SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Description of Business – VIASPACE Inc. (“we”, “us”, “VIASPACE”, or the “Company”) was founded in July 1998. Its business involves renewable energy and is based on biomass, in particular our license to a dedicated energy crop with the trademark “Giant King ® GKG can be burned in 100% biomass power plants to generate electricity; made into pellets that can be burned together with coal to reduce carbon emissions from existing power plants; generate bio methane through anaerobic digestion, and can be used as a feedstock for low carbon liquid biofuels for transportation, biochemicals and bio plastics. Cellulosic ethanol, bio butanol and other liquid cellulosic biofuels, do not use corn or other food sources as feedstock. GKG can also be used as animal feed. GKG and other plants absorb and store carbon dioxide from the atmosphere as they grow. When they are burned, they release the carbon dioxide back into the atmosphere, but it is the same carbon dioxide that was removed from the atmosphere, and so this process is carbon neutral. Small amounts of fossil fuel are used by the farm equipment, transportation of GKG and fertilizer, so that the overall process of growing and burning GKG probably has some net carbon dioxide emissions, but much lower emissions than burning coal or other fossil fuels directly to create the same amount of energy. GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals. Going Concern – The Company has incurred significant losses from operations, resulting in an accumulated deficit of $55,091,000. The Company expects such losses to continue. On November 30, 2016, the Company entered into a Loan Agreement with former CEO Haris Basit whereby he agreed to fund the Company $100,000 over a two-year period. On February 23, 2017, the Company entered into a Loan Agreement with Dr. Schewe whereby he agreed to fund the Company up to $100,000 over a two-year period. On July 25, 2017, the Company entered into a Loan Agreement with Dr. Carl Kukkonen, former CTO of the Company, whereby he agreed to fund the Company up to $25,000 over a two-year period. On May 24, 2018, the Company entered into a Loan Agreement with Dr. Schewe whereby he agreed to fund the Company up to $100,000 over a two-year period. The Company expects loans from Dr. Schewe, Mr. Basit and Dr. Kukkonen and revenue generated from future contracts using the sublicense it has for Giant King Grass to fund operations for the foreseeable future. However, no assurance can be given that Dr. Schewe, Mr. Basit and Dr. Kukkonen will continue to fund the Company or that sales contracts will be obtained in the future, or if they are obtained, that they will be profitable. Accordingly, there continues to be substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any other adjustments that might result from the outcome of these uncertainties. Basis of Presentation – The accompanying audited financial statements of the Company were prepared in accordance with United States generally accepted accounting principles (“US GAAP”) for financial information and with Securities and Exchange Commission (“SEC”) instructions to Form 10-K. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Certain reclassifications were made to the December 31, 2017 financial statements to conform to the December 31, 2018 financial statement presentation. Use of Estimates in the Preparation of the Financial Statements – The preparation of financial statements, in conformity with US GAAP, 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents – The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of December 31, 2018 or 2017. Income Taxes – Income taxes are accounted for under the asset and liability approach, where deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining whether it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. An uncertain tax position is considered effectively settled on completion of an examination by a taxing authority if certain other conditions are satisfied. Should the Company incur interest and penalties relating to tax uncertainties, such amounts would be classified as a component of interest expense, net and other income (expense), net, respectively. Revenue Recognition – The Company has three revenue models for GKG: 1. contract plantation establishment, support and licensing for a customer; 2. collaborative agreements to establish a test plot in the customer’s location to determine that GKG grows sufficiently for the customer to use in their particular application; and 3. consulting agreement services for customers considering the establishment of a grass plantation in their particular country or location. The Company must complete certain performance obligations for all three revenue models before recognizing revenue. The first is oversight and technical assistance on best practices for growing GKG at the customer’s site. Agreements with customers generally include time periods when the oversight and technical assistance is to be provided. Revenue recognition for this performance obligation is allocated during the time period the assistance is provided. The second performance obligation is providing customers with seedlings for the initial plot. Once seedlings are shipped to the customer’s location this obligation is considered complete and the revenue is recognized on shipment date. The last performance obligation is ensuring licensing rights be extended to customers to allow them to grow GKG in agreed upon regions and during certain periods. While an agreement is in place with a customer revenue earned from licensing is recognized at the time of payment. Deferred revenue represents payments received which are related to future performance. For the year ending December 31, 2018 and 2017, the Company has recognized revenues under revenue models 2 and 3. With regard to revenue recognition in connection with agreements that include multiple performance obligations, management reviews the relevant terms of the agreements and determines whether the Company has satisfied a performance obligation in accordance with FASB Topic 606. The revenue is recognized when or as the Company satisfies a performance obligation by transferring a promised good or service to a customer. The amount of revenue recognized is the amount allocated to the satisfied performance obligation. If it is determined that payments have been received prior to satisfying the performance obligation, the revenue will be deferred and included in deferred revenue within our balance sheet until such time that the performance obligation is satisfied at a point in time or over time. Management reviews and reevaluates such conclusions as each item in the arrangement is delivered and circumstances of the development arrangement change. Major Customers – A relatively small number of customers account for a significant percentage of the Company’s sales. Four customers represented 100% of revenues for the year ending December 31, 2017 and three customers represented 100% of revenues for the year ending December 31, 2018. Stock Based Compensation – VIASPACE has a stock-based compensation plan. The Company has adopted the accounting and disclosure provisions of “Share-Based Payments”, codified in FASB ASC Topic 718, using the modified prospective application transition method. FASB ASC Topic 718 requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors based on estimated fair values using the modified prospective transition method. FASB ASC Topic 718 requires companies to estimate the fair value of share-based payment awards to employees and directors on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite services periods on a straight-line basis in the Company’s Statements of Operations. The Company accounts for equity instruments issued to consultants and vendors in exchange for goods and services in accordance with the provisions of FASB ASC Topic 505-50, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services” and “Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other than Employees”. The measurement date for the fair value of the equity instruments issued is determined at the earlier of: (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with FASB ASC Topic 505-50, an asset acquired for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor's balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of the fully vested, non-forfeitable common stock issued for future consulting services as prepaid expenses in its balance sheet. Fair Value of Financial Instruments – Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants at the measurement date. Under the provisions of the Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures (“ASC 820”), there are three levels of inputs that may be used to measure fair value: Level 1. Quoted prices in active markets for identical assets or liabilities. The Company had no Level 1 assets or liabilities during any period presented. Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. The Company had no Level 2 assets or liabilities during any period presented. Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. The Company had no Level 3 assets or liabilities during any period presented. The carrying value of cash and cash equivalents, prepaid expenses, trade payables and accrued expenses, payables to related parties and deferred revenue approximates fair value due to the short period of time to maturity. Net Income (Loss) Per Share – The Company computes net loss per share in accordance with “Earnings per Share”, codified in FASB ASC Topic 260. Under the provisions of this topic, basic and diluted net loss per share is computed by dividing the net loss available to common shareholders for the period by the weighted average number of shares of common stock outstanding during the period. Research and Development – The Company did not record any research and development activities in 2018 or 2017. If we do in the future, it will be expensed as incurred. Joint Venture - The Company entered into a joint venture with Corporacion Agricola, S.A. (“Agricorp”), a Nicaragua company, and formed Energia Reino Verde, S.A. (“ERV”) on January 30, 2014. The Company was granted an equity interest of 50% of outstanding shares of ERV for $0 on December 9, 2014. At December 31, 2018 and December 31, 2017, the net assets of ERV were immaterial. The Company has accounted for their investment under the equity method and at December 31, 2018 and December 31, 2017, the investment was recorded at $0. The project has been dormant during 2018 and therefore there is no activity. Recent Accounting Standards – In May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. The FASB’s Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), was issued in three parts: (a) Section A, “Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs—Contracts with Customers (Subtopic 340-40),” (b) Section B, “Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables,” and (c) Section C, “Background Information and Basis for Conclusions.” ASU 2014-09 provides a framework for addressing revenue recognition issues and, upon its effective date, will replace almost all pre-existing revenue recognition guidance in current U.S. generally accepted accounting principles (GAAP) (i.e., legacy GAAP), including industry-specific guidance and the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin Topic 13, Revenue Recognition (which is also part of legacy GAAP for public entities). The core principle underlying the guidance in ASC 606, which is included in ASC 606-10-10-2, is to “recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” Implementation must occur no later than the quarter and year beginning January 1, 2018, for public entities (i.e., public business entities and certain not-for-profit entities and employee benefit plans) with a calendar year end. In the first quarter of 2018, we adopted the standard utilizing the modified retrospective adoption method in order to provide for comparative results in all periods presented. The adoption of this guidance does not have a material impact on our financial statements. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance does not have a material impact on the Company’s financial statements. In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation-Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07). The ASU expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and serices from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost. ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. It also clarifies that Topic 718 does not apply to share-based payments used to effectively provide financing to the issuer or awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. ASU 2018-07 is effective for annual periods ending after December 15, 2018, including interim periods within that fiscal. We adopted the standard in the first quarter of 2018 and the adoption does not have a material impact on our financial statements. Subsequent Events – We have evaluated events and transactions subsequent to the balance sheet date. Based on this evaluation, we are not aware of any events or transactions (other than those disclosed in Note 11) that occurred subsequent to the balance sheet date but prior to filing that would require recognition or disclosure in our financial statements. |