Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | May. 23, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Envision Solar International, Inc. | ||
Entity Central Index Key | 1,398,805 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public float | $ 7,524,122 | ||
Entity Common Stock, Shares Outstanding | 107,502,938 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $ 32,451 | $ 1,380,554 |
Accounts Receivable, net | 831,617 | 103,217 |
Subscription Receivable | 0 | 25,000 |
Prepaid and other current assets | 51,787 | 134,778 |
Inventory, net | 422,175 | 347,903 |
Costs and estimated earnings in excess of billings on uncompleted contract | 22,058 | 92,666 |
Total Current Assets | 1,360,088 | 2,084,118 |
Property and Equipment, net | 243,961 | 123,565 |
Other Assets | ||
Debt issue costs, net | 102,194 | 2,438 |
Patents | 36,620 | 0 |
Deposits | 163,284 | 164,347 |
Total Other Assets | 302,098 | 166,785 |
Total Assets | 1,906,147 | 2,374,468 |
Current Liabilities | ||
Accounts Payable | 834,962 | 567,834 |
Accrued Expenses | 348,467 | 368,226 |
Sales Tax Payable | 152,438 | 96,787 |
Deferred Revenue | 213,467 | 717,291 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 0 | 5,614 |
Line of Credit | 800,000 | 0 |
Convertible Note Payable - Related Party | 686,616 | 98,616 |
Notes Payable | 43,033 | 43,033 |
Auto Loan | 8,797 | 0 |
Convertible Notes Payable, net of discount of $0 and $252,070 at December 31, 2015 and 2014 respectively | 100,000 | 704,255 |
Embedded Conversion Option Liability | 87,992 | 355,611 |
Total Current Liabilities | 3,275,772 | 2,957,267 |
Long-term portion of Auto Loan | 38,978 | 0 |
Total Liabilities | $ 3,314,750 | $ 2,957,267 |
Commitments and Contingencies (Note 13) | ||
Stockholders' Deficit | ||
Common Stock, $0.001 par value, 162,500,000 million shares authorized, 105,207,701 and 98,482,611 shares issued or issuable and outstanding at December 31, 2015 and 2014, respectively | $ 105,208 | $ 98,483 |
Additional Paid-in-Capital | 31,088,122 | 30,081,118 |
Accumulated Deficit | (32,601,933) | (30,762,400) |
Total Stockholders' Deficit | (1,408,603) | (582,799) |
Total Liabilities and Stockholders' Deficit | $ 1,906,147 | $ 2,374,468 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Discount on long-term convertible note payable | $ 0 | $ 252,070 |
Common Stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common Stock shares authorized | 162,500,000 | 162,500,000 |
Common Stock shares issued | 105,207,701 | 98,482,611 |
Common Stock shares outstanding | 105,207,701 | 98,482,611 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Revenues | $ 2,642,207 | $ 1,033,438 |
Cost of Revenues | 2,720,437 | 1,133,556 |
Gross Loss | (78,230) | (100,118) |
Operating Expenses (including stock based compensation expense of $121,915 for the year ended December 31, 2015 and $736,388 for the year ended December 31, 2014) | 1,647,781 | 2,396,699 |
Loss From Operations | (1,726,011) | (2,496,817) |
Other Income (Expense) | ||
Other Income | 265 | 288 |
Gain (Loss) on Debt Settlement,net | 4,434 | (14,688) |
Interest Expense | (384,240) | (1,037,700) |
Change in fair value of embedded conversion option liability | 267,619 | 404,215 |
Total Other Expense | (111,922) | (647,885) |
Loss Before Income Tax | (1,837,933) | (3,144,702) |
Income Tax Expense | 1,600 | 1,600 |
Net Loss | $ (1,839,533) | $ (3,146,302) |
Net Loss Per Share- Basic and Diluted | $ (.02) | $ (0.04) |
Weighted Average Shares Outstanding- Basic and Diluted | 100,739,141 | 85,220,350 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Stock based compensation | $ 121,915 | $ 736,388 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Deficit - USD ($) | Common Stock [Member] | Additional Paid-In Capital | Accumulated Deficit [Member] | Total |
Beginning balance, value at Dec. 31, 2013 | $ 71,703 | $ 25,038,521 | $ (27,616,098) | $ (2,505,874) |
Beginning balance, shares at Dec. 31, 2013 | 71,702,942 | |||
Stock Issued for Cash | $ 20,187 | 3,007,823 | 3,028,010 | |
Stock Issued for Cash (Shares) | 20,186,725 | |||
Cash Offering Costs | (102,840) | (102,840) | ||
Stock Issued for Services - Related Party | $ 617 | 91,911 | 92,528 | |
Stock Issued for Services - Related Party (Shares) | 616,856 | |||
Stock Issued for Services | $ 1,125 | 167,627 | 168,752 | |
Stock Issued for Services (Shares) | 1,125,012 | |||
Stock Issued in Conversion of Convertible Note | $ 3,667 | 546,333 | 550,000 | |
Stock Issued in Conversion of Convertible Note (Shares) | 3,666,666 | |||
Stock Issued in Settlement of Note Payable | $ 150 | 23,850 | 24,000 | |
Stock Issued in Settlement of Note Payable (Shares) | 150,000 | |||
Stock Issued in Settlement of Interest | $ 1,034 | 174,816 | 175,850 | |
Stock Issued in Settlement of Interest (Shares) | 1,034,410 | |||
Warrants Issued as Conversion Inducement | 482,300 | 482,300 | ||
Warrants Issued for Debt Extension Fee | 193,625 | 193,625 | ||
Stock Option Expense | 457,152 | 457,152 | ||
Net Loss | (3,146,302) | (3,146,302) | ||
Ending balance, value at Dec. 31, 2014 | $ 98,483 | 30,081,118 | (30,762,400) | (582,799) |
Ending balance, shares at Dec. 31, 2014 | 98,482,611 | |||
Stock Issued for Cash | $ 5,433 | 809,567 | 815,000 | |
Stock Issued for Cash (Shares) | 5,433,334 | |||
Cash Offering Costs | (8,900) | (8,900) | ||
Stock Issued for Services - Related Party | $ 373 | 53,627 | 54,000 | |
Stock Issued for Services - Related Party (Shares) | 373,107 | |||
Stock Issued for Services | $ 347 | 51,735 | 52,082 | |
Stock Issued for Services (Shares) | 347,220 | |||
Shares Issued for Loan Guaranty - Related Party | $ 572 | 85,142 | 85,714 | |
Shares Issued for Loan Guaranty - Related Party (Shares) | 571,429 | |||
Stock Option Expense | 15,833 | 15,833 | ||
Net Loss | (1,839,533) | (1,839,533) | ||
Ending balance, value at Dec. 31, 2015 | $ 105,208 | $ 31,088,122 | $ (32,601,933) | $ (1,408,603) |
Ending balance, shares at Dec. 31, 2015 | 105,207,701 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (1,839,533) | $ (3,146,302) |
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities: | ||
Depreciation | 139,032 | 41,392 |
Bad debt expense | 11,700 | 0 |
Reserve on inventory | 27,783 | 0 |
Warrants issued as debt conversion inducement fee | 0 | 482,300 |
Common stock issued for services | 106,082 | 261,280 |
Amortization of prepaid expenses paid in common stock | 0 | 17,956 |
Gain (loss) on debt settlement, net | (7,358) | 14,688 |
Compensation expense related to grant of stock options | 15,833 | 457,152 |
Change in fair value of embedded conversion option liability | (267,619) | (404,215) |
Amortization of debt discount | 252,070 | 420,116 |
Amortization of debt issue costs | 11,728 | 4,062 |
Changes in assets and liabilities: (Increase) decrease in: | ||
Accounts receivable | (740,100) | 76,242 |
Prepaid expenses and other current assets | (31,080) | (114,479) |
Costs and estimated earnings in excess of billings on uncompleted contracts | 70,608 | (92,666) |
Inventory | (20,492) | (328,431) |
Deposits | 1,063 | (154,940) |
Increase (decrease) in: | ||
Accounts Payable | 274,486 | 108,901 |
Accrued Expenses | (19,759) | (79,913) |
Sales Tax Payable | 55,651 | 59,959 |
Deferred Revenue | (503,824) | 717,291 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (5,614) | (157,515) |
NET CASH USED IN OPERATING ACTIVITIES | (2,469,343) | (1,817,122) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Equipment, net | (226,920) | (76,092) |
Funding of Patent Costs | (36,620) | 0 |
NET CASH USED IN INVESTING ACTIVITIES | (263,540) | (76,092) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repayments on convertible notes payable | (268,325) | (12,000) |
Proceeds from Sale of Common Stock | 815,000 | 3,003,010 |
Proceeds from Subscription Receivable | 25,000 | 0 |
Payments of offering costs related to sale of common stock | (8,900) | (102,840) |
Borrowings on Auto Loan, net | 47,775 | 0 |
Borrowings on Line of Credit | 800,000 | 0 |
Payments of Debt Issue Costs | (25,770) | (6,500) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,384,780 | 2,881,670 |
NET (DECREASE) INCREASE IN CASH | (1,348,103) | 988,456 |
CASH AT BEGINNING OF YEAR | 1,380,554 | 392,098 |
CASH AT END OF YEAR | 32,451 | 1,380,554 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 151,620 | 0 |
Cash paid for income tax | 1,600 | 1,600 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Shares issued for loan guarantee - related party | 85,714 | 0 |
Reclassification of convertible note payable to convertible note payable - related party | 600,000 | 0 |
Transfer from prepaid asset to inventory | 114,071 | 0 |
Convertible debt converted to shares of common stock | 0 | 550,000 |
Accrued interest converted to common stock | 0 | 175,850 |
Warrants issued as debt extension fee | 0 | 193,625 |
Embedded conversion option liability recorded as debt discount | 0 | 478,561 |
Common stock issued in conversion of note payable and accrued interest | 0 | 24,000 |
Subscription receivable | $ 0 | $ 25,000 |
1. CORPORATE ORGANIZATION, NATU
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | CORPORATE ORGANIZATION Envision Solar was incorporated on June 12, 2006 as a limited liability company (“LLC”), under the name Envision Solar, LLC. In September 2007, the company was reorganized as a California C Corporation and issued one share of common stock for each outstanding member unit in the LLC. Also during 2007, the Company formed various wholly owned subsidiaries to account for its planned future operations, but these entities were mostly dissolved over the subsequent years. The only remaining subsidiary included in these consolidated financial statements is Envision Solar Construction Company, Inc. On February 11, 2010, Envision Solar International, Inc., a California corporation (Envision CA) was acquired by an inactive publicly-held company in a transaction treated as a recapitalization of the company with Envision CA being the surviving business and becoming our wholly-owned subsidiary. On March 11, 2010, Envision CA was merged into our publicly-held company and the name of the publicly-held company was changed to Envision Solar International, Inc. (along with its subsidiary, hereinafter the “Company”, "us", "we", "our" or "Envision"). The effects of the recapitalization have been retroactively applied to all periods presented in the accompanying consolidated financial statements and footnotes. NATURE OF OPERATIONS Envision, a Nevada corporation, invents, designs, and manufactures solar products and proprietary technology solutions targeting three verticals: electric vehicle charging infrastructure; out of home advertising infrastructure; and renewable energy production and disaster preparedness. The Company focuses on creating renewably energized platforms for EV charging, and media and branding which are attractive, rapidly deployed, and of the highest quality. Management believes that the Company's chief differentiator is its ability to design and engineer architecturally accretive solar products which are a complex integration of simple, commonly available engineered components. The resulting products are built to have the longest life expectancy in the industry while also delivering valuable amenities and possible revenue opportunities for our customers. Management believes that Envision's products deliver multiple layers of value such as: renewably energized EV charging; media, branding, and advertising platforms; renewable and reliable energy production; architectural enhancement; reduced carbon footprint; reduction of heat islanding and improved parking experiences through shading; high visibility "green halo" branding; reduction of net operating costs through reduced utility bills; and revenue creation opportunities through the sales of digital out of home (DOOH) media. PRINCIPALS OF CONSOLIDATION The consolidated financial statements include the accounts of Envision Solar International, Inc. and its wholly-owned subsidiary, Envision Solar Construction Company, Inc. All inter-company balances and transactions have been eliminated in consolidation. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts receivable, valuation of inventory, depreciable lives of property and equipment, estimates of costs to complete and earnings on uncompleted contracts, estimates of loss contingencies, valuation of derivatives, valuation of beneficial conversion features in convertible debt, valuation of share-based payments, and the valuation allowance on deferred tax assets. CONCENTRATIONS Concentration of Credit Risk The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2015. The Company did not have any bank balances in excess of FDIC insured levels as of December 31, 2015. Bank balances in excess of the FDIC insured levels amounted to $1,132,553 as of December 31, 2014. Concentration of Accounts Receivable At December 31, 2015 and 2014, customers that each accounted for more than 10% of our accounts receivable were as follows: 2015 2014 Customer 1 56% - Customer 2 39% - Customer 3 2% 44% Customer 4 - 36% Customer 5 3% 20% Concentration of Revenues For the years ended December 31, 2015 and 2014, customers that each represented more than 10% of our revenues were as follows: 2015 2014 Customer A 39% 9% Customer B 26% - Customer C - 59% Customer D - 27% CASH AND CASH EQUIVALENTS For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were $14,376 and $0 cash equivalents at December 31, 2015 and December 31, 2014, respectively. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses and short term loans, are carried at historical cost basis. At December 31, 2015 and 2014, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. (See Note 10 for further discussion of fair value measurements.) ACCOUNTS RECEIVABLE Accounts receivable are customer obligations due under normal trade terms. Management reviews accounts receivable on a periodic basis to determine if any receivables may become uncollectible. Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, dialogue with the customer, the financial profile of a customer, our historical write-off experience, net of recoveries, and economic conditions. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall allowance for doubtful accounts. Further, the Company may record a general reserve in its allowance for doubtful accounts to account for future changes that may negatively impact our overall collections. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. INVENTORY Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out method of accounting. Inventory costs primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for products being manufactured, and finished goods. Included in these costs are direct labor and certain manufacturing overhead costs associated with the manufacturing process. The Company regularly reviews inventory components and quantities on hand, and performs physical inventory counts. A reserve is established if this review process determines the market value of such inventory may be below the carrying value. PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 3 to 7 years. Expenditures for maintenance and repairs, along with fixed assets below our capitalization threshold, are expensed as incurred. PATENTS Effective January 2015, the company believes it will achieve future economic value for its various patents and patent ideas. All administrative costs for obtaining patents are accumulated on the balance sheet as a Patent asset until such time as a patent is issued. The costs of these intangible assets are classified as a long term asset and amortized on a straight line basis over the legal life of such asset, which is typically 20 years. In the event a patent is denied, all accumulated administrative costs will be expensed in that period. IMPAIRMENT OF LONG-LIVED ASSETS The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. ACCOUNTING FOR DERIVATIVES The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. REVENUE AND COST RECOGNITION Revenues are primarily derived from the direct sales of products in addition to construction contracts for the production and installation of our integrated solutions and proprietary products. Revenues may also consist of design fees for the design of solar systems and arrays, and revenues from sales of professional services. Revenues from design services and professional services are recognized as earned. Revenues from inventoried product sales are recognized upon the final delivery of such product to the customer. Any deposits received from a customer prior to such delivery are accounted for as deferred revenue on the balance sheet. Revenues and related costs on construction projects are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, “Construction-Type and Production-Type Contracts.” Under this method, contract revenues are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor, allocable depreciation and other allocable indirect costs and are charged to the periods as incurred. All unallocable indirect costs and corporate general and administrative costs are also charged to the periods as incurred. Any recognized revenues that have not been billed to a customer are recorded as an asset in “costs and estimated earnings in excess of billings on uncompleted contracts.” Any billings of customers in excess of recognized revenues are recorded as a liability in “Billings in excess of costs and estimated earnings on uncompleted contracts.” However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. For construction contracts that do not qualify for use of the percentage of completion method, the Company accounts for such contracts using the “completed contract method” in accordance with ASC 605-35. Under this method, contract costs are accumulated as deferred assets and billings and/or cash receipts are recorded to a deferred revenue liability account during the periods of construction, but no revenues, costs or profits are recognized in operations until the period upon completion of the contract. Costs include direct material, direct labor, subcontract labor, allocable depreciation and other allocable indirect costs. All unallocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. The deferred asset (accumulated contract costs) in excess of the deferred liability (billings and/or cash received) is classified as a current asset under “Costs in excess of billings on uncompleted contracts.” The deferred liability (billings and/or cash received) in excess of the deferred asset (accumulated contract costs) is classified under current liabilities as “Billings in excess of costs on uncompleted contracts.” A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. The Company has contracts in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Costs estimates are reviewed periodically on a contract-by-contract basis throughout the life of the contract such that adjustments to the profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated costs to complete projects, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. The Company generally provides a one year warranty on its products for materials and workmanship and will pass on the warranties from its vendors, if any, which generally covers this one year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At December 31, 2015, the Company has no product warranty accrual given its lack of any material historical warranty experience. RESEARCH AND DEVELOPMENT In accordance with ASC 730-10, “Research and Development,” expenditures for research and development of the Company’s products are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $888 for the year ending December 31, 2015 and $57,267 for the year ending December 31, 2014. ADVERTISING The Company conducts advertising for the promotion of its products and services. In accordance with ASC 720-35, “Advertising Costs,” advertising costs are charged to operations when incurred; such amounts aggregated $49,500 in 2015 and $94,065 in 2014. STOCK-BASED COMPENSATION The Company follows ASC 718, “Compensation – Stock Compensation.” ASC 718 requires companies to estimate and recognize the fair value of stock-based awards to employees and directors. The fair value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees”. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model. INCOME TAXES The Company accounts for income taxes pursuant to the provisions of ASC Topic 740, “Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provisions of ASC 740-10-25-5, “ .” The Company recognizes the benefit of a tax position when it is effectively settled. ASC 740-10-25-10, “Basic Recognition Threshold” provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority. For tax positions considered effectively settled, the Company recognizes the full amount of the tax benefit. BASIC AND DILUTED NET LOSS PER COMMON SHARE Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. Convertible debt convertible into 5,311,923 common shares, options to purchase 15,337,007 common shares and warrants to purchase 29,219,441 common shares were outstanding at December 31, 2015. Convertible debt convertible into 7,373,058 common shares, options to purchase 15,387,007 common shares and warrants to purchase 29,219,441 common shares were outstanding at December 31, 2014. Dilutive common stock equivalents were not included in the computation of diluted net loss per share in 2015 and 2014 because the effects would have been anti-dilutive due to the net losses. Due to the net losses in 2015 and 2014, basic and diluted net loss per share amounts are the same. These potential common shares may dilute future earnings per share. CONTINGENCIES Certain conditions may exist as of the date the consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed. The Company does not include legal costs in its estimates of amounts to accrue. SEGMENTS The Company follows the guidance of ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information." During 2015 and 2014, the Company only operated in one segment; therefore, segment information has not been presented. RECENT ACCOUNTING PRONOUNCEMENTS There are no new accounting pronouncements that became effective during the period ended December 31, 2015 that affect the consolidated financial position of the Company or the results of its’ operations. Accounting Standard Updates which are not effective until after December 31, 2015, including the pronouncements discussed below, are not expected to have a significant effect on the Company’s consolidated financial position or results of its’ operations. ASU 2015-03 In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," ASU 2015-08 In May 2015, the FASB issued ASU 2015-08, “Business Combinations (Topic 805) Pushdown Accounting, ASU 2015 - 11 In July 2015, the FASB issued Accounting Standards Update 2015-11, “Simplifying the Measurement of Inventory.” This standard changes the inventory valuation method from the lower of cost or market to the lower of cost or net realizable value for inventory valued under the first-in, first-out or average cost methods. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods and requires prospective adoption with early adoption permitted. The Company does not expect this ASU to have a material impact on its consolidated financial statements. |
2. GOING CONCERN
2. GOING CONCERN | 12 Months Ended |
Dec. 31, 2015 | |
Capitalization of accrued interest to convertible notes payable | |
GOING CONCERN | As reflected in the accompanying consolidated financial statements for the years ended December 31, 2015 and 2014, the Company had net losses of $1,839,533 (which includes $121,915 of stock based compensation expense) and $3,146,302 (which includes $736,388 of stock based compensation expense), respectively, and net cash used in operating activities of $2,469,343 and $1,817,122, respectively. Additionally, at December 31, 2015, the Company had a working capital deficit of $1,915,684, stockholdersÂ’ deficit of $1,408,603, and accumulated deficit of $32,601,933. These factors raise substantial doubt about the CompanyÂ’s ability to continue as a going concern. Envision is pursuing a capital raise to provide funds during the upcoming months and will look to raise additional funds for further operating capital and working capital later in the fiscal year. Further, the Company will seek additional sales that would provide additional revenues and possible gross profits. All such actions and funds, if successful, may or may not be sufficient to cover monthly operating expenses or meet minimum payments with respect to the CompanyÂ’s liabilities over the next twelve months or providing additional working capital. From January 1, 2015 through December 31, 2015, the Company raised $815,000 from a securities offering and drew down $800,000 on a $1,000,000 line of credit that was established during the year. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
3. CONTRACT ACCOUNTING, ACCOUNT
3. CONTRACT ACCOUNTING, ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
CONTRACT ACCOUNTING ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE | Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts Costs and estimated earnings in excess of billings on uncompleted contracts represents costs and estimated earnings in excess of billings and/or cash received on uncompleted contracts accounted for under the percentage of completion method (See Note 1). At December 31, 2015, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following for contracts accounted for using the percentage of completion method: Costs and estimated earnings recognized $ 511,108 Less: Billings or cash received (489,050 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 22,058 At December 31, 2014, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following for contracts accounted for using the percentage of completion method: Costs and estimated earnings recognized $ 882,716 Less: Billings or cash received (790,050 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 92,666 Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts Billings in excess of costs and estimated earnings on uncompleted contracts represents billings and/or cash received that exceed accumulated revenues recognized on uncompleted contracts accounted for under the percentage of completion method (See Note 1). As of December 31, 2015, there were no billings in excess of costs and estimated earnings on uncompleted contracts accounted for using the percentage of completion method. At December 31, 2014, billings in excess of costs and estimated earnings on uncompleted contracts consisted of the following for contracts accounted for using the percentage of completion method: Billings and/or cash receipts on uncompleted contract $ 15,000 Less: Revenues recognized (9,386 ) Billings in excess of costs and estimated earnings on uncompleted $ 5,614 Accounts Receivable The Company records accounts receivable related to its construction contracts and its design services based on billings or on amounts due under the contractual terms. The allowance for doubtful accounts is based upon the CompanyÂ’s policy (See Note 1). Accounts receivable throughout the year may decrease based on payments received, credits for change orders, or back charges incurred. At December 31, 2015 and 2014, accounts receivable were as follows: December 31, 2015 December 31, 2014 Accounts receivable $ 855,017 $ 114,917 Less: Allowance for doubtful accounts (23,400 ) (11,700 ) Accounts receivable, Net $ 831,617 $ 103,217 Bad debt expense for 2015 and 2014 was $11,700 and $0, respectively. Deferred Revenue Deferred revenues are deposits from customers for product sales which have not yet been delivered (See Note 1). Deferred revenue was $213,467 and $717,291 for the periods ended December 31, 2015 and December 31, 2014, respectively. |
4. SUBCRIPTIONS RECEIVABLE
4. SUBCRIPTIONS RECEIVABLE | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
SUBCRIPTIONS RECEIVABLE | Subscriptions receivable are subscriptions made for the purchase of shares of the CompanyÂ’s common stock in a private offering where the subscription was made but the cash payment was in transit. The balance of this account was $0 and $25,000 as of December 31, 2015 and 2014, respectively. The cash payment for the December 31, 2014 balance was received in January 2015. |
5. PREPAID EXPENSES AND OTHER C
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2015 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets are summarized as follows: December 31, 2015 December 31, 2014 Prepaid Insurance $ 20,035 $ 20,707 Deposit on future raw materials 31,752 114,071 Total prepaid expenses and other current assets $ 51,787 $ 134,778 |
6. INVENTORY
6. INVENTORY | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
INVENTORY | Inventories are stated at the lower of cost or net realizable value. Costs are determined using the first in- first out (FIFO) method. As of December 31, 2015 and 2014, inventory consists of the following: December 31, December 31, 2015 2014 Finished Goods $ 85,487 $ – Work in Process 234,226 42,120 Raw Materials 130,245 305,783 Inventory Reserve (27,783 ) – Inventory, net $ 422,175 $ 347,903 |
7. PROPERTY AND EQUIPMENT
7. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | Property and equipment consists of the following: Est. Useful December 31, December 31, Computer equipment and software 5 years $ 155,620 $ 155,620 Furniture and fixtures 7 years 202,009 197,169 Office equipment 5 years 28,289 28,289 Machinery and equipment 1-5 years 348,045 129,360 Autos 3 years 49,238 – Leasehold improvements 19 months 18,541 11,394 Total property and equipment 801,742 521,832 Less accumulated depreciation (557,781 ) (398,267 ) Property and Equipment, Net $ 243,961 $ 123,565 Depreciation expense for 2015 and 2014 was $139,032 and $41,392, respectively. In 2015, approximately $20,000 of depreciation was capitalized into inventory as manufacturing overhead costs. |
8. ACCRUED EXPENSES
8. ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | The major components of accrued expenses are summarized as follows: December 31, 2015 December 31, 2014 Accrued vacation $ 135,940 $ 122,537 Accrued officers’ salary 68,749 68,749 Accrued interest 142,261 173,437 Accrued estimated losses on contracts – 1,590 Other accrued expense 1,517 1,913 Total accrued expenses $ 348,467 $ 368,226 |
9. LINE OF CREDIT
9. LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2015 | |
Line Of Credit | |
LINE OF CREDIT | In October 2015, the Company entered into a one year Loan and Security Agreement (the “LSA”) with Silicon Valley Bank (“Bank”), pursuant to which the Bank agreed to provide the Company with a revolving line of credit in the aggregate principal amount of $1,000,000, bearing interest at a floating per annum rate equal to the greater of three quarters of one percentage point (0.75%) above the Prime Rate (as that term is defined in the LSA) or four percent (4.00%). The line of credit is secured by a second priority perfected security interest in all of the assets of the Company in favor of the Bank. The LSA contains certain restrictions, subject to certain exceptions and qualifications, on the conduct of the Company and its subsidiary, including, among other restrictions: incurring debt other than permitted indebtedness as defined, disposing of certain assets, making investments, creating or suffering liens, completing certain mergers, consolidations and sales of assets, acquisitions, declaring dividends to third parties, redeeming or prepaying other debt, and certain transactions with affiliates. Under the terms of the LSA, the Bank received a commitment fee of $2,500, reimbursement of Bank expenses for documentation of $10,000, and a reimbursement of filing fees amounting to $1,836. These fees are recorded as Debt Issue Costs on the accompanying balance sheet and will be amortized over the one year term of the line of credit. As a condition to the extension of credit to the Company under the LSA, Keshif Ventures, LLC (“Keshif”), a related party shareholder with more than 10% of the outstanding stock of the Company, agreed to guarantee all of the Company’s obligations under the LSA pursuant to a Master Unconditional Limited Guaranty between Bank and Keshif (“Guaranty”). Keshif pledged cash equivalent collateral to the Bank as security for the Guaranty. Keshif also agreed to subordinate to the Bank all of Company’s indebtedness and other monetary obligations owing to Keshif pursuant to a Subordination Agreement (“Subordination Agreement”). In consideration for the Guaranty, Envision issued 571,429 shares of its common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices) or $85,714 (the “Shares”) to Keshif pursuant to a stock purchase agreement (“SPA”). These shares, along with legal costs associated with the issuance of this guaranty amounting to $11,435, are recorded as Debt Issue Costs in the accompanying balance sheet and will be amortized over the one year term of the line of credit. Pursuant to the terms of the SPA, for each six-month period from and after the six-month anniversary of October 29, 2015 (each, a “Measurement Period”) that Keshif guarantees Borrower’s obligations under the LSA, Keshif will also receive the number of additional shares of Envision’s common stock, rounded upward to the nearest whole number, equal to (a) two and one half percent (2.5%) multiplied by the maximum outstanding principal amount of the LSA at any time during such Measurement Period, such amount to be divided by (b) the twenty (20) day average closing price of the Company’s common stock, measured for the twenty (20) consecutive trading days immediately prior to such Measurement Period, the quotient of which shall be multiplied by (c) a fraction, the numerator of which is the number of calendar days during the Measurement Period which the Guaranty remained in effect and the denominator of which is the number of calendar days in such Measurement Period. The Company also issued a side letter to Keshif (the “Side Letter”), which in addition to confirming Keshif’s entitlement to the Shares, provided certain contractual rights to Keshif in consideration for the Guaranty, including a covenant by the Company to provide financial statements and other periodic reports to Keshif, an agreement to reimburse Keshif for payments made by Keshif to the Bank in accordance with the Guaranty (“Reimbursement Obligation”), and the grant of a security interest, subordinated to the Bank under the Subordination Agreement, to secure the Reimbursement Obligation. Keshif also has the right under the Side Letter to invite one representative to attend all meetings of Envision’s Board of Directors and, in the event Envision is unable to meet its obligations under the LSA, Keshif will immediately become entitled to elect one member to Envision’s Board of Directors (see Notes 14 and 17). The outstanding balance on the line of credit at December 31, 2015 is $800,000 leaving $200,000 of credit line available to the Company. |
10. CONVERTIBLE NOTE PAYABLE -
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Convertible Note Payable - Related Parties And Fair Value Measurements | |
CONVERTIBLE NOTES PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS | As of December 31, 2015 and 2014, the following summarizes amounts owed under short-term convertible notes –related parties: December 31, 2015 December 31, 2014 Evey Note $ 86,616 $ 98,616 Gemini Master Fund - Third Amended and Restated Secured Bridge Note - Noble Portion 600,000 – $ 686,616 $ 98,616 Evey Note Prior to 2011, the Company was advanced monies by John Evey, our director, and executed a 10% convertible promissory note which was convertible into shares of common stock at $0.33 per share. There was no beneficial conversion feature at the note date and this note is subordinate to the Gemini Master Funds notes. Through a series of amendments, the conversion price of the convertible note was reduced to $0.20 and the maturity date was extended to December 31, 2013. Effective December 31, 2013, the Company entered into a further extension agreement to extend the maturity date of this note to December 31, 2014. There were no additional fees or discounts associated with this extension. Per generally accepted accounting principles, this modification was treated as an extinguishment, but as the market price of the Company’s stock was below the conversion price at the time of the modification, there was no beneficial conversion feature that needed to be recorded. During the year ended December 31, 2014, in lieu of interest payments, the Company made principal payments on this note amounting to $12,000. Effective December 31, 2014, the Company entered into a further extension agreement to extend the maturity date of this note to December 31, 2015. There were no additional fees or discounts associated with this extension. Per generally accepted accounting principles, this modification was treated as an extinguishment as the change in fair value of the embedded conversion option just before and just after the modification was more than 10% of the carrying amount of the note, but as the market price of the Company’s stock was below the conversion price at the time of the modification, there was no beneficial conversion feature that needed to be recorded. During the fiscal year ended December 31, 2015, in lieu of interest payments, the Company made principal payments on this note amounting to $12,000. Effective December 31, 2015, the Company entered into a further extension agreement to extend the maturity date of this note to December 31, 2016. There were no additional fees or discounts associated with this extension. This modification was treated as an extinguishment as the change in fair value of the embedded conversion option just before and just after the modification was more than 10% of the carrying amount of the note. The market price of the Company’s stock was below the conversion price at the time of the modification, therefore no beneficial conversion feature needed to be recorded. The note continues to bear interest at a rate of 10%. The balance of the note as of December 31, 2015 is $86,616 with accrued and unpaid interest amounting to $36,749 (See Note 17). Gemini Third Amended and Restated Secured Bridge Note – Noble Portion At the end of 2010, the Company had a series of outstanding convertible notes to Gemini Master Fund, Ltd which were due December 31, 2011. These notes bore interest at a rate of 12% per annum and, with the exception of one note, had a conversion feature whereby, the lender, at its option, may at any time convert this loan into common stock at $0.25 per share. Interest under these notes is due on the first business day of each calendar quarter, however, upon three days advance notice, the Company may elect to add such interest to the note principal balance effectively making the interest due at note maturity. With regard to the conversion feature of these notes, the conversion rights contain price protection whereby if the Company sold equity or converted existing instruments to common stock at a price less than the effective conversion price, the conversion price will be adjusted downward to the sale price. Furthermore, if the Company issues new rights, warrants, options or other common stock equivalents at an exercise price that is less than the stated conversion price, then the conversion price shall be adjusted downward to a new price based on a stipulated formula. The holder may not convert the debt if it results in the holder beneficially holding more than 4.9% of the Company’s common stock. The note is secured by substantially all assets of the Company and its subsidiary, and is unconditionally guaranteed by the subsidiary. Prior to June 30, 2010 all shares underlying the Gemini Master Fund convertible debt were subject to a lock-up agreement, and the shares were not easily convertible to cash thus, the embedded conversion option did not need to be bifurcated and recorded as a fair value derivative due to the price protection provision in the notes. Subsequent to June 30, 2010, such lock-up provisions expired and as such, the Company determined that the embedded conversion option met the definition of a derivative liability and needed to be bifurcated and recorded as a derivative at fair value. Through a series of amendments, the Company modified terms of all notes so that the terms of these notes became equivalent. Further, the interest rates were reduced to 10%; the conversion prices were reduced $0.15; and the terms were extended to December 31, 2013. Effective February 28, 2014 the Company entered into an additional extension and amendment agreement with a simultaneous principal conversion agreement related to these convertible notes payable. With this agreement, all outstanding notes were merged into one note, the term of the note was extended to June 30, 2015 and the beneficial holder ceiling was increased to 9.9%. No other terms of the notes were modified. These changes were accounted for as a debt modification but not as a debt extinguishment because the embedded conversion feature is bifurcated and treated as a derivative and no other debt extinguishment criteria were met. As a result of this transaction, the Company recorded $478,561 of embedded conversion option based effective interest based on the increase in the fair value of the embedded conversion option due to the modification which is recorded as debt discount and is being amortized over the remaining term of the loan. The Company further issued 1,500,000 common stock purchase warrants valued at $193,625 using the Black-Scholes valuation methodology, each with a three year term and $0.20 strike price, to the holder which was recorded as debt discount and is being amortized over the remaining term of the note. The Company agreed to pay a $6,500 fee to cover legal and document fees which was capitalized as an asset on the balance sheet as “Debt issue costs” and was amortized over the remaining term of the note. Simultaneously, Gemini converted $550,000 of principal convertible debt, and all accrued interest through 2013, and further, the accrued interest through the conversion date for the converted debt, totaling $155,161 into 4,701,076 shares of common stock of the Company (3,666,666 shares for principal and 1,034,410 for interest) at the contracted conversion price of $0.15 per share. The conversion was recorded to equity with no gain or loss on such conversion related to the principal portion, while the Company recorded a loss of $20,689 related to the conversion of accrued interest. As an inducement to Gemini to convert the principal debt amount, the Company issued 3,727,778 common stock purchase warrants, each with a strike price of $0.20 and a three year term. These warrants are valued at $482,300 using the Black-Scholes option pricing model and were expensed at the date of the transaction. In June 2015, Gemini sold a 70.0066819% stake in its’ note to Robert Noble, our past Chairman, in a private transaction. The Company issued two replacement notes for their respective ownership values based on this transaction. Each note has the same terms and conditions as existed prior to this transaction and as discussed above. There were no accounting effects for this transaction. In September 2015, the Company made a payment of $306,624 to pay off the balance of the Gemini note and its accrued interest, and recorded a loss on debt settlement of $2,925. In regards to the remaining note, Robert Noble agreed to an extension to March 31, 2016. Additionally, during 2015, the Company made a $100,000 payment to Mr. Noble to pay down the accrued interest on this note. As Robert Noble is a greater than 10% shareholder in the Company, the note balance has been reclassified to Convertible Notes Payable- Related Parties in the accompanying December 31, 2015 balance sheet, while it is classified as Convertible Notes Payable in the accompanying December 31, 2014 balance sheet (See Note 17). At December 31, 2015, the remaining note had a balance of $600,000, and accrued interest of $31,438. Fair Value Measurements – Derivative liability: The accounting guidance for fair value measurements provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. Fair value is defined 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. The accounting guidance established a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. An asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at December 31, 2014 and 2015: Carrying Value at Fair value Measurements at December 31, 2014 December 31, 2014 (Level 1) (Level 2) (Level 3) Embedded Conversion Option Liability $ 355,611 $ – $ – $ 355,611 Carrying Value at Fair value Measurements at December 31, 2015 December 31, 2015 (Level 1) (Level 2) (Level 3) Embedded Conversion Option Liability $ 87,992 $ – $ – $ 87,992 The following is a summary of activity of Level 3 liabilities for the period ended December 31, 2014 and 2015: Balance at December 31, 2013 $ 281,265 Increase in liability due to debt modification 478,561 Change in fair value (404,215 ) Balance at December 31, 2014 $ 355,611 Increase in liability due to debt modification – Change in fair value (267,619 ) Balance December 31, 2015 $ 87,992 Changes in fair value of the embedded conversion option liability are included in other income (expense) in the accompanying consolidated statements of operations. The Company estimates the fair value of the embedded conversion liability utilizing the Black-Scholes pricing model, which is dependent upon several variables such as the expected term (based on contractual term), expected volatility of our stock price over the expected term (based on historical volatility), expected risk-free interest rate over the expected term, and the expected dividend yield rate over the expected term. The Company believes this valuation methodology is appropriate for estimating the fair value of the derivative liability. The following table summarizes the assumptions the Company utilized to estimate the fair value of the embedded conversion option at December 31, 2014 and 2015: Assumptions December 31, 2014 December 31, 2015 Expected remaining term 0.50 0.25 Expected Volatility 174% 113% Risk free rate 0.66% 0.16% Dividend Yield 0.00% 0.00% There were no changes in the valuation techniques during 2015. |
11. NOTES PAYABLE AND AUTO LOAN
11. NOTES PAYABLE AND AUTO LOAN | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable [Abstract] | |
NOTES PAYABLE AND AUTO LOAN | Note Payable On June 1, 2010, the Company entered into a Promissory Note with one of its vendors in exchange for the vendor cancelling its open invoices to the Company. Total outstanding payables recorded by the Company at the time of settlement were $179,702. The note amount was for $160,633 and bears interest at 10%. The note can be converted only at the option of the Company, at any time, into common stock with an original conversion price of $0.33 per share. During 2011, 2012 and 2013, the company made partial conversions of this note. Further, through a series of amendments, the note was extended to December 31, 2014 and the conversion price of the note was reduced to $0.20 per share of common stock. During 2014, the Company made partial conversions of this note into 150,000 shares of the CompanyÂ’s common stock. The shares were valued at their quoted trade prices aggregating $24,000. The Company recorded a reduction of principal of $30,000, and a gain on settlement of debt of $6,000. Further, effective as of December 31, 2014, the Company entered into an amendment to extend the maturity date of the note to December 31, 2015. There was no accounting effect for this extension. Effective December 31, 2015, the Company entered into a further amendment to this note extending the maturity date of the note to June 30, 2016. There was no accounting effect for this extension. As of December 31, 2015, the note had a remaining balance due of $43,033 with accrued and unpaid interest amounting to $13,855. Auto Loan In October 2015, the Company purchased a new vehicle and financed the purchase through a dealer auto loan. The loan has a term of 60 months, requires minimum monthly payments of approximately $950, and bears interest at a rate of 5.99 percent. As of December 31, 2015, the loan had a short-term portion of $8,797 and a long term portion of $38,978. |
12. CONVERTIBLE NOTES PAYABLE
12. CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2015 | |
Convertible Notes Payable | |
CONVERTIBLE NOTES PAYABLE | Summary: As of December 31, 2015, principal amounts owed under convertible notes consisted of only the Pegasus note. As of December 31, 2014, the following summarizes principal amounts owed under convertible notes: Amount Discount Convertible Notes Payable, net of discount Pegasus Note $ 100,000 $ – $ 100,000 Gemini Master Fund – Third Amended and Restated secured bridge Note 856,325 252,070 604,255 $ 956,325 $ 252,070 $ 704,255 ENVISION SOLAR INTERNATIONAL INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2015 and 2014 Pegasus Note On December 19, 2009, the Company entered into a convertible promissory note for $100,000 to a new landlord in lieu of paying rent for one year for new office space. The interest is 10% per annum with the note principal and interest originally due December 18, 2010 and subsequently extended until December 31, 2012. However, if the Company receives greater than $1,000,000 of proceeds from debt or equity financing, 25% of the amount in excess of $1,000,000 shall be used to pay down the note. This note is subordinate to all existing senior indebtedness of the Company. This note is convertible at $0.33 per share and had no beneficial conversion feature at the note date. Through a series of amendments, the term of the note was extended until December 31, 2014, and waived, through December 31, 2013, the requirement to pay down the note with financing proceeds received by the Company. Effective December 31, 2014, the Company entered into an additional modification extending the term of the note to December 31, 2015, and waived, through December 31, 2014, the requirement to pay down the note with financing proceeds received by the Company in the period. This modification was treated as a debt extinguishment, but as the market price of the Company’s stock was below the conversion price at the time of the modification, there was no beneficial conversion feature that needed to be recorded. Effective December 31, 2015, the Company entered into an additional modification extending the term of the note to December 31, 2016, and waiving, through December 31, 2015, the requirement to pay down the note with financing proceeds received by the Company in the period. There was no accounting effect for this transaction. The balance of the note as of December 31, 2015 is $100,000 with accrued and unpaid interest amounting to $60,219. Gemini Third Amended and Restated Secured Bridge Note See note 10 for additional information on a Convertible Note classified as Convertible Note Payable in 2014 but became a Convertible Note Payable - Related Party in 2015. |
13. COMMITMENTS AND CONTINGENCI
13. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Leases: In October 2014, the Company entered into a sublease for its current corporate headquarters and manufacturing facility. The sublease expires in July 2016 which is the same term of the master lease for which the Company is the subtenant. As part of the sublease, the Company provided a $154,242 deposit to the landlord which will be reduced in each of the last five months of the sublease in lieu of rent payments. At the end of the lease period, $25,707 of the deposit will remain as security for the surrender of the premises. As of December 31, 2015 there are no lease agreements with non-cancelable terms in excess of one year. Rent expense was $30,765 and $130,939 for the years ended December 31, 2015 and 2014, respectively. Further, for the years ended December 31, 2015 and 2014, respectively, $268,487 and $22,281 of rent was capitalized into inventory as manufacturing overhead costs. Legal Matters: From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2015, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations. Other Commitments: The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments. During 2015 and 2014, the Company has agreements to act as a reseller for certain vendors; joint development contracts with third parties; sales agent agreements whereby sales agents would receive a fee equal to a percentage of revenues generated by the agent; business development agreements and strategic alliance agreements where both parties have agreed to cooperate and provide business opportunities to each other; agreements with vendors where the vendor may provide marketing, public relations, technical consulting or subcontractor services and financial advisory agreements where the financial advisor would receive a fee and/or commission for advising and raising capital for the Company. All expenses and liabilities relating to such contracts were recorded in accordance with generally accepted accounting principles during the periods. Although such agreements increase the risk of legal actions against the Company for potential non-compliance, other than sales agent agreements and revenue generating sales contracts, there are no firm commitments in such agreements as of December 31, 2015. Upon the signing of customer contracts, the Company enters into various other agreements with third party vendors who will provide services and/or products to the Company. Such vendor agreements may call for a deposit along with certain other payments based on the delivery of goods or services. Payments made by the Company before the completion of projects are treated as ongoing project expenses and due to the contractual nature of the agreements; the Company may be contingently liable for other payments required under the agreements. |
14. COMMON STOCK
14. COMMON STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
COMMON STOCK | Shares Issued Issuances of the Company’s common stock during the years ended December 31, 2015 and 2014, respectively, are as follows: 2015 Stock Issued in Cash Sales During the year ended December 31, 2015 pursuant to private placements, the Company issued 5,433,334 shares of common stock for cash with a per share price of $0.15 per share or $815,000 and the Company incurred $8,900 of capital raising fees that were paid in cash and charged to additional paid-in capital. Stock Issued for Services – Related Party For professional services provided per the terms of a consulting agreement with GreenCore Capital LLC (“GreenCore”), and during the year ended December 31, 2015, the Company issued 373,107 shares of the Company’s common stock with a per share fair value between $0.13 and $0.18 (based on an average market value of the stock when earned as defined in the agreement) or $54,000. The difference between the grant date fair value and contractual value was de minimis. These payments were expensed at time of issuance. Jay Potter, our director, is the managing member of GreenCore and the individual performing the services. (See Note 17) Stock Issued for Director Services During the year ended December 31, 2015, the Company released 347,220 shares of common stock with a per share fair value of $0.15, or $52,082 (based on the market price at the time of the agreement), to two directors for their service as defined in their respective Restricted Stock Grant Agreements. The payments were expensed at issuance (See Note 17). The total unrecognized restricted stock grant expense related to the above discussed stock issuances amounted to $62,500 at December 31, 2015. Stock Issued for Loan Guaranty During the year ended December 31, 2015, and in consideration for the Guaranty of the Company’s obligations extended under a line of credit, the Company issued 571,429 shares of its common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices) or $85,714 to Keshif Ventures LLC, a related party, pursuant to a stock purchase agreement. These shares are recorded as Debt Issue Costs in the accompanying balance sheet and will be amortized over the one year term of the line of credit (See Note 9 and Note 17). 2014 Stock Issued in Cash Sales During the year ended December 31, 2014 pursuant to private placements, the Company issued 20,186,725 shares of common stock for cash with a per share price of $0.15 per share or $3,028,010 and the Company incurred $102,840 of capital raising fees that were paid in cash and charged to additional paid-in capital. Stock Issued for Services – Related Party On March 28, 2014, the Company entered into a new consulting agreement with GreenCore Capital LLC (“GreenCore”) and effectively cancelled all prior agreements between the companies. GreenCore will continue to provide financial advisory and analytical professional services to the Company as well as acting as a sales channel for Envision products. Related to these professional services provided, and during the twelve month period ended December 31, 2014, the Company issued 440,000 shares of the Company’s common stock with a per share value of $0.15 (based on contemporaneous cash sales prices) or $66,000, and issued an additional 176,856 shares of the Company’s common stock with a per share value average of $0.15 (based on market price at the time of the transaction) or $26,528. These payments were expensed at time of issuance. Jay Potter, our director, is the managing member of GreenCore and the individual performing the services. (See Note 17) Stock Issued for Director Services On January 23, 2014, Mr. Paul H. Feller accepted an appointment as a new director of the Company effective January 23, 2014. In consideration for Mr. Feller’s acceptance to serve as a director of the Company, the Company granted 1,000,000 restricted shares of its common stock to him, subject to the terms and conditions set forth in the Restricted Stock Grant Agreement including but not limited to the following vesting schedule: 166,672 shares on January 24, 2014 and then 69,444 shares on the last day of each calendar quarter thereafter commencing on March 31, 2014. The total value of this stock grant is $0.15 per share (based on contemporaneous cash sales prices) or $150,000. The share value is being expensed proportionately as the shares vest. The Company issued and released 444,448 of these shares, with a value of $66,667, during the twelve month period ended December 31, 2014. Mr. Feller resigned as a director on April 30, 2015. On April 2, 2014, Mr. John “Jack” Schneider accepted an appointment as a new director of the Company effective April 2, 2014. In consideration for Mr. Schneider’s acceptance to serve as a director of the Company, the Company granted 1,000,000 restricted shares of its common stock to him, subject to the terms and conditions set forth in the Restricted Stock Grant Agreement including but not limited to the following vesting schedule: 166,672 shares on April 2, 2014 and then 69,444 shares on the last day of each calendar quarter thereafter commencing on June 30, 2014. The total value of this stock grant is $0.15 per share (based on contemporaneous cash sales prices) or $150,000. The share value is being expensed proportionately as the shares vest. The Company issued and released 375,004 of these shares, with a value of $56,251, during the twelve month period ended December 31, 2014. Mr. Schneider resigned as a director on March 5, 2015. On July 11, 2014, Mr. Don Moody accepted an appointment as a new director of the Company effective July 11, 2014. In consideration for Mr. Moody’s acceptance to serve as a director of the Company, the Company granted 1,000,000 restricted shares of its common stock to him, subject to the terms and conditions set forth in the Restricted Stock Grant Agreement including but not limited to the following vesting schedule: 166,672 shares on July 11, 2014 and then 69,444 shares on the last day of each calendar quarter thereafter commencing on September 30, 2014. The total value of this stock grant is $0.15 per share (based on contemporaneous cash sales prices) or $150,000. The share value is being expensed proportionately as the shares vest. The Company issued and released 305,560 of these shares, with a value of $45,834, during the twelve month period ended December 31, 2014. Stock Issued in Settlement of Convertible Notes Payable and Related Interest On February 28, 2014, the Company issued 3,666,666 shares of common stock with a value of $0.15 (based on contractual terms), or $550,000, for the conversion of principal owed on its convertible debt. There was no gain or loss recorded for this transaction. Further, and also on February 28, 2014, the Company issued an additional 1,034,410 shares of common stock with a per share value of $0.15 (based on contractual terms), or $175,850, related to the conversion of accrued interest owed on this convertible debt. The Company recorded a $20,689 loss related to this piece of this transaction. (See Note 10) Stock Issued in Settlement of Note Payable In September 2014, the Company issued 150,000 shares of common stock with a per share value of $0.16 (based on market price at the time of the transaction) or $24,000 as a partial payment of outstanding debt. The Company recorded a reduction of notes payable of $30,000, and a gain on debt settlement of $6,000 related to this transaction. (See Note 11) |
15. STOCK OPTIONS AND WARRANTS
15. STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS AND WARRANTS | On August 10, 2011, the Company’s Board of Directors approved and caused the Company to adopt the Envision Solar International, Inc. 2011 Stock Incentive Plan (the “Plan”), which authorizes the issuance of up to 30,000,000 shares of the Company’s common stock pursuant to the exercise of stock options or other awards granted under the Plan. In 2008, the Board approved the 2008 equity Incentive Plan, which authorizes 6,108,571 shares under the plan. Exercise rights may not expire more than three months after the date of termination of the employee but may expire in less time as stipulated in the individual grant notice. For disability or death, the optionee or estate will generally have up to twelve months to exercise their options. For certain options the Company may have rights of first refusal for a stipulated period of time, under a separate stock restriction agreement, whereby if the holder exercise the options and then desires to sell the underlying shares, the Company has the right to repurchase such shares at a price to which the holder has agreed to sell them to a third party. Stock Options The Company follows the provisions of ASC Topic 718, “Compensation – Stock Compensation.” ASC Topic 718 establishes standards surrounding the accounting for transactions in which an entity exchanges its equity instruments for goods or services. ASC Topic 718 focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions, such as options issued under the Company’s Stock Option Plans. The Company’s stock option compensation expense was $15,833 and $457,152 for the years ended December 31, 2015 and 2014, respectively, and there was $19,139 of total unrecognized compensation cost related to unvested options granted under the Company’s options plans as of December 31, 2015. This stock option expense will be recognized through March 2019. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock. From January 1, 2014 through December 31, 2014, the Company issued 600,000 fully vested stock options under the plans with a total valuation of $87,224. Of these stock options, 200,000 have a 5 year term while the remaining 400,000 have a 10 year term. From January 1, 2015 through December 31, 2015, the Company issued 150,000 stock options under the plans which all vest over 4 years, have a term of 10 years, and a total valuation of $18,483. We used the following assumptions for options granted in fiscal 2015 and 2014: 2015 2014 Expected volatility 169.62% 138.71% Expected term 7 Years 3-5.5 Years Risk-free interest rate 0.66% 1.52% Expected dividend yield None None The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s stock options and warrants have characteristics different from those of its traded stock, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of such stock options. The risk free interest rate is based upon quoted market yields for United States Treasury debt securities with a term similar to the expected term. The expected dividend yield is based upon the Company’s history of having never issued a dividend and management’s current expectation of future action surrounding dividends. Expected volatility was based on historical data for the trading of our stock on the open market. The expected lives for such grants were based on the simplified method for employees and directors. All options qualify as equity pursuant to ASC 815-40-25, “Contracts in Entity’s Own Equity.” Option activity for the years ended December 31, 2015 and 2014 under the 2008 and 2011 Plans are as follows: Number of Options Weighted Average Exercise Price Outstanding at December 31, 2013 24,049,862 $ 0.30 Granted 600,000 0.19 Exercised – – Forfeited 9,262,855 0.33 Expired – – Outstanding at December 31, 2014 15,387,007 $ 0.28 Granted 150,000 0.13 Exercised – – Forfeited 200,000 0.22 Expired – – Outstanding at December 31, 2015 15,337,007 $ 0.28 Exercisable at December 31, 2015 15,195,688 $ 0.28 Weighted average grant date fair value $ 0.12 The following table summarizes information about employee stock options outstanding at December 31, 2015: Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding at December 31, 2015 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Exercisable at December 31, 2015 Weighted Average Exercise Price Aggregate Intrinsic Value $ 0.13-1.31 15,337,007 4.45 Years $ 0.28 $ – 15,195,688 $ 0.28 $ – 15,337,007 4.45 Years $ 0.28 $ – 15,195,688 $ 0.28 $ – As the Company’s stock price was lower than the weighted average exercise price at December 31, 2015, there is no aggregate intrinsic value of the options. Options exercisable have a weighted average remaining contractual life of 4.41 years as of December 31, 2015. Warrants 2015 There was no new warrant activity during 2015. 2014 During the year ended December 31, 2014, pursuant to a private placement, the Company issued 20,186,725 warrants to purchase common stock which is based on the number of units sold in the private offering. These warrants have an exercise price of $0.15 per share and expire 3 years from the date of issuance. As a part of the Company’s private placement, the Company effectively issued 428,499 warrants in the twelve months ended December 31, 2014 to the placement agents. These warrants, valued at $68,124, are exercisable for 3 years at an exercise price of $0.25 per share. The Company estimated the fair value of the warrants utilizing the Black-Scholes pricing model. The assumptions used in the valuation of 106,667 of these warrants include volatility of 138.71%, expected dividends of 0.0%, a discount rate of 1.52%, and expected term of 3 years. The assumptions used in the valuation of 66,666 of these warrants include volatility of 172.66%, expected dividends of 0.0%, a discount rate of 0.66%, and expected term of 3 years. The assumptions used in the valuation of 95,166 of these warrants include volatility of 171.32%, expected dividends of 0.0%, a discount rate of 0.66%, and expected term of 3 years. The assumptions used in the valuation of 160,000 of these warrants include volatility of 172.22%, expected dividends of 0.0%, a discount rate of 0.66%, and expected term of 3 years. There was no financial statement accounting effect for the issuance of these warrants as their fair value has been charged to Additional Paid-in-Capital as an offering cost and was offset by a credit to Additional Paid-in-Capital for their fair value when recording the issuance of these warrants. As a fee to extend the term of the Gemini Master Fund convertible debt, the Company issued 1,500,000 common stock purchase warrants valued at $193,625 using the Black-Scholes valuation methodology, each with a three year term and $0.20 strike price, to the holder which was recorded as debt discount and will be amortized over the remaining term of the note. The assumptions used in the valuation of these options include volatility of 140.80%, expected dividends of 0.0%, a discount rate of 1.52%, and expected term of 3 years. (See Note 10) As an inducement to Gemini Master Fund to convert the principal debt amount discussed above, the Company agreed to issue 3,727,778 common stock purchase warrants, each with a strike price of $0.20 and a three year term. These warrants were valued at $482,300 using the Black-Scholes valuation methodology and were expensed at the date of the transaction. The assumptions used in the valuation of these options include volatility of 140.80%, expected dividends of 0.0%, a discount rate of 1.52%, and expected term of 3 years. (See Note 10) During the twelve months ended December 31, 2014, 6,475,101 warrants had expired. Warrant activity for the years ended December 31, 2015 and 2014 are as follows: Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2013 9,851,540 $ 0.23 Granted 25,843,002 0.16 Exercised – – Forfeited – – Expired (6,475,101 ) 0.20 Outstanding at December 31, 2014 29,219,441 $ 0.18 Granted – $ – Exercised – – Forfeited – – Expired – – Outstanding at December 31, 2015 29,219,441 $ 0.18 Exercisable at December 31, 2015 29,219,441 $ 0.18 Weighted average grant date fair value $ – Warrants exercisable have a weighted average remaining contractual life of 1.47 years as of December 31, 2015. |
16. INCOME TAXES
16. INCOME TAXES | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | There was no Federal income tax expense for the years ended December 31, 2015 and 2014 due to the Company’s net losses. Income tax expense represents minimum state taxes due. The blended Federal and State tax rate of 39.83% applies to loss before taxes. The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes, (computed by applying the United States Federal tax rate of 34% to loss before taxes), as follows: Year ended December 31, 2015 2014 Computed “expected” tax expense (benefit) $ (625,441 ) $ (1,069,743 ) State taxes, net of federal benefit (122,700 ) (206,901 ) Goodwill impairment and other non-deductible items (104,420 ) (192,514 ) Change in deferred tax asset valuation allowance 854,161 1,470,758 Income tax expense $ 1,600 $ 1,600 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31 are as follows: 2015 2014 Deferred tax assets: Charitable contributions $ 4,128 $ 4,128 Reserve for bad debt 25,345 20,684 Stock options 4,599,689 4,593,382 Inventory Adjustment 11,067 – Other 19,634 15,702 Net operating loss carryforward 8,297,039 7,485,682 Total gross deferred tax assets 12,956,902 12,119,578 Less: Deferred tax asset valuation allowance (12,853,622 ) (11,999,461 ) Total net deferred tax assets 103,280 120,117 Deferred tax liabilities: Accrued salaries (96,704 ) (96,704 ) Accrued vacation – (13,848 ) Depreciation (6,576 ) (9,565 ) Total deferred tax liabilities (103,280 ) (120,117 ) Total net deferred taxes $ – $ – The valuation allowance at December 31, 2015 was $12,853,622. The increase in the valuation allowance during 2015 was $854,161. At December 31, 2015, the Company has a net operating loss carry forward of $20,828,829 available to offset future net income through 2035. The NOL expires during the years 2015 to 2035. The utilization of the net operating loss carryforwards is dependent upon the ability of the Company to generate sufficient taxable income during the carryforward period. In the event that a significant change in ownership of the Company occurs as a result of the Company’s issuance of common stock, the utilization of the NOL carry forward will be subject to limitation under certain provisions of the Internal Revenue Code. Management does not presently believe that such a change has occurred. |
17. RELATED PARTY TRANSACTIONS
17. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Accounts Payable and Related Party Vendor Payments During 2015, the Company made cash payments totaling $76,000, accrued an additional $22,500, and additionally issued 373,107 shares of the Company’s common stock with a total value of $54,000 to GreenCore Capital, LLC for professional services provided to the Company as detailed in a March 28, 2014 consulting agreement. Jay Potter, our director, is the managing member of GreenCore Capital LLC (See Note 14). During 2015, pursuant to April 2015 lease agreement, the Company made cash payments to Desmond Wheatley, our President and CEO, totaling $13,480 for the lease of a vehicle owned by Mr. Wheatley but used exclusively by the Company for Company business. The lease was later terminated in 2015. During 2014, the Company made cash payments totaling $93,000, and additionally issued 616,856 shares of the Company’s common stock with a total value of $92,528 to GreenCore Capital, LLC for professional services provided to the Company as detailed in a March 28, 2014 consulting agreement. Jay Potter, our director, is the managing member of GreenCore Capital LLC. On February 21, 2014, the Company entered into a consulting agreement (the “Consulting Agreement”) with Cronus Equity LLC, a Delaware limited liability company (“Cronus”), to be effective as of February 1, 2014, pursuant to which Cronus provided professional services to the Company. Paul Feller, a prior director of the Company, is a managing partner of Cronus and the individual performing such professional services on behalf of Cronus. In consideration for services provided to the Company during 2014, Cronus received payments amounting to $41,817. This agreement with Cronus was cancelled in May 2014. Prior to this agreement with Cronus, the Company had a similar agreement with Fellco LLC, an entity also operated by Mr. Feller, to provide the same services. This agreement was cancelled in January 2014. During 2014, the Company paid $5,135 to Fellco LLC. Stock Issued for Director Services During the year ended December 31, 2015, the Company released 347,220 shares of common stock with a per share fair value of $0.15, or $52,082 (based on the market price at the time of the agreement), to two directors for their service as defined in their respective Restricted Stock Grant Agreements. The payments were expensed at issuance (See Note 14). During the year ended December 31, 2014, the Company released 1,125,012 shares of common stock with a per share fair value of $0.15, or $168,752 (based on the market price at the time of the agreement), to three directors for their service as defined in their respective Restricted Stock Grant Agreements. The payments were expensed at issuance (See Note 14). Stock Issued for Loan Guaranty and Cash Sales During the year ended December 31, 2015, and in consideration for the Guaranty of the Company’s obligations extended under a line of credit, the Company issued 571,429 shares of its common stock or $85,714 to Keshif Ventures LLC, a related party by virtue of owning more than 10% of the Company’s common stock outstanding, pursuant to a stock purchase agreement (See Notes 9 and Note 14). Additionally, during the year ended December 31, 2015, pursuant to a private placement, the Company issued 3,666,667 shares of common stock for cash, with a per share price of $0.15 per share or $550,000 to Keshif Ventures LLC. Convertible Notes Payable to Related Parties In 2009, the Company executed a 10% convertible note payable in the amount of $102,236 due December 31, 2010 to John Evey for amounts loaned to the Company. Mr. Evey joined the Board of Directors on April 27, 2010. Through a series of extensions, the note due date was extended to December 31, 2016. During the fiscal year ended December 31, 2014, in lieu of interest payments, the Company made principal payments on this note amounting to $12,000. During the fiscal year ended December 31, 2015, in lieu of interest payments, the Company made principal payments on this note amounting to $12,000. The balance of the note as of December 31, 2015 is $86,616 with accrued and unpaid interest amounting to $36,749 (See Note 10). In June 2015, Gemini Master Fund Ltd sold a 70.0066819% stake in its’ note to Robert Noble, our past Chairman and current owner of over 10% of our outstanding common stock, in a private transaction. The Company issued two replacement notes for their respective ownership values based on this transaction. In regards to the note for Mr. Noble, he agreed to an extension of his note to March 31, 2016. During the twelve months ended December 31, 2015, the Company made a $100,000 payment to Mr. Noble to pay down the accrued interest on this note. The balance of the note as of December 31, 2015 is $600,000 with accrued and unpaid interest amounting to $31,438 (See Note 10). |
18. SUBSEQUENT EVENTS
18. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Stock Issued in Cash Sales Subsequent to December 31, 2015 pursuant to private placements, the Company issued 2,166,666 shares of common stock for cash with a per share price of $0.15 per share or $325,000 and the Company incurred $23,600 of capital raising fees that were paid in cash and charged to additional paid-in capital. Related to these sales, the Company is further obligated to issue 98,333 warrants as an offering cost to a third party, each with a 5 year term and a strike price of $0.15 per share, at the close of the private placement offering. There will be no accounting effect for the issuance of these warrants as their fair value will be charged to Additional Paid-in-Capital as an offering cost and offset by a credit to Additional Paid-in-Capital for their fair value when issuing these warrants. Director Compensation On February 12, 2016, the Company issued 200,000 stock options to each of the three non executive directors that served as a director during 2015, other than Mr. Moody, for a total of 600,000 stock options. These options were granted as compensation for the services provided in 2015, will vest immediately, and were valued using the Black-Scholes option pricing methodology. Jay Potter and John Evey each received 200,000 options exercisable at a price of $0.125 per share for a period of 10 years from the date of grant, with a combined total valuation of $40,100. Robert Noble received 200,000 options exercisable at a price of $0.1375 per share for a period of 5 years from the date of grant for a total valuation of $15,493. The assumptions used in the valuation of these options include volatility of 114.93%, expected dividends of 0.0%, a discount rate of 0.16%, and expected terms, applying the simplified method, of 5 years for Mr. Potter and Mr. Evey and 2.5 years for Mr. Noble. On February 12, 2016, the Board approved a compensation program for all non executive directors that do not otherwise have a pre-existing compensation plan. Starting for the 2016 year of service, each of two directors will receive 1,000,000 shares of common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices), or $150,000, that will vest equally at the end of each calendar quarter that such director remains in service as a director over a three year period. New Director On February 19, 2016, Mr. Anthony Posawatz accepted an appointed as a new director of the Company effective February 19, 2016. In consideration for Mr. PosawatzÂ’s acceptance to serve as a director of the Company, the Company agreed to grant him 1,000,000 restricted shares of its common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices), or $150,000, vesting according to the following vesting schedule: 27,777 per month over a 36 month period commencing on March 31, 2016, issuable on the last day of each calendar quarter so long as Mr. Posawatz serves as a director of the Company, subject to the granteeÂ’s right to waive vesting and issuance on a quarterly basis. Accounts Payable and Related Party Vendor Payments Subsequent to December 31, 2015, the Company made cash payments totaling $15,000, and additionally issued 128,571 shares of the CompanyÂ’s common stock with a total value of $19,286 (based on contemporaneous cash sales prices) to GreenCoreCapital, LLC for professional services provided to the Company as detailed in a March 28, 2014 consulting agreement. The contractual value of this share issuance is $18,000 and accordingly, the Company will record a loss on conversion of $1,286. Jay Potter, our director, is the managing member of GreenCore Capital, LLC. Line of Credit Subsequent to December 31, 2015, the Company drew down an additional $200,000 on its line of credit. As of the date of this report, there is no additional drawing capacity on the line of credit. |
1. CORPORATE ORGANIZATION, NA26
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Corporate Organization | CORPORATE ORGANIZATION Envision Solar was incorporated on June 12, 2006 as a limited liability company (“LLC”), under the name Envision Solar, LLC. In September 2007, the company was reorganized as a California C Corporation and issued one share of common stock for each outstanding member unit in the LLC. Also during 2007, the Company formed various wholly owned subsidiaries to account for its planned future operations, but these entities were mostly dissolved over the subsequent years. The only remaining subsidiary included in these consolidated financial statements is Envision Solar Construction Company, Inc. On February 11, 2010, Envision Solar International, Inc., a California corporation (Envision CA) was acquired by an inactive publicly-held company in a transaction treated as a recapitalization of the company with Envision CA being the surviving business and becoming our wholly-owned subsidiary. On March 11, 2010, Envision CA was merged into our publicly-held company and the name of the publicly-held company was changed to Envision Solar International, Inc. (along with its subsidiary, hereinafter the “Company”, "us", "we", "our" or "Envision"). The effects of the recapitalization have been retroactively applied to all periods presented in the accompanying consolidated financial statements and footnotes. |
Nature of Operations | NATURE OF OPERATIONS Envision, a Nevada corporation, invents, designs, and manufactures solar products and proprietary technology solutions targeting three verticals: electric vehicle charging infrastructure; out of home advertising infrastructure; and renewable energy production and disaster preparedness. The Company focuses on creating renewably energized platforms for EV charging, and media and branding which are attractive, rapidly deployed, and of the highest quality. Management believes that the Company's chief differentiator is its ability to design and engineer architecturally accretive solar products which are a complex integration of simple, commonly available engineered components. The resulting products are built to have the longest life expectancy in the industry while also delivering valuable amenities and possible revenue opportunities for our customers. Management believes that Envision's products deliver multiple layers of value such as: renewably energized EV charging; media, branding, and advertising platforms; renewable and reliable energy production; architectural enhancement; reduced carbon footprint; reduction of heat islanding and improved parking experiences through shading; high visibility "green halo" branding; reduction of net operating costs through reduced utility bills; and revenue creation opportunities through the sales of digital out of home (DOOH) media. |
Principals of Consolidation | PRINCIPALS OF CONSOLIDATION The consolidated financial statements include the accounts of Envision Solar International, Inc. and its wholly-owned subsidiary, Envision Solar Construction Company, Inc. All inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts receivable, valuation of inventory, depreciable lives of property and equipment, estimates of costs to complete and earnings on uncompleted contracts, estimates of loss contingencies, valuation of derivatives, valuation of beneficial conversion features in convertible debt, valuation of share-based payments, and the valuation allowance on deferred tax assets. |
Concentrations | CONCENTRATIONS Concentration of Credit Risk The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through December 31, 2015. The Company did not have any bank balances in excess of FDIC insured levels as of December 31, 2015. Bank balances in excess of the FDIC insured levels amounted to $1,132,553 as of December 31, 2014. Concentration of Accounts Receivable At December 31, 2015 and 2014, customers that each accounted for more than 10% of our accounts receivable were as follows: 2015 2014 Customer 1 56% - Customer 2 39% - Customer 3 2% 44% Customer 4 - 36% Customer 5 3% 20% Concentration of Revenues For the years ended December 31, 2015 and 2014, customers that each represented more than 10% of our revenues were as follows: 2015 2014 Customer A 39% 9% Customer B 26% - Customer C - 59% Customer D - 27% |
Cash and Cash Equivalents | CASH AND CASH EQUIVALENTS For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were $14,376 and $0 cash equivalents at December 31, 2015 and December 31, 2014, respectively. |
Fair Value of Financial Instruments | FAIR VALUE OF FINANCIAL INSTRUMENTS The CompanyÂ’s financial instruments, including cash, accounts receivable, accounts payable, accrued expenses and short term loans, are carried at historical cost basis. At December 31, 2015 and 2014, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. (See Note 10 for further discussion of fair value measurements.) |
Accounts receivable | ACCOUNTS RECEIVABLE Accounts receivable are customer obligations due under normal trade terms. Management reviews accounts receivable on a periodic basis to determine if any receivables may become uncollectible. ManagementÂ’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, dialogue with the customer, the financial profile of a customer, our historical write-off experience, net of recoveries, and economic conditions. The Company includes any accounts receivable balances that are determined to be uncollectible in its overall allowance for doubtful accounts. Further, the Company may record a general reserve in its allowance for doubtful accounts to account for future changes that may negatively impact our overall collections. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. |
Inventory | INVENTORY Inventory is stated at the lower of cost or market. Cost is determined using the first-in, first-out method of accounting. Inventory costs primarily relate to purchased raw materials and components used in the manufacturing of our products, work in process for products being manufactured, and finished goods. Included in these costs are direct labor and certain manufacturing overhead costs associated with the manufacturing process. The Company regularly reviews inventory components and quantities on hand, and performs physical inventory counts. A reserve is established if this review process determines the market value of such inventory may be below the carrying value. |
Property, Equipment and Depreciation | PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 3 to 7 years. Expenditures for maintenance and repairs, along with fixed assets below our capitalization threshold, are expensed as incurred. |
Patents | PATENTS Effective January 2015, the company believes it will achieve future economic value for its various patents and patent ideas. All administrative costs for obtaining patents are accumulated on the balance sheet as a Patent asset until such time as a patent is issued. The costs of these intangible assets are classified as a long term asset and amortized on a straight line basis over the legal life of such asset, which is typically 20 years. In the event a patent is denied, all accumulated administrative costs will be expensed in that period. |
Impairment of Long-Lived assets | IMPAIRMENT OF LONG-LIVED ASSETS The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived Assets.” This guidance requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. |
Accounting for Derivatives | ACCOUNTING FOR DERIVATIVES The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. |
Revenue and Cost Recognition | REVENUE AND COST RECOGNITION Revenues are primarily derived from the direct sales of products in addition to construction contracts for the production and installation of our integrated solutions and proprietary products. Revenues may also consist of design fees for the design of solar systems and arrays, and revenues from sales of professional services. Revenues from design services and professional services are recognized as earned. Revenues from inventoried product sales are recognized upon the final delivery of such product to the customer. Any deposits received from a customer prior to such delivery are accounted for as deferred revenue on the balance sheet. Revenues and related costs on construction projects are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35, “Construction-Type and Production-Type Contracts.” Under this method, contract revenues are recognized over the performance period of the contract in direct proportion to the costs incurred as a percentage of total estimated costs for the entirety of the contract. Costs include direct material, direct labor, subcontract labor, allocable depreciation and other allocable indirect costs and are charged to the periods as incurred. All unallocable indirect costs and corporate general and administrative costs are also charged to the periods as incurred. Any recognized revenues that have not been billed to a customer are recorded as an asset in “costs and estimated earnings in excess of billings on uncompleted contracts.” Any billings of customers in excess of recognized revenues are recorded as a liability in “Billings in excess of costs and estimated earnings on uncompleted contracts.” However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. For construction contracts that do not qualify for use of the percentage of completion method, the Company accounts for such contracts using the “completed contract method” in accordance with ASC 605-35. Under this method, contract costs are accumulated as deferred assets and billings and/or cash receipts are recorded to a deferred revenue liability account during the periods of construction, but no revenues, costs or profits are recognized in operations until the period upon completion of the contract. Costs include direct material, direct labor, subcontract labor, allocable depreciation and other allocable indirect costs. All unallocable indirect costs and corporate general and administrative costs are charged to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss when such loss is determined. The deferred asset (accumulated contract costs) in excess of the deferred liability (billings and/or cash received) is classified as a current asset under “Costs in excess of billings on uncompleted contracts.” The deferred liability (billings and/or cash received) in excess of the deferred asset (accumulated contract costs) is classified under current liabilities as “Billings in excess of costs on uncompleted contracts.” A contract is considered complete when all costs except insignificant items have been incurred and the installation is operating according to specifications or has been accepted by the customer. The Company has contracts in various stages of completion. Such contracts require estimates to determine the appropriate cost and revenue recognition. Costs estimates are reviewed periodically on a contract-by-contract basis throughout the life of the contract such that adjustments to the profit resulting from revisions are made cumulative to the date of the revision. Significant management judgments and estimates, including the estimated costs to complete projects, must be made and used in connection with the revenue recognized in the accounting period. Current estimates may be revised as additional information becomes available. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. The Company generally provides a one year warranty on its products for materials and workmanship and will pass on the warranties from its vendors, if any, which generally covers this one year period. In accordance with ASC 450-20-25, the Company accrues for product warranties when the loss is probable and can be reasonably estimated. At December 31, 2015, the Company has no product warranty accrual given its lack of any material historical warranty experience. |
Research and development | RESEARCH AND DEVELOPMENT In accordance with ASC 730-10, “Research and Development,” expenditures for research and development of the Company’s products are expensed when incurred, and are included in operating expenses. The Company recognized research and development costs of $888 for the year ending December 31, 2015 and $57,267 for the year ending December 31, 2014. |
Advertising | ADVERTISING The Company conducts advertising for the promotion of its products and services. In accordance with ASC 720-35, “Advertising Costs,” advertising costs are charged to operations when incurred; such amounts aggregated $49,500 in 2015 and $94,065 in 2014. |
Stock-based compensation | STOCK-BASED COMPENSATION The Company follows ASC 718, “Compensation – Stock Compensation.” ASC 718 requires companies to estimate and recognize the fair value of stock-based awards to employees and directors. The fair value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees”. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model. |
Income taxes | INCOME TAXES The Company accounts for income taxes pursuant to the provisions of ASC Topic 740, “Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provisions of ASC 740-10-25-5, “ .” The Company recognizes the benefit of a tax position when it is effectively settled. ASC 740-10-25-10, “Basic Recognition Threshold” provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority. For tax positions considered effectively settled, the Company recognizes the full amount of the tax benefit. |
Basic and Diluted Net Loss per Common Share | BASIC AND DILUTED NET LOSS PER COMMON SHARE Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. Convertible debt convertible into 5,311,923 common shares, options to purchase 15,337,007 common shares and warrants to purchase 29,219,441 common shares were outstanding at December 31, 2015. Convertible debt convertible into 7,373,058 common shares, options to purchase 15,387,007 common shares and warrants to purchase 29,219,441 common shares were outstanding at December 31, 2014. Dilutive common stock equivalents were not included in the computation of diluted net loss per share in 2015 and 2014 because the effects would have been anti-dilutive due to the net losses. Due to the net losses in 2015 and 2014, basic and diluted net loss per share amounts are the same. These potential common shares may dilute future earnings per share. |
Contingencies | CONTINGENCIES Certain conditions may exist as of the date the consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed. The Company does not include legal costs in its estimates of amounts to accrue. |
Segments | SEGMENTS The Company follows the guidance of ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information." During 2015 and 2014, the Company only operated in one segment; therefore, segment information has not been presented. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS There are no new accounting pronouncements that became effective during the period ended December 31, 2015 that affect the consolidated financial position of the Company or the results of its’ operations. Accounting Standard Updates which are not effective until after December 31, 2015, including the pronouncements discussed below, are not expected to have a significant effect on the Company’s consolidated financial position or results of its’ operations. ASU 2015-03 In April 2015, the Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs," ASU 2015-08 In May 2015, the FASB issued ASU 2015-08, “Business Combinations (Topic 805) Pushdown Accounting, ASU 2015 - 11 In July 2015, the FASB issued Accounting Standards Update 2015-11, “Simplifying the Measurement of Inventory.” This standard changes the inventory valuation method from the lower of cost or market to the lower of cost or net realizable value for inventory valued under the first-in, first-out or average cost methods. The standard is effective for fiscal years beginning after December 15, 2016, including interim periods and requires prospective adoption with early adoption permitted. The Company does not expect this ASU to have a material impact on its consolidated financial statements. |
1. CORPORATE ORGANIZATION, NA27
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Concentration of Credit Risk | Concentration of Accounts Receivable At December 31, 2015 and 2014, customers that each accounted for more than 10% of our accounts receivable were as follows: 2015 2014 Customer 1 56% - Customer 2 39% - Customer 3 2% 44% Customer 4 - 36% Customer 5 3% 20% Concentration of Revenues For the years ended December 31, 2015 and 2014, customers that each represented more than 10% of our revenues were as follows: 2015 2014 Customer A 39% 9% Customer B 26% - Customer C - 59% Customer D - 27% |
Inventory | December 31, December 31, 2015 2014 Finished Goods $ 85,487 $ – Work in Process 234,226 42,120 Raw Materials 130,245 305,783 Inventory Reserve (27,783 ) – Inventory, net $ 422,175 $ 347,903 |
3. CONTRACT ACCOUNTING AND ACCO
3. CONTRACT ACCOUNTING AND ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Costs in excess of billings and billings in excess of costs | At December 31, 2015, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following for contracts accounted for using the percentage of completion method: Costs and estimated earnings recognized $ 511,108 Less: Billings or cash received (489,050 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 22,058 At December 31, 2014, costs and estimated earnings in excess of billings on uncompleted contracts consisted of the following for contracts accounted for using the percentage of completion method: Costs and estimated earnings recognized $ 882,716 Less: Billings or cash received (790,050 ) Costs and estimated earnings in excess of billings on uncompleted contracts $ 92,666 At December 31, 2014, billings in excess of costs and estimated earnings on uncompleted contracts consisted of the following for contracts accounted for using the percentage of completion method: Billings and/or cash receipts on uncompleted contract $ 15,000 Less: Revenues recognized (9,386 ) Billings in excess of costs and estimated earnings on uncompleted $ 5,614 |
Accounts receivable | December 31, 2015 December 31, 2014 Accounts receivable $ 855,017 $ 114,917 Less: Allowance for doubtful accounts (23,400 ) (11,700 ) Accounts receivable, Net $ 831,617 $ 103,217 |
5. PREPAID EXPENSES AND OTHER29
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid expenses and other current assets | December 31, 2015 December 31, 2014 Prepaid Insurance $ 20,035 $ 20,707 Deposit on future raw materials 31,752 114,071 Total prepaid expenses and other current assets $ 51,787 $ 134,778 |
6. INVENTORY (Tables)
6. INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | December 31, December 31, 2015 2014 Finished Goods $ 85,487 $ – Work in Process 234,226 42,120 Raw Materials 130,245 305,783 Inventory Reserve (27,783 ) – Inventory, net $ 422,175 $ 347,903 |
7. PROPERTY AND EQUIPMENT (Tabl
7. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Est. Useful December 31, December 31, Computer equipment and software 5 years $ 155,620 $ 155,620 Furniture and fixtures 7 years 202,009 197,169 Office equipment 5 years 28,289 28,289 Machinery and equipment 1-5 years 348,045 129,360 Autos 3 years 49,238 – Leasehold improvements 19 months 18,541 11,394 Total property and equipment 801,742 521,832 Less accumulated depreciation (557,781 ) (398,267 ) Property and Equipment, Net $ 243,961 $ 123,565 |
8. ACCRUED EXPENSES (Tables)
8. ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Payables and Accruals [Abstract] | |
Accrued expense schedule | December 31, 2015 December 31, 2014 Accrued vacation $ 135,940 $ 122,537 Accrued officers’ salary 68,749 68,749 Accrued interest 142,261 173,437 Accrued estimated losses on contracts – 1,590 Other accrued expense 1,517 1,913 Total accrued expenses $ 348,467 $ 368,226 |
10. CONVERTIBLE NOTES PAYABLE A
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Convertible Note Payable - Related Parties And Fair Value Measurements | |
Short Term Convertible Debt | December 31, 2015 December 31, 2014 Evey Note $ 86,616 $ 98,616 Gemini Master Fund - Third Amended and Restated Secured Bridge Note - Noble Portion 600,000 – $ 686,616 $ 98,616 |
Assets and liabilities measured at fair value on a recurring and non-recurring basis | Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at December 31, 2014 and 2015: Carrying Value at Fair value Measurements at December 31, 2014 December 31, 2014 (Level 1) (Level 2) (Level 3) Embedded Conversion Option Liability $ 355,611 $ – $ – $ 355,611 Carrying Value at Fair value Measurements at December 31, 2015 December 31, 2015 (Level 1) (Level 2) (Level 3) Embedded Conversion Option Liability $ 87,992 $ – $ – $ 87,992 |
Summary of activity of Level 3 liabilities | Balance at December 31, 2013 $ 281,265 Increase in liability due to debt modification 478,561 Change in fair value (404,215 ) Balance at December 31, 2014 $ 355,611 Increase in liability due to debt modification – Change in fair value (267,619 ) Balance December 31, 2015 $ 87,992 |
Assumptions the Company utilized to estimate the fair value of the embedded conversion option | Assumptions December 31, 2014 December 31, 2015 Expected remaining term 0.50 0.25 Expected Volatility 174% 113% Risk free rate 0.66% 0.16% Dividend Yield 0.00% 0.00% |
12. CONVERTIBLE NOTES PAYABLE (
12. CONVERTIBLE NOTES PAYABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Convertible Notes Payable | |
Schedule of convertible notes payable | Amount Discount Convertible Notes Payable, net of discount Pegasus Note $ 100,000 $ – $ 100,000 Gemini Master Fund – Third Amended and Restated secured bridge Note 856,325 252,070 604,255 $ 956,325 $ 252,070 $ 704,255 |
15. STOCK OPTIONS AND WARRANTS
15. STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions for options granted | 2015 2014 Expected volatility 169.62% 138.71% Expected term 7 Years 3-5.5 Years Risk-free interest rate 0.66% 1.52% Expected dividend yield None None |
Rollforward of option activity | Number of Options Weighted Average Exercise Price Outstanding at December 31, 2013 24,049,862 $ 0.30 Granted 600,000 0.19 Exercised – – Forfeited 9,262,855 0.33 Expired – – Outstanding at December 31, 2014 15,387,007 $ 0.28 Granted 150,000 0.13 Exercised – – Forfeited 200,000 0.22 Expired – – Outstanding at December 31, 2015 15,337,007 $ 0.28 Exercisable at December 31, 2015 15,195,688 $ 0.28 Weighted average grant date fair value $ 0.12 |
Stock options information by exercise price | Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding at December 31, 2015 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Exercisable at December 31, 2015 Weighted Average Exercise Price Aggregate Intrinsic Value $ 0.13-1.31 15,337,007 4.45 Years $ 0.28 $ – 15,195,688 $ 0.28 $ – 15,337,007 4.45 Years $ 0.28 $ – 15,195,688 $ 0.28 $ – |
Warrant activity | Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2013 9,851,540 $ 0.23 Granted 25,843,002 0.16 Exercised – – Forfeited – – Expired (6,475,101 ) 0.20 Outstanding at December 31, 2014 29,219,441 $ 0.18 Granted – $ – Exercised – – Forfeited – – Expired – – Outstanding at December 31, 2015 29,219,441 $ 0.18 Exercisable at December 31, 2015 29,219,441 $ 0.18 Weighted average grant date fair value $ – |
16. INCOME TAXES (Tables)
16. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income tax reconciliation | Year ended December 31, 2015 2014 Computed “expected” tax expense (benefit) $ (625,441 ) $ (1,069,743 ) State taxes, net of federal benefit (122,700 ) (206,901 ) Goodwill impairment and other non-deductible items (104,420 ) (192,514 ) Change in deferred tax asset valuation allowance 854,161 1,470,758 Income tax expense $ 1,600 $ 1,600 |
Deferred tax assets and liabilities | 2015 2014 Deferred tax assets: Charitable contributions $ 4,128 $ 4,128 Reserve for bad debt 25,345 20,684 Stock options 4,599,689 4,593,382 Inventory Adjustment 11,067 – Other 19,634 15,702 Net operating loss carryforward 8,297,039 7,485,682 Total gross deferred tax assets 12,956,902 12,119,578 Less: Deferred tax asset valuation allowance (12,853,622 ) (11,999,461 ) Total net deferred tax assets 103,280 120,117 Deferred tax liabilities: Accrued salaries (96,704 ) (96,704 ) Accrued vacation – (13,848 ) Depreciation (6,576 ) (9,565 ) Total deferred tax liabilities (103,280 ) (120,117 ) Total net deferred taxes $ – $ – |
1. CORPORATE ORGANIZATION, NA37
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounts Receivable [Member] | Customer 1 [Member] | ||
Concentration risk percentage | 56.00% | |
Accounts Receivable [Member] | Customer 2 [Member] | ||
Concentration risk percentage | 39.00% | |
Accounts Receivable [Member] | Customer 3 [Member] | ||
Concentration risk percentage | 2.00% | 44.00% |
Accounts Receivable [Member] | Customer 4 [Member] | ||
Concentration risk percentage | 36.00% | |
Accounts Receivable [Member] | Customer 5 [Member] | ||
Concentration risk percentage | 3.00% | 20.00% |
Revenues [Member] | Customer A [Member] | ||
Concentration risk percentage | 39.00% | 9.00% |
Revenues [Member] | Customer B [Member] | ||
Concentration risk percentage | 26.00% | |
Revenues [Member] | Customer C [Member] | ||
Concentration risk percentage | 59.00% | |
Revenues [Member] | Customer D [Member] | ||
Concentration risk percentage | 27.00% |
1. CORPORATE ORGANIZATION, NA38
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Uninsured cash | $ 0 | $ 1,132,553 |
Cash equivalents | 14,376 | 0 |
Accrued warranty reserve | 0 | 0 |
Research and development costs | 888 | 57,267 |
Advertising costs | $ 49,500 | $ 94,065 |
Convertible Debt Shares [Member] | ||
Potentially dilutive stock equivalents outstanding | 5,311,923 | 7,373,058 |
Option Shares [Member] | ||
Potentially dilutive stock equivalents outstanding | 15,337,007 | 15,387,007 |
Warrant Shares [Member] | ||
Potentially dilutive stock equivalents outstanding | 29,219,441 | 29,219,441 |
2. GOING CONCERN (Details Narra
2. GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Capitalization of accrued interest to convertible notes payable | |||
Net losses | $ (1,839,533) | $ (3,146,302) | |
Stock based compensation expense | 121,915 | 736,388 | |
Net cash used in operations | (2,469,343) | (1,817,122) | |
Working capital | (1,915,684) | ||
Accumulated deficit | (32,601,933) | (30,762,400) | |
Stockholders' deficit | (1,408,603) | (582,799) | $ (2,505,874) |
Proceeds from offering | 815,000 | 3,003,010 | |
Proceeds from line of credit | $ 800,000 | $ 0 |
3. CONTRACT ACCOUNTING AND AC40
3. CONTRACT ACCOUNTING AND ACCOUNTS RECEIVABLE (Details-Billings in Excess of Cost) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Costs in Excess of Billings on Uncompleted Contracts or Programs [Abstract] | ||
Costs and estimated earnings recognized | $ 511,108 | $ 882,716 |
Less: Billings or cash received | (489,050) | (790,050) |
Costs and estimated earnings in excess of billings on uncompleted contracts | 22,058 | 92,666 |
Billings and/or cash receipts on uncompleted contract | 0 | 15,000 |
Less: Revenues recognized | 0 | (9,386) |
Billings in excess of costs and estimated earnings on uncompleted contracts | $ 0 | $ 5,614 |
3. CONTRACT ACCOUNTING AND AC41
3. CONTRACT ACCOUNTING AND ACCOUNTS RECEIVABLE (Details-Accounts Receivable) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Accounts receivable | $ 855,017 | $ 114,917 |
Less: Allowance for doubtful accounts | (23,400) | (11,700) |
Accounts receivable, Net | $ 831,617 | $ 103,217 |
3. CONTRACT ACCOUNTING AND AC42
3. CONTRACT ACCOUNTING AND ACCOUNTS RECEIVABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Receivables [Abstract] | ||
Bad debt expense (recovery) | $ 11,700 | $ 0 |
Deferred revenue | $ 213,467 | $ 717,291 |
4. SUBSCRIPTION RECEIVABLE (Det
4. SUBSCRIPTION RECEIVABLE (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Subscription Receivable Details Narrative | ||
Subscriptions receivable | $ 0 | $ 25,000 |
5. PREPAID EXPENSES AND OTHER44
5. PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid Insurance | $ 20,035 | $ 20,707 |
Deposit on future raw materials | 31,752 | 114,071 |
Total prepaid expenses and other current assets | $ 51,787 | $ 134,778 |
6. INVENTORY (Details)
6. INVENTORY (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished Goods | $ 85,487 | $ 0 |
Work in Process | 234,226 | 42,120 |
Raw Materials | 130,245 | 305,783 |
Inventory Reserve | (27,783) | 0 |
Inventory, net | $ 422,175 | $ 347,903 |
7. PROPERTY AND EQUIPMENT (Deta
7. PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Total property and equipment | $ 801,742 | $ 521,832 |
Less accumulated depreciation | (557,781) | (398,267) |
Property and Equipment, Net | $ 243,961 | 123,565 |
Computer equipment and software [Member] | ||
Est. Useful Lives | 5 years | |
Total property and equipment | $ 155,620 | 155,620 |
Furniture and fixtures [Member] | ||
Est. Useful Lives | 7 years | |
Total property and equipment | $ 202,009 | 197,169 |
Office equipment [Member] | ||
Est. Useful Lives | 5 years | |
Total property and equipment | $ 28,289 | 28,289 |
Machinery and equipment [Member] | ||
Est. Useful Lives | 5 years | |
Total property and equipment | $ 348,045 | 129,360 |
Autos [Member] | ||
Est. Useful Lives | 3 years | |
Total property and equipment | $ 49,238 | 0 |
Leasehold Improvements [Member] | ||
Est. Useful Lives | 19 months | |
Total property and equipment | $ 18,541 | $ 11,394 |
7. PROPERTY AND EQUIPMENT (De47
7. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 139,032 | $ 41,392 |
8. ACCRUED EXPENSES (Details)
8. ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Payables and Accruals [Abstract] | ||
Accrued vacation | $ 135,940 | $ 122,537 |
Accrued officers' salary | 68,749 | 68,749 |
Accrued interest | 142,261 | 173,437 |
Accrued estimated losses on contracts | 0 | 1,590 |
Other accrued expense | 1,517 | 1,913 |
Total accrued expenses | $ 348,467 | $ 368,226 |
9. LINE OF CREDIT (Details Narr
9. LINE OF CREDIT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Shares Issued for Loan Guaranty - Related Party | $ 85,714 | |
Line of credit outstanding | 800,000 | $ 0 |
Loan and Security Agreement [Member] | ||
Line of credit maximum borrowing capacity | $ 1,000,000 | |
Line of credit interest rate terms | Floating per annum rate equal to the greater of 0.75% above the Prime Rate or 4%. | |
Commitment fee paid | $ 2,500 | |
Reimbursement of bank expenses for documentation | 10,000 | |
Reimbursement of filing fees | 1,836 | |
Line of credit outstanding | 800,000 | |
Line of credit remaining available balance | 200,000 | |
Loan and Security Agreement [Member] | Keshif Ventures, LLC [Member] | ||
Shares Issued for Loan Guaranty - Related Party | $ 85,714 | |
Shares Issued for Loan Guaranty - Related Party (Shares) | 571,429 | |
Debt issuance costs | $ 11,435 |
10. CONVERTIBLE NOTES PAYABLE50
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details-Summary) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Convertible Notes Payable - Related Parties | $ 686,616 | $ 98,616 |
Convertible Notes Payable [Member] | Evey Note [Member] | ||
Convertible Notes Payable - Related Parties | 86,616 | 98,616 |
Convertible Notes Payable [Member] | Gemini Master Fund - Third Amended [Member] | ||
Convertible Notes Payable - Related Parties | $ 600,000 | $ 0 |
10. CONVERTIBLE NOTES PAYABLE51
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details-Fair Value Measurements) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value Measurements - Derivative liability | |||
Embedded Conversion Option Liability | $ 87,992 | $ 355,611 | $ 281,265 |
Fair Value Inputs Level 1 [Member] | |||
Fair Value Measurements - Derivative liability | |||
Embedded Conversion Option Liability | 0 | 0 | |
Fair Value Inputs Level 2 [Member] | |||
Fair Value Measurements - Derivative liability | |||
Embedded Conversion Option Liability | 0 | 0 | |
Fair Value Inputs Level 3 [Member] | |||
Fair Value Measurements - Derivative liability | |||
Embedded Conversion Option Liability | $ 87,992 | $ 355,611 |
10. CONVERTIBLE NOTES PAYABLE52
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details-Level 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Beginning balance | $ 355,611 | $ 281,265 |
Increase in liability due to debt modification | 0 | 478,561 |
Change in fair value | (267,619) | (404,215) |
Ending balance | $ 87,992 | $ 355,611 |
10. CONVERTIBLE NOTES PAYABLE53
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details-Assumptions) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Expected term | 6 months | 3 months |
Expected Volatility | 174.00% | 113.00% |
Risk free rate | 0.66% | 0.16% |
Dividend Yield | 0.00% | 0.00% |
10. CONVERTIBLE NOTE PAYABLE 54
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Repayments of related party debt, principal and interest | $ 418,624 | |
Convertible Notes Payable - Related Parties | 686,616 | $ 98,616 |
Convertible Notes Payable [Member] | Evey Note [Member] | ||
Repayments of related party debt, principal and interest | 12,000 | 12,000 |
Convertible Notes Payable - Related Parties | 86,616 | 98,616 |
Accrued and unpaid interest | $ 36,749 | |
Interest rate on convertible note | 10.00% | |
Debt maturity date | Dec. 31, 2016 | |
Convertible Notes Payable [Member] | Gemini Master Fund - Third Amended [Member] | ||
Repayments of related party debt, principal and interest | $ 306,624 | |
Loss on debt settlement | 2,925 | 20,689 |
Convertible Notes Payable - Related Parties | 600,000 | $ 0 |
Accrued and unpaid interest | $ 31,438 | |
Debt maturity date | Mar. 31, 2016 | |
Debt converted, shares issued | 3,666,666 | |
Accrued interest converted, shares issued | 1,034,410 | |
Debt converted, amount converted | $ 550,000 | |
Accrued interest converted | $ 155,161 | |
Warrants issued upon debt conversion | 3,727,778 | |
Warrant value at date of issuance | $ 482,300 |
11. NOTES PAYABLE AND AUTO LO55
11. NOTES PAYABLE AND AUTO LOAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Issued in Settlement of Note Payable, value | $ 24,000 | |
Note payable balance | $ 43,033 | 43,033 |
Auto loan, current portion | 8,797 | 0 |
Auto loan, noncurrent portion | $ 38,978 | 0 |
Notes Payable [Member] | ||
Stock Issued in Settlement of Note Payable, value | $ 24,000 | |
Stock Issued in Settlement of Note Payable (Shares) | 150,000 | |
Gain on settlement of note payable | $ 6,000 | |
Reduction of principal | $ (30,000) | |
Debt maturity date | Jun. 30, 2016 | |
Note payable balance | $ 43,033 | |
Accrued and unpaid interest | $ 13,855 | |
Automobile Loan [Member] | ||
Debt term | 60 months | |
Auto loan, current portion | $ 8,797 | |
Auto loan, noncurrent portion | $ 38,978 | |
Debt interest rate | 5.99% |
12. CONVERTIBLE NOTES PAYABLE56
12. CONVERTIBLE NOTES PAYABLE (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Unamortized Discount | $ 0 | $ 252,070 |
Convertible notes payable, net of discount | 100,000 | 704,255 |
Pegasus Note [Member] | ||
Convertible note | 100,000 | 100,000 |
Unamortized Discount | 0 | 0 |
Convertible notes payable, net of discount | 100,000 | 100,000 |
Gemini Master Fund - Third Amended and Restated [Member] | ||
Convertible note | 0 | 856,325 |
Unamortized Discount | 0 | 252,070 |
Convertible notes payable, net of discount | $ 0 | $ 604,255 |
12. CONVERTIBLE NOTES PAYABLE57
12. CONVERTIBLE NOTES PAYABLE (Details Narrative) - Pegasus Note [Member] | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Debt maturity date | Dec. 31, 2016 |
Accrued interest | $ 60,219 |
13. COMMITMENTS AND CONTINGEN58
13. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Security deposit | $ 25,707 | |
Rent expense | 30,765 | $ 130,939 |
Rent capitalized into inventory as manufacturing overhead costs | $ 268,487 | $ 22,281 |
14. COMMON STOCK (Details Narra
14. COMMON STOCK (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock issued for cash, amount | $ 815,000 | $ 3,028,010 |
Cash offering costs | 8,900 | 102,840 |
Stock Issued for Services - Related Party | 54,000 | 92,528 |
Stock Issued for Services | 52,082 | 168,752 |
Shares Issued for Loan Guaranty - Related Party | 85,714 | |
Stock Issued in Conversion of Convertible Note | 550,000 | |
Stock Issued in Settlement of Note Payable | 24,000 | |
Notes Payable [Member] | ||
Stock Issued in Settlement of Note Payable | $ 24,000 | |
Stock Issued in Settlement of Note Payable (Shares) | 150,000 | |
Reduction of notes payable | $ (30,000) | |
Gain on settlement of notes payable | $ 6,000 | |
Convertible Notes Payable [Member] | ||
Shares Issued for Loan Guaranty - Related Party (Shares) | 3,666,666 | |
Stock Issued in Conversion of Convertible Note | $ 550,000 | |
Accrued interest converted, shares issued | 1,034,410 | |
Accrued interest converted | $ 175,850 | |
Gain on settlement of notes payable | (20,689) | |
Keshif Ventures, LLC [Member] | Loan and Security Agreement [Member] | ||
Shares Issued for Loan Guaranty - Related Party | $ 85,714 | |
Shares Issued for Loan Guaranty - Related Party (Shares) | 571,429 | |
Stock Issued for Services [Member] | GreenCore Capital [Member] | ||
Stock Issued for Services - Related Party | $ 54,000 | $ 92,528 |
Stock Issued for Services - Related Party (Shares) | 373,107 | 616,856 |
Stock Issued for Services [Member] | Two Directors [Member] | ||
Stock Issued for Services | $ 52,082 | |
Stock Issued for Services (Shares) | 347,220 | |
Stock Issued for Services [Member] | GreenCore Capital [Member] | ||
Stock Issued for Services - Related Party | $ 66,000 | |
Stock Issued for Services - Related Party (Shares) | 440,000 | |
Stock Issued for Services [Member] | GreenCore Capital [Member] | ||
Stock Issued for Services - Related Party | $ 26,528 | |
Stock Issued for Services - Related Party (Shares) | 176,856 | |
Stock Issued for Services [Member] | Feller [Member] | ||
Stock Issued for Services - Related Party | $ 66,667 | |
Stock Issued for Services - Related Party (Shares) | 444,448 | |
Stock Issued for Services [Member] | Schneider [Member] | ||
Stock Issued for Services - Related Party | $ 56,251 | |
Stock Issued for Services - Related Party (Shares) | 375,004 | |
Stock Issued for Services [Member] | Moody [Member] | ||
Stock Issued for Services - Related Party | $ 45,834 | |
Stock Issued for Services - Related Party (Shares) | 305,560 | |
Private Placement [Member] | ||
Stock issued for cash, shares | 5,433,334 | 20,186,725 |
Stock issued for cash, amount | $ 815,000 | $ 3,028,010 |
Cash offering costs | $ 8,900 | $ 102,840 |
15. STOCK OPTIONS AND WARRANT60
15. STOCK OPTIONS AND WARRANTS (Details-Assumptions) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Expected volatility | 169.62% | 138.71% |
Risk-free interest rate | 0.66% | 1.52% |
Expected dividend yield | 0.00% | 0.00% |
Maximum [Member] | ||
Expected term | 7 years | 5 years 6 months |
Minimum [Member] | ||
Expected term | 3 years |
15. STOCK OPTIONS AND WARRANT61
15. STOCK OPTIONS AND WARRANTS (Details-Option Activity) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Options | ||
Number of Options Outstanding, Beginning | 15,387,007 | 24,049,862 |
Number of Options Granted | 150,000 | 600,000 |
Number of Options Exercised | ||
Number of Options Forfeited | 200,000 | 9,262,855 |
Number of Options Expired | ||
Number of Options Outstanding, Ending | 15,337,007 | 15,387,007 |
Number of Options Exercisable, Ending | 15,195,688 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.28 | $ .30 |
Weighted Average Exercise Price Granted | $ 0.13 | $ 0.19 |
Weighted Average Exercise Price Exercised | ||
Weighted Average Exercise Price Forfeited | $ 0.22 | $ 0.33 |
Weighted Average Exercise Price Expired | ||
Weighted Average Exercise Price Outstanding, Ending | $ .28 | $ 0.28 |
Weighted Average Exercise Price Exercisable, Ending | 0.28 | |
Weighted average grant date fair value | $ .12 |
15. STOCK OPTIONS AND WARRANT62
15. STOCK OPTIONS AND WARRANTS (Details-Options Outstanding and Exercisable) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number of Outstanding | 15,337,007 | 15,387,007 | 24,049,862 |
Weighted Average Remaining Contractual Life | 4 years 5 months 12 days | ||
Weighted Average Exercise Price | $ .28 | $ 0.28 | $ .30 |
Aggregate Intrinsic Value | $ 0 | ||
Number of Exercisable | 15,195,688 | ||
Weighted Average Exercise Price | $ 0.28 | ||
Aggregate Intrinsic Value | $ 0 | ||
0.13-1.31 [Member] | |||
Range of Exercise Price, Lower | $ .13 | ||
Range of Exercise Price, Upper | $ 1.31 | ||
Number of Outstanding | 15,337,007 | ||
Weighted Average Remaining Contractual Life | 4 years 5 months 12 days | ||
Weighted Average Exercise Price | $ .28 | ||
Aggregate Intrinsic Value | $ 0 | ||
Number of Exercisable | 15,195,688 | ||
Weighted Average Exercise Price | $ 0.28 | ||
Aggregate Intrinsic Value | $ 0 |
15. STOCK OPTIONS AND WARRANT63
15. STOCK OPTIONS AND WARRANTS (Details-Warrant Activity) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of Warrants | ||
Number of Warrants Outstanding, Beginning | 29,219,441 | 9,851,540 |
Number of Warrants Granted | 25,843,002 | |
Number of Warrants Exercised | ||
Number of Warrants Forfeited | ||
Number of Warrants Expired | (6,475,101) | |
Number of Warrants Outstanding, Ending | 29,219,441 | 29,219,441 |
Number of Warrants Exercisable, Ending | 29,219,441 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.18 | $ .23 |
Weighted Average Exercise Price Granted | $ .16 | |
Weighted Average Exercise Price Exercised | ||
Weighted Average Exercise Price Forfeited | ||
Weighted Average Exercise Price Expired | $ .20 | |
Weighted Average Exercise Price Outstanding, Ending | $ .18 | $ 0.18 |
Weighted Average Exercise Price Exercisable | .18 | |
Weighted average grant date fair value | $ 0 |
15. STOCK OPTIONS AND WARRANT64
15. STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Employee Stock Option [Member] | ||
Stock option compensation expense | $ 15,833 | $ 457,152 |
Total unrecognized compensation cost related to unvested options | $ 19,139 | |
Unrecognized compensation period of recognition | 3 years | |
Stock options issued, shares | 150,000 | 600,000 |
Stock options issued, value | $ 18,483 | $ 87,224 |
Weighted average remaining contractual life | 4 years 4 months 28 days | |
Warrants [Member] | ||
Weighted average remaining contractual life | 1 year 5 months 19 days |
16. INCOME TAXES (Details-Tax E
16. INCOME TAXES (Details-Tax Expense) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" tax expense (benefit) | $ (625,441) | $ (1,069,743) |
State taxes, net of federal benefit | (122,700) | (206,901) |
Goodwill impairment and other non-deductible items | (104,420) | (192,514) |
Change in deferred tax asset valuation allowance | 854,161 | 1,470,758 |
Income tax expense | $ 1,600 | $ 1,600 |
15. INCOME TAXES (Details-Defer
15. INCOME TAXES (Details-Deferred tax assets and liabilities) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets: | ||
Charitable contributions | $ 4,128 | $ 4,128 |
Reserve for bad debt | 25,345 | 20,684 |
Stock options | 4,599,689 | 4,593,382 |
Inventory Adjustment | 11,067 | 0 |
Other | 19,634 | 15,702 |
Net operating loss carryforward | 8,297,039 | 7,485,682 |
Total gross deferred tax assets | 12,956,902 | 12,119,578 |
Less: Deferred tax asset valuation allowance | (12,853,622) | (11,999,461) |
Total net deferred tax assets | 103,280 | 120,117 |
Deferred tax liabilities: | ||
Accrued salaries | (96,704) | (96,704) |
Accrued vacation | 0 | (13,848) |
Depreciation | (6,576) | (9,565) |
Total deferred tax liabilities | (103,280) | (120,117) |
Total net deferred taxes | $ 0 | $ 0 |
15. INCOME TAXES (Details Narra
15. INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Blended federal and state tax rate | 39.83% | |
Federal tax rate | 34.00% | |
Valuation allowance | $ 12,853,622 | $ 11,999,461 |
Increase in valuation allowance | 854,161 | |
Net operating loss carryforward | $ 20,828,829 | |
Operating loss carryforward expiration date | Dec. 31, 2035 |
17. RELATED PARTY TRANSACTIONS
17. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Issued for Services - Related Party | $ 54,000 | $ 92,528 |
Stock Issued for Services | 52,082 | 168,752 |
Shares Issued for Loan Guaranty - Related Party | 85,714 | |
Convertible Notes Payable - Related Parties | 686,616 | 98,616 |
Stock Issued for Cash | 815,000 | 3,028,010 |
Convertible Notes Payable [Member] | Evey Note [Member] | ||
Payments on related party note | 12,000 | 12,000 |
Convertible Notes Payable - Related Parties | 86,616 | 98,616 |
Accrued and unpaid interest | 36,749 | |
Convertible Notes Payable [Member] | Gemini Master Fund - Third Amended [Member] | ||
Payments on related party note | 100,000 | |
Convertible Notes Payable - Related Parties | 600,000 | 0 |
Accrued and unpaid interest | 31,438 | |
GreenCore Capital [Member] | ||
Amounts accrued to related party | 22,500 | |
Professional services rendered | 76,000 | 93,000 |
GreenCore Capital [Member] | Stock Issued for Services [Member] | ||
Stock Issued for Services - Related Party | $ 54,000 | $ 92,528 |
Stock Issued for Services - Related Party (Shares) | 373,107 | 616,856 |
Wheatley [Member} | ||
Payments for auto lease | $ 13,480 | |
Fellco [Member] | ||
Professional services rendered | $ 5,135 | |
Two Directors [Member] | Stock Issued for Services [Member] | ||
Stock Issued for Services | $ 52,082 | |
Stock Issued for Services (Shares) | 347,220 | |
Three Directors [Member] | Stock Issued for Services [Member] | ||
Stock Issued for Services | $ 168,752 | |
Stock Issued for Services (Shares) | 1,125,012 | |
Keshif Ventures, LLC [Member] | Loan and Security Agreement [Member] | ||
Shares Issued for Loan Guaranty - Related Party | $ 85,714 | |
Shares Issued for Loan Guaranty - Related Party (Shares) | 571,429 | |
Cronus [Member] | ||
Professional services rendered | $ 41,817 | |
Keshif Ventures LLC [Member] | ||
Stock Issued for Cash | $ 3,666,667 | |
Stock Issued for Cash (Shares) | 550,000 |
18. SUBSEQUENT EVENTS (Details
18. SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | |
Feb. 12, 2016 | Feb. 19, 2016 | Mar. 26, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock issued new, value | $ 815,000 | $ 3,028,010 | |||
Stock issuance costs | 8,900 | 102,840 | |||
Stock issued for services, value | 52,082 | 168,752 | |||
Proceeds from line of credit | $ 800,000 | $ 0 | |||
Subsequent Event [Member] | Subsequent to December 31, 2015 | |||||
Stock issued new, shares issued | 2,166,666 | ||||
Stock issued new, value | $ 325,000 | ||||
Stock issuance costs | 23,600 | ||||
Proceeds from line of credit | $ 200,000 | ||||
Subsequent Event [Member] | Subsequent to December 31, 2015 | GreenCore Capital [Member] | |||||
Stock issued for services, shares issued | 128,571 | ||||
Stock issued for services, value | $ 19,286 | ||||
Professional fees paid | $ 15,000 | ||||
Subsequent Event [Member] | February 12, 2016 [Member] | Potter [Member] | |||||
Stock options issued | 200,000 | ||||
Fair value of stock options issued | $ 20,050 | ||||
Subsequent Event [Member] | February 12, 2016 [Member] | Evey [Member] | |||||
Stock options issued | 200,000 | ||||
Fair value of stock options issued | $ 20,050 | ||||
Subsequent Event [Member] | February 12, 2016 [Member] | Noble [Member] | |||||
Stock options issued | 200,000 | ||||
Fair value of stock options issued | $ 15,493 | ||||
Subsequent Event [Member] | February 19, 2016 [Member] | Posawatz [Member] | |||||
Restricted stock issued for service, stock issued | 1,000,000 |