Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Details | ||
Registrant Name | CLEAN ENERGY TECHNOLOGIES, INC. | |
Registrant CIK | 0001329606 | |
SEC Form | 10-K | |
Period End date | Dec. 31, 2018 | |
Fiscal Year End | --12-31 | |
Trading Symbol | CETY | |
Tax Identification Number (TIN) | 202675800 | |
Number of common stock shares outstanding | 575,657,656 | |
Public Float | $ 1,918,362 | |
Filer Category | Non-accelerated Filer | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Shell Company | false | |
Small Business | true | |
Emerging Growth Company | false | |
Ex Transition Period | false | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | FY |
Statement of Financial Position
Statement of Financial Position - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash | $ 6,456 | $ 9,418 |
Accounts receivable - net | 724,845 | 477,081 |
Inventory | 711,894 | 854,547 |
Total Current Assets | 1,443,195 | 1,341,046 |
Property and Equipment - Net | 96,027 | 144,867 |
Goodwill | 747,976 | 747,976 |
License | 354,322 | 354,322 |
Patents | 151,199 | 163,076 |
Other Assets | 25,400 | 24,229 |
Total Non Current assets | 1,278,897 | 1,289,603 |
Total Assets | 2,818,119 | 2,775,516 |
Current Liabilities: | ||
Bank Overdraft | 5,850 | 10,863 |
Accounts payable - trade | 1,033,375 | 996,474 |
Accrued Expenses | 1,786,796 | 1,607,778 |
Accrued Expenses Related party | 123,394 | 133,260 |
Customer Deposits | 365,815 | 98,594 |
Warranty Liability | 100,000 | 100,000 |
Deferred Revenue | 33,000 | 0 |
Derivative Liability | 245,988 | 244,496 |
Notes Payable - Current (net of discount) | 2,775,090 | 3,692,233 |
Notes Payable - Current - Related Party | 1,144,505 | 5,000 |
Total Current Liabilities | 7,613,813 | 6,888,698 |
Total Liabilities | 7,613,813 | 6,888,698 |
Preferred D stock, stated value $100 per share; 20,000 shares authorized; 7,500 shares and 7,500 shares issued and outstanding respectively | 750,000 | 750,000 |
Common stock, $.001 par value; 800,000,000 shares authorized; 555,582,656 and 210,881,122 shares issued and outstanding respectively | 555,585 | 210,883 |
Shares to be issued | 262,000 | 58,000 |
Additional paid-in capital | 5,236,456 | 3,657,653 |
Accumulated deficit | (11,599,735) | (8,789,718) |
Total Stockholders' (Deficit) | (4,795,694) | (4,113,182) |
Total Liabilities and Stockholders' Deficit | $ 2,818,119 | $ 2,775,516 |
Income Statement
Income Statement - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Details | ||
Sales | $ 1,331,171 | $ 957,633 |
Cost of Goods Sold | 810,489 | 544,752 |
Gross Profit | 520,682 | 412,881 |
General and Administrative | ||
General and Administrative expense | 449,549 | 375,808 |
Salaries | 740,146 | 783,656 |
Facility lease | 280,239 | 268,551 |
Professional fees | 142,234 | 139,322 |
Consulting | 79,084 | 46,938 |
Share Based Expense | 353,140 | 2,460 |
Total Expenses | 2,044,392 | 1,616,735 |
Net Profit / (Loss) From Operations | (1,523,710) | (1,203,854) |
Change in derivative liability | 116,259 | 142,326 |
Gain / (Loss) on disposition of assets | 2,389 | 0 |
Financing Fees | (542,419) | (708,714) |
Interest Expense | (862,536) | (444,612) |
Net Profit / (Loss) Before Income Taxes | (2,810,017) | (2,214,854) |
Income Tax Expense | 0 | 0 |
Net Profit / (Loss) | $ (2,810,017) | $ (2,214,854) |
of common shares outstanding | 553,354,983 | 209,915,415 |
Net Profit / (Loss) per common share basic and diluted | $ (0.01) | $ (0.01) |
Statement of Cash Flows
Statement of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Cash Flows from Operating Activities: | ||
Net Profit / (Loss) | $ (2,810,017) | $ (2,214,854) |
Depreciation and amortization | 52,444 | 54,650 |
Share Based Expense | 353,140 | 2,460 |
Gain on sale of fixed asset | (2,389) | 0 |
Financing fees | 542,419 | 551,997 |
Change in Derivative Liability and Debt discount | 21,512 | (45,486) |
(Increase) decrease in accounts receivable | (247,764) | (109,458) |
(Increase) decrease in inventory | 142,653 | 59,407 |
(Increase) decrease in other assets | (1,171) | 0 |
(Decrease) increase in accounts payable | 36,901 | 16,274 |
Other (Decrease) increase in accrued expenses | 169,152 | 90,946 |
Other (Decrease) increase in deferred revenue | 33,000 | |
Other (Decrease) increase in customer deposits | 267,221 | 98,594 |
Net Cash Used In Operating Activities | (1,442,899) | (1,495,470) |
Cash Flows from Financing Activities | ||
Bank Overdraft / (Repayment) | (5,013) | (4,544) |
Payments on notes payable | (218,295) | 0 |
Proceeds from notes payable | 755,868 | 1,502,990 |
Stock issued for cash | 907,377 | 0 |
Cash Flows Provided By Financing Activities | 1,439,937 | 1,498,446 |
Net (Decrease) Increase in Cash and Cash Equivalents | (2,962) | 2,976 |
Cash and Cash equivalent at beginning of period | 9,418 | 6,442 |
Cash and Cash equivalent at end of period | $ 6,456 | $ 9,418 |
Organization, Consolidation and
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies | Clean Energy Technologies, Inc. established a new CETY Europe Sales and Service Center in Silea (Treviso), Italy established in December 2017. The service center will be operational in November 2018 and will include a 24/7 Call Center, support Field Service Personnel, including remote access to the Waste Heat Generators and inventory spare parts to support the currently commissioned 65 Clean CycleTM installations in Europe. The service center will also provide support services for new European sales. CETY has identified substantial unmet market needs in many European countries including the United Kingdom, Germany, Italy, Ukraine, Croatia, Slovakia, Slovenia, Austria, Belarus and the Czech Republic. The CETY Europe Sales and Service Center will be the warranty and service hub for CETY’s Clean Cycle™ Heat Recovery Solutions (HRS) Waste Heat Generators. CETY purchased the patented HRS technology from General Electric in 2015. The HRS System captures waste heat from a variety of sources such as Reciprocating Engines, Turbines, landfills, composting operations, water, or steam processes, and converts it into reliable electricity without requiring additional manpower, fuel or emissions. The CETY Europe Sales and Service Center will be well suited to handle any warranty and/or service issues. Going Concern The financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the normal course of business. The Company had a total stockholder’s deficit of $4,795,694 and a working capital deficit of $6,170,618 and a net loss of $2,810,017 for the year ended December 31, 2018. The company also had an accumulated deficit of $11,599,735 as of December 31, 2018 and used $1,442,899 in net cash from operating activities for the year ended December 31, 2018. Therefore, there is substantial doubt about the ability of the Company to continue as a going concern. There can be no assurance that the Company will achieve its goals and reach profitable operations and is still dependent upon its ability (1) to obtain sufficient debt and/or equity capital and/or (2) to generate positive cash flow from operations. Plan of Operation Management is taking the following steps to sustain profitability and growth: Growth Strategy Strategy Sales and Marketing Our marketing approach is to position CETY as a worldwide leader in the heat to power & energy efficiency markets by targeting industries that have wasted heat which could potentially turn into electricity. We are leveraging our proprietary magnetic bearing turbine technology and over 100 installation with 1 million fleet operating to increase our market share in low to medium temperature waste heat recovery markets. We utilize both a direct sales force and global distribution group with expertise in heat recovery solutions and clean energy markets. We have also established relationships with integrators, consultant and project developers and integrated solution proivders. We plan to leverage our core expertise to identify, acquire and develop leading clean energy and clean technology solutions and products. We will continue to utilize our relationships and expertise to expand in clean and renewable energy sector through new in-house development of disruptive heat to power technologies, acquisitions, cogeneration, and licensing agreements. CETY maintains an online presence through our web portal and social media. Our application engineers assist in converting the opportunities into projects. We provide technical support to our Clean Cycle TM The sales of our products are related to the global prices for oil, gas, coal and solar energy. As prices increase our products produce a better return on investment for our customers. They are also dependent on regulatory drivers and financial incentives. Our Market The advantage of recapturing and utilizing waste heat is that it typically replaces purchased electric power, much of which does and will continue to require burning fossil fuels, or directly replaces fuels which must be purchased and combusted. Thus it actually can directly reduce emissions and eliminate transmission losses. Projections of market potential are truly enormous, with unrecovered waste heat in industrial processes estimated at half a quintillion (a billion billion) BTUs. The Company believes that if it can capture even a small percentage of this market it would have a strong opportunity to reduce exhaust emissions, assist in lowering energy costs of the manufacturers, while growing the Company and its client base. Our Products Organic Rankine Cycle System Using Clean Cycle Generator The Rankine Cycle is a thermodynamic cycle that converts heat into energy. The organic Rankine cycle is similar. Heat from an industrial waste source is passed through a heat exchanger where it superheats cold fluid that is vaporized. The vapor is passed through an expansion device (turbine or other expander) which creates electricity, and then through a condenser where the vapor is re-condensed to liquid and cooled. The cycle repeats itself generating energy. We produce an Organic Rankine Cycle system called the Clean Cycle TM heat to power generator through our wholly owned subsidiary Heat Recovery Solutions, (HRS). Our Clean Cycle TM generators create additional power from waste heat with no additional emission and come in two models, skids for use inside a plant or containers for outdoor applications. By using the Clean Cycle TM generator our customers boost their overall energy efficiency. Our product saves fuel, reduces pollution, requires very little maintenance and provides a fast return on investment. We produce a turnkey Organic Rankine Cycle system we call the Clean Cycle TM TM We compete based on efficiency, maintenance and our customer’s return on investment. We have an exclusive license from Calnetix to use their magnetic turbine for heat waste recovery applications. We believe that the magnetic turbine technology is more efficient than our competitor’s turbines which allows our systems to generate more electricity at lower heat ranges. Because our generator is magnetic, it requires far less maintenance than our competitors who use oil, gearbox and rubber seals in their turbines. We have the advantage of selling a system that was originally manufactured and sold by General Electric International so our Clean Cycle TM Our greatest advantage is that the Clean Cycle TM NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, Inc.) is presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity. The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves. Cash and Cash Equivalents We maintain the majority of our cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank. For purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents. Accounts Receivable We grant credit to our customers located within the United States of America; and do not require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of December 31, 2018, and December 31, 2017, we had a reserve for potentially un-collectable accounts of $57,000. Five (5) customers accounted for approximately 98% of accounts receivable at December 31, 2018. Our trade accounts primarily represent unsecured receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant. Inventory Inventories are valued at the lower of weighted average cost or market value. Our industry experiences changes in technology, changes in market value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made. Any inventory write offs are charged to the reserve account. As of December 31, 2018 and December 31, 2017, we had a reserve for potentially obsolete inventory of $250,000. Property and Equipment Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets: Furniture and fixtures 3 to 7 years Equipment 7 to 10 years Leasehold Improvements Long –Lived Assets Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which could result in impairment of long-lived assets in the future. Revenue Recognition The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” The following steps are applied to our legacy contract manufacturing division: Fair Value of Financial Instruments The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value: The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments. The carrying amounts of the Company’s financial instruments as of December 31 2017 and 2018, reflect: Level 1 Level 2 Level 3 Total Fair value of convertible notes derivative liability – December 31, 2017 $ – $ – $ 244,496 $ 244,496 Level 1 Level 2 Level 3 Total Fair value of convertible notes derivative liability – December 31, 2018 $ – $ – $ 245,988 $ 245,988 The carrying amount of accounts payable and accrued expenses are considered to be representative of their respective fair values because of the short-term nature of these financial instruments. Other Comprehensive Income We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods. Net Profit (Loss) per Common Share Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At December 31, 2018, we had outstanding common shares of 555,582,656 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents at December 31, 2018 and 2017 were 553,354,983 and 209,915,415, respectively. As of December 31, 2018, we had convertible notes, convertible into approximately Research and Development We had no amounts of research and development R&D expense during the year ended December 31, 2018 and 2017. Segment Disclosure FASB Codification Topic 280, Segment Reporting The Company has three reportable segments: Clean Energy HRS (HRS), Cety Europe and the legacy electronic manufacturing services division. The segments are determined based on several factors, including the nature of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics. Refer to note 1 for a description of the various product categories manufactured under each of these segments. Prior to March 31, 2017 we only had one reporting segment. An operating segment's performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, other charges (income), net and interest and other, net. Selected Financial Data 2018 2017 Net Sales Electronics Assembly 567,417 581,191 Clean Energy HRS 752,783 376,442 Cety Europe 10,971 - Total Sales 1,331,171 957,633 Compensation-Stock Compensation ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates. We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the year ended December 31, 2018 and 2017 we had $353,140 and $2,460 respectively, in share-based expense, due to the issuance of common stock. As of December 31, 2018, we had no further non-vested expense to be recognized. Income Taxes The Company accounts for income taxes under SFAS No. 109 (now contained in FASB Codification Topic 740-10-25, Accounting for Uncertainty in Income Taxes), which requires the asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. As of December 31, 2018, we had a net operating loss carry-forward of approximately $(2,810,017) and a deferred tax asset of $515,944 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(515,944). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December 31, 2018 the Company had not taken any tax positions that would require disclosure under FASB ASC 740. December 31, 2018 December 31, 2017 Deferred Tax Asset $ 515,944 $ 845,490 Valuation Allowance (515,944) (845,490) Deferred Tax Asset (Net) $ - $ - On February 13, 2018 , Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant” or “Corporation”) entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) by and between MGW Investment I Limited (“MGWI”) and the Corporation. The Corporation received $907,388 in exchange for the issuance of 302,462,667 restricted shares of the Corporation’s common stock, par value $.001 per share (the “Common Stock”). On February 13, the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement (the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL Note”) in the principal amount of $939,500 with an interest rate of 10% per annum interest rate and a maturity date of February 13, 2020. The CVL Note is convertible into shares of Common Stock at $0.003 per share, as adjusted as provided therein. This note was assigned to Mgw Investments and they agreed not to convert the $939,500 note in to shares in excess of the 800,000,000 Authorized limit until we have increased the Authorized shares to the Board approved limit of 2 billion shares. This resulted in a change in control, which limited the net operating to that date forward. We are subject to taxation in the U.S. and the states of California. Further, the Company currently has no open tax years’ subject to audit prior to December 31, 2015. The Company is current on its federal and state tax returns . Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, or stockholders’ equity as previously reported. Recently Issued Accounting Standards The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements. Update 2018-08 Update 2018-05 Update 2018-04 Update 2018-03 Update 2018-01 Update 2017-20 Update 2017-18 Update 2017-17 Update 2017-16 Update 2017-15 —Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Update 2017-13 —Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Update 2017-12 |
Loans, Notes, Trade and Other R
Loans, Notes, Trade and Other Receivables Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Loans, Notes, Trade and Other Receivables Disclosure | NOTE 3 – ACCOUNTS AND NOTES RECEIVABLE December 31, 2018 December 31, 2017 Accounts Receivable $ 781,845 $ 484,081 December 31, 2018 December 31, 2017 Raw Material $ 952,214 $ 1,089,813 Work in Process 9,680 14,734 Total 961,894 1,104,547 Less reserve for excess or obsolete inventory (250,000) (250,000) Inventory $ 711,894 $ 854,547 Our Inventory is pledged to Nations Interbanc, our line of credit. |
Property, Plant and Equipment D
Property, Plant and Equipment Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Property, Plant and Equipment Disclosure | NOTE 5 – PROPERTY AND EQUIPMENT Property and equipment were comprised of the following at: December 31, 2018 December 31, 2017 Capital Equipment $ 1,342,794 $ 1,772,632 Leasehold improvements 75,436 75,436 Accumulated Depreciation (1,322,203) (1,703,201) Net Fixed Assets $ 96,027 $ 144,867 Our Depreciation Expense for the years ended December 31, 2018 and 2017 was $40,567 and 42,815 respectively. Our Property Plant and Equipment is pledged to Nations Interbanc, our line of credit. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Goodwill and Intangible Assets Disclosure | NOTE 6 – INTANGIBLE ASSETS December 31, 2018 December 31, 2017 Goodwill $ 747,976 $ 747,976 License 354,322 354,322 Patents 190,789 190,789 Accumulated Amortization (39,590) (27,713) Net Intangible Assets $ 1,253,497 $ 1,265,374 Our Amortization Expense for the years ended December 31, 2018 and 2017 was $11,877 and 11,877 respectively. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Accounts Payable and Accrued Liabilities Disclosure | NOTE 7 – ACCRUED EXPENSES December 31, 2018 December 31, 2017 Accrued Wages $ 224,514 $ 287,002 Accrued Interest 466,425 224,918 Accrued Interest Related party 123,394 133,259 Customer Deposits 365,815 98,594 Accrued Payable to GE - TSA 972,231 972,233 Accrued Rents and Moving Expenses 123,626 123,626 $ 2,276,005 $ 1,839,632 |
Debt Disclosure
Debt Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Debt Disclosure | NOTE 8 – NOTES PAYABLE . On September 21, 2018 the corporation entered into a promissory note with MGW Investment I Limited, for the principal amount of $100,000, with an interest rate of Eight Percent (8%) per annum and a maturity date of September 21, 2019. Convertible notes On September 6, 2016, we entered into a one-year convertible note payable for $87,500, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of fifty-five percent (55%) of the lowest closing bid price (as reported by Bloomberg LP) of our common stock for the twenty (20) Trading Days immediately preceding the date of conversion. On December 16, 2016 we issued 1,200,000 shares of common stock at $.0031 for a partial conversion of this note in the amount of $3,696. January 4, 2018, we issued 2,300,000 shares of common stock at $.002192 for a partial conversion of this note in the amount of $5,042. On November 2, 2016, we effected the repayment of the convertible note dated March 15, 2016 for an aggregate amount of $84,000. Concurrently, we entered into an Escrow Funding Agreement with Red Dot Investment, Inc., a California corporation (“Reddot”), pursuant to which Reddot deposited funds into escrow to fund the repayment and we assigned to Reddot our right to acquire the convertible note and Reddot acquired the convertible note. Concurrently, we and Reddot amended the convertible note (a) to have a fixed conversion price of $.005 per share, subject to potential further adjustment in the event of certain Common Stock issuances, (b) to have a fixed interest rate of ten percent (10%) per annum with respect to both the redemption amount and including a financing fee and any costs, expenses, or other fees relating to the convertible note or its enforcement and collection, and any other expense for or on our account (in each case with a minimum 10% yield in the event of payoff or conversion within the first year), such amounts to constitute additional principal under the convertible note, as amended, and (c) as otherwise provided in the Escrow Funding Agreement. The March 2016 convertible note, as so amended, is referred to as the “Master Note.” On January 9, 2017, we effected the partial repayment of the convertible note dated July 6, 2016. The holder had elected to convert $15,400 ($11,544 in principal and $3,855 in accrued interest) into a total of 7,000,000 shares of Common Stock. The conversion left $66,205 remaining due and payable under the July 2016 convertible note and we paid the note holder a total of $89,401 in repayment. On January 12, 2017, we effected the partial repayment of the convertible note dated September 6, 2016. The holder had elected to retain $26,117 (consisting of $24,228 in principal and $1,899 in interest), leaving $60,941 remaining due and payable under the September 2016 convertible note, which was satisfied and canceled in consideration of the payment to the note holder of $97,506. On January 9, 2017, we effected the repayment in full of the convertible note dated August 12, 2016 through payment to the note holder of a total of $89,401. Concurrently with the foregoing note repayments, we entered into a Credit Agreement and Promissory Note (the “Credit Agreement”) with Megawell USA Technology Investment Fund I LLC, a Wyoming limited liability company in formation (“MW I”), pursuant to which MW I deposited funds into escrow to fund the repayment of the convertible notes and we assigned to MW I our right to acquire the convertible notes and otherwise agreed that MW I would be subrogated to the rights of each note holder to the extent a note was repaid with funds advanced by MW I. Concurrently, MW I acquired the Master Note and we agreed that all amounts advanced by MG I to or for our benefit would be governed by the terms of the Master Note, including the payment of a financing fees, interest, minimum interest, and convertibility. Reddot is MW I’s agent for purposes of administration of the Credit Agreement and the Master Note and advances thereunder. The foregoing summary descriptions of the Escrow Funding Agreement (including amendments to the Master Note), the Settlement Agreement, and the Credit Agreement are not complete and are qualified in their entirety by reference to the full texts thereof, copies of which were included as Exhibits 10.02 to our Current Report on Form 8-K dated October 31, 2016 and to Exhibits 10.01 and 10.02 to our Current Report on Form 8-K dated January 4, 2016. The foregoing summary description of the original Master Note is not complete and is qualified in its entirety by reference to the full text thereof, a copy of which was included as Exhibit 10.03 to our Current Report on Form 8-K dated October 31, 2016. On May 5, 2017 we entered into a nine-month convertible note payable for $78,000, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of ninety one percent (61%) of the lowest closing bid price (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. On November 6, 2017 this note was assumed and paid in full at a premium for a total of $116,600 by Cybernaut Zfounder Ventures. An amended term were added to the original note with the interest rate of 14%. This note matured on February 21 st On May 24, 2017 we entered into a nine-month convertible note payable for $32,000, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of fifty-five eight percent (58%) of the lowest closing bid price (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. On November 6, 2017 this note was assumed and paid in full at a premium for a total of $95,685, by Cybernaut Zfounder Ventures. An amended term was added to the original note with the interest rate of 14%. This note matured on February 26 th On September 13, 2017 we entered into a nine-month convertible note payable for $110,000, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of fifty-five percent (55%) of the lowest closing bid price (as reported by Bloomberg LP) of our common stock for the twenty-five (25) Trading Days immediately preceding the date of conversion. This note was partially converted into common stock and the balance was paid in full on February 14, 2018 On July 13, 2017 we entered into a convertible note payable for $58,000, with a maturity date of April 30, 2018, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of fifty-eight percent (58%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. This note was paid in full. On August 17, 2017 we entered into a convertible note payable for $68,000, with a maturity date of May 30, 2018, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of fifty-eight percent (58%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. This note was paid in full on February 15, 2018 On July 25, 2017 we entered into a convertible note payable for $103,000, with a maturity date of April 25, 2018, which accrues interest at the rate of 12% per annum. It is not convertible until nine months after its issuance and has a conversion rate of ninety percent (60%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the twenty (20) Trading Days immediately preceding the date of conversion. This note was paid in full on February 15, 2018 On February 13, 2018 the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement (the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL Note”) in the principal amount of $939,500 with an interest rate of 10% per annum interest rate and a maturity date of February 13, 2020. The CVL Note is convertible into shares of Common Stock at $0.003 per share, as adjusted as provided therein. As a result we recognized a beneficial conversion feature of $532,383, which is amortized over the life of the note. This note was assigned to Mgw Investments and they agreed not to convert the $939,500 note in to shares in excess of the 800,000,000 Authorized limit until we have increased the Authorized shares to the Board approved limit of 2 billion shares. On February 8, 2018 the Corporation entered a Convertible Promissory Note in the principal amount of $153,123, due October 8, 2018, with an interest rate of 12% per annum payable to MGWI (the “MGWI Note”). The MGWI Note is convertible into shares of the Corporation’s common stock at the lower of: (i) a 40% discount to the lowest trading price during the previous twenty (20) trading days to the date of a Conversion Notice; or (ii) 0.003. As a result of the closing of the transactions contemplated by the Stock Purchase Agreement and Convertible Note Purchase Agreement, the MGWI Note must be redeemed by the Corporation in an amount that will permit CVL and MGWI and their affiliates to hold 65% of the issued and outstanding Common Stock of the Corporation on a fully diluted basis. The proceeds from the MGWI Note were used to redeem the convertible note of the Corporation to JSJ Investments, Inc. in the principal amount of $103,000 with an interest rate of 12% per annum, due April 25, 2018. At December 31, 2018 the holder of this note beneficially owned 70% of the company and this note is not convertible if the holder holds more than 9.99%, as a result, we did not recognize a derivative liability or a beneficial conversion feature. On December 13, 2018 we entered into a convertible note payable for $83,000, with a maturity date of December 13, 2019, which accrues interest at the rate of 12% per annum. It is convertible six months after its issuance and has a conversion rate of fifty-eight percent (65%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. Subsequently on February 13, 2019 we entered into a convertible note payable for $138,000, with a maturity date of February 13, 2020, which accrues interest at the rate of 12% per annum. It is not convertible six months after its issuance and has a conversion rate of fifty-eight percent (65%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. Note 9 – Derivative Liabilities As a result of the convertible notes we recognized the embedded derivative liability on the date that the note was convertible. We also revalued the remaining derivative liability on the outstanding note balance on the date of the balance sheet. The remaining derivative liabilities were: December 31, 2018 December 31, 2017 Derivative Liabilities on Convertible Loans: Outstanding Balance $ 245,988 $ 244,496 |
Commitments and Contingencies D
Commitments and Contingencies Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Commitments and Contingencies Disclosure | NOTE 10 – COMMITMENTS AND CONTINGENCIES The company has received an invoice from Oberon Securities for $291,767 which is in dispute. The company believes it has defenses to the claim for compensation and plans to assert appropriate counterclaims and actions as permitted by law. No liability has been recorded for this claim as the Company believes there is a greater than not probability that our Company will prevail in defending against the claim. Operating Rental Leases On August 27, 2015, we entered into a sublease agreement with Rosenson Properties, LLC, a California limited liability company, as landlord, and General Electric International, Inc., a Delaware corporation, as tenant and assignor, for the premises located at 150 Baker Street East, Costa Mesa, California. GEII had entered into a lease dated as of December 17, 2010, as amended by a First Amendment to Lease dated March 11, 2014, wherein Rosenson Properties leased the premises to GEII. The premises consist of approximately 35,704 square feet of space and the lease provides for monthly triple-net lease payments of $22,973. The lease term ended on December 31, 2017. As of May 1, 2017, our corporate headquarters are located at 2990 Redhill Unit A, Costa Mesa, CA. On March 10, 2017, the Company signed a lease agreement for a 18,200-square foot CTU Industrial Building. Lease term is seven years and two months beginning July 1, 2017. Future minimum lease payments for the years ending December 31, are: In October of 2018 we signed a sublease agreement with our facility in Italy with an indefinite term that may be terminated by either party with a 60 day notice for 1,000 Euro per month. Due to the short termination clause, we are treating this as a month to month lease. Year Lease Payment 2019 $234,840 2020 $241,884 2021 $249,132 2022 $256,608 2023 $44,052 Our Rent expense for the years ended December 31, 2018 and 2017 was $280,239 and $268,551 respectively. Severance Benefits Effective at December 31, 2018, Mr. Bennett, was entitled to receive in the event of his termination without cause a severance benefit consisting of a single lump sum cash payment equal the salary that Mr. Bennett would have been entitled to receive through the remainder of his employment period or two (2) years, whichever is greater, at an annual salary of $140,000. |
Stockholders' Equity Note Discl
Stockholders' Equity Note Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Stockholders' Equity Note Disclosure | NOTE 11 – CAPITAL STOCK TRANSACTIONS On April 21, 2005, our Board of Directors and shareholders approved the re-domicile of the Company in the State of Nevada, in connection with which we increased the number of our authorized common shares to 200,000,000 and designated a par value of $.001 per share. On May 25, 2006, our Board of Directors and shareholders approved an amendment to our Articles of Incorporation to authorize a new series of preferred stock, designated as Series C, and consisting of 15,000 authorized shares. On June 30, 2017, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to 400,000,000 and in the number of our authorized preferred shares to 10,000,000. The amendment effecting the increase in our authorized capital was filed and effective on July 5, 2017. On August 28, 2018, our Board of Directors and shareholders approved an increase in the number of our authorized common shares to 800,000,000. The amendment effecting the increase in our authorized capital was filed and effective on August 23, 2018 Common Stock Transactions Beginning with the year 2017, we issued the following securities without registration under the Securities Act of 1933, as amended. These securities were issued on the reliance of an exemption provided by Section 4(a)(2) or 4(a)(5) of the Securities Act. On January 4, 2017 we issued 2,300,000 shares .002291 for a partial conversion of a note dated September 6, 2016 in the amount of $5,041. On January 4, 2017 we issued 7,000,000 shares .0022 for a partial conversion of a note dated July 6, 2016 in the amount of $15,400. On February 8, 2017 we issued 2,400,000 shares .00188 for a partial conversion of a note dated September 6, 2016 in the amount of $4,512. On February 27, 2017 we issued 8,600,000 shares .001 for a partial conversion of a note dated September 6, 2016 in the amount of $8,600. On March 3, 2017 we issued 9,000,000 shares .001 for a partial conversion of a note dated September 6, 2016 in the amount of $9,000. On March 8, 2017 we issued 600,000 shares .007 for compensation in the amount of $4,200. On March 10, 2017 we issued 9,500,000 shares .001 for a partial conversion of a note dated September 6, 2016 in the amount of $9,500. On April 4, 2017 we issued 7,700,000 shares .001 for a partial conversion of a note dated September 6, 2016 in the amount of $7,700. $1,000,000 with an over-allotment of $500,000 in multiple closings over the course of six months. We received an aggregate of $750,000 in financing in subscription for Series D Preferred Stock, or 7,500 shares. The following are primary terms of the Series D Preferred Stock. The Series D Preferred holders were initially entitled to be paid a special monthly divided at the rate of 17.5% per annum. Initially, the Series D Preferred Stock was also entitled to be paid special dividends in the event cash dividends were not paid when scheduled. If the Company does not pay the dividend within five (5) business days from the end of the calendar month for which the payment of such dividend to owed, the Company will pay the investor a special dividend of an additional 3.5%. Any unpaid or accrued special dividends will be paid upon a liquidation or redemption. For any other dividends or distributions, the Series D Preferred Stock participates with common stock on an as-converted basis. The Series D Preferred holders may elect to convert the Series D Preferred Stock, in their sole discretion, at any time after a one year (1) year holding period, by sending the Company a notice to convert. The conversion rate is equal to the greater of $0.08 or a 20% discount to the average of the three (3) lowest closing market prices of the common stock during the ten (10) trading day period prior to conversion. The Series D Preferred Stock is redeemable from funds legally available for distribution at the option of the individual holders of the Series D Preferred Stock commencing any time after the one (1) year period from the offering closing at a price equal to the initial purchase price plus all accrued but unpaid dividends, provided, that if the Company gave notice to the investors that it was not in a financial position to redeem the Series D Preferred, the Company and the Series D Preferred holders are obligated to negotiate in good faith for an extension of the redemption period. The Company timely notified the investors that it was not in a financial position to redeem the Series D Preferred and the Company and the investors have engaged in ongoing negotiations to determine an appropriate extension period. The Company may elect to redeem the Series D Preferred Stock any time at a price equal to initial purchase price plus all accrued but unpaid dividends, subject to the investors’ right to convert, by providing written notice about its intent to redeem. Each investor has the right to convert the Series D Preferred Stock at least ten (10) days prior to such redemption by the Company. In connection with the subscriptions for the Series D Preferred, we issued series F warrants to purchase an aggregate of 375,000 shares of our common stock at $.10 per share and series G warrants to purchase an aggregate of 375,000 shares of our common stock at $.20 per share. On August 21, 2014, a holder holding 5,000 shares of Preferred Series D Preferred agreed to lower the dividend rate to 13% on its Series D Preferred. In September 2015, all holders of Series D Preferred signed and delivered estoppel agreements, whereby the holders agreed, among other things, that the Series D Preferred was not in default and to reduce (effective as of December 31, 2015) the dividend rate on the Series D Preferred Stock to six percent per annum and to terminate the 3.5% penalty in respect of unpaid dividends accruing on or after such date. Warrants Series E – Common stock warrants On April 8, 2011, we issued 300,000 series E Warrants. Each warrant gives the holder the right to purchase one share of common stock (300,000 total shares) at $0.50 per share. The Series E Warrants expired on April 8, 2017. Series F – Common stock warrants On June 25, 2013, we issued 250,000 series F warrants. Each warrant gives the holder the right to purchase one share of common stock at $.10. These Warrants expired on June 25, 2018. On September 19, 2013, we issued 125,000 series F warrants. Each warrant gives the holder the right to purchase one share of common stock at $.10. These Warrants expired on September 19, 2018. Series G – Common stock warrants On June 25, 2013, we issued 250,000 series G warrants. Each warrant gives the holder the right to purchase one share of common stock at $.20. These Warrants expired on June 25, 2018. On September 19, 2013, we issued 125,000 series G warrants. Each warrant gives the holder the right to purchase one share of common stock at $.20. These Warrants expired on September 19, 2018. A summary of warrant activity for the periods is as follows: Warrants - Common Share Equivalents Weighted Average Exercise price Warrants exercisable - Common Share Equivalents Weighted Average Exercise price Outstanding December 31, 2017 750,000 0.15 750,000 0.15 Granted - - - - Expired 750,000 0.15 750,000 0.15 Exercised - - - - Outstanding December 31, 2018 - - - - Stock Options On February 8, 2007 pursuant to our 2006 Qualified Incentive Option Plan, we granted to Company employees incentive stock options to purchase 406,638 shares of our common stock. These options were granted at $1.73 cents, the fair market value of the Company’s common stock at the time of the grant. These options expired on February 8, 2018. On February 8, 2008, we granted stock options to our key employees to purchase up to 750,000 shares of our common stock. These options were granted at $1.73 cents, the fair market value of the Company’s common stock at the time of the grant. These options expired on February 8, 2018. On February 28, 2008, we granted stock options to a key employee to purchase up to 30,000 shares of our common stock. These options were granted at $.033 cents, the fair market value of the Company’s common stock at the time of the grant. These options expired on February 8, 2018. Pursuant to our 2017 Stock Compensation Program, effective July 1, 2017, we made the following stock option grants to members of our Board of Directors: (a) we issued to each of our non-employee members of our Board of Directors first joining the Board in October 2015 and who had not received any compensation for serving as directors of the Company (five persons) options to purchase 150,000 shares of our common stock with an exercise price of $.03 per share, the last sale price of our common stock on June 29, 2017 and (b) we issued to each of our non-employee members of our Board of Directors currently serving on the Board (six persons) options to purchase 300,000 shares of our common stock with an exercise price of $.03 per share. On February 9, the non-employee board members resigned, as disclosed in our 8K filed on February 15, 2018 . As a result, all remaining stock options were cancelled. |
NOTE 12 - RELATED PARTY TRANSAC
NOTE 12 - RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
NOTE 12 - RELATED PARTY TRANSACTIONS | Pursuant to our 2017 Stock Compensation Program, effective July 1, 2017, we made the following stock option grants to members of our Board of Directors: (a) we issued to each of our non-employee members of our Board of Directors first joining the Board in October 2015 and who had not received any compensation for serving as directors of the Company (five persons) options to purchase 150,000 shares of our common stock with an exercise price of $.03 per share, the last sale price of our common stock on June 29, 2017 and (b) we issued to each of our non-employee members of our Board of Directors currently serving on the Board (six persons) options to purchase 300,000 shares of our common stock with an exercise price of $.03 per share. On the non-employee board members resigned, as disclosed in our 8K filed on February 15, 2018. As a result, all remaining stock options were cancelled. On February 13, 2018 the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement (the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL Note”) in the principal amount of $939,500 with an interest rate of 10% per annum interest rate and a maturity date of February 13, 2020. The CVL Note is convertible into shares of Common Stock at $0.003 per share, as adjusted as provided therein. As a result we recognized a beneficial conversion feature of $532,383, which is amortized over the life of the note. This note was assigned to Mgw Investments and they agreed not to convert the $939,500 note in to shares in excess of the 800,000,000 Authorized limit until we have increased the Authorized shares to the Board approved limit of 2 billion shares. On February 8, 2018 the Corporation entered a Convertible Promissory Note in the principal amount of $153,123, due October 8, 2018, with an interest rate of 12% per annum payable to MGWI (the “MGWI Note”). The MGWI Note is convertible into shares of the Corporation’s common stock at the lower of: (i) a 40% discount to the lowest trading price during the previous twenty (20) trading days to the date of a Conversion Notice; or (ii) 0.003. As a result of the closing of the transactions contemplated by the Stock Purchase Agreement and Convertible Note Purchase Agreement, the MGWI Note must be redeemed by the Corporation in an amount that will permit CVL and MGWI and their affiliates to hold 65% of the issued and outstanding Common Stock of the Corporation on a fully diluted basis. The proceeds from the MGWI Note were used to redeem the convertible note of the Corporation to JSJ Investments, Inc. in the principal amount of $103,000 with an interest rate of 12% per annum, due April 25, 2018. At December 31, 2018 the holder of this note beneficially owned 70% of the company and this note is not convertible if the holder holds more than 9.99%, as a result, we did not recognize a derivative liability or a beneficial conversion feature. On June 21, 2018 the corporation entered into a promissory note with MGW Investment I Limited, for the principal amount of $250,000, with an interest rate of Eight Percent (8%) per annum and a maturity date of June 21, 2019. On September 21, 2018 the corporation entered into a promissory note with MGW Investment I Limited, for the principal amount of $100,000, with an interest rate of Eight Percent (8%) per annum and a maturity date of September 21, 2019. On February 15, 2018 we issued 9,200,000 .0053 as additional compensation in the amount of $48,760. On October 18, 2018 we entered into a 1 year employment agreement with Kambiz Mahdi our CEO, as part of the agreement Mr. Mahdi was to be issued 20,000,000 shares of our common stock, as additional compensation. As a result; for the year ended December 31, 2018 we accrued for and subsequently on February 13, 2019, issued 20,000,000 shares $.0131 to Mr. Mahdi in the amount of $262,000. |
Other Liabilities Disclosure
Other Liabilities Disclosure | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Other Liabilities Disclosure | Note 13 - Warranty Liability For the year ended December 31, 2017 and 2018 there was no change in our warranty liability. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Notes | |
Subsequent Events | NOTE 14 – SUBSEQUENT EVENTS On February 13, 2019 we issued 20,000,000 $.0131 to Kambiz Mahdi our CEO as additional compensation accrued for in 2018 in the amount of $262,000. Subsequently on February 13, 2019 we entered into a convertible note payable for $138,000, with a maturity date of February 13, 2020, which accrues interest at the rate of 12% per annum. It is convertible six months after its issuance and has a conversion rate of fifty-eight percent (65%) of the average of the two lowest trading prices (as reported by Bloomberg LP) of our common stock for the fifteen (15) Trading Days immediately preceding the date of conversion. In accordance with ASC 855, the Company has analyzed its operations subsequent to December 31, 2018 through the date these financial statements were issued, and has determined that it does not have any other material subsequent events to disclose in these financial statements. |
Organization, Consolidation a_2
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The summary of significant accounting policies of Clean Energy Technologies, Inc. (formerly Probe Manufacturing, Inc.) is presented to assist in the understanding of the Company's financial statements. The financial statements and notes are representations of the Company’s management, who is responsible for their integrity and objectivity. The consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. |
Organization, Consolidation a_3
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Use of Estimates, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Use of Estimates, Policy | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Such estimates may be materially different from actual financial results. Significant estimates include the recoverability of long-lived assets, the collection of accounts receivable and valuation of inventory and reserves. |
Organization, Consolidation a_4
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Cash and Cash Equivalents, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Cash and Cash Equivalents, Policy | Cash and Cash Equivalents We maintain the majority of our cash accounts at a commercial bank. The total cash balance is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 per commercial bank. For purposes of the statement of cash flows we consider all cash and highly liquid investments with initial maturities of one year or less to be cash equivalents. |
Organization, Consolidation a_5
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Receivable (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Receivable | Accounts Receivable We grant credit to our customers located within the United States of America; and do not require collateral. Our ability to collect receivables is affected by economic fluctuations in the geographic areas and industries served by us. Reserves for un-collectable amounts are provided, based on past experience and a specific analysis of the accounts. Although we expect to collect amounts due, actual collections may differ from the estimated amounts. As of December 31, 2018, and December 31, 2017, we had a reserve for potentially un-collectable accounts of $57,000. Five (5) customers accounted for approximately 98% of accounts receivable at December 31, 2018. Our trade accounts primarily represent unsecured receivables. Historically, our bad debt write-offs related to these trade accounts have been insignificant. |
Organization, Consolidation a_6
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Inventory, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Inventory, Policy | Inventory Inventories are valued at the lower of weighted average cost or market value. Our industry experiences changes in technology, changes in market value and availability of raw materials, as well as changing customer demand. We make provisions for estimated excess and obsolete inventories based on regular audits and cycle counts of our on-hand inventory levels and forecasted customer demands and at times additional provisions are made. Any inventory write offs are charged to the reserve account. As of December 31, 2018 and December 31, 2017, we had a reserve for potentially obsolete inventory of $250,000. |
Organization, Consolidation a_7
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Property, Plant and Equipment, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Property, Plant and Equipment, Policy | Property and Equipment Property and equipment are recorded at cost. Assets held under capital leases are recorded at lease inception at the lower of the present value of the minimum lease payments or the fair market value of the related assets. The cost of ordinary maintenance and repairs is charged to operations. Depreciation and amortization are computed on the straight-line method over the following estimated useful lives of the related assets: Furniture and fixtures 3 to 7 years Equipment 7 to 10 years Leasehold Improvements |
Organization, Consolidation a_8
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Impairment or Disposal of Long-Lived Assets, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Impairment or Disposal of Long-Lived Assets, Policy | Long –Lived Assets Our management assesses the recoverability of its long-lived assets by determining whether the depreciation and amortization of long lived assets over their remaining lives can be recovered through projected undiscounted future cash flows. The amount of long-lived asset impairment if any, is measured based on fair value and is charged to operations in the period in which long-lived assets impairment is determined by management. There can be no assurance however, that market conditions will not change or demand for our services will continue, which could result in impairment of long-lived assets in the future. |
Organization, Consolidation a_9
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Revenue from Contract with Customer (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Revenue from Contract with Customer | Revenue Recognition The Company recognizes revenue under ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” The following steps are applied to our legacy contract manufacturing division: |
Organization, Consolidation _10
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Fair Value Measurement, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Fair Value Measurement, Policy | Fair Value of Financial Instruments The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value: The Company’s financial instruments consist of cash, prepaid expenses, inventory, accounts payable, convertible notes payable, advances from related parties, and derivative liabilities. The estimated fair value of cash, prepaid expenses, investments, accounts payable, convertible notes payable and advances from related parties approximate their carrying amounts due to the short-term nature of these instruments. |
Organization, Consolidation _11
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Comprehensive Income, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Comprehensive Income, Policy | Other Comprehensive Income We have no material components of other comprehensive income (loss) and accordingly, net loss is equal to comprehensive loss in all periods. |
Organization, Consolidation _12
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Earnings Per Share, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Earnings Per Share, Policy | Net Profit (Loss) per Common Share Basic profit / (loss) per share is computed on the basis of the weighted average number of common shares outstanding. At December 31, 2018, we had outstanding common shares of 555,582,656 used in the calculation of basic earnings per share. Basic Weighted average common shares and equivalents at December 31, 2018 and 2017 were 553,354,983 and 209,915,415, respectively. As of December 31, 2018, we had convertible notes, convertible into approximately |
Organization, Consolidation _13
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Research, Development, and Computer Software, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Research, Development, and Computer Software, Policy | Research and Development We had no amounts of research and development R&D expense during the year ended December 31, 2018 and 2017. |
Organization, Consolidation _14
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Segment Reporting, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Segment Reporting, Policy | Segment Disclosure FASB Codification Topic 280, Segment Reporting The Company has three reportable segments: Clean Energy HRS (HRS), Cety Europe and the legacy electronic manufacturing services division. The segments are determined based on several factors, including the nature of products and services, the nature of production processes, customer base, delivery channels and similar economic characteristics. Refer to note 1 for a description of the various product categories manufactured under each of these segments. Prior to March 31, 2017 we only had one reporting segment. An operating segment's performance is evaluated based on its pre-tax operating contribution, or segment income. Segment income is defined as net sales less cost of sales, and segment selling, general and administrative expenses, and does not include amortization of intangibles, stock-based compensation, other charges (income), net and interest and other, net. Selected Financial Data 2018 2017 Net Sales Electronics Assembly 567,417 581,191 Clean Energy HRS 752,783 376,442 Cety Europe 10,971 - Total Sales 1,331,171 957,633 Segment income and reconciliation before tax Electronics Assembly 56,231 70,949 Clean Energy HRS 457,978 341,932 Cety Europe 6,473 - Total Segment income 520,682 412,881 Reconciling items General and Administrative (449,549) (375,808) Share Based Expense (353,140) (2,460) Salaries (740,146) (783,656) Rent (280,239) (268,551) Professional fees (142,234) (139,322) Consulting (79,084) (46,938) Financing Fees (542,419) (708,714) Loss on disposal of fixed assets 2,389 - Change in derivative liability 116,259 142,326 Interest expense (862,536) (444,612) Net Loss before income tax (2,810,017) (2,214,854) December 31, 2018 December 31, 2017 Total Assets Electronics Assembly Clean Energy HRS 1,613,615 Cety Europe Total Assets |
Organization, Consolidation _15
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Compensation Related Costs, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Compensation Related Costs, Policy | The Company has adopted the use of Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R) (now contained in FASB Codification Topic 718, Compensation-Stock Compensation ultimately expected to vest using historical employee attrition rates and the expense is reduced accordingly. It is also adjusted to account for the restricted and thinly traded nature of the shares. The expense is reviewed and adjusted in subsequent periods if actual attrition differs from those estimates. We re-evaluate the assumptions used to value our share-based awards on a quarterly basis and, if changes warrant different assumptions, the share-based compensation expense could vary significantly from the amount expensed in the past. We may be required to adjust any remaining share-based compensation expense, based on any additions, cancellations or adjustments to the share-based awards. The expense is recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. For the year ended December 31, 2018 and 2017 we had $353,140 and $2,460 respectively, in share-based expense, due to the issuance of common stock. As of December 31, 2018, we had no further non-vested expense to be recognized. |
Organization, Consolidation _16
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Income Tax, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Income Tax, Policy | Income Taxes The Company accounts for income taxes under SFAS No. 109 (now contained in FASB Codification Topic 740-10-25, Accounting for Uncertainty in Income Taxes), which requires the asset and liability approach to accounting for income taxes. Under this method, deferred tax assets and liabilities are measured based on differences between financial reporting and tax bases of assets and liabilities measured using enacted tax rates and laws that are expected to be in effect when differences are expected to reverse. As of December 31, 2018, we had a net operating loss carry-forward of approximately $(2,810,017) and a deferred tax asset of $515,944 using the statutory rate of 21%. The deferred tax asset may be recognized in future periods, not to exceed 20 years. However, due to the uncertainty of future events we have booked valuation allowance of $(515,944). FASB ASC 740 prescribes recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASB ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. At December 31, 2018 the Company had not taken any tax positions that would require disclosure under FASB ASC 740. December 31, 2018 December 31, 2017 Deferred Tax Asset $ 515,944 $ 845,490 Valuation Allowance (515,944) (845,490) Deferred Tax Asset (Net) $ - $ - On February 13, 2018 , Clean Energy Technologies, Inc., a Nevada corporation (the “Registrant” or “Corporation”) entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) by and between MGW Investment I Limited (“MGWI”) and the Corporation. The Corporation received $907,388 in exchange for the issuance of 302,462,667 restricted shares of the Corporation’s common stock, par value $.001 per share (the “Common Stock”). On February 13, the Corporation and Confections Ventures Limited. (“CVL”) entered into a Convertible Note Purchase Agreement (the “Convertible Note Purchase Agreement,” together with the Stock Purchase Agreement and the transactions contemplated thereunder, the “Financing”) pursuant to which the Corporation issued to CVL a convertible promissory Note (the “CVL Note”) in the principal amount of $939,500 with an interest rate of 10% per annum interest rate and a maturity date of February 13, 2020. The CVL Note is convertible into shares of Common Stock at $0.003 per share, as adjusted as provided therein. This note was assigned to Mgw Investments and they agreed not to convert the $939,500 note in to shares in excess of the 800,000,000 Authorized limit until we have increased the Authorized shares to the Board approved limit of 2 billion shares. This resulted in a change in control, which limited the net operating to that date forward. We are subject to taxation in the U.S. and the states of California. Further, the Company currently has no open tax years’ subject to audit prior to December 31, 2015. The Company is current on its federal and state tax returns |
Organization, Consolidation _17
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Reclassifications (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
Reclassifications | Reclassification Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported income, total assets, or stockholders’ equity as previously reported. |
Organization, Consolidation _18
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: New Accounting Pronouncements, Policy (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Policies | |
New Accounting Pronouncements, Policy | Recently Issued Accounting Standards The Company is reviewing the effects of following recent updates. The Company has no expectation that any of these items will have a material effect upon the financial statements. Update 2018-08 Update 2018-05 Update 2018-04 Update 2018-03 Update 2018-01 Update 2017-20 Update 2017-18 Update 2017-17 Update 2017-16 Update 2017-15 —Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) Update 2017-13 —Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Update 2017-12 |
Loans, Notes, Trade and Other_2
Loans, Notes, Trade and Other Receivables Disclosure: Schedule of Accounts, Notes, Loans and Financing Receivable (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Accounts, Notes, Loans and Financing Receivable | NOTE 3 – ACCOUNTS AND NOTES RECEIVABLE December 31, 2018 December 31, 2017 Accounts Receivable $ 781,845 $ 484,081 Less Reserve for uncollectable accounts (57,000) (7,000) Accounts Receivable (Net) $ 724,845 $ 477,081 |
Loans, Notes, Trade and Other_3
Loans, Notes, Trade and Other Receivables Disclosure: Schedule of Inventory, Noncurrent (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Schedule of Inventory, Noncurrent | Inventories by major classification were comprised of the following at: December 31, 2018 December 31, 2017 Raw Material $ 952,214 $ 1,089,813 Work in Process 9,680 14,734 Total 961,894 1,104,547 Less reserve for excess or obsolete inventory (250,000) (250,000) Inventory $ 711,894 $ 854,547 |
Property, Plant and Equipment_2
Property, Plant and Equipment Disclosure: Property, Plant and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Property, Plant and Equipment | Property and equipment were comprised of the following at: December 31, 2018 December 31, 2017 Capital Equipment $ 1,342,794 $ 1,772,632 Leasehold improvements 75,436 75,436 Accumulated Depreciation (1,322,203) (1,703,201) Net Fixed Assets $ 96,027 $ 144,867 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets Disclosure: Finite-lived Intangible Assets Amortization Expense (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Finite-lived Intangible Assets Amortization Expense | Intangible assets were comprised of the following at: December 31, 2018 December 31, 2017 Goodwill $ 747,976 $ 747,976 License 354,322 354,322 Patents 190,789 190,789 Accumulated Amortization (39,590) (27,713) Net Intangible Assets $ 1,253,497 $ 1,265,374 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Liabilities Disclosure: Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Tables/Schedules | |
Other Current Liabilities | December 31, 2018 December 31, 2017 Accrued Wages $ 224,514 $ 287,002 Accrued Interest 466,425 224,918 Accrued Interest Related party 123,394 133,259 Customer Deposits 365,815 98,594 Accrued Payable to GE - TSA 972,231 972,233 Accrued Rents and Moving Expenses 123,626 123,626 $ 2,276,005 $ 1,839,632 |
Organization, Consolidation _19
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies: Income Tax, Policy (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Deferred Tax Asset | $ 515,944 | $ 845,490 |
Valuation Allowance | (515,944) | (845,490) |
Deferred Tax Asset (Net) | $ 0 | $ 0 |
Loans, Notes, Trade and Other_4
Loans, Notes, Trade and Other Receivables Disclosure: Schedule of Inventory, Noncurrent (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Raw Material | $ 952,214 | $ 1,089,813 |
Work in Process | 9,680 | 14,734 |
Less reserve for excess or obsolete inventory | (250,000) | (250,000) |
Inventory | $ 711,894 | $ 854,547 |
Property, Plant and Equipment_3
Property, Plant and Equipment Disclosure: Property, Plant and Equipment (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Leasehold improvements | $ 75,436 | $ 75,436 |
Net Fixed Assets | $ 96,027 | $ 144,867 |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Liabilities Disclosure: Other Current Liabilities (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Details | ||
Accrued Wages | $ 224,514 | $ 287,002 |
Accrued Interest | 466,425 | 224,918 |
Accrued Interest Related party | 123,394 | 133,259 |
Customer Deposits | 365,815 | 98,594 |
Accrued Payable to GE - TSA | 972,231 | 972,233 |
Accrued Rents and Moving Expenses | $ 123,626 | $ 123,626 |