Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Jun. 01, 2020 | Jun. 30, 2019 | |
Cover [Abstract] | |||
Entity Registrant Name | DAIS Corp | ||
Entity Central Index Key | 0001125699 | ||
Document Type | 10-K/A | ||
Amendment Flag | true | ||
Amendment Description | Subsequent to the filing of the original SEC Form 10-K, we determined loss per common share, basic and diluted and weighted average number of common shares outstanding, basic and diluted as of December 31, 2019 was incorrect due to a computational miscalculation. Thus, several numbers within these financial statements change significantly. Note 3 to the financial statements (under Earnings (loss) per share) explains in detail the numbers that change and to what extent. Disclosure of these items in Management's Discussion and Analysis have also been corrected. No other information included in the Original Form 10-K is amended or changed by this Amendment. | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Common Stock Shares Outstanding | 278,128 | ||
Entity Public Float | $ 285,695 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity Interactive Data Current | Yes |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 4,083 | $ 29,300 |
Accounts receivable, net | 12,883 | 34,043 |
Other receivables | 34,144 | 14,348 |
Inventory | 91,281 | 53,184 |
Prepaid expenses | 32,362 | 48,654 |
Total Current Assets | 174,753 | 179,529 |
Property and equipment, net | 30,957 | 57,420 |
OTHER ASSETS: | ||
Deposits | 4,780 | 4,780 |
Patents, net | 146,135 | 150,842 |
Total Other Assets | 150,915 | 155,622 |
TOTAL ASSETS | 356,625 | 392,571 |
CURRENT LIABILITIES: | ||
Accounts payable, including related party payables of $280,247 and $165,076 at December 31, 2019 and 2018, respectively | 952,415 | 632,574 |
Accrued expenses, other, including interest due to related party of $444,476 and $261,901 at December 31, 2019 and 2018, respectively | 1,034,745 | 702,601 |
Accrued compensation and related benefits | 2,019,777 | 1,909,936 |
Customer deposits | 91,742 | 78,816 |
Notes payable to related parties | 1,832,600 | 1,332,000 |
Current portion of deferred revenue | 398,656 | 448,656 |
Derivative liabilities | 2,349,471 | 1,280,188 |
Convertible notes payable, net of unamortized debt discount and deferred debt issuance costs | 1,336,213 | 809,197 |
Total Current Liabilities | 10,015,619 | 7,193,968 |
Note payable - related party | 10,000 | |
Total Liabilities | 10,025,619 | 7,193,968 |
STOCKHOLDERS' DEFICIT | ||
Preferred Stock Value | 0 | 0 |
Common stock; $0.01 par value; 1,100,000,000 shares authorized; 278,757 and 74,910 shares issued and 278,128 and 74,281 shares outstanding at December 31, 2019 and 2018, respectively | 2,788 | 749 |
Capital in excess of par value | 45,976,660 | 44,797,156 |
Accumulated deficit | (54,186,330) | (50,137,190) |
Total | (8,206,882) | (5,339,285) |
Treasury stock at cost, 629 shares at December 31, 2019 and 2018, respectively | (1,462,112) | (1,462,112) |
Total Stockholders' Deficit | (9,668,994) | (6,801,397) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 356,625 | 392,571 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock Value | 0 | 0 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock Value | $ 0 | $ 0 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
CURRENT LIABILITIES: | ||
Accounts payable, Related party payables | $ 280,247 | $ 165,076 |
Accrued expenses, interest due to related party | $ 444,476 | $ 261,901 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 7,990,000 | 7,990,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, shares par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 278,757 | 74,910 |
Common stock, shares outstanding | 278,128 | 74,281 |
Treasury stock shares | 629 | 629 |
Preferred Class A [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred Class B [Member] | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, shares par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 10 | 0 |
Preferred stock, shares outstanding | 10 | 0 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
REVENUE | ||
Sales | $ 830,625 | $ 1,331,251 |
Royalty and license fees | 75,000 | 50,000 |
Total revenues | 905,625 | 1,381,251 |
COST OF GOODS SOLD | 600,213 | 921,394 |
GROSS MARGIN | 305,412 | 459,857 |
OPERATING EXPENSES | ||
Research and development, net of government grant proceeds of $89,994 and $64,894 for the years ended December 31, 2019 and 2018, respectively | 203,757 | 253,464 |
Selling, general and administrative | 1,369,037 | 1,862,024 |
TOTAL OPERATING EXPENSES | 1,572,794 | 2,115,488 |
LOSS FROM OPERATIONS | (1,267,382) | (1,655,631) |
OTHER INCOME (EXPENSE) | ||
Interest expense | (2,126,590) | (1,396,468) |
Change in fair value of derivative | (712,952) | (322,383) |
Gain on extinguishment of debt | 57,784 | 349,721 |
TOTAL OTHER EXPENSE, NET | (2,781,758) | (1,369,130) |
NET LOSS | $ (4,049,140) | $ (3,024,761) |
NET LOSS PER COMMON SHARE, BASIC AND DILUTED (restated) | $ (25.67) | $ (41.88) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED (Restated) | 157,771 | 72,229 |
STATEMENTS OF STOCKHOLDERS DEFI
STATEMENTS OF STOCKHOLDERS DEFICIT - USD ($) | Total | Common Stock | Capital in Excess of Par Value [Member] | Accumulated Deficit | Treasury Stock [Member] | Preferred Stock |
Balance, shares at Dec. 31, 2017 | 70,304 | |||||
Balance, amount at Dec. 31, 2017 | $ (4,165,451) | $ 703 | $ 44,408,387 | $ (47,112,429) | $ (1,462,112) | |
Sale of preferred stock, shares | 10 | |||||
Sale of preferred stock, amount | 15 | 15 | ||||
Issuance of common stock for services, shares | 3,000 | |||||
Issuance of common stock for services, amount | 300,000 | $ 30 | 299,970 | |||
Issuance of common stock for accrued expenses, shares | 1,000 | |||||
Issuance of common stock for accrued expenses, amount | 40,000 | $ 10 | 39,990 | |||
Issuance of common stock for debt issue costs, shares | 506 | |||||
Issuance of common stock for debt issue costs, amount | 42,800 | $ 5 | 42,795 | |||
Issuance of common stock for finance cost, shares | 100 | |||||
Issuance of common stock for finance cost, amount | 6,000 | $ 1 | 5,999 | |||
Net loss | (3,024,761) | (3,024,761) | ||||
Balance, shares at Dec. 31, 2018 | 74,910 | 10 | ||||
Balance, amount at Dec. 31, 2018 | (6,801,397) | $ 749 | 44,797,156 | (50,137,190) | (1,462,112) | |
Issuance of common stock for debt issue costs, amount | 954,646 | |||||
Issuance of common stock for finance cost, shares | 550 | |||||
Issuance of common stock for finance cost, amount | 10,000 | $ 6 | 9,994 | |||
Net loss | (4,049,140) | (4,049,140) | ||||
Shares issued upon conversion of debt, shares | 203,020 | |||||
Shares issued upon conversion of debt, amount | 954,646 | $ 2,030 | 952,616 | |||
Adjustment for fractions, amount | $ 3 | (3) | ||||
Adjustment for fractions, shares | 277 | |||||
Warrants issued for finance cost | 216,897 | 216,897 | ||||
Balance, shares at Dec. 31, 2019 | 278,757 | 10 | ||||
Balance, amount at Dec. 31, 2019 | $ (9,668,994) | $ 2,788 | $ 45,976,660 | $ (54,186,330) | $ (1,462,112) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (4,049,140) | $ (3,024,761) |
Adjustments to reconcile net loss to net cash and cash equivalents used by operating activities: | ||
Amortization of deferred debt issue costs | 48,094 | 38,803 |
Depreciation and amortization | 42,717 | 61,088 |
Change in fair value of derivative liability | 712,952 | 322,383 |
Non-cash interest expenses | 1,047,141 | 493,212 |
Amortization of debt discount | 664,329 | 343,883 |
Gain on extinguishment of debt | (57,784) | (349,721) |
Bad debt expense | 3,589 | |
Stock issued for finance cost | 6,000 | |
Legal fees paid through proceeds of notes payable | 150,000 | |
Stock compensation | 300,000 | |
(Increase) decrease in: | ||
Accounts receivable | 21,160 | (32,574) |
Inventory | (38,097) | 48,423 |
Other receivables | (19,796) | (10,750) |
Prepaid expenses/Other assets | 16,292 | (36,060) |
Increase (decrease) in: | ||
Accounts payable | 319,841 | 279,381 |
Accrued expenses | 461,275 | 579,639 |
Customer deposits | 12,926 | (41,763) |
Deferred revenue | (50,000) | (50,000) |
Net cash used in operating activities | (718,090) | (1,069,228) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Increase in patent costs | (11,547) | (54,744) |
Purchases of property and equipment | (5,100) | |
Net cash used in investing activities | (11,547) | (59,844) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable - related parties | 500,600 | |
Proceeds from note payable | 237,500 | 1,534,132 |
Repayments of notes | (33,680) | (497,796) |
Net cash provided by financing activities | 704,420 | 1,036,336 |
Net decrease in cash and cash equivalents | (25,217) | (92,736) |
Cash and cash equivalents, beginning of period | 29,300 | 122,036 |
Cash and cash equivalents, end of period | 4,083 | 29,300 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 7,311 | 195,210 |
NON-CASH FINANCING AND FINANCING ACTIVITIES | ||
Issuance of common stock upon conversion of notes and accrued interest | 954,646 | |
Payment of accrued expense with common stock | 40,000 | |
Notes and accrued interest converted to common stock | 328,011 | |
Debt costs deducted from proceeds of note | $ 20,000 | 31,750 |
Issuance of common stock for deferred debt issuance costs | $ 42,800 | |
Issuance of common stock for finance cost | 10,000 | 6,000 |
Issuance of warrants for debt modification | $ 216,897 | |
Initial derivative liability at issuance of notes | 1,112,125 | $ 907,969 |
Initial debt discount at issuance of notes | $ 393,994 | $ 816,750 |
Background Information
Background Information | 12 Months Ended |
Dec. 31, 2019 | |
Background Information | |
Note 1. Background Information | Dais Corporation (the “Company”), a New York corporation, has developed and is commercializing applications using its nanostructure polymer technology. The first commercial product, ConsERV TM TM The Company is dependent on third parties to manufacture the key components needed for its nanostructured based materials and some portion of the value-added products made with these materials. Accordingly, a suppliers’ failure to supply components in a timely manner, or to supply components that meet the Company’s quality, quantity and cost requirements or technical specifications, or the inability to obtain alternative sources of these components on a timely basis or on acceptable terms, would create delays in production of the Company’s products and/or increase its unit costs of production. Certain of the components or the processes of the Company’s suppliers are proprietary. If the Company was ever required to replace any of its suppliers, it should be able to obtain comparable components from alternative suppliers at comparable costs, but this would create a delay in production and may briefly affect the Company’s operations. On November 2, 2018, the shareholders of the Company approved an increase in the authorized common shares of the company from 240,000,000 shares to 340,000,000 shares. On March 14, 2019, the shareholders approved an increase in authorized common shares from 340,000,000 shares to 1,100,000,000 shares. In July 2019, the shareholders of the Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio ranging from one-for-500 to one-for-2,000. On October 31, 2019, the Company amended its Certificate of Incorporation to reflect a one-for-2,000 reverse stock split of the Company’s common stock. The reverse split was effective December 6, 2019. All share and per share data have been retroactively restated in the accompanying financial statements and footnotes to reflect the effects of the reverse split. |
Going Concern and Management's
Going Concern and Management's Plans | 12 Months Ended |
Dec. 31, 2019 | |
Going Concern and Management's Plans | |
Note 2. Going Concern and Management's Plans | The accompanying financial statements have been prepared assuming the Company will continue as a going concern. For the year ended December 31, 2019, the Company generated a net loss of $4,049,140 and has incurred significant losses since inception. As of December 31, 2019, the Company has an accumulated deficit of $54,186,330, total stockholders’ deficit of $9,668,994, negative working capital of $9,840,866 and cash and cash equivalents of $4,083. The Company used $718,090 and $1,069,228 of cash from operations during the years ended December 31, 2019 and 2018, respectively, which was funded primarily by proceeds from loans from related parties and equity financings. There is no assurance that any such financing will be available in the future. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently pursuing the following sources of short and long-term working capital: 1. The Company has select targeted parties that it is actively working with who are interested in licensing, purchasing the rights to, or establishing a joint venture to commercialize applications of the Company’s technology; 2. The Company continues to seek capital from certain strategic and/or government (grant) related sources. These sources may, pursuant to any agreements that may be developed in conjunction with such funding, assist in the product definition and design, roll-out and channel penetration of products; and 3. The Company is actively working with newer investors, private equity companies, purchase order financing parties, and its existing debt holders to restructure its existing debt, and obtain short and long-term working and growth capital. Any failure by the Company to timely procure additional financing or investment adequate to fund the ongoing operations, including planned product development initiatives and commercialization efforts, will have material adverse consequences on the Company’s financial condition, results of operations and cash flows as could any unfavorable terms. There are no assurances the Company will be able to obtain the financing and planned product development commercialization. Accordingly, the Company may not have the ability to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies | |
Note 3. Significant Accounting Policies | The significant accounting policies followed are: Use of estimates - Significant estimates underlying the Company’s reported financial position and results of operations include the allowance for doubtful accounts, fair value of stock-based compensation, fair value of derivative liabilities, valuation allowance on deferred taxes and the warranty reserve. Cash and cash equivalents - Accounts receivable - Concentrations - Other receivables - Fair Value of Financial Instruments - Inventory - Property and equipment - Intangible assets Long-lived assets - Government Funding – Research and development expenses and funding proceeds - Stock issuance costs - Common stock - Revenue recognition - In certain instances, the Company’s ConsERV system product may carry a limited warranty of up to one year for all parts contained therein except for the energy recovery ventilator core produced and sold by the Company. The distributor of the ConsERV system may carry a limited warranty of up to ten years. The limited warranty includes replacement of defective parts for the ConsERV system and includes workmanship and material failure for the ConsERV core. The Company recorded an accrual of $91,531 for future warranty expenses at December 31, 2019 and 2018, which is included in accrued expenses, other. Royalty revenue is recognized as earned. The Company recognized royalty revenue of $25,000 and $0 for the years ended December 31, 2019 and 2018, respectively. Revenue derived from the sale of licenses is deferred and recognized as license fee revenue on a straight-line basis over the life of the license, or until the license arrangement is terminated. The Company recognized license fee revenue of $50,000 for each of the years ended December 31, 2019 and 2018. The Company accounts for revenue arrangements with multiple elements under the provisions of the Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) Topic 605-25, “Revenue Recognition-Multiple-Element Arrangements.” In order to account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the licensee. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. In December 2017, the Company and Zhejiang MENRED Environmental Tech Co, Ltd., Zhejiang Province, China (“Menred”), entered into a License and Supply Agreement (the “Agreement”), effective December 21, 2017. Pursuant to the Agreement, the Company licensed certain intellectual property and improvements to Menred, for use in the manufacture and sale of energy recovery ventilators (“ERV”) and certain other HVAC systems for installation in commercial, residential or industrial buildings in China. Menred also agreed to purchase its requirements of certain products from the Company for Menred’s use, pursuant to the terms and conditions of the Agreement. Menred will also pay royalties, as defined, to the Company on a quarterly basis, based on price and production volume as provided by Menred. No royalties are due within the first year of the Agreement. Also pursuant to the Agreement, the Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The Agreement has a ten-year term with mutually agreed upon five-year extensions. Shipping and handling fees billed to customers are included in revenue. Shipping and handling fees associated with freight are generally included in cost of revenue. Derivative Liability Warranties - Stock based compensation There were no grants in 2019 or 2018. Fair Value Measurements The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 - Inputs that are both significant to the fair value measurement and unobservable. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company has recorded a derivative liability for its convertible notes which contain variable conversion prices. The table below summarizes the fair values of our financial liabilities as of December 31, 2019: Fair Value at December 31, Fair Value Measurement Using 2019 Level 1 Level 2 Level 3 Derivative liability $ 2,349,471 $ - $ - $ 2,349,471 The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows for the years ended December 31, 2019 and 2018: December 31, December 31, 2019 2018 Balance, beginning of year $ 1,280,188 $ 243,501 Additions 1,112,125 1,262,460 Extinguished derivative liability (755,794 ) (578,156 ) Change in fair value of derivative liabilities 712,952 322,383 $ 2,349,471 $ 1,280,188 Income taxes - The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s 2016 through 2019 tax years remain open and subject to examination by the Internal Revenue Service. Earnings (loss) per share Error in accounting for earnings (loss) per common share, basic and diluted and weighted average number of common shares outstanding, basic and diluted for the year ended December 31, 2019: Subsequent to the filing of the original SEC Form 10-K we determined loss per common share, basic and diluted and weighted average number of common shares outstanding, basic and diluted as of December 31, 2019 was incorrect due to a computational miscalculation. In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements Year ended December 31, 2019 As Reported Corrections As Restated Net loss per common share, basic and diluted $ (19.20 ) $ (6.47 ) $ (25.67 ) Weighted average number of common shares outstanding, basic and diluted 210,940 (53,169 ) 157,771 Recent Accounting Pronouncements - In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this ASU did not have a material effect on the Company's financial statements. In December 2019, the FASB issued ASU 2019-12, “ Simplifying the Accounting for Income Taxes |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Note 4. Property and Equipment | Property and equipment consist of the following: December 31, 2019 2018 Furniture and fixtures $ 20,966 $ 20,966 Computer equipment and software 21,761 21,761 Demonstration equipment 92,733 92,733 Office and lab equipment 308,949 308,949 Leasehold improvements 14,808 14,808 Property and equipment, gross 459,217 459,217 Less accumulated depreciation 428,260 401,797 Property and equipment, net $ 30,957 $ 57,420 |
Accrued Expenses, Other
Accrued Expenses, Other | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Expenses, Other | |
Note 5. Accrued Expenses, Other | Accrued expenses, other consists of the following: December 31, 2019 2018 Accrued expenses, other $ 166,158 $ 174,489 Accrued interest 777,056 436,581 Accrued warranty costs 91,531 91,531 $ 1,034,745 $ 702,601 |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Note 6. Related Party Transactions | The Company rents a building that is owned by two stockholders of the Company, one of which is the Chief Executive Officer. Rent expense for this building is $4,066 per month, including sales tax. The Company recognized rent expense (including property tax charges) related to this lease of $57,565 and $56,760 for the years ended December 31, 2019 and 2018, respectively. The lease term will terminate upon 30 days’ written notice from landlord or 90 days written termination from us. The Company has accrued compensation due to the Chief Executive Officer as of December 31, 2019 and 2018 of $1,882,464 and $1,772,623, respectively, included in accrued compensation and related benefits in the accompanying balance sheets. On June 24, 2016, the Company entered into a Loan and Security Agreement (“Security Agreement”) with Patricia Tangredi (the “Holder”) pursuant to which the Company issued a Senior Secured Promissory Note for $150,000 (the “Note”). The interest rate is 12% per annum compounded daily with a minimum interest payment of $2,000. The Note grants the Holder a secured interest in the assets of the Company. Ms. Tangredi is the wife of Timothy N. Tangredi, the Company’s CEO and stockholder, and therefore is a related party of the Company. Pursuant to the Note, the Company is to pay the Holder the principal amount of $150,000 plus all interest due thereon in accordance with terms and conditions of the Security Agreement on the earlier of: (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) October 31, 2016 (the “Maturity Date”). During 2016 to the period ended December 31, 2019, the Holder extended the Note pursuant to various amendments. Pursuant to the amendments, the principal amount due was increased to $1,822,600 with an extended maturity date of January 30, 2020. As consideration for the additional proceeds and modification of the maturity date, the Company issued to the related party warrants to purchase an aggregate of 239,125 shares of common stock with a weighted average exercise price of $3.41 with a ten year exercise period, from the date of issuance and 240 shares of common stock in 2017, valued at $17,200, of which $15,400 was recorded against debt due to related party. On January 28, 2019, the Holder further extended the Note pursuant to an amendment. The maturity date was extended to April 8, 2019, effective as of November 16, 2018. As consideration for the additional extension of the maturity date, the Company issued a warrant to purchase 1,000 shares of common stock with an exercise price of $20 and a ten-year exercise period. The Company calculated the relative fair value of the warrant as $25,320, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.75%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company's common stock of 244%; and (4) an expected life of 10 years. The fair value of the warrant was charged to expense as finance cost. During the three months ended June 30, 2019 the maturity date was extended twice, to May 30, 2019 and then to August 20, 2019. The Company also received additional proceeds of $100,000. As consideration for the additional extensions of the maturity date and the additional proceeds, the Company issued warrants to purchase 20,000 shares of common stock with an exercise price of $20 and a ten-year exercise period. The Company calculated the relative fair value of the warrants as $141,844, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.46%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company's common stock of 246%; and (4) an expected life of 10 years. The fair value of the warrants was charged to expense as finance cost. During the three months ended September 30, 2019 the maturity date was extended to November 21, 2019. The Company also received additional proceeds of $91,500. As consideration for the additional extension of the maturity date and the additional proceeds, the Company issued warrants to purchase 5,000 shares of common stock with an exercise price of $20 and a ten-year exercise period. The Company calculated the relative fair value of the warrants as $17,734, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 1.49%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company's common stock of 255%; and (4) an expected life of 10 years. The fair value of the warrants was charged to expense as finance cost. During the three months ended December 31, 2019 the maturity date was extended to January 30, 2020. The Company also received additional proceeds of $230,100. As consideration for the additional extension of the maturity date and the additional proceeds, the Company issued warrants to purchase 200,000 shares of common stock with an exercise price of $0.16 and a ten-year exercise period. The Company calculated the relative fair value of the warrants as $31,999, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 1.49%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company's common stock of 255%; and (4) an expected life of 10 years. The fair value of the warrants was charged to expense as finance cost. As of the date of filing, the note is being further negotiated to extend the maturity date. The Company is using the proceeds of the Note and related amendments for working capital purposes. Interest expense on the Note was $182,425 and $159,842 for the years December 31, 2019 and 2018, respectively. Accrued interest on the Note was $444,326 and $261,901 at December 31, 2019 and 2018, respectively. During May 2019 Dais Holdings Corp. (Dais Holdings”) was formed in Vancouver, B.C. and is wholly owned by our Chief Executive Officer. Dais Holdings’ purpose is to facilitate debt financing in Europe. The intent is for Dais Holdings to enter into the debt transactions. It will then immediately loan any proceeds received to the Company on the same or similar terms as the European debt. To date, Dais Holdings has not entered into any transactions and Dais Corporation has not received any funding from Dais Holdings. The Company has paid the professional and other fees for setting up the Dais Holdings structure, aggregating $150,000. Ultimately, Dais Corporation will benefit from the Dais Holdings capital raise activities, and therefore has borne the cost. The costs have been expensed as incurred. On October 12, 2019, the Company entered into a promissory note with an entity controlled by our Chief Executive Officer in the amount of $10,000. The note bears interest at 10% per year and matures on October 12, 2021. Accrued interest at December 31, 2019 is $150. On February 27, 2015, the Company, and Timothy N. Tangredi, the Company’s Chief Executive Officer entered into an amendment (the “Tangredi Employment Agreement Amendment”) to Mr. Tangredi’s Amended and Restated Employment Agreement. Currently, the Company has non-interest-bearing accrued compensation due to the Chief Executive Officer for deferred salaries earned and unpaid as described above. The Tangredi Employment Agreement Amendment provides that, if at any time during a calendar year, the unpaid compensation is greater than $500,000, Mr. Tangredi must convert $100,000 of unpaid compensation into the Company’s common stock during such calendar year. The conversion rate shall be equal to 75% of the average closing price for the Company’s common stock for the 30 trading days prior to the date of conversion. The Company shall also pay to Mr. Tangredi a cash payment equal to 20% of the compensation income incurred because of the conversion. The Company has waived the conversion requirement from 2015 to the present. See Note 12 Commitments and Contingencies for further disclosure of the terms of Mr. Tangredi’s employment agreement. Further, at any time any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act) of greater of 40% of the then-outstanding voting power of the voting equity interests of the Company or a person or group initiate a tender offer for the Company’s common stock, Mr. Tangredi may convert unpaid compensation into Class A Convertible Preferred Stock (“Class A Preferred Stock”) of the Company at a conversion price of $1.50 per share. The Board of Directors waived the requirement to convert $100,000 of unpaid compensation into common stock during 2016. No amounts have been converted under the terms of the Tangredi Employment Agreement Amendment to date. The above terms and amounts are not necessarily indicative of the terms and amounts that would have been incurred had comparable transactions been entered into with independent parties. |
Equity Transactions
Equity Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Equity Transactions | |
Note 7. Equity Transactions | Preferred Stock At December 31, 2019 and 2018, the Company’s Board of Directors has authorized 10,000,000 shares of preferred stock with a par value of $0.01 to be issued in series with terms and conditions to be determined by the Board of Directors. 2,000,000 of the shares of preferred stock has been designated as Class A Preferred Stock. The Class A Preferred Stock shall entitle the holder thereof to 150 votes on all matters submitted to a vote of the stockholders of the Company. 10,000 of the shares of preferred stock has been designated as Class B Preferred Stock. The Class A Preferred Stock shall entitle the holder thereof to 150 votes on all matters submitted to a vote of the stockholders of the Company. The Class B Stock includes the right to vote in an amount equal to 51% of the votes to approve certain corporate actions, including, without limitation, changing the name of the Company and increasing the number of authorized shares. On November 1, 2018, the Company issued ten shares of Class B Redeemable Preferred Stock par value $0.01 per share (“Class B Stock”) having a stated value of $1.50 per share to Timothy N. Tangredi, the Company’s Chief Executive Officer, in exchange for $15, pursuant to approval of the Board of Directors of the Company. Upon any liquidation, dissolution or winding up of the Company, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Class A or Class B Preferred Stock unless, prior thereto, the holders of shares of Class A or Class B Preferred Stock shall have received $1.50 per share (the “Stated Amount”). The Class A and Class B Preferred Stock shall rank, with respect to the payment of liquidation, dividends and the distribution of assets, senior to the Company’s Common Stock. The Holder (as defined in the Class A Preferred Stock certificate of designations) of the Class A Preferred Stock may convert all or part of the outstanding and unpaid Stated Amount (as defined in the Class A Preferred Stock certificate of designations) into fully paid and non-assessable shares of the Company’s common stock at the Conversion Price (as defined in the Class A Preferred Stock certificate of designations). The number of shares receivable upon conversion equals the Stated Amount divided by the Conversion Price. The Conversion Price shall be equal to the 75% of the average closing price for the 30 trading days prior to the election to convert. At no time will the Company convert any of the Stated Amount into common stock if that would result in the Holder beneficially owning more than 49% of the sum of the voting power of the Company’s outstanding shares of common stock plus the voting power of the Class A Preferred Stock. No shares of Class A Preferred Stock have been issued. The shares of the Class B Preferred Stock shall be automatically redeemed by the Company at $0.01 per share on the date that Timothy N. Tangredi ceases, for any reason, to serve as an officer, director, or consultant of the Company. Common Stock At December 31, 2019, the Company’s Board of Directors has authorized 1,100,000,000 shares of common stock with a par value of $0.01 to be issued in series with terms and conditions to be determined by the Board of Directors. On November 2, 2018, the shareholders of the Company approved an increase in the authorized common shares of the company from 240,000,000 shares to 340,000,000 shares. On March 14, 2019, the shareholders approved an increase in authorized common shares from 340,000,000 shares to 1,100,000,000 shares. In July 2019, the shareholders of the Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio ranging from one-for-500 to one-for-2,000. On October 31, 2019, the Company amended its Certificate of Incorporation to reflect a one-for-2,000 reverse stock split of the Company’s common stock. The reverse split was effective December 6, 2019. All share and per share data have been retroactively restated in the accompanying financial statements and footnotes to reflect the effects of the reverse split. 2019 Transactions: During the year ended December 31, 2019, the Company issued 203,020 shares of common stock with a value of $954,646 upon the conversion of $286,960 principal amount of notes and related accrued interest and costs of $41,051. During the year ended December 31, 2019, the Company issued 550 shares of common stock, valued at $10,000, as a finance cost. 2018 Transactions: On March 19, 2018, the parties amended the Loan and Security Agreement (“Thirteenth Amendment”) whereby the Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) April 10, 2018. The Company is further obligated to issue 10 shares of common stock valued at $800. The obligations to issue shares of common stock were recorded as interest expense and current liabilities at December 31, 2018. On April 23, 2018, the Company entered into a consulting agreement with an outside business consultant. Under the terms of the consulting agreement, services commenced on April 23, 2018 and continued for three months. The Company issued to the consultant 1,500 shares of common stock, valued at $120,000. All shares earned under the agreement are considered earned in full and beneficially owned as of April 25, 2018. On May 7, 2018, the parties amended the Loan and Security Agreement (“Fourteenth Amendment”) whereby the Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) May 22, 2018. The Company is further obligated to issue 10 shares of $0.01 par value common stock valued at $600. The obligations to issue shares of common stock were recorded as interest expense and current liabilities at December 31, 2018. On May 15, 2018, the Company issued 1,000 shares of common stock as consideration towards past services rendered, valued at $40,000, in accordance with the License and Supply Agreement with Zhejiang MENRED Environmental Tech Co, Ltd. effective December 21, 2017. The value of the shares issued was included in accrued expenses at December 31, 2017. On June 15, 2018, the Company issued 1,500 shares of common stock, valued at $180,000, pursuant to an agreement with an outside business consultant. On June 20, 2018, the Company issued 74 shares of common stock, valued at $8,925, as further incentive to an outside investor to issue a convertible note with a face amount of $89,250. (See Note 8. – Convertible Notes Payable). On July 11, 2018, the Company issued 100 shares of common stock, valued at $14,000, as further incentive to an outside investor to issue a convertible note with a face amount of $100,000. (See Note 8. – Convertible Notes Payable). On July 31, 2018, the parties amended the Loan and Security Agreement (“Fifteenth Amendment”) whereby the Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) August 22, 2018. The Company is further obligated to issue 10 shares of $0.01 par value common stock valued at $1,200. The obligations to issue shares of common stock were recorded as interest expense and current liabilities at December 31, 2018. On October 1, 2018, the Company issued 100 shares of common stock, valued at $6,000, as further incentive to an outside investor to continue to issue convertible notes. On October 31, 2018, the parties amended the Loan and Security Agreement (“Fifteenth Amendment”) whereby the Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) November 16, 2018. The Company is further obligated to issue 10 shares of $0.01 par value common stock valued at $600. The obligations to issue shares of common stock were recorded as interest expense and current liabilities at December 31, 2018. On December 1, 2018, the Company issued 332 shares of common stock, valued at $19,875, as further incentive to an outside investor to issue two convertible notes with a face amount of $210,000. (See Note 7. – Convertible Notes Payable). |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Convertible Notes Payable | |
Note 8. Convertible Notes Payable | The Company’s convertible promissory notes at December 31, 2019 and 2018 are as follows: December 31, 2019 December 31, 2018 Convertible notes payable, bearing interest at 8- 10% $ 1,453,960 $ 1,284,250 Unamortized debt discount (101,899 ) (440,315 ) Unamortized deferred debt issuance cost (5,848 ) (34,738 ) Total 1,346,213 809,197 Current portion $ 1,346,213 $ 809,197 2019 Transactions February 2019 Note On February 20, 2019, the Company issued a convertible note with a face amount of $155,000. The note and related accrued interest are convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price of 60% of the lowest trading price for 15 days prior to conversion. The note bears interest at 8% per year and matures on February 20, 2020. The note contains original issue discount aggregating $12,500 which is being amortized over the life of the note. The Company has also agreed to issue 1,100,000 shares of common stock with a value of $10,000 in connection with the note. The shares have been valued at $10,000. This cost will also be amortized over the life of the note. The Company received cash proceeds of $142,500. March 2019 Note On March 26, 2019, the Company issued a convertible note with a face amount of $78,750. The note and related accrued interest are convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price of 60% of the lowest trading price for 15 days prior to conversion. The note bears interest at 8% per year and matures on March 7, 2020. The note included legal costs of $3,750 which were deducted from the proceeds and which will be amortized over the life of the note. Proceeds of $75,000 were used for legal fees and were disbursed directly to the attorney. July 2019 Notes On July 3, 2019, the Company issued a convertible note with a face amount of $100,000. The note and related accrued interest are convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price of 60% of the lowest trading price for 15 days prior to conversion. The note bears interest at 8% per year and matures on July 3, 2020. The note included legal costs of $5,000 which were deducted from the proceeds and which will be amortized over the life of the note. The Company received cash proceeds of $95,000. On July 18, 2019, the Company issued a convertible note with a face amount of $78,750. The note and related accrued interest are convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price of 60% of the lowest trading price for 15 days prior to conversion. The note bears interest at 8% per year and matures on March 7, 2020. The note included legal costs of $3,750 which were deducted from the proceeds and which will be amortized over the life of the note. Proceeds of $75,000 were used for legal fees and were disbursed directly to the attorney. During the year ended December 31, 2019, the Company amortized $292,094 of debt discount and $16,651 of debt issue costs to interest expense. At December 31, 2019, unamortized debt discount was $101,899 and unamortized debt issue costs were $5,848. Unamortized debt discount and debt costs of $68,079 and $3,295, respectively, were charged against gain on extinguishment of debt at the time of redemption. 2018 Notes The company entered various convertible notes during 2018, aggregating $1,041,460 at December 31, 2019. The notes all matured during 2019. Three notes that came due during the period were extended to August 15, 2019. Pursuant to the terms of the extensions, we have agreed to issue one million shares of common stock for each month that the notes are outstanding, commencing in April 2019. The shares have not been issued at December 31, 2019. We have accrued $34,323 as interest expense during 2019 for the 13,000 shares due for the extensions. All notes are currently being renegotiated. During the year ended December 31, 2019, the Company amortized $372,236 of debt discount and $31,443 of debt issue costs to interest expense. Unamortized debt discount and debt costs of $68,079 and $3,296, respectively, were charged against gain on extinguishment of debt at the time of redemption. During 2018, the Company amortized $343,882 of debt discount and $38,803 of debt issue costs to interest expense. Unamortized debt discount and debt costs of $134,219 and $5,554, respectively, were charged against gain on extinguishment of debt at the time of redemption. At December 31, 2018, unamortized debt discount was $440,315 and unamortized debt issue costs were $34,738. Debt conversions During the year ended December 31, 2019, the Company issued 203,020 shares of common stock with a value of $954,646 upon the conversion of $286,960 principal amount of notes and related accrued interest and costs of $41,051. The Company also made a cash payment of $33,680 against principal. In addition, $755,794 of derivative liability was extinguished. The company recorded gain on extinguishment of debt of $57,784. |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Liabilities | |
Note 9. Derivative Liabilities | The Company has identified certain embedded derivatives related to its convertible notes. Since the notes are convertible into a variable number of shares or have a price reset feature, the conversion features of those notes are recorded as derivative liabilities. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date and to adjust to fair value as of each subsequent balance sheet date. 2019 Notes February 2019 Note The Company identified embedded derivatives related to the conversion features of the February 2019 Note. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the note and to adjust the fair value as of each subsequent balance sheet date. The Company calculated the fair value of the embedded derivative at the inception of the note as $213,517, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.54%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 240%; and (4) an expected life of 1 year. The initial fair value of the embedded debt derivative was allocated $142,500 as debt discount, which will be amortized to interest expense over the original term of the note, with the balance of $71,017 charged to expense at issue date as non-cash interest expense. March 2019 Note The Company identified embedded derivatives related to the conversion features of the March 2019 Note. The Company calculated the fair value of the embedded derivative at the inception of the note as $103,009, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.4%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 223%; and (4) an expected life of 11 months. The initial fair value of the embedded debt derivative was allocated $78,750 as debt discount, which will be amortized to interest expense over the original term of the note, with the balance of $24,259 charged to expense at issue date as non-cash interest expense. June 2019 Derivative Addition On June 5, 2019, a note that previously had a fixed conversion price became a variable conversion price note. As a result, we have recorded a derivative liability on that date. The Company calculated the fair value of the embedded derivative as $205,808, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.35%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 311%; and (4) an expected life of 3 months. This amount has been charged to expense as non-cash interest expense. July 2019 Notes The Company identified embedded derivatives related to the conversion features of the July 3, 2019 Note. The Company calculated the fair value of the embedded derivative at the inception of the note as $81,494, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.54%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 240%; and (4) an expected life of 1 year. The initial fair value of the embedded debt derivative was allocated $81,494 as debt discount, which will be amortized to interest expense over the original term of the note. The Company identified embedded derivatives related to the conversion features of the July 18, 2019 Note. The Company calculated the fair value of the embedded derivative at the inception of the note as $166,842, using the Black Scholes Model based on the following assumptions: (1) risk free interest rate of 2.01%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 312%; and (4) an expected life of 7.5 months. The initial fair value of the embedded debt derivative was allocated $78,750 as debt discount, which will be amortized to interest expense over the original term of the note, with the balance of $88,092 charged to expense at issue date as non-cash interest expense. The Company has recorded additions to the derivative conversion liabilities related to the conversion feature attributable to interest accrued during the period. These additions totaled $82,154 for the year ended December 31, 2019 and were charged to interest expense. During the year ended December 31, 2019, the Company recorded expense of $534,539 related to the change in the fair value of the derivatives. The fair value of the embedded derivative was $1,506,684 at December 31, 2019, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 1.51% - 1.6%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 537% - 751%; and (4) an expected life of 2 – 6 months. During the year ended December 31, 2019, the Company issued 25,079 shares of common stock upon the conversion of $9,800 principal amount of notes and related accrued interest and costs of $3,600. As a result of the conversions and payment, derivative liability in the amount of $47,372 was extinguished. We recorded gain on extinguishment of debt of $57,784 during 2019. 2018 Notes The Company identified embedded derivatives related to the conversion features of the various 2018 notes. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the Dais derivatives as of the inception date of the note and to adjust the fair value as of each subsequent balance sheet date. The Company has recorded additions to the derivative conversion liabilities related to the conversion feature attributable to interest accrued during the periods. These additions totaled $92,608 and 51,734 for the years ended December 31, 2019 and 2018, respectively, and were charged to interest expense. During the year ended December 31, 2019, the Company recorded expense of $178,413 related to the change in the fair value of the derivatives. The fair value of the embedded derivative was $842,787 at December 31, 2019, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 1.6%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 537%; and (4) an expected life of 6 months. During the year ended December 31, 2018, the Company recorded expense of $322,383 related to the change in the fair value of the derivatives. The fair value of the embedded derivative was $1,280,188 at December 31, 2018, determined using the Black Scholes Model with the following assumptions: (1) risk free interest rate of 2.56% – 2.63%; (2) dividend yield of 0%; (3) volatility factor of the expected market price of the Company’s common stock of 217% - 232%; and (4) an expected life of 5 – 11 months. During the year ended December 31, 2019, the Company issued 177,941 shares of common stock upon the conversion of $277,160 principal amount of notes and related accrued interest and costs of $37,451 and made a cash principal payment of $33,680. As a result of the conversions and payment, derivative liability in the amount of $708,422 was extinguished. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2019 | |
Stock Options and Warrants | |
Note 10. Stock Options and Warrants | Options In June 2000 and November 2009, the Company’s Board of Directors adopted, and the shareholders approved, the 2000 Plan and 2009 Plan, respectively (together the “Plans”). The Plans provide for the granting of options to qualified employees of the Company, independent contractors, consultants, directors, and other individuals. The Company’s Board of Directors approved and made available 5,547 and 7,500 shares of common stock to be issued pursuant to the 2000 Plan and the 2009 Plan, respectively. On February 27, 2015, the shareholders approved the Dais Analytic Corporation 2015 Stock Incentive Plan (the “2015 Plan”). The number of shares of common stock reserved for issuance under the 2015 Plan is 5,000. The Plans and the 2015 Plan permit grants of options to purchase common shares authorized and approved by the Company’s Board of Directors. The shares authorized by the Plans have been reduced pursuant to the one-for-2,000 reverse stock split effective December 6, 2019. There were no stock options issued during the year ended December 31, 2019 and 2018. The following summarizes the information relating to outstanding stock options activity during 2019 and 2018: Common Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2017 13,446 $ 500.00 6.42 $ - Granted - - Forfeited or expired (1,000 ) 320.00 Outstanding at December 31, 2018 12,446 343.37 5.5 $ - Granted - - Forfeited or expired (1,932 ) 837.15 Outstanding at December 31, 2019 10,514 $ 252.61 5.5 $ - Exercisable at December 31, 2019 10,514 $ 252.61 5.5 $ - Stock compensation expense related to options was $0 for the years ended December 31, 2019 and 2018. As of December 31, 2019, there was no unrecognized employee stock-based compensation expense related to non-vested stock options. Warrants At December 31, 2019, the Company had outstanding warrants to purchase the Company’s common stock which were issued in connection with multiple financing arrangements and consulting agreements. Information relating to these warrants is summarized as follows: Number of Shares Weighted Average Remaining Life (Years) Weighted Average Exercise Price Warrants at December 31, 2017 13,730 9.29 $ 60.00 Granted - - Forfeited or expired (605 ) 960.00 Warrants at December 31, 2018 13,125 8.70 $ 20.00 Granted 226,000 2.44 Forfeited or expired - - Warrants at December 31, 2019 239,125 9.77 $ 3.41 |
Deferred Revenue
Deferred Revenue | 12 Months Ended |
Dec. 31, 2019 | |
Deferred Revenue | |
Note 11. Deferred Revenue | In December 2017, the Company and Zhejiang MENRED Environmental Tech Co, Ltd., Zhejiang Province, China (“Menred”), entered into a License and Supply Agreement (the “License and Supply Agreement”), effective December 21, 2017. Pursuant to the License and Supply Agreement, the Company licensed certain intellectual property and improvements to Menred, for use in the manufacture and sale of energy recovery ventilators (“ERV”) and certain other HVAC systems for installation in commercial, residential or industrial buildings in China. Menred also agreed to purchase its requirements of certain products from the Company for Menred’s use, pursuant to the terms and conditions of the License and Supply Agreement. Menred will also pay royalties, as defined, to the Company on a quarterly basis, based on price and production volume as provided by Menred. No royalties are due within the first year of the License and Supply Agreement. Also pursuant to the License and Supply Agreement, the Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The License and Supply Agreement has a ten-year term with mutually agreed upon five-year extensions. The Company recognized license revenue of $50,000 for each of the years ended December 31, 2019 and 2018. Deferred revenue for the agreement was $398,656 and $448,656 at December 31, 2019 and 2018, respectively. The Company recognized royalty revenue of $25,000 and $0 for the years ended December 31, 2019 and 2018, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Note 12. Commitments and Contingencies | The Company has employment agreements with some of its key employees and executives. These agreements provide for minimum levels of compensation during current and future years. In addition, these agreements call for grants of stock options and for payments upon termination of the agreements. The Company entered into an amended and restated employment agreement with Mr. Timothy N. Tangredi, the Company’s President, Chief Executive Officer, and director, dated as of September 14, 2011. Mr. Tangredi’s employment agreement provides for an initial term of three years commencing on September 14, 2011 with the term extending on the second anniversary thereof for an additional two-year period and on each subsequent anniversary of the commencement date for an additional year. Mr. Tangredi’s initial base salary is $200,000. Mr. Tangredi’s base salary shall be increased annually, if applicable, by a sum equal to his current base salary multiplied by one third of the percentage increase in the Company’s yearly revenue compared to the Company’s prior fiscal year revenue; provided however any annual increase in Mr. Tangredi’s base salary shall not exceed a maximum of 50% for any given year. Any further increase in Mr. Tangredi’s base salary shall be at the sole discretion of the board of directors or compensation committee (if applicable). Additionally, at the discretion of the Company’s board of directors and its compensation committee, Mr. Tangredi may be eligible for an annual bonus, if any, of up to 100% of his then-effective base salary, if he meets or exceeds certain annual performance goals established by the board of directors. In addition to this bonus, Mr. Tangredi may be eligible for a separate merit bonus if approved by the board of directors, for specific extraordinary events or achievements such as a sale of a division, major license or distribution arrangement or merger. Mr. Tangredi is entitled to medical, disability and life insurance, as well as six weeks of paid time off annually, an automobile allowance, reimbursement of all reasonable business expenses, automobile insurance and maintenance, and executive conference or educational expenses. Under his employment agreement, in addition to any other compensation which he may receive, if the Company completes a secondary public offering, Mr. Tangredi will be granted an option to purchase up to 260 shares of the Company’s common stock with an exercise price equal to the fair market value per share on the date of grant. This option will become vested and exercisable in thirds, with one third vested upon grant, another third at the one-year anniversary of the grant, and another third upon the second anniversary of the grant. The option shall have a term of ten years, shall be exercisable for up to three years after termination of employment (unless termination is for cause, in which event it shall expire on the date of termination), shall have a “cashless” exercise feature, and shall be subject to such additional terms and conditions as are then applicable to options granted under such plan provided they do not conflict with the terms set forth in the agreement. If Mr. Tangredi’s employment is terminated for any reason, the Company’s will be obligated to pay him his accrued but unpaid base salary, bonus and accrued vacation pay, and any unreimbursed expenses (“Accrued Sums”). In addition to any Accrued Sums owed, if Mr. Tangredi’s employment is terminated by the Company in the event of his disability or without cause or by Mr. Tangredi for good reason, he shall be entitled to: (i) an amount equal to the sum of (A) the greater of 150% of the base salary then in effect or $320,000 plus (B) the cash bonus and/or merit bonus, if any, awarded for the most recent year; (ii) health and life insurance, a car allowance and other benefits set forth in the agreement until two years following termination of employment, and thereafter to the extent required by COBRA or similar statute; and (iii) all stock options, to the extent they were not exercisable at the time of termination of employment, shall become exercisable in full. In addition to any Accrued Sum owed, in the event of termination upon death, Mr. Tangredi shall be entitled to (i) and (iii) above. In addition to any Accrued Sums owed, in the event that Mr. Tangredi elects to terminate employment within one year following a change in control, he shall receive a lump sum payment equal to the sum of (a) the greater of his then current base salary or $210,000 plus (b) the cash bonus and merit bonus, if any, awarded in the most recent year. In addition, he will be entitled to (ii) and (iii) above. The employment agreement also contains customary covenants restricting the use of the Company’s confidential information and solicitation of employees, which are similarly applicable to other executive officers. In addition the Company is obligated to indemnify Mr. Tangredi for any claims made against him in connection with his employment with the Company, to advance indemnification expenses, and maintain his coverage under the Company’s directors’ and officers’ liability insurance policy. Under the employment agreement, the Company and Mr. Tangredi have agreed that the Company will retain an independent compensation consultant, which may modify the compensation program for Mr. Tangredi and other officers, subject to certain conditions including approval of the board of directors. Notwithstanding the recommendation and board consideration, Mr. Tangredi has the right to continue the current terms of the employment agreement. On February 27, 2015, the Company and Mr. Tangredi entered into an amendment to Mr. Tangredi’s Amended and Restated Employment Agreement. Currently, the Company has non-interest-bearing accrued compensation due to the Chief Executive Officer for deferred salaries earned and unpaid as described above. The amendment provides that, if at any time during a calendar year, the unpaid compensation is greater than $500,000, Mr. Tangredi must convert $100,000 of unpaid compensation into the Company’s common stock during such calendar year. The conversion rate shall be equal to 75% of the average closing price for the Company’s common stock for the 30 trading days prior to the date of conversion. The Company shall also pay to Mr. Tangredi a cash payment equal to 20% of the compensation income incurred because of the conversion. Further, at any time any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under such Act) of greater of 40% of the then-outstanding voting power of the voting equity interests or a person or group initiate a tender offer for the Company’s common stock, Mr. Tangredi may convert unpaid compensation to Class A Convertible Preferred Stock of the Company at $1.50 per share. The Board of Directors waived the requirement to convert $100,000 of unpaid compensation into common stock during 2019 and 2018. No amounts have been converted under this agreement to date. Litigation From time to time, claims are made against the Company in the ordinary course of its business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties, or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods. In the third quarter of 2015, the Company commenced an action for the cancellation of the 37,500,000 shares issued to Soex (the “Shares”) in connection with a Securities Purchase Agreement, dated January 21, 2014 (“Soex SPA”), and 3,750,000 shares issued to Zan Investment Advisory Limited (“Zan”), which is affiliated with Soex through Aifan Liu, who was appointed as a Company board observer by SOEX and her husband, Xinghong Hua. Sharon Han, General Manager and Chairwoman of Soex, served on our board pursuant to the provisions of the Soex SPA. Ms. Han resigned from the Board of Directors effective February 1, 2016. On April 24, 2014, we entered into a Distribution Agreement (the “Distribution Agreement”), with Soex to distribute certain of the Company’s products in China. As reported in the Company’s Form 10-K for the year ended December 31, 2014 and filed with the Securities and Exchange Commission on April 1, 2015, the Company was entitled to receive, pursuant to the Distribution Agreement, royalties and a $500,000 payment, of which $50,000 has been received, that was due on or before October 24, 2014. Further, the Company reported it had not received any royalties from Soex. Soex is in breach of the Distribution Agreement. As first reported in the Company’s Form 10-Q for the quarter ended June 30, 2015, the Company began pursuing legal action against Soex for breach of the Soex SPA and Distribution Agreement. On July 8, 2015, the Company filed a lawsuit in state courts in Florida against Soex and Zan. Pursuant to the Distribution Agreement, Soex is in material breach of the following: (1) Section 1(a) of the Distribution Agreement for Soex’s failure to make a $225,000 payment to the Company for the appointment of Soex as the exclusive distributor of the Products in the Field and Territory (the “Distribution Payment Default”) in accordance with the terms set forth in the Distribution Agreement. Such payment was due on October 20, 2014 (the “Payment Date”). (2) Section 8(b) of the Distribution Agreement for Soex’s failure to make a $225,000 payment to the Company for the grant of the license and right to manufacture, sell, lease and distribute Products (excluding manufacture of MTM), and to use the Intellectual Property in connection therewith (the “License Payment Default” and, together with the Distribution Payment Default, the “Payment Default”) in accordance with the terms set forth in the Distribution Agreement. Such payment was due on the Payment Date. (3) Section 15(b) of the Distribution Agreement for Soex’s failure to issue to the Company 25% of the equity (the “Equity Default”) of SOEX (Beijing) Environmental Protection Technology Company Limited (the “China Subsidiary”). As a result of the above, we terminated the Soex Distribution Agreement. As provided in Section 14(e) of the Soex Distribution Agreement, the Company has the right to enforce any obligation due to us by Soex. As a result, Soex still must (a) pay the remaining $450,000 due under the Distribution Agreement and the amount of Royalties due, plus interest at 1.5% per month (18% per year) with interest accruing from the date that payment was due and (b) issue to us 25% of the equity of SOEX (Beijing) Environmental Protection Technology Company Limited. As provided in Section 14(b), neither us nor Soex shall be liable for compensation, reimbursement or damages due to loss of profits on sales or anticipated sales or losses due to expenditures, investments or commitments made or in connection with the establishment, development or maintenance of the business. The Soex Litigation was moved to the U.S. District Court for the Middle District of Florida where Soex has instituted a counterclaim (Civil Docket Case #: 8:15-CV-02362-MSS-EAJ). On September 19, 2018, a pre-trial conference was held in Tampa finding a trial date set for October 22, 2018. The trial for the original case was held between October 22 and 24, 2018. The jury at the conclusion of the trial did not award monetary damages to either party for claims or counterclaims. On October 24, 2018, the Company initiated a third lawsuit against an affiliate of Soex, Zhongshan Trans-Tech New Material Technology Co. Ltd. Zhongshan, China, (“Transtech”), and the Chairperson of the affiliate and Soex, based on new information learned by the Company. The Company will seek maximum relief and damages for this on-going and growing illegal misuse the Company’s Intellectual Property. The Company feels this third action will lead in a judgment in favor of the Company. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Note 13. Income Taxes | The Company had, subject to limitation, approximately $31,200,000 of net operating loss carryforwards at December 31, 2019, of which approximately $27,700,000 will expire at various dates beginning in 2020 through 2037. In addition, the Company has research and development tax credits of approximately $353,000 at December 31, 2019 available to offset future taxable income, which will expire from 2030 through 2037. We have provided a 100% valuation allowance for the deferred tax benefits resulting from the net operating loss carryover and our tax credits due to our lack of earnings history. In addressing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The valuation allowance increased by approximately $400,000 and $600,000 for the years ended December 31, 2019 and 2018, respectively. Significant components of deferred tax assets and liabilities are as follows: 2019 2018 Deferred revenue $ 101,000 $ 114,000 Depreciation 4,000 6,000 Accrued compensation 504,000 477,000 Research and development credit 353,000 333,000 Accrued warranty and interest expense 132,000 86,000 Net operating loss carryforward 7,887,000 7,551,000 Valuation allowance (8,981,000 ) (8,567,000 ) $ - $ - A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows: December 31, 2019 2018 Federal statutory income tax rate (21.0 )% (21.0 )% State income taxes, net of federal benefit (4.3 ) (4.3 ) Permanent differences 15.5 6.3 Change in valuation allowance 9.8 19.0 Provision for income taxes 0.0 % 0.0 % As of December 31, 2019, the Company has not performed an IRC Section 382 study to determine the amount, if any, of its net operating losses that may be limited as a result of the ownership change percentages during 2019 and prior years. However, the Company will complete the study prior to the utilization of any of its recorded net operating losses. Income Tax returns remain open by statue, generally for the years 2016 through 2019. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Note 14. Subsequent Events | No material events have occurred after December 31, 2019 that requires recognition or disclosure in the financial statements except as follows: On January 9, 2020, the principal amount due on the related party Senior Secured Promissory Note (described in Note 6) was increased to $1,922,600 as part of the Twenty Second Amendment dated December 12, 2019. On March 10, 2020, Tom Turner resigned from his position as a member of the board of directors of Dais Corporation (the “Company”), effective immediately. Mr. Turner did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. On March 11, 2020, the World Health Organization declared a pandemic related to the rapidly spreading coronavirus (COVID-19) outbreak, which has led to a global health emergency. The extent of the public-health impact of the outbreak is currently unknown and rapidly evolving, and the related health crisis could adversely affect the global economy, resulting in an economic downturn. Any disruption of the Company’s facilities or those of our suppliers could likely adversely impact the Company’s operations. Currently, there is significant uncertainty relating to the potential effect of the novel coronavirus on our business. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies | |
Use of estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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. Actual results could differ from those estimates. Significant estimates underlying the Company’s reported financial position and results of operations include the allowance for doubtful accounts, fair value of stock-based compensation, fair value of derivative liabilities, valuation allowance on deferred taxes and the warranty reserve. |
Cash and cash equivalents | For purposes of the Statements of Cash Flows, the Company considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company had no uninsured balances at December 31, 2019. The Company has never experienced any losses related to these balances. |
Accounts receivable | Accounts receivable consist primarily of receivables from the sale of the Company’s ERV products and royalties due under license and supply agreements. The Company regularly reviews accounts receivable for any bad debts based on an analysis of the Company’s collection experience, customer credit worthiness and current economic trends. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on management’s review of accounts receivable, no allowance for doubtful accounts was deemed necessary at December 31, 2019 and 2018, respectively. |
Concentrations | At December 31, 2019, one customer accounted for 77% of accounts receivable. For the year ended December 31, 2019, five customers accounted for 71% of total revenue. For the year ended December 31, 2018 three customers accounted for 74% of total revenue. |
Other receivables | Other receivables consist primarily of receivables from the U.S. Department of Defense (See Note 3 - Research and development expenses and funding proceeds). The Company prepares invoices as it meets funding program milestones. Based on management’s review of other receivables, management has determined that no allowance for other receivables is necessary at December 31, 2019 and 2018. |
Fair Value of Financial Instruments | The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, deferred revenue, customer deposits and notes payable are carried at historical cost. At December 31, 2019 and 2018 the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. |
Inventory | Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost, determined by first-in, first-out method, or market. Market is determined based on the net realizable value, with appropriate consideration given to obsolescence, excessive levels, deterioration, and other factors. At December 31, 2019 and 2018, the Company had $85,456 and $40,341 of raw materials, $4,101 and $12,191 of in-process inventory and $1,724 and $652 of finished goods inventory, respectively. A reserve is recorded for any inventory deemed excessive or obsolete. No reserve is recorded at December 31, 2019 and 2018, respectively. |
Property and equipment | Property and equipment is recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets ranging from 3 to 7 years. Leasehold improvements are amortized over the shorter of their estimated useful lives of 5 years or the related lease term. Depreciation and amortization expense were $26,463 and $39,580 for the years ended December 31, 2019 and 2018, respectively. Gains and losses upon disposition are reflected in the Statement of Operations in the period of disposition. Maintenance and repair expenditures are charged to expense as incurred. There were no dispositions of property and equipment in 2019 or 2018. |
Intangible assets | Identified intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company’s existing intangible assets consist solely of patents. Patents are amortized over their estimated useful or economic lives of 17 years. Patent amortization expense was $16,254 and $21,508 for the years ended December 31, 2019 and 2018, respectively. Based on current capitalized costs, total patent amortization expense is estimated to be approximately $16,000 per year for the next five years and thereafter. |
Long-lived assets | Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the book value of the asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that indicate possible impairment. When impairment indicators exist, the Company estimates the future undiscounted net cash flows of the related asset or asset group over the remaining life in measuring whether or not the asset values are recoverable. The Company did not recognize impairment on its long-lived assets during the years ended December 31, 2019 or 2018. |
Government Funding | Government funding represents grants from the U.S. Department of Defense and are recognized when there is reasonable assurance that the funding will be received and conditions associated with the funding are met. When funding’s are received related to property and equipment, the Company reduces the basis of the assets on the balance sheet, resulting in lower depreciation expense over the life of the associated asset. When funding’s are received which relate to expense reimbursement they are recorded as a reduction of the associated expense in the period in which the expense is incurred. |
Research and development expenses and funding proceeds | Expenditures for research, development and engineering of products are expensed as incurred. The Company incurred research and development costs of $293,751 and $318,358 for the years ended December 31, 2019 and 2018, respectively. The Company accounts for proceeds received from government funding’s for research as a reduction in research and development costs. The Company recorded proceeds against research and development expenses on the Statements of Operations of $89,994 and $64,894 for the years ended December 31, 2019 and 2018, respectively. |
Stock issuance costs | Stock issuance costs are recorded as a reduction of the related proceeds through a charge to stockholders’ deficit. |
Common stock | The Company records common stock issuances when all the legal requirements for the issuance of such common stock have been satisfied. |
Revenue recognition | The Company has adopted the new revenue recognition guidelines in accordance with ASC 606, Revenue from Contracts with Customers (ASC 606). The Company analyzes its contracts to assess that they are within the scope and in accordance with ASC 606. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, whether for goods and services or licensing, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated selling prices; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions. Generally, the Company recognizes revenue for its products upon shipment to customers, provided no significant obligations remain and collection is probable. In certain instances, the Company’s ConsERV system product may carry a limited warranty of up to one year for all parts contained therein except for the energy recovery ventilator core produced and sold by the Company. The distributor of the ConsERV system may carry a limited warranty of up to ten years. The limited warranty includes replacement of defective parts for the ConsERV system and includes workmanship and material failure for the ConsERV core. The Company recorded an accrual of $91,531 for future warranty expenses at December 31, 2019 and 2018, which is included in accrued expenses, other. Royalty revenue is recognized as earned. The Company recognized royalty revenue of $25,000 and $0 for the years ended December 31, 2019 and 2018, respectively. Revenue derived from the sale of licenses is deferred and recognized as license fee revenue on a straight-line basis over the life of the license, or until the license arrangement is terminated. The Company recognized license fee revenue of $50,000 for each of the years ended December 31, 2019 and 2018. The Company accounts for revenue arrangements with multiple elements under the provisions of the Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) Topic 605-25, “Revenue Recognition-Multiple-Element Arrangements.” In order to account for these agreements, the Company must identify the deliverables included within the agreement and evaluate which deliverables represent separate units of accounting based on if certain criteria are met, including whether the delivered element has stand-alone value to the licensee. The consideration received is allocated among the separate units of accounting, and the applicable revenue recognition criteria are applied to each of the separate units. In December 2017, the Company and Zhejiang MENRED Environmental Tech Co, Ltd., Zhejiang Province, China (“Menred”), entered into a License and Supply Agreement (the “Agreement”), effective December 21, 2017. Pursuant to the Agreement, the Company licensed certain intellectual property and improvements to Menred, for use in the manufacture and sale of energy recovery ventilators (“ERV”) and certain other HVAC systems for installation in commercial, residential or industrial buildings in China. Menred also agreed to purchase its requirements of certain products from the Company for Menred’s use, pursuant to the terms and conditions of the Agreement. Menred will also pay royalties, as defined, to the Company on a quarterly basis, based on price and production volume as provided by Menred. No royalties are due within the first year of the Agreement. Also pursuant to the Agreement, the Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The Agreement has a ten-year term with mutually agreed upon five-year extensions. Shipping and handling fees billed to customers are included in revenue. Shipping and handling fees associated with freight are generally included in cost of revenue. |
Derivative liability | The Company has financial instruments that are considered derivatives or contain embedded features subject to derivative accounting. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in the Company’s balance sheet. The Company measures these instruments at their estimated fair value and recognizes changes in their estimated fair value in results of operations during the period of change. |
Warranties | The Company offers a limited warranty generally ranging from one to three years, A provision for product warranties has been recorded at December 31, 2019 and 2018. The Company has not incurred any warranty expense in either 2019 or 2018. |
Stock based compensation | The Company recognizes all share-based payments to employees, including grants of employee stock options, as compensation expense in the financial statements based on their fair values. That expense will be recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period) or immediately if the share-based payments vest immediately. There were no grants in 2019 or 2018. |
Fair Value Measurements | The Company accounts for financial instruments in accordance with FASB Accounting Standards Codification (ASC) 820 “Fair value Measurement and Disclosures” (ASC 820). ASC 820 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g. interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. • Level 3 - Inputs that are both significant to the fair value measurement and unobservable. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. The Company has recorded a derivative liability for its convertible notes which contain variable conversion prices. The table below summarizes the fair values of our financial liabilities as of December 31, 2019: Fair Value at December 31, Fair Value Measurement Using 2019 Level 1 Level 2 Level 3 Derivative liability $ 2,349,471 $ - $ - $ 2,349,471 The reconciliation of the derivative liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows for the years ended December 31, 2019 and 2018: December 31, December 31, 2019 2018 Balance, beginning of year $ 1,280,188 $ 243,501 Additions 1,112,125 1,262,460 Extinguished derivative liability (755,794 ) (578,156 ) Change in fair value of derivative liabilities 712,952 322,383 $ 2,349,471 $ 1,280,188 |
Income taxes | Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences. Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s 2016 through 2019 tax years remain open and subject to examination by the Internal Revenue Service. |
Earnings (loss) per share | Basic income (loss) per share is computed by dividing net income (loss) attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted income (loss) per share is computed giving effect to all potentially dilutive common shares. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and upon the conversion of notes. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered anti-dilutive and thus are excluded from the calculation. Common share equivalents of 11,735,574 and 54,832 were excluded from the computation of diluted earnings per share for the years ended December 31, 2019 and 2018, respectively, because their effect is anti-dilutive. Error in accounting for earnings (loss) per common share, basic and diluted and weighted average number of common shares outstanding, basic and diluted for the year ended December 31, 2019: Subsequent to the filing of the original SEC Form 10-K we determined loss per common share, basic and diluted and weighted average number of common shares outstanding, basic and diluted as of December 31, 2019 was incorrect due to a computational miscalculation. In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99, Materiality Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements Year ended December 31, 2019 As Reported Corrections As Restated Net loss per common share, basic and diluted $ (19.20 ) $ (6.47 ) $ (25.67 ) Weighted average number of common shares outstanding, basic and diluted 210,940 (53,169 ) 157,771 |
Recent Accounting Pronouncements | There are new accounting pronouncements issued by the Financial Accounting Standards Board (“FASB”) which are not yet effective as follows: In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The adoption of this ASU did not have a material effect on the Company's financial statements. In December 2019, the FASB issued ASU 2019-12, “ Simplifying the Accounting for Income Taxes |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Significant Accounting Policies | |
Derivative Financial Instruments | Fair Value at December 31, Fair Value Measurement Using 2019 Level 1 Level 2 Level 3 Derivative liability $ 2,349,471 $ - $ - $ 2,349,471 |
Reconciliation of derivative liability | December 31, December 31, 2019 2018 Balance, beginning of year $ 1,280,188 $ 243,501 Additions 1,112,125 1,262,460 Extinguished derivative liability (755,794 ) (578,156 ) Change in fair value of derivative liabilities 712,952 322,383 $ 2,349,471 $ 1,280,188 |
Summary of error in accounting for earnings (loss) per share | Year ended December 31, 2019 As Reported Corrections As Restated Net loss per common share, basic and diluted $ (19.20 ) $ (6.47 ) $ (25.67 ) Weighted average number of common shares outstanding, basic and diluted 210,940 (53,169 ) 157,771 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Schedule of Property and Equipment | December 31, 2019 2018 Furniture and fixtures $ 20,966 $ 20,966 Computer equipment and software 21,761 21,761 Demonstration equipment 92,733 92,733 Office and lab equipment 308,949 308,949 Leasehold improvements 14,808 14,808 Property and equipment, gross 459,217 459,217 Less accumulated depreciation 428,260 401,797 Property and equipment, net $ 30,957 $ 57,420 |
Accrued Expenses, Other (Tables
Accrued Expenses, Other (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accrued Expenses, Other | |
Schedule of Accrued Expenses | December 31, 2019 2018 Accrued expenses, other $ 166,158 $ 174,489 Accrued interest 777,056 436,581 Accrued warranty costs 91,531 91,531 $ 1,034,745 $ 702,601 |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Convertible Notes Payable | |
Schedule of Convertible Notes Payable | December 31, 2019 December 31, 2018 Convertible notes payable, bearing interest at 8- 10% $ 1,453,960 $ 1,284,250 Unamortized debt discount (101,899 ) (440,315 ) Unamortized deferred debt issuance cost (5,848 ) (34,738 ) Total 1,346,213 809,197 Current portion $ 1,346,213 $ 809,197 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stock Options and Warrants | |
Schedule of Outstanding stock options activity | Common Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2017 13,446 $ 500.00 6.42 $ - Granted - - Forfeited or expired (1,000 ) 320.00 Outstanding at December 31, 2018 12,446 343.37 5.5 $ - Granted - - Forfeited or expired (1,932 ) 837.15 Outstanding at December 31, 2019 10,514 $ 252.61 5.5 $ - Exercisable at December 31, 2019 10,514 $ 252.61 5.5 $ - |
Schedule of Warrants outstanding | Number of Shares Weighted Average Remaining Life (Years) Weighted Average Exercise Price Warrants at December 31, 2017 13,730 9.29 $ 60.00 Granted - - Forfeited or expired (605 ) 960.00 Warrants at December 31, 2018 13,125 8.70 $ 20.00 Granted 226,000 2.44 Forfeited or expired - - Warrants at December 31, 2019 239,125 9.77 $ 3.41 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Deferred tax assets and deferred tax liabilities | 2019 2018 Deferred revenue $ 101,000 $ 114,000 Depreciation 4,000 6,000 Accrued compensation 504,000 477,000 Research and development credit 353,000 333,000 Accrued warranty and interest expense 132,000 86,000 Net operating loss carryforward 7,887,000 7,551,000 Valuation allowance (8,981,000 ) (8,567,000 ) $ - $ - |
Reconciliation of the federal statutory income tax rate | December 31, 2019 2018 Federal statutory income tax rate (21.0 )% (21.0 )% State income taxes, net of federal benefit (4.3 ) (4.3 ) Permanent differences 15.5 6.3 Change in valuation allowance 9.8 19.0 Provision for income taxes 0.0 % 0.0 % |
Background Information (Details
Background Information (Details Narrative) | Mar. 14, 2019 | Nov. 02, 2018 | Oct. 31, 2019 | Jul. 31, 2019 | Dec. 31, 2019 |
Background Information | |||||
Date of incorporation | Apr. 1993 | ||||
Reverse stock split | The Company amended its Certificate of Incorporation to reflect a one-for-2,000 reverse stock split of the Company’s common stock The reverse split was effective December 6, 2019 | The Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio ranging from one-for-500 to one-for-2,000 | |||
Changes in authorization capital, description | The shareholders approved an increase in authorized common shares from 340,000,000 shares to 1,100,000,000 shares | The shareholders of the Company approved an increase in the authorized common shares of the company from 240,000,000 shares to 340,000,000 shares | |||
State of incorporation | New York |
Going Concern and Management'_2
Going Concern and Management's Plans (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Going Concern and Management's Plans | ||
Net loss | $ (4,049,140) | $ (3,024,761) |
Net cash used in operating activities | (718,090) | $ (1,069,228) |
Working capital deficit | $ (9,840,866) |
Significant Accounting Polici_4
Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative Liability | $ 2,349,471 | $ 1,280,188 | $ 243,501 |
Level 3 [Member] | |||
Derivative Liability | $ 2,349,471 |
Significant Accounting Polici_5
Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Significant Accounting Policies | ||
Balance at beginning of period | $ 1,280,188 | $ 243,501 |
Additions | 1,112,125 | 1,262,460 |
Extinguished derivative liabilities | (755,794) | (578,156) |
Loss on change in fair value of derivative liability | (712,952) | (322,383) |
Balance at end of period | $ 2,349,471 | $ 1,280,188 |
Significant Accounting Polici_6
Significant Accounting Policies (Details 2) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Net loss per common share, basic and diluted | $ (25.67) | $ (41.88) |
Weighted average number of common shares outstanding, basic and diluted | 157,771 | 72,229 |
As Reported [Member] | ||
Net loss per common share, basic and diluted | $ (19.20) | |
Weighted average number of common shares outstanding, basic and diluted | 210,940 | |
Corrections [Member] | ||
Net loss per common share, basic and diluted | $ (6.47) | |
Weighted average number of common shares outstanding, basic and diluted | (53,169) |
Significant Accounting Polici_7
Significant Accounting Policies (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | |
Depreciation and amortization expense | $ 26,463 | $ 39,580 | |
Patent amortization expense | 16,254 | 21,508 | |
Research and development costs | 293,751 | 318,358 | |
Proceeds against research and development expenses | 89,994 | 64,894 | |
Future warranty expenses | 91,531 | 91,531 | |
Royalty revenue | 25,000 | 0 | |
License fees revenue | $ 50,000 | $ 50,000 | |
Estimated useful lives of patents | 17 years | ||
Common share excluded from diluted earnings per share | 11,735,574 | 54,832 | |
Description for product warranty | In certain instances, the Company’s ConsERV system product may carry a limited warranty of up to two years for all parts contained therein except for the energy recovery ventilator core produced and sold by the Company. The distributor of the ConsERV system may carry a limited warranty of up to ten years. | ||
License and Supply Agreement [Member] | Zhejiang Province [Member] | |||
Conditions of agreement, description | Pursuant to the Agreement, the Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The Agreement has a ten-year term with mutually agreed upon five-year extensions | ||
Leasehold Improvements [Member] | |||
Property plant and equipment, estimated useful lives | The shorter of their estimated useful lives of 5 years or the related lease term. | ||
Minimum [Member] | |||
Property and equipment estimated useful life | 3 years | ||
Maximum [Member] | |||
Property and equipment estimated useful life | 7 years | ||
Accounts receivable [Member] | |||
Concentration of risk, percentage | 77.00% | ||
Numbe of customer | 1 | ||
Rervenue [Member] | |||
Concentration of risk, percentage | 71.00% | 74.00% | |
Numbe of customer | 5 | 3 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Property and equipment, gross | $ 459,217 | $ 459,217 |
Less: accumulated depreciation | 428,260 | 401,797 |
Property and equipment, net | 30,957 | 57,420 |
Leasehold Improvements [Member] | ||
Property and equipment, gross | 14,808 | 14,808 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 20,966 | 20,966 |
Computer Equipment and Software [Member] | ||
Property and equipment, gross | 21,761 | 21,761 |
Demonstration Equipment [Member] | ||
Property and equipment, gross | 92,733 | 92,733 |
Office and Lab Equipment [Member] | ||
Property and equipment, gross | $ 308,949 | $ 308,949 |
Accrued Expenses, Other (Detail
Accrued Expenses, Other (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Accrued Expenses, Other | ||
Accrued expenses, other | $ 166,158 | $ 174,489 |
Accrued interest | 777,056 | 436,581 |
Accrued warranty costs | 91,531 | 91,531 |
Accrued Expenses | $ 1,034,745 | $ 702,601 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
May 31, 2019 | Feb. 27, 2015 | Dec. 31, 2019 | Dec. 31, 2018 | |
Rent expense | $ 57,565 | $ 56,760 | ||
Lease term description | The lease term will terminate upon 30 days’ written notice from landlord or 90 days written termination from us | |||
Professional and other fees | $ 150,000 | |||
Timothy N. Tangredi [Member] | Tangredi Employment Agreement Amendment [Member] | Class B Redeemable Preferred Stock [Member] | ||||
Employment agreement, description | If at any time during a calendar year, the unpaid compensation is greater than $500,000, Mr. Tangredi must convert $100,000 of unpaid compensation into the Company’s common stock during such calendar year. The conversion rate shall be equal to 75% of the average closing price for the Company’s common stock for the 30 trading days prior to the date of conversion. The Company shall also pay to Mr. Tangredi a cash payment equal to 20% of the compensation income incurred because of the conversion | |||
Building [Member] | ||||
Monthly rent expense | $ 4,066 |
Equity Transactions (Details Na
Equity Transactions (Details Narrative) - USD ($) | Mar. 14, 2019 | Nov. 02, 2018 | May 15, 2018 | May 07, 2018 | Oct. 31, 2019 | Jul. 31, 2019 | Oct. 31, 2018 | Jul. 31, 2018 | Apr. 23, 2018 | Mar. 19, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 01, 2018 | Nov. 01, 2018 | Oct. 01, 2018 | Jul. 11, 2018 | Jun. 20, 2018 | Jun. 15, 2018 |
Changes in authorization capital, description | The shareholders approved an increase in authorized common shares from 340,000,000 shares to 1,100,000,000 shares | The shareholders of the Company approved an increase in the authorized common shares of the company from 240,000,000 shares to 340,000,000 shares | ||||||||||||||||
Reverse stock split | The Company amended its Certificate of Incorporation to reflect a one-for-2,000 reverse stock split of the Company’s common stock The reverse split was effective December 6, 2019 | The Company approved a reverse stock split of the issued and outstanding shares of the Company’s common stock at the ratio ranging from one-for-500 to one-for-2,000 | ||||||||||||||||
Common stock, shares issued | 278,757 | 74,910 | ||||||||||||||||
Common stock, shares value | $ 2,788 | $ 749 | ||||||||||||||||
Common stock shares issued for services, amount | 300,000 | |||||||||||||||||
Debt conversion, converted instrument, shares issued | 177,941 | |||||||||||||||||
Debt conversion, converted instrument, amount | $ 277,160 | |||||||||||||||||
Debt conversion, converted instrument, original debt | $ 286,960 | |||||||||||||||||
Common stock shares issued for finance cost, amount | $ 40,000 | |||||||||||||||||
Preferred stock, shares issued | 0 | 0 | ||||||||||||||||
Preferred Class A [Member] | ||||||||||||||||||
Preferred stock, shares issued | 0 | 0 | ||||||||||||||||
Conversion price description | The Conversion Price shall be equal to the 75% of the average closing price for the 30 trading days prior to the election to convert. At no time will the Company convert any of the Stated Amount into common stock if that would result in the Holder beneficially owning more than 49% of the sum of the voting power of the Company’s outstanding shares of common stock plus the voting power of the Class A Preferred Stock. | |||||||||||||||||
2018 Transactions [Member] | Zhejiang MENRED Environmental Tech Co, Ltd [Member] | ||||||||||||||||||
Common stock shares issued for services, shares | 1,000 | |||||||||||||||||
Common stock shares issued for services, amount | $ 40,000 | |||||||||||||||||
2018 Transactions [Member] | Outside Business Consultant [Member] | ||||||||||||||||||
Common stock, shares issued | 1,500 | |||||||||||||||||
Common stock, shares value | $ 180,000 | |||||||||||||||||
2018 Transactions [Member] | Outside Investor [Member] | ||||||||||||||||||
Common stock, shares issued | 332 | 100 | 100 | 74 | ||||||||||||||
Common stock, shares value | $ 19,875 | $ 6,000 | $ 6,000 | $ 8,925 | ||||||||||||||
Debt instrument, face amount | $ 210,000 | $ 100,000 | $ 89,250 | |||||||||||||||
2018 Transactions [Member] | Fifteenth Amendment [Member] | ||||||||||||||||||
Amendment, description | The Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) November 16, 2018. The Company is further obligated to issue 10 shares of $0.01 par value common stock valued at $600 | The Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) August 22, 2018. The Company is further obligated to issue 10 shares of $0.01 par value common stock valued at $1,200 | ||||||||||||||||
2018 Transactions [Member] | Fourteenth Amendment [Member] | ||||||||||||||||||
Amendment, description | The Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) May 22, 2018. The Company is further obligated to issue 10 shares of $0.01 par value common stock valued at $600 | |||||||||||||||||
2018 Transactions [Member] | Consulting Agreement [Member] | ||||||||||||||||||
Common stock shares issued for services, shares | 1,500 | |||||||||||||||||
Common stock shares issued for services, amount | $ 120,000 | |||||||||||||||||
2018 Transactions [Member] | Thirteenth Amendment [Member] | ||||||||||||||||||
Amendment, description | The Maturity Date of the Note was extended to the earlier of (i) the date upon which the Company secures funds, regardless of source, equal to or exceeding, in the aggregate, $1,000,000 or (ii) April 10, 2018. The Company is further obligated to issue 10 shares of common stock valued at $800 | |||||||||||||||||
2019 Transactions [Member] | ||||||||||||||||||
Debt conversion, converted instrument, shares issued | 203,020 | |||||||||||||||||
Debt conversion, converted instrument, amount | $ 954,646 | |||||||||||||||||
Debt conversion, converted instrument, original debt | 286,960 | |||||||||||||||||
Debt conversion, converted instrument, accrued interest and other cost | $ 41,051 | |||||||||||||||||
Common stock shares issued for finance cost, shares | 550 | |||||||||||||||||
Common stock shares issued for finance cost, amount | $ 10,000 | |||||||||||||||||
Class B Redeemable Preferred Stock [Member] | Timothy N. Tangredi [Member] | ||||||||||||||||||
Preferred stock, shares issued | 10 | |||||||||||||||||
Preferred stock, par value | $ 0.01 | |||||||||||||||||
Preferred stock redemption price per share | $ 1.50 |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Convertible Notes Payable | ||
Convertible notes payable, bearing interest at 8- 10% | $ 1,453,960 | $ 1,284,250 |
Unamortized debt discount | (101,899) | (440,315) |
Unamortized deferred debt issuance cost | (5,848) | (34,738) |
Total | 1,346,213 | 809,197 |
Current portion | $ 1,336,213 | $ 809,197 |
Convertible Notes Payable (De_2
Convertible Notes Payable (Details Narrative) - USD ($) | Jul. 03, 2019 | Jul. 18, 2019 | Mar. 26, 2019 | Feb. 20, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Accured interest and costs | $ 41,051 | |||||
Conversion amount | 286,960 | |||||
Common stock value | 954,646 | $ 42,800 | ||||
Gain on extinguishment of debt | (57,784) | (349,721) | ||||
Extinguishment of derivative liability | $ 755,794 | |||||
Common stock issuable shares | 203,020 | |||||
Cash payment | $ 33,680 | |||||
2018 Notes [Member] | ||||||
Amortized debt discounts | 372,236 | 343,882 | ||||
Debt issuances cost | $ 31,443 | $ 38,803 | ||||
February 2019 Note [Member] | ||||||
Common stock issuable shares | 1,100,000 | |||||
Cash proceeds | $ 142,500 | |||||
July 2019 Note [Member] | ||||||
Cash proceeds | $ 95,000 | $ 75,000 | ||||
March 2019 Note [Member] | ||||||
Cash proceeds | $ 75,000 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Debt instrument converte amount, principal | $ 277,160 | |
Debt instrument converte amount, accrued interest | $ 33,680 | |
Common stock shares issued upon conversion of debt | 177,941 | |
Gain on change in fair value of derivative liability | $ 708,422 | |
Interest expense | 82,154 | |
Debt discount | 664,329 | $ 343,883 |
Interest expense | 2,126,590 | $ 1,396,468 |
Maximum [Member] | 2018 Notes [Member] | ||
Volatility rate | 232.00% | |
Risk free interest rate | 2.63% | |
Expected life | 11 months | |
Minimum [Member] | 2018 Notes [Member] | ||
Volatility rate | 217.00% | |
Risk free interest rate | 2.56% | |
Expected life | 5 months | |
Common Stock Issued [Member] | ||
Debt converted amount, principal | 9,800 | |
February 2019 Note [Member] | ||
Debt discount | 142,500 | |
Interest expense | 71,017 | |
March 2019 Note [Member] | ||
Debt discount | $ 78,750 | |
July 2019 Note [Member] | Maximum [Member] | ||
Volatility rate | 751.00% | |
Risk free interest rate | 1.60% | |
Expected life | 6 months | |
July 2019 Note [Member] | Minimum [Member] | ||
Volatility rate | 537.00% | |
Risk free interest rate | 1.51% | |
Expected life | 6 months |
Stock Options and Warrants (Det
Stock Options and Warrants (Details) - Stock Options [Member] - shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Common Shares Outstanding, Beginning balance | 12,446 | 13,446 |
Granted | ||
Forfeited or expired | (1,932) | (1,000) |
Common Shares Outstanding, Ending balance | 10,514 | 12,446 |
Stock Options and Warrants (D_2
Stock Options and Warrants (Details 1) - Warrants [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Number of Shares | ||
Number of shares, Outstanding, Beginning Balance | 13,125 | 13,730 |
Granted | 226,000 | |
Forfeited or expired | (605) | |
Number of shares, Outstanding, Ending Balance | $ 239,125 | $ 13,125 |
Weighted Average Remaining Life (Years) | ||
Weighted average remaining contractual term (in years) of shares outstanding, Begining balance | 8 years 8 months 12 days | 9 years 3 months 14 days |
Weighted average remaining contractual term (in years) of shares outstanding, Ending balance | 9 years 9 months 7 days | 8 years 8 months 12 days |
Weighted Average Exercise Price | ||
Weighted average exercise price of shares outstanding, Beginning balance | $ 20 | $ 60 |
Weighted average exercise price, Granted | 2.44 | 0 |
Weighted average exercise price of shares expired/forfeited | 0 | 960 |
Weighted average exercise price of shares outstanding, Ending balance | $ 3.41 | $ 20 |
Stock Options and Warrants (D_3
Stock Options and Warrants (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Stock Options and Warrants | ||
Stock compensation expense | $ 0 | $ 0 |
Deferred Revenue (Details Narra
Deferred Revenue (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
License revenue | $ 50,000 | $ 50,000 | |
Royalty revenue | $ 25,000 | $ 0 | |
Zhejiang Province [Member] | |||
License and supply agreement description | The Company is required to purchase 50,000 square meters of Product from Menred for delivery as an annual minimum with a 10,000 square meter minimum order quantity per delivery. The License and Supply Agreement has a ten-year term with mutually agreed upon five-year extensions |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | 1 Months Ended | 12 Months Ended | ||||
Feb. 27, 2015USD ($)integer$ / shares | Dec. 31, 2019USD ($)shares | Dec. 31, 2018USD ($) | Sep. 30, 2015shares | Jul. 08, 2015USD ($) | Oct. 24, 2014USD ($) | |
Termination of Soex distribution agreement, description | Soex Distribution Agreement. As provided in Section 14(e) of the Soex Distribution Agreement, the Company has the right to enforce any obligation due to us by Soex. As a result, Soex still must (a) pay the remaining $450,000 due under the Distribution Agreement and the amount of Royalties due, plus interest at 1.5% per month (18% per year) with interest accruing from the date that payment was due and (b) issue to us 25% of the equity of SOEX (Beijing) Environmental Protection Technology Company Limited | |||||
Soex [Member] | ||||||
Litigation | ||||||
Material breach of agreement terms, description | (1) Section 1(a) of the Distribution Agreement for Soex’s failure to make a $225,000 payment to the Company for the appointment of Soex as the exclusive distributor of the Products in the Field and Territory (the “Distribution Payment Default”) in accordance with the terms set forth in the Distribution Agreement. Such payment was due on October 20, 2014 (the “Payment Date”). (2) Section 8(b) of the Distribution Agreement for Soex’s failure to make a $225,000 payment to the Company for the grant of the license and right to manufacture, sell, lease and distribute Products (excluding manufacture of MTM), and to use the Intellectual Property in connection therewith (the “License Payment Default” and, together with the Distribution Payment Default, the “Payment Default”) in accordance with the terms set forth in the Distribution Agreement. Such payment was due on the Payment Date. (3) Section 15(b) of the Distribution Agreement for Soex’s failure to issue to the Company 25% of the equity (the “Equity Default”) of SOEX (Beijing) Environmental Protection Technology Company Limited (the “China Subsidiary”). | |||||
Cancellation of share issued | shares | 37,500,000 | |||||
Royalty received | $ 500,000 | |||||
Payment received | $ 50,000 | |||||
Zan [Member] | ||||||
Litigation | ||||||
Cancellation of share issued | shares | 37,500,000 | |||||
Failure to make payment, amount | $ 225,000 | |||||
Tangredi [Member] | Employment Agreement [Member] | ||||||
Litigation | ||||||
Base salary | $ 200,000 | |||||
Date of agreement | Sep. 14, 2011 | |||||
Percentage of upper limit increment in base salary per year | 50.00% | |||||
Annual bonus description | Eligible for an annual bonus, if any, of up to 100% of his then-effective base salary | |||||
Term of agreement | 3 Years | |||||
Option granted to purchase | shares | 260 | |||||
Employment termination description | Shall be entitled to the sum of (A) the greater of 150% of the base salary then in effect or $320,000 plus (B) the cash bonus and/or merit bonus, if any, awarded for the most recent year | |||||
Amount as cash bonus | $ 320,000 | |||||
Conditional base salary addition to accrued sums owed | 210,000 | |||||
Upper limit of compensation | $ 500,000 | |||||
Unpaid compensation if upper limit reaches | $ 100,000 | |||||
Conversion rate | 75.00% | |||||
Number of trading days | integer | 30 | |||||
Percentage of cash payment on compensation income incurred | 20.00% | |||||
Class A Convertible Preferred Stock | $ / shares | $ 1.50 | |||||
Voting equity interests | 40.00% | |||||
Board of Directors [Member] | Employment Agreement [Member] | ||||||
Litigation | ||||||
Unpaid compensation if upper limit reaches | $ 100,000 | $ 100,000 |
Income Tax (Details)
Income Tax (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Taxes | ||
Deferred revenue | $ 101,000 | $ 114,000 |
Depreciation | 4,000 | 6,000 |
Accrued compensation | 504,000 | 477,000 |
Research and development credit | 353,000 | 333,000 |
Accrued warranty and interest expense | 132,000 | 86,000 |
Net operating loss carryforward | 7,887,000 | 7,551,000 |
Valuation allowance | (8,981,000) | (8,567,000) |
Deferred tax assets and liabilities | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | ||
Federal statutory income tax rate | (21.00%) | (21.00%) |
State income taxes, net of federal benefit | (4.30%) | (4.30%) |
Permanent differences | 15.50% | 6.30% |
Change in valuation allowance | 9.80% | 19.00% |
Provision for income taxes | 0.00% | 0.00% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Net operating loss carry-forward expire year | Beginning in 2020 through 2037 |
Research and development tax credits expire year | Expire from 2030 through 2037 |
Deferred tax benefits valuation allowance | 100.00% |
Subsequent Event (Details Narra
Subsequent Event (Details Narrative) | Jan. 09, 2020USD ($) |
Senior Secured Promissory Note [Member] | Twenty Second Amendment [Member] | Subsequent Event [Member] | |
Due to related party, principal amount | $ 1,922,600 |