Document_And_Entity_Informatio
Document And Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 13, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'TURBINE TRUCK ENGINES INC | ' |
Entity Central Index Key | '0001138978 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 253,470,861 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
CURRENT ASSETS: | ' | ' |
Cash | $519 | $6,293 |
Prepaid expenses | 78,483 | 10,705 |
Total Current Assets | 79,002 | 16,998 |
Furniture and equipment, net of accumulated depreciation of $56,002 (2013) and $52,381 (2012) | 13,917 | 17,538 |
Construction in process | 285,799 | ' |
TOTAL ASSETS | 378,718 | 34,536 |
CURRENT LIABILITIES: | ' | ' |
Accounts payable, including related party payables of $12,220 (2013) and $12,220 (2012) | 159,517 | 118,098 |
Accrued interest | 17,702 | 20,684 |
Accrued payroll | 1,137 | 5,512 |
Convertible notes, net | 27,223 | 96,767 |
Note payable | 500 | 500 |
Total Current Liabilities | 206,079 | 241,561 |
LONG-TERM LIABILITIES: | ' | ' |
Derivative liability | 8,675 | 123,272 |
Accrued expenses - long term | 76,850 | 66,100 |
Accrued payroll - long term | 477,959 | 372,628 |
Accrued royalty fees | 43,750 | 25,000 |
Note payable | 446,246 | ' |
Note payable to related party | 3,331 | 3,331 |
Total Long-Term Liabilities | 1,056,811 | 590,331 |
STOCKHOLDERS' DEFICIT | ' | ' |
Series A Convertible Preferred Stock; $0.001 par value; 1,000,000 shares authorized; and outstanding 500,000 (2013) and 500,000 (2012) shares issued and outstanding | 500 | 500 |
Common stock; $0.001 par value; 499,000,000 shares authorized; 253,470,861 (2013) shares issued and outstanding and 69,169,111 (2012) shares issued and outstanding | 253,470 | 69,168 |
Additional paid in capital | 18,190,549 | 16,913,769 |
Common stock payable | 337,367 | 20,000 |
Prepaid consulting services paid with common stock | -43,553 | -57,385 |
Receivable for common stock | -212,000 | -212,000 |
Deferred non-cash offering costs | -1,183,779 | ' |
Deficit accumulated during development stage | -18,226,726 | -17,531,408 |
Total Stockholders' Deficit | -884,172 | -797,356 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $378,718 | $34,536 |
BALANCE_SHEETS_Parenthetical
BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
CURRENT ASSETS: | ' | ' |
Furniture and equipment, accumulated depreciation (in dollars) | $56,002 | $52,381 |
CURRENT LIABILITIES: | ' | ' |
Related party payables, included in accounts payable (in dollars) | $12,220 | $12,220 |
STOCKHOLDERS' DEFICIT | ' | ' |
Series A convertible preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Series A convertible preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Series A Convertible Preferred stock, shares issued | 500,000 | 500,000 |
Series A Convertible Preferred stock, shares outstanding | 500,000 | 500,000 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 499,000,000 | 499,000,000 |
Common stock, shares issued | 253,470,861 | 69,169,111 |
Common stock, shares outstanding | 253,470,861 | 69,169,111 |
STATEMENTS_OF_OPERATIONS_UNAUD
STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | 9 Months Ended | 154 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Statements Of Operations | ' | ' | ' | ' | ' |
Research and development costs | ' | ' | ' | ' | $3,882,494 |
Operating costs | 102,993 | 168,118 | 371,020 | 927,066 | 13,061,465 |
Total operating costs and expenses | 102,993 | 168,118 | 371,020 | 927,066 | 16,943,959 |
OTHER EXPENSE (INCOME) | ' | ' | ' | ' | ' |
Change in fair value of derivative liability | -32,555 | -19,528 | 120,000 | -35,326 | 96,648 |
Loss on investment | ' | ' | ' | ' | 197,500 |
Interest expense | 99,045 | 50,310 | 204,299 | 103,264 | 988,619 |
TOTAL OTHER EXPENSE (INCOME) | 66,490 | 30,782 | 324,299 | 67,938 | 1,282,767 |
NET LOSS | ($169,483) | ($198,900) | ($695,319) | ($995,004) | ($18,226,726) |
NET LOSS PER COMMON SHARE, BASIC AND DILUTED | $0 | $0 | $0 | ($0.02) | ($0.61) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED | 180,262,796 | 67,091,966 | 120,151,651 | 65,066,098 | 29,818,380 |
STATEMENTS_OF_CASH_FLOWS_UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 9 Months Ended | 154 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' | ' |
Net loss | ($695,319) | ($995,004) | ($18,226,726) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Common stock and long-term debt issued for acquisition of license agreement | ' | ' | 2,735,649 |
Common stock issued for services and amortization of common stock issued for services | 19,232 | 533,537 | 5,390,915 |
Loss on deposit | ' | ' | 197,500 |
Contribution from shareholder | ' | ' | 188,706 |
Unrealized loss on derivative liability | 120,000 | -35,326 | 96,648 |
Amortization of beneficial conversion feature | ' | ' | 539,876 |
Amortization of deferred loan costs | 39,800 | ' | 64,550 |
Write off of deferred offering costs | ' | ' | 119,383 |
Write off of deferred non cash offering costs | ' | ' | 49,120 |
Gain on disposal of fixed assets | ' | ' | -1,965 |
Depreciation | 3,621 | 3,271 | 59,085 |
Amortization of agency fee | ' | ' | 100,000 |
Amortization of discount on notes payable | 114,030 | 100,899 | 296,235 |
Decrease (increase) in prepaid expenses | 17,284 | -27,878 | 6,579 |
Increase (decrease) in: | ' | ' | ' |
Accounts payable | 41,419 | 7,987 | 368,355 |
Accrued expenses | 10,750 | 2,612 | 311,256 |
Accrued payroll | 100,957 | 85,882 | 829,381 |
Accrued royalty fees | 18,750 | 18,750 | 1,761,917 |
Accrued interest | 418 | ' | 22,802 |
Net cash used by operating activities | -209,058 | -305,270 | -5,090,734 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' | ' |
Payment of agency fee rights | ' | ' | -100,000 |
Issuance of notes receivable from stockholders | ' | ' | -23,000 |
Deposit for Global Hydrogen Energy Corp. | ' | -197,500 | -197,500 |
Repayment of notes receivable from stockholders | ' | ' | 22,095 |
Advances to related party | ' | ' | 805 |
Proceeds from sale of fixed assets | ' | ' | 2,500 |
Purchase of fixed assets | ' | -15,000 | -68,538 |
Net cash used by investing activities | ' | -212,500 | -363,638 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' | ' |
Repayment of stockholder advances | ' | -5,000 | -162,084 |
Advances from stockholders | ' | 1,430 | 272,582 |
Increase in deferred offering costs | ' | ' | -194,534 |
Proceeds from issuance of common stock | 140,599 | 373,350 | 4,391,743 |
Proceeds from exercise of options | ' | ' | 45,000 |
Debt issuance costs | ' | ' | -19,750 |
Repayment of convertible notes payable | -43,200 | ' | -66,200 |
Proceeds from issuance of convertible notes payable | 105,885 | 160,000 | 1,188,135 |
Net cash provided by financing activities | 203,284 | 529,780 | 5,454,891 |
Net (decrease) increase in cash | -5,774 | 12,010 | 519 |
Cash, beginning of period | 6,293 | 11,638 | ' |
Cash, end of period | 519 | 23,648 | 519 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ' | ' | ' |
Cash paid for interest | 36,067 | ' | 70,376 |
NON-CASH FINANCING AND INVESTING ACTIVITIES: | ' | ' | ' |
Subscription receivable for issuance of common stock | ' | ' | 29,090 |
Option to acquire license for issuance of common stock | ' | ' | 10,000 |
Deferred offering costs netted against issuance of common stock under private placement | ' | ' | 33,774 |
Deferred offering costs netted against issuance of common stock | ' | ' | 41,735 |
Value of beneficial conversion feature of notes payable | ' | ' | 19,507 |
Deferred non-cash offering costs in connection with private placement | ' | ' | 74,850 |
Application of amount due from shareholder against related party debt | ' | ' | 8,099 |
Amortization of offering costs related to stock for services | ' | ' | 25,730 |
Settlement of notes payable in exchange for prepaid services | ' | ' | 356,466 |
Common stock issued in exchange for prepaid services | 5,400 | 110,500 | 2,460,064 |
Common stock issued in exchange for accrued royalties | ' | 1,301,500 | 1,718,167 |
Common stock issued for accruals | ' | 206,750 | 206,750 |
Receivable issued for exercise of common stock options | ' | ' | 367,000 |
Common stock issued in exchange for fixed assets | ' | ' | 5,000 |
Acquisition of agency fee intangible through accrued expenses | ' | ' | 900,000 |
Beneficial conversion feature on convertible notes | ' | ' | 531,561 |
Conversion of convertible debt to equity (44,646,707 shares since inception) | 138,147 | 44,201 | 976,647 |
Common stock issued for accounts payable | ' | ' | 208,838 |
Common stock issued for accrued payroll | ' | ' | 15,000 |
Preferred stock issued for accrued payroll | ' | 335,285 | 335,285 |
Common stock payable for prepaid services | ' | 245,000 | 245,000 |
Issuance of common stock to employees | ' | ' | 274,000 |
Common stock issued for accrued expenses | ' | ' | 29,400 |
Derivative liability and debt discount | 45,070 | 160,000 | 270,114 |
Write off uncollectible stock subscription receivable | ' | ' | 155,000 |
Write off of intangible asset and agency fee payable | ' | ' | 900,000 |
Conversion of accrued interest to common stock | 3,400 | ' | 5,100 |
Common stock issued to extinguish derivative liability | 267,324 | ' | 342,351 |
Construction in process financed with a note payable | 285,799 | ' | 285,799 |
Deferred loan costs paid with common stock | 892,912 | ' | 892,912 |
Deferred loan costs paid with common stock payable | $330,667 | ' | $330,667 |
STATEMENTS_OF_CASH_FLOWS_UNAUD1
STATEMENTS OF CASH FLOWS (UNAUDITED) (Parenthetical) | 154 Months Ended |
Sep. 30, 2013 | |
Statements Of Cash Flows Parenthetical | ' |
Conversion of convertible debt to equity (in shares) | 44,646,707 |
Background_Information
Background Information | 9 Months Ended |
Sep. 30, 2013 | |
Background Information | ' |
1. Background Information | ' |
Turbine Truck Engines, Inc. (the “Company”) is a development stage enterprise that was incorporated in the state of Delaware on November 27, 2000, and converted to a Nevada corporation in 2008. To date, the Company’s activities have been limited to raising capital, organizational matters, and the structuring of its business plan. The corporate headquarters is located in Paisley, Florida. | |
We are currently working on the development of three (3) separate revolutionary technologies: (a) Hydrogen Production Burner System (HPBS); (b) Detonation Cycle Gas Turbine Engine (DCGT); and (c) the Gas To Methanol Technology (GTM) | |
Effective August 20, 2013, the Company amended its Articles of Incorporation filed with the Nevada Secretary of State, to reflect the Board of Directors adoption of a resolution, consented to by those holding a majority of the common shareholder votes, which increased the authorized common stock of the company to 499,000,000 shares of common stock, having a par value of $.001. |
Financial_Statements
Financial Statements | 9 Months Ended |
Sep. 30, 2013 | |
Financial Statements | ' |
2. Financial Statements | ' |
In the opinion of management, all adjustments consisting only of normal recurring adjustments necessary for a fair statement of (a) the results of operations for the three and nine month periods ended September 30, 2013 and 2012 and the period November 27, 2000 (Date of Inception) through September 30, 2013, (b) the financial position at September 30, 2013 and December 31, 2012, and (c) cash flows for the nine month periods ended September 30, 2013 and 2012, and the period November 27, 2000 (Date of Inception) through September 30, 2013, have been made. | |
The unaudited financial statements and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying financial statements and notes should be read in conjunction with the audited financial statements and notes of the Company for the fiscal year ended December 31, 2012. The results of operations for the nine month period ended September 30, 2013 are not necessarily indicative of those to be expected for the entire year. |
Going_Concern
Going Concern | 9 Months Ended |
Sep. 30, 2013 | |
Going Concern | ' |
3. Going Concern | ' |
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the three and nine months ended September 30, 2013 and since November 27, 2000 (date of inception) through September 30, 2013, the Company had a net loss of $169,483, $695,319 and $18,226,726, respectively. As of September 30, 2013, the Company has not emerged from the development stage. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to begin operations and to achieve a level of profitability. Since inception, the Company has financed its activities principally from the sale of public equity securities and issuance of debt. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes and proceeds from sub-licensing agreements until such time that funds provided by operations are sufficient to fund working capital requirements. 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. | |
Commitments_and_Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments And Contingencies | ' |
4. Commitments and Contingencies | ' |
The Company leased its corporate headquarters on a month-to-month basis. For each of the three month periods ended September 30, 2013 and 2012, rent expense was approximately $6,250. For each of the nine months periods ended September 30, 2013 and 2012, rent expense was $18,750. | |
In October 2011, the Company entered into employment agreements with terms that commence on October 1, 2011 and run through a range of dates with the latest being September 2014. These agreements have a cumulative annual salary of approximately $156,000 annually and cumulative grants of fully vested stock issuances of 850,000 shares of stock. Upon signing the employment agreements, all unearned stock compensation from the previous employment agreements was recognized in full, as the employees were not required to forfeit their previous granted shares of common stock. At the October 1, 2011 grant date, the Company recognized approximately $279,000 in stock-based compensation related to the above grants of common stock, and grants made during 2010. Additionally, the employees were granted 850,000 fully vested common stock options, with an exercise price of $0.25 per share, and expire five years from the date of grant. The grants of common stock and common stock options were essentially sign-on bonuses, and accordingly, the grant-date fair values were recognized as compensation expense at the October 1, 2011 grant date. | |
In January 2013, the Company entered into employment agreements with terms that commence on January 1, 2013 and run through December 31, 2013. These agreements have a cumulative annual salary of approximately $104,000 annually and cumulative grants of fully vested stock issuances of 450,000 shares of stock. At the January 1, 2013 grant date, the Company recognized approximately $1,350 in stock-based compensation related to the above grants of common stock made during 2013. Additionally, the employees were entitled to receive a bonus of 1,250,000 common stock options, with an exercise price of $0.05 per share, and expire five years from the date of grant. The grants of common stock and common stock options were essentially sign-on bonuses, and accordingly, the grant-date fair values were recognized as compensation expense at the January 1, 2013. | |
On January 23, 2013 the Company entered into a Letter of Intent with BluGen, Inc., a California corporation (“BluGen”) for the purpose of setting the basis for the joint development of a natural gas to Methanol technology (“GTM Technology”). Under the terms of the Agreement, BluGen will work with TTE, and the inventor, Robert Scragg to recreate and expand upon the original designs created by Mr. Scragg and to re-develop a lab version and control system, among other things. These items are to be completed under a timetable that has been agreed upon by the parties. The Parties have agreed to establish at a later date, a joint venture, wherein the Company will have a 15% interest and BluGen will have a 49% interest, and into which the commercial application of the technology will be developed. There has been no activity at the date of this filing. | |
On May 28, 2013, the Company entered into Lease Agreement dated with Fujian Xinchang Leather Company Limited, a Chinese company (“Fujian”), whose address is Jinjiang City, Fujian, China Ying Lin Zhenxin Chang Industrial Park (the “Plant”) for the lease of a Hydrogen boiler combustion equipment system (the “Equipment”) to be installed at their Plant. The Unit price for the Equipment is RMB 4,800,000 Yuan (approximately $800,000 US). The term of the Lease is seven (7) years, and renews on an annual basis if not terminated. Once installation and proven energy efficiency are established, Fujian will post the performance bond of RMB 1 million Yuan and rental payments shall commence, and be paid monthly thereafter. Any termination of the Lease within the first six (6) years will entitle the Company to take possession of the entire performance bond. As of September 30, 2013, there has not been any payments made on this lease. | |
On July 30, 2013, the Company signed an Agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the initial sum of CAN $450,000 and a maximum of CAN $10,000,000 in accordance with the terms of the Agreement. The financing to be provided is to be funded in tranches, and will have terms between three (3) and five (5) years, with each tranche being separately negotiated. As a part of the loan costs, 236 shall be issued restricted common stock equal to the issued and outstanding common shares of the Company at the time of the initial advance, with such shares being subject to a Lock Up/Leak Out Agreement to be negotiated between the parties. These shares are considered an additional cost in obtaining the financing and the value of these shares at the commitment date is recorded as a contra equity and amortized over five years. | |
The initial advance of CAN $450,000 is covered by a Loan Agreement dated June 19, 2013, and was signed on July 30, 2013 (the “Loan Agreement”), which provides that (a) the interest rate shall be 20% per annum; and (b) CAN $90,000 shall be withheld by lender in interest rate reserve account for the payment of the first years interest. The total of CAN $300,000 under the Loan Agreement was received during the three months ended September 30, 2013 and delivered to Energy Technology Services Co., Ltd., (ETS) as the initial payment on the first machine to be delivered under a purchase order agreement. As of September 30, 2013, the Company has recorded $374,636 as a note payable and $285,799 as construction in progress. | |
During the nine months ended September 30, 2013, the Company, as part of the above agreement, is required to issue 124,000,000 shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. As of September 30, 2013, the Company has issued 82,666,666 shares to 236 and recorded $661,333 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at September 30, 2013 was $638,866. The remaining 41,333,334 shares will be issued at a later date when the initial advance is fully funded. The Company recorded a common stock payable of $330,667 related to these shares at September 30, 2013. | |
On August 1, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 5,000,000 shares of restricted common stock to 236. These shares are valued at $0.02 which was the share price at commitment date. As of September 30, 2013, the Company recorded a note payable in the amount of $23,225 and $100,000 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at September 30, 2013 was $96,712. | |
On August 22, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $50,000 to pay off a convertible note the Company owed. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue 13,157,895 shares of restricted common stock to 236. These shares are valued at $0.01 which was the share price at commitment date. As of September 30, 2013, the Company recorded a note payable in the amount of $48,385 and $131,579 in deferred non-cash debt issuance costs which are amortized over five years. The balance of these deferred non-cash debt issuance costs at September 30, 2013 was $128,767. | |
On June 28, 2012, the Company entered into a joint venture with Energy Technology Services Co., Ltd., ("ETS"), a Taiwan corporation, for the manufacture, distribution, leasing/sale, installation and maintenance of ETS’s Hydrogen Generator Burning Systems. Under the final structure of the joint venture, the Company is the managing partner and ETS is the operational partner and managing agent in Asia for all business conducted on behalf of the joint venture. All revenue and contracts from the joint venture will be booked by Turbine Truck Engines with a 50/50 sharing of net profit between the Company and ETS after “reasonable expenses”. The Company will purchase and own all assets, leases and contracts generated by the joint venture. There has been no activity. | |
The Company has entered into various other agreements that have been disclosed in previous 10K and 10Q filings. These agreements have been put on hold but will be further pursued as adequate funding is generated. |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions | ' |
5. Related Party Transactions | ' |
During the year ended December 31, 2003, the Company signed a note payable with a related party in the amount of $15,000. The balance at September 30, 2013 and December 31, 2012 is $1,901. This note payable was unsecured, non-interest bearing and has no specific repayment terms, however, payment is not expected prior to December 31, 2013. | |
As of September 30, 2013 and December 31, 2012, accounts payable included $12,220 for various accounting services, due to the Company’s Chief Accounting Officer who is also a director of the Company. | |
On March 15, 2012, the Board of Directors resolved to issue 500,000 shares of Series A Convertible Preferred shares to Michael Rouse, the Company’s President and CEO, in exchange for $335,285 of unpaid and accrued salary. | |
During the year ended December 31, 2012, the Company’s CEO advanced the Company $1,430 with no specific terms of repayment and no stated interest rate. | |
The Company entered into a Debt Settlement Agreement (the “Agreement”) dated April 27, 2012 with Alpha Engines Corporation (“Alpha”). The Company and Alpha entered into a License Agreement dated December 31, 2001, pursuant to which the Company has accrued royalties and other payables to Alpha in the amount of $1,508,250 as of the date of the Agreement. Pursuant to the terms of the Agreement, Alpha agreed to accept 250,000 shares of the company common stock in full settlement of the above royalties and other payables and further agreed to reduce the annual license royalty payable under the License Agreement from $250,000 per year to $25,000 per year, retroactive to January 1, 2012, with the first payment being due January 1, 2013. On April 27, 2012, the Company recorded the difference between the fair value of the common stock issued to Alpha and the settlement of the accrued royalties and other payables as a capital contribution from Alpha to the Company, which is included in additional paid-in capital at December 31, 2012. As of September 30, 2013, the Company has not made a payment under this license agreement and has recorded total accrued royalty fees of $43,750. | |
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. |
Convertible_Notes_and_Derivati
Convertible Notes and Derivative liability | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Convertible Notes And Derivative Liability | ' | ||||||||||||||||
6. Convertible Notes and Derivative liability | ' | ||||||||||||||||
In April 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest is due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $62,225, respectively. The debt discount will be amortized over the life of the note, and the Company recognized approximately $6,900 of interest expense related to amortization during 2013. As of September 30, 2013, the Company has converted $42,500 of debt into 5,538,855 shares of common stock. As of September 30, 2013 the discount related to the note was fully amortized. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense. | |||||||||||||||||
In July 2012, the Company issued a convertible promissory note for $42,500. The note pays interest at 8% per annum, and principal and accrued interest is due on the maturity date of January 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $42,500 and $48,384, respectively. As of September 30, 2013, the Company has converted $42,500 of debt into 12,880,124 shares of common stock and $1,300 of accrued interest into 565,217 shares of common stock. As of September 30, 2013 the discount related to the note was fully amortized. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense. | |||||||||||||||||
In October 2012, the Company issued a convertible promissory note for $27,500. The note pays interest at 8% per annum, and principal and accrued interest is due on the maturity date of July 18, 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $27,500 and $28,950, respectively. As of September 30, 2013, the Company has converted $27,500 of debt into 10,200,000 shares of common stock. As of September 30, 2013 the discount related to the note was fully amortized. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense. | |||||||||||||||||
On April 24 2012 (the “Closing date”), the Company issued a convertible promissory note for $278,000. The lender funded $75,000 to the Company, and the lender at their discretion may fund additional amounts to the Company. The note matures one year from the closing date. If the Company pays the note within 90 days of the closing date, the interest rate is 0%. If the note is not paid within 90 days of the closing date, a one-time interest charge of 5% will be applied to the unpaid principal amount. The conversion option price associated with the note is the lesser of $0.10 or 70% of the lowest trade price in the 25 trading days previous to any conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of $75,000 and $100,415, respectively. The debt discount will be amortized over the life of the note, and the Company recognized $59,657 of interest expense related to amortization through 2013. The derivative liability has been adjusted to fair value each reporting period with unrealized gain (loss) reflected in other income and expense. | |||||||||||||||||
In February 2013, the Company issued a convertible promissory note for $32,500. The note pays interest at 8% per annum, and principal and accrued interest is due in November 2013. The conversion option price associated with the note has a 41 percent discount to the market price of the stock. The market price is based on the average of the three lowest trading prices during a ten day period prior to conversion. The note is convertible at any time. As a result of the variable feature associated with the conversion option, pursuant to ASC Topic 815, the Company bifurcated the conversion option, and utilized the black Scholes model to determine the fair value of the conversion option. At the issuance date, the Company recorded a debt discount and derivative liability of approximately $32,500 and $53,900, respectively. The debt discount was amortized over the life of the note, and the Company recognized $32,500 of interest expense related to amortization during 2013 and approximately $15,000 of interest expenses as a pre-payment penalty. This note was fully repaid as of September 30, 2013. The derivative liability has been adjusted to fair value each reporting period, with unrealized gain (loss) reflected in other income and expense. | |||||||||||||||||
For the nine months ended September 30, 2013, the unrealized loss on the above derivatives was $120,000. | |||||||||||||||||
Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2013 and December 31, 2012 related to the above derivative liability are as follows: | |||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||
Measurements at | Measurements | ||||||||||||||||
September 30, 2013 (1) | at December 31, 2012(1) | ||||||||||||||||
Using Level 2 | Total | Using Level 2 | Total | ||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities | $ | (8,675 | ) | $ | (8,675 | ) | $ | (123,272 | ) | $ | (123,272 | ) | |||||
Total liabilities | $ | (8,675 | ) | $ | (8,675 | ) | $ | (123,272 | ) | $ | (123,272 | ) | |||||
-1 | The Company did not have any assets or liabilities measured at fair value using Level 1 or Level 3 of the fair value hierarchy as of September 30, 2013 or December 31, 2012. | ||||||||||||||||
The Company’s derivative liabilities are classified within Level 2 of the fair value hierarchy. The Company utilizes the Black-Scholes Option Pricing Model to value the derivative liabilities utilizing observable inputs such as the Company’s common stock price, the exercise price of the warrants, and expected volatility, which is based on historical volatility. The Black-Scholes model employs the market approach in determining fair value. | |||||||||||||||||
Earnings_per_Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2013 | |
Earnings Per Share | ' |
7. Earnings per Share | ' |
Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted 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 the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common shares are considered antidilutive and thus are excluded from the calculation. For the three and nine month periods ended September 30, 2013 and 2012 and for the period from November 27, 2000 (Date of Inception) through September 30, 2013, the Company had 6,665,413, 5,405,413, 6,665,413, 5,405,413 and 6,665,413 potentially dilutive common stock options and warrants, respectively, which were not included in the computation of loss per share. Additionally, convertible notes with a face amount of $27,223 can convert into approximately 2,991,538 shares of common stock at September 30, 2013. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events | ' |
8. Subsequent Events | ' |
On October 20, 2013, the Company entered into a note agreement with 2367416 Ontario, Inc., a Canadian company (“236”), whereby 236 agrees to provide financing to the Company in the amount of CAN $25,000 for working capital needs. The agreement provides for interest rate at 20% per annum, with interest payable monthly and principle is due five years from the date of advance. As part of the above agreement, the Company is required to issue shares of restricted common stock to 236. These shares are valued at $0.008 which was the share price at commitment date. The Company will record a note payable to 236 and deferred non-cash debt issuance costs which are amortized over five years. |
Convertible_Notes_and_Derivati1
Convertible Notes and Derivative liability (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Convertible Notes And Derivative Liability Tables | ' | ||||||||||||||||
Schedule of fair value liabilities measured on recurring basis | ' | ||||||||||||||||
Liabilities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2013 and December 31, 2012 related to the above derivative liability are as follows: | |||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||
Measurements at | Measurements | ||||||||||||||||
September 30, 2013 (1) | at December 31, 2012(1) | ||||||||||||||||
Using Level 2 | Total | Using Level 2 | Total | ||||||||||||||
Liabilities: | |||||||||||||||||
Derivative liabilities | $ | (8,675 | ) | $ | (8,675 | ) | $ | (123,272 | ) | $ | (123,272 | ) | |||||
Total liabilities | $ | (8,675 | ) | $ | (8,675 | ) | $ | (123,272 | ) | $ | (123,272 | ) |
Going_Concern_Detail_Textuals
Going Concern (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | 154 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Going Concern Detail Textuals | ' | ' | ' | ' | ' |
Net loss | $169,483 | $198,900 | $695,319 | $995,004 | $18,226,726 |
Commitments_and_Contingencies_
Commitments and Contingencies (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Rent expense | $6,250 | $6,250 | $18,750 | $18,750 | ' |
Common stock payable | 337,367 | ' | 337,367 | ' | 20,000 |
2367416 Ontario, Inc [Member] | ' | ' | ' | ' | ' |
Notes Payable | 48,385 | ' | 48,385 | ' | ' |
Deferred non-cash debt issuance costs | 131,579 | ' | 131,579 | ' | ' |
Balance of Deferred non-cash debt issuance costs | 128,767 | ' | 128,767 | ' | ' |
Loan Agreemenrt [Memeber] | ' | ' | ' | ' | ' |
Number of shares issued | ' | ' | 82,666,666 | ' | ' |
Shares remaining to be issued | ' | ' | 41,333,334 | ' | ' |
Notes Payable | 374,636 | ' | 374,636 | ' | ' |
Construction in progress | 285,799 | ' | 285,799 | ' | ' |
Share price at commitment date | ' | ' | $0.01 | ' | ' |
Deferred non-cash debt issuance costs | 661,333 | ' | 661,333 | ' | ' |
Amotized years | ' | ' | '5 years | ' | ' |
Balance of Deferred non-cash debt issuance costs | 638,866 | ' | 638,866 | ' | ' |
Common stock payable | $330,667 | ' | $330,667 | ' | ' |
Related_Party_Transactions_Det
Related Party Transactions (Detail Textuals) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
Chief Executive Officer [Member] | Chief Accounting Officer and Director [Member] | Chief Accounting Officer and Director [Member] | |||
Note payable to related party | $1,901 | $1,901 | ' | ' | ' |
Accounts payable included due to Chief Accounting Officer who is also a director | 12,220 | 12,220 | ' | 12,220 | 12,220 |
Proceeds from related party advances | ' | ' | 1,430 | ' | ' |
Total accrued royalty fees | $43,750 | ' | ' | ' | ' |
Convertible_Notes_and_Derivati2
Convertible Notes and Derivative liability (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | ||
Liabilities: | ' | ' | ||
Derivative liabilities | ($8,675) | [1] | ($123,272) | [1] |
Total liabilities | -8,675 | [1] | -123,272 | [1] |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' | ||
Liabilities: | ' | ' | ||
Derivative liabilities | -8,675 | [1] | -123,272 | [1] |
Total liabilities | ($8,675) | [1] | ($123,272) | [1] |
[1] | The Company did not have any assets or liabilities measured at fair value using Level 1 or Level 3 of the fair value hierarchy as of September 30, 2013 or December 31, 2012. |
Convertible_Notes_and_Derivati3
Convertible Notes and Derivative liability - (Detail Textuals) (USD $) | 9 Months Ended | 154 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Issued convertible promissory note | $27,223 | ' | $27,223 |
Interest expense related to amortization | 114,030 | 100,899 | 296,235 |
Unrealized loss on derivatives | 120,000 | ' | ' |
Interest expenses as a pre-payment penalty | 15,000 | ' | ' |
Convertible Promissory Note in April 2012 [Member] | ' | ' | ' |
Interest expense related to amortization | 6,900 | ' | ' |
Amount of debt converted | 42,500 | ' | ' |
Convertible note converted into common shares, Number | 5,538,855 | ' | ' |
Convertible Promissory Note Issued On July 2012 [Member] | ' | ' | ' |
Interest expense related to amortization | 1,300 | ' | ' |
Amount of debt converted | 42,500 | ' | ' |
Convertible note converted into common shares, Number | 12,880,124 | ' | ' |
Accrued interest converted into common shares, Number | 565,217 | ' | ' |
Convertible Promissory Note Due On Maturity Date Of 2013 July 18 [Member] | ' | ' | ' |
Amount of debt converted | 27,500 | ' | ' |
Convertible note converted into common shares, Number | 10,200,000 | ' | ' |
Convertible Promissory Note Matures One Year From Closing Date [Member] | ' | ' | ' |
Interest expense related to amortization | 59,657 | ' | ' |
Convertible Promissory Note Due On Maturity Date 2013 November [Member] | ' | ' | ' |
Interest expense related to amortization | $32,500 | ' | ' |
Earnings_per_Share_Detail_Text
Earnings per Share (Detail Textuals) (USD $) | 3 Months Ended | 9 Months Ended | 154 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | |
Earnings Per Share Detail Textuals | ' | ' | ' | ' | ' |
Dilutive common stock | 6,665,413 | 5,405,413 | 6,665,413 | 5,405,413 | 6,665,413 |
Convertible debenture principal payment | $27,223 | ' | $27,223 | ' | $27,223 |
Conversion of debt, convertible number of shares | 2,991,538 | ' | 2,991,538 | ' | 2,991,538 |