Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended |
Jun. 30, 2014 | |
Document and Entity Information | ' |
Entity Registrant Name | 'Poly Shield Technologies Inc. |
Document Type | '10-Q |
Document Period End Date | 30-Jun-14 |
Amendment Flag | 'false |
Entity Central Index Key | '0001143238 |
Current Fiscal Year End Date | '--12-31 |
Entity Common Stock, Shares Outstanding | 87,995,005 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'Yes |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q2 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Current Assets | ' | ' |
Cash | $1,195,234 | $177,986 |
Accounts receivable | 3,993 | 3,754 |
Prepaids | 196,093 | 266,448 |
Work in progress | 741,511 | ' |
Total Current Assets | 2,136,831 | 448,188 |
Equipment | 35,264 | 39,413 |
Investment in distribution and license rights | 45,491 | 48,141 |
Investment in emission abatement technologies | 50,852,250 | ' |
Total Assets | 53,069,836 | 535,742 |
Current Liabilities | ' | ' |
Accounts payable | 457,323 | 147,600 |
Accrued liabilities | 63,653 | 206,454 |
Unearned revenue | 2,075,000 | 1,100,000 |
Notes and advances payable | 1,137,562 | 1,070,898 |
Due to related parties | 24,749 | 58,293 |
Current portion of the long-term loan | 470,383 | ' |
Total Current Liabilities | 4,228,670 | 2,583,245 |
Long-Term Liabilities | ' | ' |
Long-term loan | 178,103 | ' |
Total Long-Term Liabilities | 178,103 | ' |
Total Liabilities | 4,406,773 | 2,583,245 |
Stockholders' Deficit | ' | ' |
Common stock value | 87,995 | 187,995 |
Common stock obligation | 46,410 | ' |
Additional paid-in capital | 65,934,336 | 2,240,253 |
Accumulated deficit | -17,417,343 | -4,487,416 |
Accumulated other comprehensive income | 11,665 | 11,665 |
Total Stockholders' Equity (Deficit) | 48,663,063 | -2,047,503 |
Total Liabilities and Stockholders' Equity (Deficit) | $53,069,836 | $535,742 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Balance Sheet | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 87,995,005 | 187,995,005 |
Common stock, shares outstanding | 87,995,005 | 187,995,005 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Income Statement | ' | ' | ' | ' |
Survey income | ' | ' | $15,000 | ' |
Royalty income | 3,862 | 3,757 | 13,810 | 13,976 |
Total revenues | 3,862 | 3,757 | 28,810 | 13,976 |
Operating expenses | ' | ' | ' | ' |
Amortization | 1,312,924 | 74,084 | 1,534,549 | 145,959 |
General and administrative expense | 931,108 | 185,674 | 1,475,918 | 490,601 |
Royalty fee | -195,833 | 25,000 | -170,833 | 50,000 |
Loss before other items | -2,044,337 | -281,001 | -2,810,824 | -672,584 |
Other items | ' | ' | ' | ' |
Accretion expense | 86,824 | ' | -136,313 | ' |
Impairment of loan | -150,000 | ' | -150,000 | ' |
Interest expense | -91,444 | -49,184 | -155,060 | -90,328 |
Non-cash consulting fees | ' | ' | -9,677,730 | ' |
Net income (loss) | ($2,372,605) | ($330,185) | ($12,929,927) | ($762,912) |
Net income (loss) per common share - basic and diluted | ($0.03) | $0 | ($0.10) | $0 |
Weighted common shares outstanding - basic and diluted | 87,995,005 | 187,845,005 | 128,878,983 | 157,198,044 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Equity (Deficit) (USD $) | Common Stock | Obligation to Issue Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning Balance, amount at Dec. 31, 2011 | $33,745 | ' | $2,295,003 | ($2,295,013) | $11,665 | $45,400 |
Beginning Balance, shares at Dec. 31, 2011 | 33,745,005 | ' | ' | ' | ' | ' |
Shares issued under employeement agreement, shares | 154,000,000 | ' | ' | ' | ' | ' |
Shares issued under employeement agreement, value | 154,000 | ' | 81,466,000 | ' | ' | 81,620,000 |
Deferred compensation | ' | ' | -81,620,000 | ' | ' | -81,620,000 |
Shares issued for purchase of subsidiary, shares | 100,000 | ' | ' | ' | ' | ' |
Shares issued for purchase of subsidiary, value | 100 | ' | 52,900 | ' | ' | 53,000 |
Obligation to issue shares | ' | 45,000 | ' | ' | ' | 45,000 |
Net loss for the period | ' | ' | ' | -762,912 | ' | -762,912 |
Ending Balance, amount at Jun. 30, 2013 | 187,845 | 45,000 | 2,193,903 | -3,057,925 | 11,665 | -619,512 |
Ending Balance, shares at Jun. 30, 2013 | 187,845,005 | ' | ' | ' | ' | ' |
Shares issued for services, shares | 150,000 | ' | ' | ' | ' | ' |
Shares issued for services, value | 150 | -45,000 | 46,350 | ' | ' | 1,500 |
Net loss for the period | ' | ' | ' | -1,429,491 | ' | -1,429,491 |
Ending Balance, amount at Dec. 31, 2013 | 187,995 | ' | 2,240,253 | -4,487,416 | 11,665 | -2,047,503 |
Ending Balance, shares at Dec. 31, 2013 | 187,995,005 | ' | ' | ' | ' | ' |
Obligation to issue shares | ' | 46,410 | ' | ' | ' | 46,410 |
Shares cancelled upon cancellation of employment agreement, shares | -154,000,000 | ' | ' | ' | ' | ' |
Shares cancelled upon cancellation of employment agreement, value | -154,000 | ' | 154,000 | ' | ' | ' |
Fair value of warrants issued on long-term financing | ' | ' | 1,536,353 | ' | ' | 1,536,353 |
Fair value of warrants issued for consulting services | ' | ' | 9,677,730 | ' | ' | 9,677,730 |
Shares issued for patents, shares | 54,000,000 | ' | ' | ' | ' | ' |
Shares issued for patents, value | 54,000 | ' | 52,326,000 | ' | ' | 52,380,000 |
Net loss for the period | ' | ' | ' | -12,929,927 | ' | -12,929,927 |
Ending Balance, amount at Jun. 30, 2014 | $87,995 | $46,410 | $65,934,336 | ($17,417,343) | $11,665 | $48,663,063 |
Ending Balance, shares at Jun. 30, 2014 | 87,995,005 | ' | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Cash Flows from Operating Activities | ' | ' |
Net loss | ($12,929,927) | ($762,912) |
Non cash items | ' | ' |
Accretion expense | 136,313 | ' |
Amortization | 1,534,549 | 145,959 |
Consulting services | 9,677,730 | ' |
Website design | 46,410 | 45,000 |
Foreign exchange gain | 844 | -10,428 |
Changes to operating assets and liabilities: | ' | ' |
Accounts receivable | -239 | -2,793 |
Prepaids | 68,072 | -4,692 |
Advances payable | ' | 80,000 |
Advances receivable | ' | 44,765 |
Work in progress | -741,511 | ' |
Accounts payable | 324,723 | 39,834 |
Accrued liabilities | -142,801 | 52,324 |
Unearned revenue | 975,000 | 350,000 |
Due to related parties | -31,261 | -142,600 |
Accrued interest | 155,060 | 89,712 |
Net cash provided by (used in) operating activities | -927,038 | -75,831 |
Cash Flows from Financing Activities | ' | ' |
Long-term loan | 2,000,000 | ' |
Notes and advances payable | 48,286 | 194,835 |
Repayment of accrued interest on notes payable | 104,000 | ' |
Net cash provided by financing activities | 1,944,286 | 194,835 |
Net increase in cash | 1,017,248 | 119,004 |
Cash, beginning of period | 177,986 | 6,969 |
Cash, end of period | 1,195,234 | 125,973 |
Supplemental Disclosure of Cash Flow Information: | ' | ' |
Income tax | ' | ' |
Interest | $104,000 | ' |
Organization_and_Nature_of_Ope
Organization and Nature of Operations | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Organization and Nature of Operations | ' |
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS | |
Poly Shield Technologies Inc. (the “Company”) was incorporated in the state of Delaware on March 2, 2000 and is listed on the OTCQB under the symbol “SHPR”. The Company is in the business of developing and marketing environmental and pollution emission control solutions to a worldwide maritime market. | |
Poly Shield Technologies Inc.’s main focus is on the development and marketing of its proprietary DSOX-15 and DSOX-20 Fuel Purification Systems, designed to remove sulfur from marine fuel. These technologies are currently aimed at the maritime industry which includes vessels for cruise-line, freight shipping and tanker companies and can be installed during normal vessel operation. | |
Basis of presentation | |
The unaudited interim consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2013. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, these unaudited financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2013, included in the Company’s report on Form 10-K. | |
Reclassifications | |
Certain prior period amounts in the accompanying consolidated interim financial statements have been reclassified to conform to the current period’s presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any period presented. | |
Going Concern | |
The accompanying unaudited consolidated interim financial statements have been prepared assuming the Company will continue as a going concern. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Notes | ' | |||||
Related Party Transactions | ' | |||||
NOTE 2 - RELATED PARTY TRANSACTIONS | ||||||
Amounts due to related parties at June 30, 2014 and December 31, 2013: | ||||||
30-Jun-14 | 31-Dec-13 | |||||
Due to a company controlled by a Chief Financial Officer | $ | 703 | $ | 5,405 | ||
Due to a Chief Technical Officer, Chief Executive Officer and a President | 8,588 | 4,911 | ||||
Due to a former President | 294 | 294 | ||||
Due to a former Chief Executive Officer | 2,656 | 43,605 | ||||
Due to a Vice President of Engineering | 12,508 | 4,078 | ||||
Due to related parties | $ | 24,749 | $ | 58,293 | ||
Amounts are unsecured, due on demand and bear no interest. | ||||||
During the six months ended June 30, 2014 and 2013, the Company incurred the following expenses with related parties: | ||||||
June 30, | June 30, | |||||
2014 | 2013 | |||||
Administrative fees incurred to a company controlled by the Chief Financial Officer | $ | 150,000 | $ | 80,000 | ||
Management fees incurred to the Chief Financial Officer | 22,500 | - | ||||
Management fees incurred to the Senior Vice President of Business Development | 112,500 | - | ||||
Consulting fees incurred to the Vice President of Engineering | 70,002 | - | ||||
Consulting and management fees incurred to the President, Chief Executive Officer and the Chief Technical Officer | 90,000 | - | ||||
Fair value of warrants issued to the President, Chief Executive Officer and the Chief Technical Officer for consulting services (Notes 3 and 9) | 9,677,730 | - | ||||
Salary incurred to the President, Chief Executive Officer and the Chief Technical Officer | 31,644 | 192,514 | ||||
Consulting fees incurred to the former President | 15,000 | - | ||||
Consulting fees incurred to the former Chief Executive Officer | 252,000 | - | ||||
Total transactions with related parties | $ | 10,421,376 | $ | 272,514 | ||
Employment_Agreement_and_manag
Employment Agreement and management Consulting Agreements | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Employment Agreement and management Consulting Agreements | ' |
NOTE 3 - EMPLOYMENT AND MANAGEMENT CONSULTING AGREEMENTS | |
Employment and Management Consulting Agreement with President, CEO and CTO | |
On December 1, 2012 (and as amended on December 30, 2013 and February 28, 2014), the Company entered into an Employment Agreement with its President, CEO and CTO (the “Vendor”). This agreement became effective on February 5, 2013 (“Effective Date”). Under the terms of the Employment Agreement, the Vendor was appointed the Company’s Chief Executive Officer and received a signing bonus of $180,000. Beginning on the first anniversary of the Effective Date, the Vendor was to be paid an annual base salary of $180,000 per year. In addition, on the Effective Date, the Company issued 154,000,000 shares of its common stock with a fair value of $81,620,000, which were placed in escrow and were to be released to the Vendor upon delivery of bona fide contracts for the sale or lease of products or services at a rate of one share for each $0.25 in revenue. Escrowed stock was to be released in increments of 1,250,000 shares of common stock. | |
On March 10, 2014, the Company and the Vendor terminated the Employment Agreement and entered into a Technology Transfer Agreement whereby the Vendor transferred the title of certain patent applications to the Company in return for the release of 54,000,000 of the aforementioned 154,000,000 shares. The remaining 100,000,000 shares were cancelled (Notes 6 and 9). | |
On March 10, 2014, the Company entered into a management consulting agreement (the “Management Consulting Agreement”) with the Vendor whereby the Vendor agreed to provide consulting services to the Company in return for a monthly fee of $22,500 and the issuance of 10,000,000 warrants with an exercise price of $1.00, which expire on March 10, 2017 (Note 9). The Vendor may choose to exercise the warrants for up to 5,000,000 shares of common stock by way of a cashless exercise. Either party may terminate the agreement at any time with sixty days written notice. | |
The fair value of the warrants issued for the Management Consulting Agreement was calculated to be $9,677,730 and was expensed at the time of issuance. The fair value was determined using the Black-Scholes option pricing model at the grant date using the following assumptions: expected life of 3 years, risk-free interest rate of 0.79%, expected dividend yield of 0% and expected stock price volatility of 352%. | |
Management Consulting Agreements with CFO and Senior VP of Business Development | |
On June 25, 2014, the Company entered into two separate Management Consulting Agreements (the “Management Agreements”) with its Chief Financial Officer and its Senior Vice President of Business Development. Under the terms of the Management Agreements, the Company agreed to management fees of $7,500 per month payable to its CFO and $22,500 per month payable to its Senior Vice President of Business Development. Both Management Agreements are payable retroactively beginning as of April 1, 2014 and expire on June 25, 2017. |
License_Agreement_Note
License Agreement, Note | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
License Agreement, Note | ' |
NOTE 4 - LICENSE AGREEMENT | |
On March 12, 2012, the Company entered into a license agreement with Teak Shield (the “Teak Shield License”) and its owners Robert and Marion Diefendorf (the “Licensors”) whereby the Company acquired a license to market and sell Teak Shield’s licensed products. In exchange, the Company agreed to pay a 5% royalty to the Licensors with a minimum $100,000 annual royalty payment, and agreed to issue to the Licensors 1,666,667 shares of the Company’s common stock. | |
At December 31, 2013, management determined that the Teak Shield License was fully impaired. | |
On June 24, 2014, the Company and Licensors reached an agreement to amend the Teak Shield License (the “Amended Teak Shield License”). Both parties agreed to release each other from any and all obligations pursuant to the original Teak Shield License, which resulted in reversal of the royalty fees accrued of $170,833. | |
The Amended Teak Shield License has an initial term of six years and may be automatically renewed for successive two-year terms. The Company is not required to pay any royalty, and no additional consideration is required in order to maintain the licensing rights. |
Distribution_and_License_Right
Distribution and License Rights | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Distribution and License Rights | ' |
NOTE 5 - DISTRIBUTION AND LICENSE RIGHTS | |
On January 31, 2013, the Company issued 100,000 shares of its common stock with a fair value of $53,000 as a purchase price for all of the issued and outstanding shares in the capital of Ecolutions which held the rights to the intellectual property of Green Tech Marine AS (“GTM”). As a result of acquiring Ecolutions, the Company acquired distribution and license rights to the Exhaust Scrubber, a proprietary exhaust gas scrubber technology developed by GTM (“GTM Contracts”). | |
The GTM Contracts are in effect until November 15, 2022, and may be automatically renewed for a further ten year period unless either party gives written notice of termination at least 90 days prior to the then current term. | |
The GTM Contracts are amortized over 10 years on a straight line basis. During the six months ended June 30, 2014, amortization expense of $2,650 (June 30, 2013 - $2,208) was recorded. |
Technology_Transfer_Agreement_
Technology Transfer Agreement, Note | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Technology Transfer Agreement, Note | ' |
NOTE 6 - TECHNOLOGY TRANSFER AGREEMENT | |
On March 10, 2014, the Company entered into a Technology Transfer Agreement with the Vendor. Under the terms of the Technology Transfer Agreement, the Vendor agreed to sell to the Company all of his right, title and interest in and to all technologies owned by him that relate to the abatement and reduction of emissions and exhausts from internal combustion engines through the pre-treatment of input fuels, the treatment of exhaust gases produced by such engines, or any combination thereof (collectively, the “Technology”), including all of the Vendor’s right, title and interest in and to certain patent applications to the Technology. | |
In consideration for the Technology, the Company agreed to release 54,000,000 of the total 154,000,000 shares of common stock that were previously issued to the Vendor and held in escrow, subject to forfeiture or release upon the fulfillment of certain performance conditions as set in the Employment Agreement. The remaining 100,000,000 shares have been cancelled (Notes 3 and 9). | |
The fair value of the 54,000,000 shares which were released for the Technology was $52,380,000. The Technology is amortized over 10 years on a straight line basis. During the six months ended June 30, 2014, amortization expense of $1,527,750 (June 30, 2013 - $Nil) was recorded. |
Equipment_Note
Equipment, Note | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Notes | ' | |||||
Equipment, Note | ' | |||||
NOTE 7 - EQUIPMENT | ||||||
Amortization schedule for the equipment at June 30, 2014 and December 31, 2013: | ||||||
30-Jun-14 | 31-Dec-12 | |||||
Book value | $ | 39,413 | $ | 41,602 | ||
Amortization | -4,149 | -2,189 | ||||
Equipment | $ | 35,264 | $ | 39,413 | ||
The equipment consists of testing and laboratory tools and machinery, and is amortized on a straight-line basis over its useful life of five years. |
Unearned_Revenue_and_Work_in_P
Unearned Revenue and Work in Progress | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Unearned Revenue and Work in Progress | ' |
NOTE 8 - UNEARNED REVENUE AND WORK IN PROGRESS | |
During the six months ended June 30, 2014, the Company received $975,000, as a deposit for future installation of its DSOX Fuel Purification System (the “DSOX System”) pursuant to its April 15, 2014 purchase and services agreement. The agreement provides for the purchase of up to ten additional DSOX Systems. | |
During the six months ended June 30, 2014, the Company started a manufacturing process of its first land-based DSOX System, representing a combination of two DSOX-15 Systems originally designed to be used on board of a ship. As of June 30, 2014, the Company recorded $741,511 as work in progress, of which $109,820 was represented by the cost of parts and equipment required to build DSOX System and $631,691 consisted of fees charged by the external contractors for building the DSOX System. |
Share_Capital_Note
Share Capital, Note | 3 Months Ended | ||
Jun. 30, 2014 | |||
Notes | ' | ||
Share Capital, Note | ' | ||
NOTE 9 - SHARE CAPITAL | |||
On March 10, 2014, in consideration for the Technology transferred by the Vendor to the Company (Notes 3 and 6), the Company agreed to release, from escrow, 54,000,000 shares of the total 154,000,000 shares of common stock that were previously issued to the Vendor and held in escrow. The fair value of the 54,000,000 shares was $52,380,000. The remaining 100,000,000 shares were cancelled. | |||
On April 1, 2014, the Company recorded an obligation to issue 51,000 shares of its common stock with a fair value of $46,410 for the consulting and website design services. As of June 30, 2014, these shares remained unissued. | |||
Warrants | |||
On January 15, 2014, the Company entered into a binding letter agreement (the “Letter Agreement”) with KF Business Ventures LP (the “Lender”), which was superseded by the formal definitive loan agreement signed on February 11, 2014 and further amended on March 10, 2014 (the “KF Loan Agreement”). In consideration for the KF Loan Agreement, the Company issued to the Lender non-transferrable share purchase warrants to purchase a total of 6,200,000 shares of the Company’s common stock, exercisable at a price of $1 per share. Warrants for 2,200,000 shares of the Company’s common stock expire on January 15, 2015, and warrants for 4,000,000 shares of the Company’s common stock expire on January 15, 2018. The Lender may choose to exercise the warrants for up to 3,100,000 shares of common stock by way of a cashless exercise (Notes 10 and 12). | |||
On March 10, 2014, the Company signed an amendment to the KF Loan Agreement (Note 10). Under the terms of the amended agreement, the Company issued to the Lender non-transferrable share purchase warrants for a total of 704,546 shares of the Company’s common stock with an initial exercise price of $1 per share (collectively, the “Additional Warrants”). The Additional Warrants to purchase a total of 250,000 shares of the Company’s common stock expire on January 15, 2015, with the remaining 454,546 Additional Warrants expiring on January 15, 2018. The Additional Warrants may be exercised by way of a cashless exercise for a total of up to 352,273 shares. | |||
On March 10, 2014, in consideration for the Management Consulting Agreement, the Company issued non-transferrable share purchase warrants to purchase a total of 10,000,000 shares of the Company’s common stock with an initial exercise price of $1 per share (Note 3). The warrants expire on March 10, 2017. The Vendor may choose to exercise the warrants for up to 5,000,000 shares of common stock by way of a cashless exercise. | |||
Details of warrants outstanding as at June 30, 2014 are as follows: | |||
Exercise price | Expiry date | Number of warrants | |
outstanding | |||
$1.00 | 15-Jan-15 | 2,450,000 | |
$1.00 | 10-Mar-17 | 10,000,000 | |
$1.00 | 15-Jan-18 | 4,454,546 | |
16,904,546 | |||
At June 30, 2014, the weighted-average remaining contractual life of the outstanding share purchase warrants was 2.61 years. |
Notes_and_Loans_Payable
Notes and Loans Payable | 3 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Notes | ' | ||||||||
Notes and Loans Payable | ' | ||||||||
NOTE 10 - NOTES AND LOANS PAYABLE | |||||||||
Acamar Loan | |||||||||
On April 19, 2012, the Company signed a loan agreement for $260,000, repayable on October 31, 2013 (the “Acamar Loan”). The Acamar Loan bears interest at 3.5% per month for an effective rate of 51% per annum and is secured by the Teak Shield License (Note 4). The repayment of Acamar Loan was extended to June 30, 2014. | |||||||||
During the six months ended June 30, 2014, the Company paid $104,000 in interest (June 30, 2013 - Nil). As of June 30, 2014, the total principle payable under the Acamar Loan was $380,688 (December 31, 2013 - $377,500) and accrued interest totaled $101,450 (December 31, 2013 - $108,059). | |||||||||
KF Business Ventures Loan Agreement | |||||||||
Under the KF Loan Agreement (Notes 9 and 12), the Lender agreed to lend to the Company up to $2,000,000 (the “KF Loan”) in four equal installments of $500,000 each. As of June 30, 2014 the full amount of the loan was advanced to the Company. | |||||||||
The KF Loan accumulates interest at a rate of 10% per annum, compounded monthly. Principal and interest will become payable in 18 equal monthly installments commencing on January 1, 2015. The Company has the right to prepay the amounts outstanding under the KF Loan at any time in increments of not less than $250,000. | |||||||||
As additional consideration for the Lender agreeing to loan the funds to the Company, the Company has agreed to issue to the Lender non-transferrable share purchase warrants to purchase a total of 6,904,546 shares of the Company’s common stock, exercisable at a price of $1 per share (Notes 9 and 12). Warrants for 2,450,000 shares of the Company’s common stock expire on January 15, 2015, and warrants for 4,454,546 shares of the Company’s common stock expire on January 15, 2018. The Lender may choose to exercise the warrants for up to 3,452,273 shares of common stock by way of a cashless exercise. | |||||||||
The fair value of the warrants was calculated to be $5,821,189 using the Black-Scholes option pricing model at the grant date using the following assumptions: | |||||||||
Expected Warrant Life (in years) | 1-4 yrs. | ||||||||
Risk-Free Interest Rate | 0.13%-1.24% | ||||||||
Expected Dividend Yield | Nil | ||||||||
Expected Stock Price Volatility | 130%-362% | ||||||||
Under the guidance provided by ASC 470-20-25-2, proceeds from the sale of debt instrument with stock purchase warrants shall be allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds so allocated to the warrants shall be accounted for as paid-in capital. The remainder of the proceeds shall be allocated to the debt instrument portion of the transaction. | |||||||||
Management has determined that the warrants in this case are detachable from the debt instrument, as the debt instrument does not have to be surrendered to exercise the warrant. | |||||||||
The relative fair value of the warrants was determined to be $1,536,353 and the value allocated to the debt portion of the instrument was determined to be $463,647 at the time of issuance using an effective interest rate of 15%. During the six months ended June 30, 2014, the Company recognized accretion expense of $136,313. At June 30, 2014, the Company accrued $48,526 in interest payable under the KF Loan (December 31, 2013 - $Nil). $470,383 of the loan is due in the next 12 months. | |||||||||
Other Loans | |||||||||
During the six months ended June 30, 2014, the Company received an advance of CAD$50,000 ($48,286). | |||||||||
The tables below summarize the other loans outstanding as at June 30, 2014 and December 31, 2013: | |||||||||
As at June 30, 2014 | |||||||||
Interest rate | Due | Principal outstanding | Accrued | Total | |||||
per annum | date | interest | |||||||
Other Loans | 8% | On demand | $ | 27,000 | $ | 5,879 | $ | 32,879 | |
Other Loans | 7% | On demand | 49,500 | 14,581 | 64,081 | ||||
Other Loans | 6% | On demand | 177,969 | 23,715 | 201,684 | ||||
Other Loans | 0% | On demand | 356,780 | - | 356,780 | ||||
$ | 611,249 | $ | 44,175 | $ | 655,424 | ||||
As at December 31, 2013 | |||||||||
Interest rate | Due | Principal outstanding | Accrued | Total | |||||
per annum | date | interest | |||||||
Other Loans | 8% | On demand | $ | 27,000 | $ | 4,604 | $ | 31,604 | |
Other Loans | 7% | On demand | 49,500 | 12,401 | 61,901 | ||||
Other Loans | 6% | On demand | 178,639 | 17,884 | 196,523 | ||||
Other Loans | 0% | On demand | 295,311 | - | 295,311 | ||||
$ | 550,450 | $ | 34,889 | $ | 585,339 | ||||
Notes_and_Loans_Receivable
Notes and Loans Receivable | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Notes and Loans Receivable | ' |
NOTE 11 - NOTES AND LOANS RECEIVABLE | |
During the six months ended June 30, 2014, the Company advanced a total of $150,000 to its former subsidiary, New World Technologies Group Inc. The loans bare interest at 6% per year compounded monthly and are due on demand. As at June 30, 2014, the amount receivable was impaired due to uncertainty of collectability. | |
Subsequent_Event
Subsequent Event | 3 Months Ended |
Jun. 30, 2014 | |
Notes | ' |
Subsequent Event | ' |
NOTE 12 - SUBSEQUENT EVENTS | |
UK Subsidiary | |
On July 9, 2014, the Company formed a subsidiary, Poly Shield Technologies (UK) Limited, under the Companies Act 2006 of the United Kingdom. | |
Second KF Business Ventures Loan Agreement | |
On July 28, 2014, the Company entered into a loan agreement (the “Second KF Loan”) with KF Business Ventures LP for an additional $2,400,000, to be advanced in eight equal instalments of $300,000 each, commencing on September 1, 2014, and on the first day of each consecutive calendar month thereafter until fully advanced. The Second KF Loan is conditional upon the Company agreeing to amend the First KF Loan Agreement (Note 10) and issuing to the Lender non-transferrable share purchase warrants for a total of 9,600,000 shares of the Company’s common stock, exercisable at a price of $0.50 per share for a period expiring September 1, 2019, with cashless exercise rights for up to 4,800,000 shares. | |
The Second KF Loan accumulates interest at a rate of 10% per annum, compounded monthly and is repayable in full on January 15, 2016. The maturity date may be extended by the Company to January 15, 2017 by the issuance of additional share purchase warrants equal to one-half of the outstanding principal and unpaid interest at January 15, 2016, with an initial exercise price of $0.50 per share and expiring on September 1, 2021. |
Organization_and_Nature_of_Ope1
Organization and Nature of Operations: Basis of Presentation (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Basis of Presentation | ' |
Basis of presentation | |
The unaudited interim consolidated financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2013. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, these unaudited financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2013, included in the Company’s report on Form 10-K. |
Organization_and_Nature_of_Ope2
Organization and Nature of Operations: Reclassifications (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Reclassifications | ' |
Reclassifications | |
Certain prior period amounts in the accompanying consolidated interim financial statements have been reclassified to conform to the current period’s presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any period presented. |
Organization_and_Nature_of_Ope3
Organization and Nature of Operations: Going Concern (Policies) | 3 Months Ended |
Jun. 30, 2014 | |
Policies | ' |
Going Concern | ' |
Going Concern | |
The accompanying unaudited consolidated interim financial statements have been prepared assuming the Company will continue as a going concern. Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These unaudited interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern. Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock. |
Related_Party_Transactions_Sch
Related Party Transactions: Schedule of Related Party Transactions (Tables) | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Tables/Schedules | ' | |||||
Schedule of Related Party Transactions | ' | |||||
30-Jun-14 | 31-Dec-13 | |||||
Due to a company controlled by a Chief Financial Officer | $ | 703 | $ | 5,405 | ||
Due to a Chief Technical Officer, Chief Executive Officer and a President | 8,588 | 4,911 | ||||
Due to a former President | 294 | 294 | ||||
Due to a former Chief Executive Officer | 2,656 | 43,605 | ||||
Due to a Vice President of Engineering | 12,508 | 4,078 | ||||
Due to related parties | $ | 24,749 | $ | 58,293 |
Related_Party_Transactions_Sch1
Related Party Transactions: Schedule of expenses with related parties (Tables) | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Tables/Schedules | ' | |||||
Schedule of expenses with related parties | ' | |||||
June 30, | June 30, | |||||
2014 | 2013 | |||||
Administrative fees incurred to a company controlled by the Chief Financial Officer | $ | 150,000 | $ | 80,000 | ||
Management fees incurred to the Chief Financial Officer | 22,500 | - | ||||
Management fees incurred to the Senior Vice President of Business Development | 112,500 | - | ||||
Consulting fees incurred to the Vice President of Engineering | 70,002 | - | ||||
Consulting and management fees incurred to the President, Chief Executive Officer and the Chief Technical Officer | 90,000 | - | ||||
Fair value of warrants issued to the President, Chief Executive Officer and the Chief Technical Officer for consulting services (Notes 3 and 9) | 9,677,730 | - | ||||
Salary incurred to the President, Chief Executive Officer and the Chief Technical Officer | 31,644 | 192,514 | ||||
Consulting fees incurred to the former President | 15,000 | - | ||||
Consulting fees incurred to the former Chief Executive Officer | 252,000 | - | ||||
Total transactions with related parties | $ | 10,421,376 | $ | 272,514 |
Equipment_Note_Amortization_Sc
Equipment, Note: Amortization Schedule for Equipment (Tables) | 3 Months Ended | |||||
Jun. 30, 2014 | ||||||
Tables/Schedules | ' | |||||
Amortization Schedule for Equipment | ' | |||||
30-Jun-14 | 31-Dec-12 | |||||
Book value | $ | 39,413 | $ | 41,602 | ||
Amortization | -4,149 | -2,189 | ||||
Equipment | $ | 35,264 | $ | 39,413 |
Share_Capital_Note_Schedule_of
Share Capital, Note: Schedule of Stockholders' Equity Note, Warrants (Tables) | 3 Months Ended | ||
Jun. 30, 2014 | |||
Tables/Schedules | ' | ||
Schedule of Stockholders' Equity Note, Warrants | ' | ||
Exercise price | Expiry date | Number of warrants | |
outstanding | |||
$1.00 | 15-Jan-15 | 2,450,000 | |
$1.00 | 10-Mar-17 | 10,000,000 | |
$1.00 | 15-Jan-18 | 4,454,546 | |
16,904,546 |
Notes_and_Loans_Payable_Schedu
Notes and Loans Payable: Schedule of Loans Outstanding (Tables) | 3 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Tables/Schedules | ' | ||||||||
Schedule of Loans Outstanding | ' | ||||||||
As at June 30, 2014 | |||||||||
Interest rate | Due | Principal outstanding | Accrued | Total | |||||
per annum | date | interest | |||||||
Other Loans | 8% | On demand | $ | 27,000 | $ | 5,879 | $ | 32,879 | |
Other Loans | 7% | On demand | 49,500 | 14,581 | 64,081 | ||||
Other Loans | 6% | On demand | 177,969 | 23,715 | 201,684 | ||||
Other Loans | 0% | On demand | 356,780 | - | 356,780 | ||||
$ | 611,249 | $ | 44,175 | $ | 655,424 | ||||
As at December 31, 2013 | |||||||||
Interest rate | Due | Principal outstanding | Accrued | Total | |||||
per annum | date | interest | |||||||
Other Loans | 8% | On demand | $ | 27,000 | $ | 4,604 | $ | 31,604 | |
Other Loans | 7% | On demand | 49,500 | 12,401 | 61,901 | ||||
Other Loans | 6% | On demand | 178,639 | 17,884 | 196,523 | ||||
Other Loans | 0% | On demand | 295,311 | - | 295,311 | ||||
$ | 550,450 | $ | 34,889 | $ | 585,339 |
Related_Party_Transactions_Sch2
Related Party Transactions: Schedule of Related Party Transactions (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Due to related parties | $24,749 | $58,293 |
Company controlled by Chief Financial Officer | ' | ' |
Due to related parties | 703 | 5,405 |
Chief Technical Officer, Chief Executive Officer and President | ' | ' |
Due to related parties | 8,588 | 4,911 |
Former President | ' | ' |
Due to related parties | 294 | 294 |
Former Chief Executive Officer | ' | ' |
Due to related parties | 2,656 | 43,605 |
Vice President of Engineering | ' | ' |
Due to related parties | $12,508 | $4,078 |
Related_Party_Transactions_Sch3
Related Party Transactions: Schedule of expenses with related parties (Details) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Expenses incurred with related parties | $10,421,376 | $272,514 |
Company controlled by Chief Financial Officer | ' | ' |
Expenses incurred with related parties | 150,000 | 80,000 |
Chief Financial Officer | ' | ' |
Expenses incurred with related parties | 22,500 | ' |
Senior Vice President of Business Development | ' | ' |
Expenses incurred with related parties | 112,500 | ' |
Vice President of Engineering | ' | ' |
Expenses incurred with related parties | 70,002 | ' |
Chief Technical Officer, Chief Executive Officer and President | ' | ' |
Expenses incurred with related parties | 90,000 | ' |
Chief Technical Officer, Chief Executive Officer and President (Warrants) | ' | ' |
Expenses incurred with related parties | 9,677,730 | ' |
Chief Technical Officer, Chief Executive Officer and President (Salaries) | ' | ' |
Expenses incurred with related parties | 31,644 | 192,514 |
Former President | ' | ' |
Expenses incurred with related parties | 15,000 | ' |
Former Chief Executive Officer | ' | ' |
Expenses incurred with related parties | $252,000 | ' |
Employment_Agreement_and_manag1
Employment Agreement and management Consulting Agreements (Details) (USD $) | 0 Months Ended | 0 Months Ended | |||||
Dec. 01, 2012 | Feb. 05, 2013 | Mar. 10, 2014 | Feb. 05, 2013 | Mar. 10, 2014 | Jun. 25, 2014 | Jun. 25, 2014 | |
Chief Executive Officer | Chief Executive Officer | Technology Transfer Agreement | Technology Transfer Agreement | Management Consulting Agreement | Management Agreement, CFO | Management Agreement, Senior Vice President of Business Development | |
Signing bonus | $180,000 | ' | ' | ' | ' | ' | ' |
Annual base salary | ' | 180,000 | ' | ' | ' | ' | ' |
Shares of common stock issued and placed in escrow per agreement | ' | ' | ' | 154,000,000 | ' | ' | ' |
Fair value of common stock issued | ' | 81,620,000 | ' | ' | ' | ' | ' |
Number of incremental shares of escrowed stock to released | ' | 1,250,000 | ' | ' | ' | ' | ' |
Number of Escrowed Shares Released | ' | ' | 54,000,000 | ' | ' | ' | ' |
Number of Escrowed Shares Cancelled | ' | ' | 100,000,000 | ' | ' | ' | ' |
Monthly fee | ' | ' | ' | ' | 22,500 | 7,500 | 22,500 |
Issuance of warrants | ' | ' | ' | ' | 10,000,000 | ' | ' |
Common stock that may be exercised by warrants | ' | ' | ' | ' | 5,000,000 | ' | ' |
Fair value of the warrants issued | ' | ' | ' | ' | $9,677,730 | ' | ' |
Risk-free interest rate assumption | ' | ' | ' | ' | 0.79% | ' | ' |
Expected dividend yield | ' | ' | ' | ' | 0.00% | ' | ' |
Expected stock price volatility | ' | ' | ' | ' | 352.00% | ' | ' |
License_Agreement_Note_Details
License Agreement, Note (Details) (Teak Shield License, USD $) | 0 Months Ended | |
Mar. 12, 2012 | Jun. 24, 2014 | |
Teak Shield License | ' | ' |
Annual royalty payment percentage | 5.00% | ' |
Minimum annual royalty payment | $100,000 | ' |
Shares agreed to be issued to licensors | 1,666,667 | ' |
Reversal of the royalty fees | ' | $170,833 |
Distribution_and_License_Right1
Distribution and License Rights (Details) (USD $) | 12 Months Ended | 6 Months Ended | |
Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Ecolutions | GTM Contracts | GTM Contracts | |
Shares of common stock issued for purchase | 100,000 | ' | ' |
Fair value of purchase price | $53,000 | ' | ' |
Amortization expense | ' | $2,650 | $2,208 |
Technology_Transfer_Agreement_1
Technology Transfer Agreement, Note (Details) (Technology Transfer Agreement, USD $) | 6 Months Ended | ||
Jun. 30, 2014 | Mar. 10, 2014 | Feb. 05, 2013 | |
Technology Transfer Agreement | ' | ' | ' |
Number of Escrowed Shares Released | ' | 54,000,000 | ' |
Shares of common stock issued and placed in escrow per agreement | ' | ' | 154,000,000 |
Number of Escrowed Shares Cancelled | ' | 100,000,000 | ' |
Fair value of shares release | ' | $52,380,000 | ' |
Amortization expense recorded | $1,527,750 | ' | ' |
Equipment_Note_Amortization_Sc1
Equipment, Note: Amortization Schedule for Equipment (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Details | ' | ' | ' |
Book value of equipment | $39,413 | ' | $41,602 |
Amortization of equipment | -4,149 | ' | -2,189 |
Equipment, net | $35,264 | $39,413 | $39,413 |
Unearned_Revenue_and_Work_in_P1
Unearned Revenue and Work in Progress (Details) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Proceeds from deposits | $975,000 |
Work in progress recorded | 741,511 |
Cost of parts and equipment required to build DSOX System | ' |
Work in progress recorded | 109,820 |
Fees charged by the external contractors for building the DSOX System | ' |
Work in progress recorded | $631,691 |
Share_Capital_Note_Details
Share Capital, Note (Details) (USD $) | 6 Months Ended | ||
Jun. 30, 2014 | Mar. 10, 2014 | Feb. 05, 2013 | |
Technology Transfer Agreement | Technology Transfer Agreement | ||
Number of Escrowed Shares Released | ' | 54,000,000 | ' |
Shares of common stock issued and placed in escrow per agreement | ' | ' | 154,000,000 |
Fair value of shares release | ' | $52,380,000 | ' |
Number of Escrowed Shares Cancelled | ' | 100,000,000 | ' |
Obligation to issue shares of common stock | 51,000 | ' | ' |
Obligation to issue shares, fair value | $46,410 | ' | ' |
Weighted-average remaining contractual life of the outstanding share purchase warrants | 2.61 | ' | ' |
Share_Capital_Note_Schedule_of1
Share Capital, Note: Schedule of Stockholders' Equity Note, Warrants (Details) | Jun. 30, 2014 |
Number of warrants outstanding | 16,904,546 |
Expire January 15, 2015 | ' |
Number of warrants outstanding | 2,450,000 |
Expire March 10, 2017 | ' |
Number of warrants outstanding | 10,000,000 |
Expire January 15, 2018 | ' |
Number of warrants outstanding | 4,454,546 |
Notes_and_Loans_Payable_Detail
Notes and Loans Payable (Details) (USD $) | 3 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | ||||
Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Apr. 19, 2012 | Jun. 30, 2014 | Mar. 10, 2014 | |
Acamar Loans | Acamar Loans | Acamar Loans | KF Loan Agreement | KF Loan Agreement | ||||
Loan agreement | ' | ' | ' | ' | ' | $260,000 | ' | $2,000,000 |
Stated interest rate | ' | ' | ' | ' | ' | 3.50% | ' | ' |
Effective interest rate | ' | ' | ' | ' | ' | 51.00% | ' | 10.00% |
Interest paid | ' | ' | ' | 104,000 | ' | ' | ' | ' |
Principal Outstanding | 611,249 | 611,249 | 550,450 | 380,688 | ' | ' | ' | ' |
Loans payable total | 1,137,562 | 1,137,562 | 1,070,898 | ' | 377,500 | ' | ' | ' |
Accrued interest | 44,175 | 44,175 | 34,889 | 101,450 | 108,059 | ' | ' | ' |
Common stock that may be exercised by warrants | ' | ' | ' | ' | ' | ' | ' | 6,904,546 |
Accretion expense | -86,824 | 136,313 | ' | ' | ' | ' | 136,313 | ' |
Interest payable accrued | ' | ' | ' | ' | ' | ' | $48,526 | ' |
Notes_and_Loans_Payable_Schedu1
Notes and Loans Payable: Schedule of Loans Outstanding (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Principal Outstanding | $611,249 | $550,450 |
Accrued interest | 44,175 | 34,889 |
Loans payable total | 1,137,562 | 1,070,898 |
Other Loans (1) | ' | ' |
Effective interest rate | 8.00% | 8.00% |
Principal Outstanding | 27,000 | 27,000 |
Accrued interest | 5,879 | 4,604 |
Loans payable total | 32,879 | 31,604 |
Other Loans (2) | ' | ' |
Effective interest rate | 7.00% | 7.00% |
Principal Outstanding | 49,500 | 49,500 |
Accrued interest | 14,581 | 12,401 |
Loans payable total | 64,081 | 61,901 |
Other Loans (3) | ' | ' |
Effective interest rate | 6.00% | 6.00% |
Principal Outstanding | 177,969 | 178,639 |
Accrued interest | 23,715 | 17,884 |
Loans payable total | 201,684 | 196,523 |
Other Loans (4) | ' | ' |
Effective interest rate | 0.00% | 0.00% |
Principal Outstanding | 356,780 | 295,311 |
Loans payable total | $356,780 | $295,311 |
Notes_and_Loans_Receivable_Det
Notes and Loans Receivable (Details) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Details | ' |
Advance to former affiliate | $150,000 |
Subsequent_Event_Details
Subsequent Event (Details) (Second KF Loan, USD $) | Jul. 28, 2014 |
Second KF Loan | ' |
Loan agreement | $2,400,000 |
Common stock that may be exercised by warrants | 9,600,000 |