | ||
Outstanding Options | ||
Options outstanding | 471,052 | |
Life (Years), options outstanding | 4 years 7 months 6 days | |
Weighted Average Exercise Price, options outstanding | $ 0.85 | |
Exercisable Options | ||
Options exercisable | 471,052 | |
Weighted Average Exercise Price, options exercisable | $ 0.85 | |
$1.00 - $2.00 [Member] | ||
Outstanding Options | ||
Options outstanding | 150,446 | |
Life (Years), options outstanding | 3 years 9 months 18 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 Warrants_4
8. Stock Options and Warrants (Details-Warrants Outstanding) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2019$ / sharesshares | |
Warrants outstanding, beginning balance | shares | 21,055,355 |
Warrants granted | shares | 10,922,062 |
Warrants exercised | shares | (3,501,493) |
Warrants cancelled | shares | (2,534,862) |
Warrants outstanding, ending balance | shares | 25,941,062 |
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 0.09 |
Weighted Average Exercise Price, Granted | $ / shares | 0.07 |
Weighted Average Exercise Price, Exercised | $ / shares | 0.06 |
Weighted Average Exercise Price, Cancelled | $ / shares | 0.13 |
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares | $ 0.08 |
8. Stock Options and Warrants_5
8. Stock Options and Warrants (Details-Warrant Exercise Price per Share) - Warrants [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Outstanding Warrants | ||
Warrants outstanding | 25,941,062 | 21,055,355 |
Life (Years), warrants outstanding | 6 months | |
Weighted Average Exercise Price, warrants outstanding | $ 0.08 | |
Exercisable Warrants | ||
Warrants exercisable | 25,941,062 | |
Weighted Average Exercise Price, warrants exercisable | $ 0.08 | |
$0.05-$0.24 Price Per Share [Member] | ||
Outstanding Warrants | ||
Warrants outstanding | 23,871,062 | |
Life (Years), warrants outstanding | 4 months 24 days | |
Weighted Average Exercise Price, warrants outstanding | $ .06 | |
Exercisable Warrants | ||
Warrants exercisable | 23,871,062 | |
Weighted Average Exercise Price, warrants exercisable | $ .06 | |
$0.25-$0.49 Price Per Share [Member] | ||
Outstanding Warrants | ||
Warrants outstanding | 2,000,000 | |
Life (Years), warrants outstanding | 2 years 1 month 6 days | |
Weighted Average Exercise Price, warrants outstanding | $ 0.30 | |
Exercisable Warrants | ||
Warrants exercisable | 2,000,000 | |
Weighted Average Exercise Price, warrants exercisable | $ 0.30 | |
$0.50-$1.00 Price Per Share [Member] | ||
Outstanding Warrants | ||
Warrants outstanding | 70,000 | |
Life (Years), warrants outstanding | 4 years 7 months 6 days | |
Weighted Average Exercise Price, warrants outstanding | $ 0.80 | |
Exercisable Warrants | ||
Warrants exercisable | 70,000 | |
Weighted Average Exercise Price, warrants exercisable | $ 0.80 |
8. Stock options and Warrants_6
8. Stock options and Warrants (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share based compensation expense | $ 275,000 | $ 340,000 | ||
Proceeds from warrant exercises | 292,000 | 647,000 | ||
Warrants [Member] | ||||
Aggregate intrinsic value of warrants outstanding | $ 1,060,000 | $ 1,060,000 | ||
Warrants granted | 10,922,062 | |||
Warrants exercised | 3,501,493 | |||
Proceeds from warrant exercises | $ 221,000 | |||
Warrants [Member] | Consulting Agreement [Member] | ||||
Warrants granted | 99,999 | |||
Fair value of warrants granted | $ 17,000 | |||
Warrants [Member] | Convertible Notes [Member] | ||||
Warrants granted | 10,823,062 | |||
Options [Member] | ||||
Options granted | 4,687,500 | |||
Option exercise price | $ 0.08 | |||
Share based compensation expense | 82,000 | $ 95,000 | $ 265,000 | $ 340,000 |
Aggregate intrinsic value of options outstanding | 453,000 | 453,000 | ||
Unamortized compensation expense | $ 82,000 | $ 82,000 | ||
Weighted average life of options | 3 months | |||
Options [Member] | Board of Directors [Member] | ||||
Options granted | 4,687,500 | |||
Option exercise price | $ 0.08 | |||
Fair value of options at grant date | $ 328,000 |