Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2018 | |
Document And Entity Information | |
Entity Registrant Name | Envision Solar International, Inc. |
Entity Central Index Key | 1,398,805 |
Document Type | S1 |
Document Period End Date | Mar. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Smaller Reporting Company |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Current Assets | |||
Cash | $ 254,225 | $ 403,475 | $ 8,568 |
Accounts Receivable, net | 873,769 | 5,946 | 1,161,064 |
Prepaid and other current assets | 202,289 | 55,674 | 94,167 |
Inventory, net | 538,425 | 2,319,500 | 271,802 |
Total Current Assets | 1,868,708 | 2,784,595 | 1,535,601 |
Property and Equipment, net | 202,673 | 226,112 | 293,041 |
Other Assets | |||
Debt issue costs, net | 0 | 800 | |
Patents, net | 102,361 | 75,279 | 73,370 |
Deposits | 109,788 | 156,588 | 154,778 |
Total Other Assets | 212,149 | 231,867 | 228,948 |
Total Assets | 2,283,530 | 3,242,574 | 2,057,590 |
Current Liabilities | |||
Accounts Payable | 592,799 | 486,690 | 873,012 |
Accrued Expenses | 436,775 | 451,924 | 430,433 |
Sales Tax Payable | 34,869 | 46 | 50,181 |
Deferred Revenue | 55,649 | 77,514 | 75,323 |
Line of Credit | 0 | 1,000,000 | |
Convertible Line of Credit - net of discount amounting to $120,371 and $226,768 at March 31, 2018 and December 31, 2017, respectively | 169,629 | 923,232 | 0 |
Convertible Note Payable - Related Parties | 207,116 | 197,616 | 724,616 |
Convertible Notes Payable, net of discount amounting to $115,141 and $175,668 and $0 at March 31, 2018 and December 31, 2017 and December 31, 2016, respectively | 1,484,859 | 1,424,332 | 100,000 |
Notes Payable | 0 | 43,033 | |
Auto Loan-current portion | 10,057 | 9,862 | 9,337 |
Embedded Conversion Option Liability | 0 | 107,081 | |
Total Current Liabilities | 2,991,753 | 3,571,216 | 3,413,016 |
Long-term portion of Auto Loan | 17,259 | 20,620 | 29,678 |
Total Liabilities | 3,009,012 | 3,591,836 | 3,442,694 |
Stockholders' Deficit | |||
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 0 outstanding as of December 31, 2017 and 2016 respectively. | 0 | 0 | 0 |
Common Stock, $0.001 par value, 490,000,000 shares authorized,144,706,495 and 141,835,662 and 120,105,418 shares issued or issuable and outstanding at March 31, 2018 and December 31, 2017 and 2016, respectively. | 144,706 | 141,836 | 120,105 |
Additional Paid-in-Capital | 38,418,298 | 37,785,781 | 33,730,240 |
Accumulated Deficit | (39,288,486) | (38,276,879) | (35,235,449) |
Total Stockholders' Deficit | (725,482) | (349,262) | (1,385,104) |
Total Liabilities and Stockholders' Deficit | $ 2,283,530 | $ 3,242,574 | $ 2,057,590 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common Stock par value (in Dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common Stock shares authorized | 490,000,000 | 490,000,000 | 490,000,000 |
Common Stock shares issued | 144,706,495 | 141,835,662 | 120,105,418 |
Common Stock shares outstanding | 144,706,495 | 141,835,662 | 120,105,418 |
Unamortized discount | $ 120,371 | $ 232,767 | |
Convertible Notes Payable [Member] | |||
Unamortized discount | 115,141 | 175,668 | $ 0 |
Convertible Line of Credit [Member] | |||
Unamortized discount | $ 120,371 | $ 226,768 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||||
Revenues | $ 2,875,972 | $ 370,689 | $ 1,412,042 | $ 2,781,273 |
Cost of Revenues | 2,841,672 | 374,543 | 1,884,793 | 2,925,994 |
Gross Loss | 34,300 | (3,854) | (472,751) | (144,721) |
Operating Expenses (including stock based compensation expense of $430,084 for the year ended December 31, 2017 and $842,089 for the year ended December 31, 2016) | 609,169 | 668,989 | 2,227,645 | 2,643,672 |
Loss From Operations | (574,869) | (672,843) | (2,700,396) | (2,788,393) |
Other Income (Expense) | ||||
Other Income | 808 | 170 | 1,762 | 415 |
Gain on Debt Settlement, net | 25,524 | 450,927 | ||
Interest Expense | (437,546) | (53,981) | (474,601) | (275,776) |
Gain on debt extinguishment | 107,081 | 107,081 | 0 | |
Change in the fair value of embedded conversion option liability | 0 | (19,089) | ||
Total Other Income (Expense) | (436,738) | 53,270 | (340,234) | 156,477 |
Loss Before Tax Expense | (1,011,607) | (619,573) | (3,040,630) | (2,631,916) |
Tax Expense | 800 | 1,600 | ||
Net Loss | $ (1,011,607) | $ (619,573) | $ (3,041,430) | $ (2,633,516) |
Net Loss Per Share- Basic and Diluted | $ (0.01) | $ (0.01) | $ (0.02) | $ (0.02) |
Weighted Average Shares Outstanding- Basic and Diluted | 143,489,736 | 122,413,803 | 127,470,749 | 112,469,828 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||||
Stock based compensation | $ 144,967 | $ 69,486 | $ 430,084 | $ 842,089 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Deficit - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, Shares at Dec. 31, 2015 | 0 | 105,207,701 | |||
Beginning balance, Amount at Dec. 31, 2015 | $ 0 | $ 105,208 | $ 31,088,122 | $ (32,601,933) | $ (1,408,603) |
Stock Issued for Cash, Amount | 1,820,000 | ||||
Cash Offering Costs | (68,800) | ||||
Stock Issued for Services, Amount | 150,000 | ||||
Stock Issued for Services - Related Party, Amount | 69,603 | ||||
Stock Issued for Director Services, Amount | 172,916 | ||||
Shares Issued for Loan Guaranty - Related Party, Amount | 22,123 | ||||
Stock Option Expense | 442,871 | ||||
Net Loss | (2,633,516) | ||||
Ending balance, Shares at Dec. 31, 2016 | 120,105,418 | ||||
Ending balance, Amount at Dec. 31, 2016 | $ 120,105 | 33,730,240 | (35,235,449) | (1,385,104) | |
Beginning balance, Shares at Dec. 31, 2015 | 0 | 105,207,701 | |||
Beginning balance, Amount at Dec. 31, 2015 | $ 0 | $ 105,208 | 31,088,122 | (32,601,933) | (1,408,603) |
Stock Issued for Cash, Shares | 12,133,333 | ||||
Stock Issued for Cash, Amount | $ 12,133 | 1,807,867 | 1,820,000 | ||
Cash Offering Costs | (68,800) | (68,800) | |||
Stock Issued for Services, Shares | 1,000,000 | ||||
Stock Issued for Services, Amount | $ 1,000 | 149,000 | 150,000 | ||
Stock Issued for Services - Related Party, Shares | 464,115 | ||||
Stock Issued for Services - Related Party, Amount | $ 464 | 69,139 | 69,603 | ||
Stock Issued for Director Services, Shares | 1,152,776 | ||||
Stock Issued for Director Services, Amount | $ 1,153 | 171,763 | 172,916 | ||
Shares Issued for Loan Guaranty - Related Party, Shares | 147,493 | ||||
Shares Issued for Loan Guaranty - Related Party, Amount | $ 147 | 21,976 | 22,123 | ||
Stock Option Expense | 442,871 | 442,871 | |||
Stock Warrant Modification Expense | 48,302 | 48,302 | |||
Net Loss | (2,633,516) | (2,633,516) | |||
Ending balance, Shares at Dec. 30, 2016 | 0 | 120,105,418 | |||
Ending balance, Amount at Dec. 30, 2016 | $ 0 | $ 120,105 | 33,730,240 | (35,235,449) | (1,385,104) |
Beginning balance, Shares at Dec. 31, 2016 | 120,105,418 | ||||
Beginning balance, Amount at Dec. 31, 2016 | $ 120,105 | 33,730,240 | (35,235,449) | (1,385,104) | |
Stock Issued for Cash, Shares | 15,633,327 | ||||
Stock Issued for Cash, Amount | $ 15,634 | 2,329,366 | 2,345,000 | ||
Cash Offering Costs | (53,600) | (53,600) | |||
Stock Issued for Services, Shares | 15,000 | ||||
Stock Issued for Services, Amount | $ 15 | 2,235 | 2,250 | ||
Stock Issued for Loan Conversion, Shares | 4,698,060 | ||||
Stock Issued for Loan Conversion, Amount | $ 4,698 | 700,011 | 704,709 | ||
Stock Issued for Services - Related Party, Shares | 180,000 | ||||
Stock Issued for Services - Related Party, Amount | $ 180 | 26,820 | 27,000 | ||
Stock Issued for Director Services, Shares | 750,000 | ||||
Stock Issued for Director Services, Amount | $ 750 | 111,750 | 112,500 | ||
Shares Issued for Loan Guaranty - Related Party, Shares | 453,857 | ||||
Shares Issued for Loan Guaranty - Related Party, Amount | $ 454 | 67,624 | 68,078 | ||
Recording of Debt Discount on Convertible Loans | 651,251 | 651,251 | |||
Stock Option Expense | 220,084 | 220,084 | |||
Net Loss | (3,041,430) | (3,041,430) | |||
Ending balance, Shares at Dec. 30, 2017 | 0 | 141,835,662 | |||
Ending balance, Amount at Dec. 30, 2017 | $ 0 | $ 141,836 | 37,785,781 | (38,276,879) | (349,262) |
Beginning balance, Shares at Dec. 31, 2016 | 120,105,418 | ||||
Beginning balance, Amount at Dec. 31, 2016 | $ 120,105 | $ 33,730,240 | $ (35,235,449) | (1,385,104) | |
Stock Issued for Cash, Amount | 2,345,000 | ||||
Cash Offering Costs | (53,600) | ||||
Stock Issued for Services, Amount | 2,250 | ||||
Stock Issued for Services - Related Party, Amount | 27,000 | ||||
Stock Issued for Director Services, Amount | 112,500 | ||||
Shares Issued for Loan Guaranty - Related Party, Amount | 68,078 | ||||
Stock Option Expense | 220,084 | ||||
Net Loss | (3,041,430) | ||||
Ending balance, Amount at Dec. 31, 2017 | (349,262) | ||||
Stock Option Expense | 4,342 | ||||
Net Loss | (1,011,607) | ||||
Ending balance, Amount at Mar. 31, 2018 | $ (725,482) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||
Net Loss | $ (1,011,607) | $ (619,573) | $ (3,041,430) | $ (2,633,516) |
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities: | ||||
Depreciation and amortization | 18,071 | 17,475 | 69,381 | 102,438 |
Shares issued for services | 140,625 | 30,375 | ||
Bad Debt Expense | 0 | 510 | ||
Decrease of Reserve on Inventory | 0 | (19,182) | ||
Common Stock issued for Loan Guaranty | 68,250 | |||
Common stock issued for services | 141,750 | 350,916 | ||
Gain on debt settlement, net | (25,524) | (450,927) | ||
Compensation expense related to grant of stock options | 4,342 | 39,111 | 220,084 | 442,871 |
Warrant Modification Expense | 0 | 48,302 | ||
Gain on debt extinguishment | (107,081) | (107,081) | 0 | |
Change in fair value of embedded conversion option liability | 0 | 19,089 | ||
Amortization of debt discount | 379,344 | 271,098 | 0 | |
Amortization of debt issue costs | 800 | 800 | 125,917 | |
Changes in assets and liabilities: (Increase) decrease in: | ||||
Accounts receivable | (867,823) | 693,263 | 1,155,118 | (329,957) |
Prepaid expenses and other current assets | (176,887) | (13,478) | 19,659 | (24,845) |
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | 0 | 22,058 | ||
Inventory | 1,816,855 | (54,231) | (2,004,526) | 166,236 |
Deposits | 46,800 | (1,810) | 8,506 | |
Increase (decrease) in: | ||||
Accounts Payable | 106,109 | (174,968) | (386,322) | 351,691 |
Accrued Expenses | (15,149) | 150,429 | 146,185 | 172,871 |
Convertible Note Payable Issued in Lieu of Salary - Related Party | 12,500 | 47,500 | 85,000 | 50,000 |
Sales Tax Payable | 34,823 | (31,822) | (50,135) | (63,560) |
Deferred Revenue | (21,865) | 40,657 | 2,191 | (138,144) |
NET CASH USED IN OPERATING ACTIVITIES | 466,138 | 18,457 | (3,437,312) | (1,798,726) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of Equipment | (3,219) | (23,895) | (115,886) | |
Funding of Patent Costs | (27,222) | (962) | (2,470) | (37,311) |
NET CASH USED IN INVESTING ACTIVITIES | (27,222) | (4,181) | (26,365) | (153,197) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||
Proceeds from Sale of Common Stock | 290,000 | 30,000 | 2,345,000 | 1,820,000 |
Payments of Offering Costs Related to Sale of Common Stock | (12,000) | (2,400) | (53,600) | (68,800) |
Borrowings on Convertible Note Payable | 1,500,000 | 0 | ||
Borrowings on Convertible Line of Credit | 1,150,000 | 0 | ||
Borrowings (Payments) on Line of Credit, Net | (860,000) | (1,000,000) | 200,000 | |
Repayments of Convertible Notes Payable-Related Parties | (12,000) | (12,000) | ||
Repayments on Notes Payable | (3,000) | (3,000) | (40,000) | 0 |
Repayments of Auto Loan | (3,166) | (2,276) | (8,533) | (8,760) |
Payments of Debt Issue Costs | (22,283) | (2,400) | ||
NET CASH PROVIDED BY FINANCING ACTIVITIES | (588,166) | 22,324 | 3,858,584 | 1,928,040 |
NET INCREASE (DECREASE) IN CASH | (149,250) | 36,600 | 394,907 | (23,883) |
CASH AT BEGINNING OF YEAR | 403,475 | 8,568 | 8,568 | 32,451 |
CASH AT END OF YEAR | 254,225 | 45,168 | 403,475 | 8,568 |
Supplemental Disclosure of Cash Flow Information: | ||||
Cash paid for interest | 71,372 | 11,412 | 73,409 | 45,133 |
Cash paid for tax | 800 | 1,600 | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||
Shares issued for debt conversion | 704,709 | 704,709 | 0 | |
Recording of debt discount | 212,420 | 715,829 | 0 | |
Shares issued for loan guarantee -related party | 68,250 | 22,123 | ||
Transfer of prepaid asset to inventory | 30,272 | 21,168 | 21,168 | 31,752 |
Depreciation transferred to inventory | 5,508 | 5,481 | 22,004 | 21,606 |
Transfer of inventory to property and equipment | 0 | 56,677 | ||
Prepaid insurance financed by third party | $ 31,250 | $ 2,334 | $ 2,412 |
1. CORPORATE ORGANIZATION, NATU
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Nature of Operations Envision Solar International Inc. (along with its subsidiary, hereinafter the “Company”, “us”, “we”, “our” or “Envision”), a Nevada corporation, invents, designs, and manufactures solar powered products and proprietary technology solutions targeting three verticals: electric vehicle charging infrastructure, out of home advertising infrastructure, and energy security and disaster preparedness. The Company focuses on creating renewably energized platforms for electric vehicle (“EV”) charging, media and branding, and energy security which management believes are attractive, rapidly deployed, and of the highest quality. Management believes that the Company’s chief differentiator is its ability to invent, design, engineer, and manufacture solar products which are a complex integration of our own proprietary technology and other commonly available engineered components. The resulting products are built to have the longest life expectancy in the industry while also delivering valuable amenities and potentially highly attractive revenue opportunities for our customers. Management believes that Envision’s products deliver multiple layers of value such as: impact free renewably energized EV charging; media, branding, and advertising platforms; sustainable and secure energy production; architectural enhancement; reduced carbon footprint; 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. Basis of Presentation The interim unaudited condensed consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company’s management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations and cash flows for the three months ended March 31, 2018 and 2017, and our financial position as of March 31, 2018, have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year. Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017. The December 31, 2017 consolidated balance sheet is derived from those statements. Principals of Consolidation The unaudited condensed 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 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 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 unaudited condensed consolidated financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment, 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 Financial instruments that potentially subject us to concentrations of credit risk consist of cash and revenues. The Company maintains its cash in banks and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts from inception through March 31, 2018. As of March 31, 2018, there were no amounts greater than the federally insured limits. Concentration of Accounts Receivable As of March 31, 2018, customers that each represented more than 10% of the Company’s net accounts receivable balance were as follows: Customer A 48% Customer B 24% As of December 31, 2017, there was a single customer that represented 94% of the Company’s net accounts receivable balance. Concentration of Revenues For the three months ended March 31, 2018, customers that each represented more than 10% of our net revenues were as follows: Customer A 69% Customer B 15% For the three months ended March 31, 2017, customers that each represented more than 10% of our net revenues were as follows: Customer C 39% Customer D 24% Customer E 17% Customer F 13% Cash and Cash Equivalents For the purposes of the unaudited condensed 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 no cash equivalents at March 31, 2018 and December 31, 2017 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 March 31, 2018, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. 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 of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on extinguishment. 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 Recognition As of January 1, 2018, Envision adopted the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606). The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized in accordance with that core principle by applying the following five steps: 1) identify the contracts with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation Revenues are primarily derived from the direct sales of manufactured products. Revenues may also consist of maintenance fees for the maintenance of previously sold products, and revenues from sales of professional services. Revenues from inventoried product sales are recognized upon the final delivery of such product to the customer or when legal transfer of ownership takes place. Revenue values are fixed price arrangements determined at the time an order is placed or a contract is entered into. The customer is typically obligated to make payment for such products within a 15-45 day period after delivery. Revenues from maintenance fees are recognized equally over the period of the maintenance term. Revenue values are fixed price arrangements determined at the time an order is placed or a contract is entered into. The customer is typically obligated to make payment for the service in advance of the maintenance period. Revenues from professional services are recognized as services are performed. Revenue values are based upon fixed fee arrangements or hourly fee-based arrangements with agreed to hourly rates of service categories in line with expertise requirements. These services are billed to a customer as such services are provided and the customer will be obligated to make payments for such services typically within a 15-45 day period. Any deposits received from a customer prior to delivery of the purchased product or monies paid prior to the period for which a service is provided are accounted for as deferred revenue on the balance sheet. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. Sales tax is recorded on a net basis and excluded from revenue. The Company generally provides a standard one year warranty on its products for materials and workmanship but will pass on the warranties from its vendors, if any, which generally cover at least such 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 March 31, 2018, the Company has no product warranty accrual given the Company’s de minimis historical financial warranty experience. Patents The company believes it is in a position to achieve future economic value benefits 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 or abandoned, all accumulated administrative costs will be expensed in the period in which the patent was denied or abandoned. Patent amortization expense was $140 in each of the three-month periods ended March 31, 2018 and 2017. 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. Net Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common share is computed using 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 notes payable that are convertible into 9,067,752 common shares, options to purchase 15,216,664 common shares and warrants to purchase 6,463,017 common shares were outstanding at March 31, 2018. These shares were not included in the computation of diluted loss per share for the three months ended March 31, 2018 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per share. Segments The Company follows ASC 280-10 for, "Disclosures about Segments of an Enterprise and Related Information." During 2018 and 2017, the Company only operated in one segment; therefore, segment information has not been presented. New Accounting Pronouncements ASU 2018-05 In March 2018, the Financial Accounting Standards Board issued Accounting Standards Update No. 2018-05: "Income Taxes (Topic 805)” ASU 2016-02 In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees will need to recognize almost all leases on their balance sheet as a right of use asset and a lease liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company expects this ASU will increase its current assets and current liabilities but have no net material impact on its consolidated financial statements. ASU 2017-05 In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-05: "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” - ASU 2016-15 In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2014-09 In May 2014, the Financial Accounting Standards Board issued Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” which requires that an entity recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; ii) clarify the guidance relating to performance obligations and licensing; iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transaction; and iv) clarify narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue recognition standard, amended by the updates, becomes effective in the first quarter of 2018 and is to be applied retrospectively using one of two prescribed methods. The Company has adopted the new standard effective January 1, 2018 and the adoption of this standard did not have any impact on the amount or timing of its revenues. | CORPORATE ORGANIZATION Envision Solar was incorporated in June 2006 as a limited liability company (“LLC”). Through a series of transactions and mergers, including a series of 2010 transactions where the then existing entity was acquired by an inactive publicly-held company in a transaction treated as a recapitalization of the company, the resulting entity became Envision Solar International, Inc., a Nevada Corporation (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. Additionally, the Company had formed various wholly owned subsidiaries to account for its planned future operations, but these entities were dissolved over the subsequent years. The only remaining subsidiary included in these consolidated financial statements is Envision Solar Construction Company, Inc. which was a non-operational entity officially dissolved in 2017. NATURE OF OPERATIONS Envision invents, designs, and manufactures solar powered products and proprietary technology solutions targeting three verticals: electric vehicle charging infrastructure, out of home advertising infrastructure, and energy security and disaster preparedness. The Company focuses on creating renewably energized platforms for EV charging, media and branding, and energy security which are attractively designed, rapidly deployable, and of the highest quality. Management believes that the Company’s chief differentiator is its ability to invent, design, engineer, and manufacture solar products which are a complex integration of our own proprietary technology and other commonly available engineered components. The resulting products are built to have the longest life expectancy in the industry while also delivering valuable amenities and potentially highly attractive revenue opportunities for our customers. Management believes that Envision’s products deliver multiple layers of value such as: impact free renewably energized EV charging; media, branding, and advertising platforms; sustainable and secure energy production; architectural enhancement; reduced carbon footprint; 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 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, 2017. The Company had approximately $150,000 of bank balances in excess of FDIC insured levels as of December 31, 2017 and no such amounts as of December 31, 2016. Concentration of Accounts Receivable At December 31, 2017 and 2016, customers that each accounted for more than 10% of our accounts receivable were as follows: 2017 2016 Customer 1 94% – Customer 2 – 71% Customer 3 – 25% Concentration of Revenues For the years ended December 31, 2017 and 2016, customers that each represented more than 10% of our revenues were as follows: 2017 2016 Customer A 28% – Customer B 12% 14% Customer C – 26% Customer D – 30% 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 no cash equivalents at December 31, 2017 and December 31, 2016, 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, 2017 and 2016, 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 net realizable value. 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 annual 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 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. For the years ended December 31, 2017 and 2016 respectively, patent amortization expense was $561 and $561. 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 of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on extinguishment. 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. Revenues may also consist of maintenance fees for previously sold products, design fees for the design of solar systems and arrays, and revenues from sales of professional services. Revenues from leases, maintenance fees, 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 or when legal transfer of ownership takes place. Any deposits received from a customer prior to such delivery are accounted for as deferred revenue on the balance sheet. At December 31, 2017 and December 31, 2016, deferred revenue amounted to $77,514 and $75,323 respectively. At December 31, 2017, the Company has received partial deposits for two undelivered Solar Tree® units, an undelivered EVARC® unit and a multi-year maintenance contract. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. Sales tax is recorded on a net basis and excluded from revenue. 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, 2017, the Company has no product warranty accrual given the Company’s de minimis historical financial 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, not including the minimal amounts of labor associated with research and development projects, of $1,772 for the year ending December 31, 2017 and $3,459 for the year ending December 31, 2016. 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 $81,278 in 2017 and $58,149 in 2016. 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 19,846,181 common shares, options to purchase 15,216,664 common shares and warrants to purchase 5,781,900 common shares were outstanding at December 31, 2017. Convertible debt convertible into 6,123,370 common shares, options to purchase 19,917,007 common shares and warrants to purchase 28,196,822 common shares were outstanding at December 31, 2016. Dilutive common stock equivalents were not included in the computation of diluted net loss per share in 2017 and 2016 because the effects would have been anti-dilutive due to the net losses. Due to the net losses in 2017 and 2016, 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 2017 and 2016, 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 year ended December 31, 2017 that materially 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, 2017, including the pronouncements discussed below, disclose the potential effects on the Company’s consolidated financial position and/or results of its’ operations and financial statement disclosures. ASU 2017-05 In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-05: "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” - ASU 2017-08 In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-08: “Receivables – Non-Refundable fees and Other Costs (Subtopic 310-20)” to amend the amortization period for certain purchased callable debt securities held at a premium. The Board is shortening the amortization period for the premium to the earliest call date. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company does not expect this ASU to have a material impact on its consolidated financial statements. ASU 2016-15 In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-02 In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees will need to recognize almost all leases on their balance sheet as a right of use asset and a lease liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company expects this ASU will increase its current assets and current liabilities, but have no net material impact on its consolidated financial statements. ASU 2016-09 In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-09: "Compensation – Stock Compensation (Topic 718) - I ASU 2014-09 In May 2014, the Financial Accounting Standards Board issued Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” which requires that an entity recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; ii) clarify the guidance relating to performance obligations and licensing; iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transaction; and iv) clarify narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue recognition standard, amended by the updates, becomes effective in the first quarter of 2018 and is to be applied retrospectively using one of two prescribed methods. Early adoption is permitted. The Company currently plans to adopt the new standard effective January 1, 2018 and does not believe the adoption of this standard will have any impact on the amount or timing of its revenues. ASU 2015-17 In November 2015, the FASB issued ASU No. 2015-17, “ Balance Sheet Classification of Deferred Taxes ASU 2014-15 In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard was effective for the Company for its annual period beginning December 31, 2016. The Company has reflected the related disclosure requirements associated with the standard in Note 2. |
2. GOING CONCERN
2. GOING CONCERN | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Capitalization of accrued interest to convertible notes payable | ||
GOING CONCERN | As reflected in the accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2018, the Company had a net loss of $1,011,607. Additionally, at March 31, 2018, the Company had a working capital deficit of $1,123,045, an accumulated deficit of $39,288,486 and a stockholdersÂ’ deficit of $725,482. It is ManagementÂ’s opinion that these factors raise substantial doubt about the CompanyÂ’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. The Company has incurred significant losses from operations, and such losses are expected to continue. In addition, the Company has limited working capital. In the upcoming months, Management's plans include seeking additional operating and working capital through a combination of public, private and debt financings. There is no guarantee that additional capital or debt financing will be available when and to the extent required, or that if available, it will be on terms acceptable to the Company. Further, the Company continues to seek out sales contracts for new product sales that should provide additional revenues and, in the long term, gross profits. Additionally, Envision intends to renegotiate the debt instruments that are currently due or become due later in 2018. All such actions and funds, if successful, 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. The unaudited condensed 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. | As reflected in the accompanying consolidated financial statements for the years ended December 31, 2017 and 2016, the Company had net losses of $3,041,430 (which includes $430,084 of stock based compensation expense) and $2,633,516 (which includes $842,089 of stock based compensation expense), respectively, and net cash used in operating activities of $3,437,312 and $1,798,726, respectively. Additionally, at December 31, 2017, the Company had a working capital deficit of $786,621, stockholdersÂ’ deficit of $349,262, and accumulated deficit of $38,276,879. It is managements opinion that these factors raise substantial doubt about the CompanyÂ’s ability to continue as a going concern for a period of twelve months from the date of this filing. In addition to the funds raised in a private securities offering during the year ended December 31, 2017 and reflected in the accompanying financial statements, Envision raised an additional $290,000 from the same offering subsequent to December 31, 2017. Envision will look to raise additional funds for further operating capital and working capital. 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 provide additional working capital. From January 1, 2017 through December 31, 2017, the Company raised $2,345,000 from a private securities offering, borrowed a net $500,000 from certain loan facilities and additionally drew down $1,150,000 on a potential $3,000,000 line of credit that was established during 2017. 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. ACCOUNTS RECEIVABLE, AND DEF
3. ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE | Accounts Receivable The Company records accounts receivable as it bills its customers for products and services. The allowance for doubtful accounts is based upon the Company’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, 2017 and 2016, accounts receivables were as follows: December 31, 2017 December 31, 2016 Accounts receivable $ 5,946 $ 1,161,064 Less: Allowance for doubtful accounts – – Accounts receivable, Net $ 5,946 $ 1,161,064 Bad debt expense for 2017 and 2016 was $0 and $510, respectively. Deferred Revenue Deferred revenues are deposits from customers for product sales which have not yet been delivered and multi period maintenance contracts (See Note 1). Deferred revenue was $77,514 and $75,323 for the years ended December 31, 2017 and December 31, 2016, respectively. |
4. PREPAID EXPENSES AND OTHER C
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 December 31, 2016 Prepaid insurance $ 25,402 $ 26,124 Deposit on future raw materials 30,272 21,168 Prepaid services – 46,875 Total prepaid expenses and other current assets $ 55,674 $ 94,167 |
5. INVENTORY
5. INVENTORY | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
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. Inventory consists approximately of the following: March 31, December 31, 2018 2017 Finished Goods $ 121,616 $ 1,716,141 Work in Process 275,506 311,481 Raw Materials 149,904 300,479 Inventory Allowance (8,601 ) (8,601 ) Total Inventory $ 538,425 $ 2,319,500 | 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, 2017 and 2016, inventory consists of the following: December 31, 2017 December 31, 2016 Finished goods $ 1,716,141 $ 22,375 Work in process 311,481 164,915 Raw materials 300,479 93,113 Inventory reserve (8,601 ) (8,601 ) Inventory, net $ 2,319,500 $ 271,802 |
6. PROPERTY AND EQUIPMENT
6. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
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 $ 32,666 $ 28,344 Furniture and fixtures 7 years 82,529 82,529 Office equipment 5 years 20,533 20,533 Machinery and equipment 1-5 years 341,583 322,010 Autos 3 years 49,238 49,238 Leasehold improvements 47 months 6,790 6,790 Total property and equipment 533,339 509,444 Less accumulated depreciation (307,227 ) (216,403 ) Property and Equipment, Net $ 226,112 $ 293,041 Depreciation expense for 2017 and 2016 was $68,820 and $101,877, respectively. In 2017 and 2016, respectively, approximately $22,000 and $21,600 of depreciation was capitalized into inventory as manufacturing overhead costs. |
7. ACCRUED EXPENSES
7. ACCRUED EXPENSES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Payables and Accruals [Abstract] | ||
ACCRUED EXPENSES | The major components of accrued expenses are summarized as follows: March 31, December 31, Accrued vacation $ 146,622 $ 152,051 Accrued interest 162,783 175,953 Accrued rent 76,332 77,164 Accrued loss contingency – 44,423 Other accrued expense 51,038 2,333 Total accrued expenses $ 436,775 $ 451,924 | The major components of accrued expenses are summarized as follows: December 31, 2017 December 31, 2016 Accrued vacation $ 152,051 $ 136,410 Accrued interest 175,953 235,776 Accrued loan guaranty – 8,333 Accrued rent 77,164 26,091 Accrued commissions – 18,828 Accrued loss contingency 44,423 – Other accrued expense 2,333 4,995 Total accrued expenses $ 451,924 $ 430,433 |
8. LINE OF CREDIT_TERM DEBT - S
8. LINE OF CREDIT/TERM DEBT - SILICON VALLEY BANK | 12 Months Ended |
Dec. 31, 2017 | |
Line Of Credit | |
LINE OF CREDIT/TERM DEBT - SILICON VALLEY BANK | 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 was secured by a second priority perfected security interest in all of the assets of the Company in favor of the Bank. The LSA contained 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. Envision drew down $800,000 of this line in 2015 with another $200,000 drawdown in February 2016. As of December 31, 2016, the balance of this revolving line of credit was $1,000,000. 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 were recorded as Debt Issue Costs on the accompanying balance sheet and were amortized over the one year term of the line of credit. As of December 31, 2016, the term of the LSA was extended to January 28, 2017. Fees amounting to $2,400 relating to this extension were recorded as Debt Issue Costs on the accompanying balance sheet and were amortized over the term of this extension. 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, were recorded as Debt Issue Costs and were amortized over the initial 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. Related to this guaranty, as of October 29, 2016, the Company issued 147,493 shares of its common stock valued at $0.15 per share, or $22,123, and expensed this over the six month Measurement Period of the Guaranty. The Company recorded a gain on debt settlement of $2,877 on this transaction. Additionally, as of April 29, 2017, the Company issued 234,302 shares of its common stock valued at $0.15 per share, or $35,145, and expensed this over the six month Measurement Period of the Guaranty. The Company recorded a gain on debt settlement of $2,355 on this transaction. Additionally, in September 2017, the Company issued 219,555 shares of its common stock valued at $0.15 per share, or $32,933 and expensed this over the final Measurement Period of the Guaranty. The Company recorded a loss of $2,183 on this transaction (See Notes 14 and 17). Additionally, the Company 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 had 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 was unable to meet its obligations under the LSA, Keshif was to immediately become entitled to elect one member to Envision’s Board of Directors. Effective March 30, 2017, the Company entered into an additional amendment to the LSA with Silicon Valley Bank as it relates to this debt. The amendment (i) extended the maturity date to March 1, 2020, (ii) increased the loan to an aggregate principal amount of $1,500,000, and (iii) changed the payment terms requiring monthly interest only payments through December 2017, and starting January 1, 2018, the Company was required to repay the balance outstanding in twenty-seven equal monthly principal payments in addition to the monthly accrued interest. The additional $500,000 of debt was funded to the Company in April 2017. Related to this amendment, the Company paid $9,655 of fees to the Bank. These fees were recorded as debt discount and netted against the loan balance and amortized to interest expense over the term of the debt facility. As of September 25, 2017, the Company paid off the LSA in full with the proceeds of the “Lender” note as discussed in Note 11, and the Guaranty and all other contractual rights related to this debt facility were cancelled. |
9. CONVERTIBLE LINE OF CREDIT
9. CONVERTIBLE LINE OF CREDIT | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Disclosure [Abstract] | ||
CONVERTIBLE LINE OF CREDIT | On September 18, 2017, in addition to a convertible “Lender” note (See Note 7), the Company entered into a revolving secured convertible promissory note (the “Revolver”) with an unaffiliated lender (the “Lender”). Pursuant to the Revolver, the Company has the right to make borrowings from the Lender in amounts of up to 70% of the value of any specific purchase order (each a “PO”) received by the Company from a credit worthy customer (each a “Draw Down”), up to a maximum of $3,000,000, commencing on the date of the Revolver and terminating 300 days after the date of the Revolver. The Revolver bears simple interest at the floating rate per annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 600 basis points (the “Interest Rate”). The Interest Rate will be adjusted on the first day of each calendar month during the term of this Note to reflect any changes in the 12 month LIBOR rate as quoted on that day, or if that day is not a business day, on the next business day thereafter. The principal and accrued unpaid interest with respect to each Draw Down is due and payable within five (5) business days of receipt from the Customer by the Company of a payment due under the applicable PO (with respect to each Draw Down, the “Maturity Date”). Each Draw Down is secured by a perfected recorded second priority security interest in all of the Company’s assets, as set forth in that certain Security Agreement by and between the Company and the Lender. The Lender will have the right at any time until the Maturity Date of a Draw Down, provided the Lender gives the Company written notice of the Lender’s election to convert prior to any prepayment of such Draw Down by the Company with respect to converting that portion of such Draw Down covered by the prepayment, to convert all or any portion of the outstanding principal and accrued unpaid interest (the “Conversion Amount”), into such number of fully paid and nonassessable shares of the Company’s common stock as is determined by dividing the Conversion Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the Lender’s written notice of the Lender’s election to convert. As additional consideration for any Draw Downs made by the Company as evidenced by the Revolver, the Company agreed to issue to the Lender common stock purchase warrants exercisable for a period of three years from the date of issuance with an exercise price equal to the greater of (i) $0.15 per share or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the applicable Draw Down. The number of warrants issuable to the Lender will equal 25% of the increase over the highest dollar amount previously drawn down by the Company on the Revolver divided by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the applicable Draw Down which causes the increase over the previous highest amount borrowed. The Company received funds for an initial Draw Down on September 26, 2017 in the amount of $850,000. As a result of this Draw Down, the Company issued 1,416,667 common stock purchase warrants having a value of $122,992 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price and three year term. As a result of this transaction and including the relative fair value of the issued warrants, the Company recorded $243,223 of value of beneficial conversion features and warrants, which was recorded as debt discount on the accompanying balance sheet and was amortized to interest expense over the term of the Draw Down. This Draw Down was paid back to the Lender during the three month period ended March 31, 2018. The Company received funds for a second Draw Down on October 24, 2017 in the amount of $300,000. As a result of this Draw Down, the Company issued 500,000 common stock purchase warrants having a value of $56,620 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price and three year term. As a result of this transaction and including the relative fair value of the issued warrants, the Company recorded $175,261 of value of beneficial conversion features and warrants, which was recorded as debt discount on the accompanying balance sheet and was amortized to interest expense over the term of the Draw Down. This Draw Down was paid back to the Lender during the three month period ended March 31, 2018. The Company received funds for a third Draw Down on February 20, 2018 in the amount of $290,000. As a result of this Draw Down, the Company issued 407,784 common stock purchase warrants having a fair value of $61,282 using the Black-Scholes valuation methodology, and each with a $0.1778 exercise price and three year term (See Note 11 and 13). As a result of this transaction, the Company recorded $212,420 of debt discount consisting of the relative fair value of warrants of $50,591 and a beneficial conversion feature value of $161,829 which is being amortized to interest expense over the estimated term of the Draw Down. As of March 31, 2018, the convertible line of credit had a balance, net of a $120,371 debt discount, amounting to $169,629. | On September 18, 2017, in addition to a convertible “Lender” note (See Note 11), the Company entered into a revolving secured convertible promissory note (the “Revolver”) with an unaffiliated lender (the “Lender”). Pursuant to the Revolver, the Company has the right to make borrowings from the Lender in amounts of up to 70% of the value of any specific purchase order (each a “PO”) received by the Company from a credit worthy customer (each a “Draw Down”), up to a maximum of $3,000,000, commencing on the date of the Revolver and terminating 300 days after the date of the Revolver. The Revolver bears simple interest at the floating rate per annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 600 basis points (the “Interest Rate”). The Interest Rate will be adjusted on the first day of each calendar month during the term of this Note to reflect any changes in the 12 month LIBOR rate as quoted on that day, or if that day is not a business day, on the next business day thereafter. The principal and accrued unpaid interest with respect to each Draw Down is due and payable within five (5) business days of receipt from the Customer by the Company of a payment due under the applicable PO (with respect to each Draw Down, the “Maturity Date”). Each Draw Down is secured by a perfected recorded second priority security interest in all of the Company’s assets, as set forth in that certain Security Agreement by and between the Company and the Lender. The Lender will have the right at any time until the Maturity Date of a Draw Down, provided the Lender gives the Company written notice of the Lender’s election to convert prior to any prepayment of such Draw Down by the Company with respect to converting that portion of such Draw Down covered by the prepayment, to convert all or any portion of the outstanding principal and accrued unpaid interest (the “Conversion Amount”), into such number of fully paid and nonassessable shares of the Company’s common stock as is determined by dividing the Conversion Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the Lender’s written notice of the Lender’s election to convert. As additional consideration for any Draw Downs made by the Lender to the Company as evidenced by the Revolver, the Company agreed to issue to the Lender common stock purchase warrants exercisable for a period of three years from the date of issuance with an exercise price equal to the greater of (i) $0.15 per share or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the applicable Draw Down. The number of warrants issuable to the Lender will equal 25% of the increase over the highest amount previously drawn down by the Company on the Revolver divided by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the applicable Draw Down which causes the increase over the previous highest amount borrowed. The Company received funds for an initial Draw Down on September 26, 2017 in the amount of $850,000. As a result of this Draw Down, the Company issued 1,416,667 common stock purchase warrants having a value of $122,992 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price (See Note 15). As a result of this transaction, and including the value of the issued warrants, the Company recorded $243,223 of value of beneficial conversion features, which is recorded as debt discount on the accompanying balance sheet, and is being amortized to interest expense over the term of the loan. The Company received funds for a second Draw Down on October 24, 2017 in the amount of $300,000. As a result of this Draw Down, the Company issued 500,000 common stock purchase warrants having a value of $56,620 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price (See Note 15). As a result of this transaction, and including the value of the issued warrants, the Company recorded $175,261 of value of beneficial conversion features, which is recorded as debt discount on the accompanying balance sheet, and is being amortized to interest expense over the term of the loan. As of December 31, 2017, the convertible line of credit had a balance, net of a $226,768 debt discount, amounting to $923,232. Accrued and unpaid interest related to this note amounting to $22,236 is included in accrued expenses (See Note 7). |
10. CONVERTIBLE NOTES PAYABLE -
10. CONVERTIBLE NOTES PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Convertible Notes Payable - Related Parties And Fair Value Measurements | ||
CONVERTIBLE NOTES PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS | As of March 31, 2018, the following summarizes amounts owed under short-term convertible notes –related parties: Amount Evey Note $ 59,616 Wheatley Note 147,500 $ 207,116 Evey Note Prior to fiscal 2011, the Company was advanced monies by John Evey, our former director, and executed a 10% convertible promissory note with compounding interest 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 then existing notes. Through a series of amendments from the original due date, the conversion price of the convertible note was reduced to $0.20 and the maturity date was extended to December 31, 2017. Although as of December 31, 2016, Mr. Evey is no longer a director, because he was our Chairman and a related party since 2010, we have continued to classify this note as a Convertible Note Payable - Related Parties in the accompanying balance sheet. For the three month period ended March 31, 2018, the Company made principal payments totaling $3,000. As of March 31, 2018, this note is past due and has a balance of $59,616 with accrued interest amounting to $64,222 which is included in accrued expenses (See Note 4 and 13). The note continues to bear interest at a rate of 10% . Wheatley Note On October 18, 2016, the Company entered into a five year employment agreement, effective as of January 1, 2016, with Mr. Desmond Wheatley, the Chief Executive Officer, President, and Chairman of the Company (the “Agreement”). Pursuant to the Agreement, Mr. Wheatley will receive an annual deferred salary of $50,000 which Mr. Wheatley will defer until such time as Mr. Wheatley and the Board of Directors agree that payment of the deferred salary and/or cessation of the deferral is appropriate. In certain circumstances upon the Company achieving specified milestones, which are described in the Agreement, Mr. Wheatley can demand payment of all or any portion of the deferred amount, and the Company must comply with such demand. All deferred amounts are evidenced by an unsecured convertible promissory note payable by the Company to Mr. Wheatley, bearing simple interest at the rate of 10% per annum, accruing until paid, convertible into shares of the Company’s common stock at $0.15 per share at any time in whole or in part at Mr. Wheatley’s discretion, with a maturity date of December 31, 2020. As the conversion price was equivalent to the market price at the time of issuance, there was no beneficial conversion feature to this note. Additionally, on March 29, 2017 the board of directors granted Mr. Wheatley a $35,000 bonus for which Mr. Wheatley agreed to defer such bonus under the same terms of his salary deferral. The balance of the note as of March 31, 2018, is $147,500 with accrued and unpaid interest amounting to $15,769 which is included in accrued expenses (See Notes 4 and 13). | As of December 31, 2017 and 2016, the following summarizes amounts owed under short-term convertible notes –related parties: December 31, December 31, 2017 2016 Evey Note $ 62,616 $ 74,616 Wheatley Note 135,000 50,000 Gemini Master Fund – Third Amended and Restated Secured Bridge Note – Current Group – 600,000 $ 197,616 $ 724,616 Evey Note Prior to 2011, the Company was advanced monies by John Evey, our former chairman and director, and executed a 10% convertible promissory note with compounding interest 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 was 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, 2016. The Company made principal payments amounting to $12,000 in fiscal 2016. Effective December 31, 2016, the Company entered into a further extension agreement to extend the maturity date of this note to December 31, 2017. 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 Company made principal payments amounting to $12,000 in fiscal 2017. Although Mr. Evey is no longer a director as of December 31, 2016, because he was our Chairman and a related party throughout most of 2016, we have continued to classify this note as a Convertible note payable - related parties in the accompanying balance sheet. The note continues to bear interest at a rate of 10%. The balance of the note as of December 31, 2017, is $62,616 with accrued and unpaid interest amounting to $61,242 which is included in accrued expenses (See Note 7 and Note 17). Wheatley Note On October 18, 2016, the Company entered into a five year employment agreement, effective as of January 1, 2016, with Mr. Desmond Wheatley, the Chief Executive Officer, President, and Chairman of the Company (the “Agreement”). Pursuant to the Agreement, Mr. Wheatley will receive an annual deferred salary of $50,000 which Mr. Wheatley will defer until such time as Mr. Wheatley and the Board of Directors agree that payment of the deferred salary and/or cessation of the deferral is appropriate. In certain circumstances upon the Company achieving specified milestones, which are described in the Agreement, Mr. Wheatley can demand payment of all or any portion of the deferred amount, and the Company must comply with such demand. All deferred amounts are evidenced by an unsecured convertible promissory note payable by the Company to Mr. Wheatley, bearing simple interest at the rate of 10% per annum, accruing until paid, convertible into shares of the Company’s common stock at $0.15 per share at any time in whole or in part at Mr. Wheatley’s discretion, with a maturity date of December 31, 2020. As the conversion price was equivalent to the market price at the time of issuance, there is no beneficial conversion feature to this note. Additionally, on March 29, 2017 the board of directors granted Mr. Wheatley a $35,000 bonus for which Mr. Wheatley agreed to defer such bonus under the same terms of his salary deferral. The balance of the note as of December 31, 2017, is $135,000 with accrued and unpaid interest amounting to $12,312 which is included in accrued expenses (See Note 7). Gemini Third Amended and Restated Secured Bridge Note – Current Group 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. The note was secured by substantially all assets of the Company and its subsidiary, and was 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; the beneficial holder ceiling was increased to 9.9% and the terms were extended to June 30, 2015. 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 with the Noble note having a balance of $600,000 and the Gemini note having a balance of $256,325. 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 to pay off the balance of the Gemini note and its accrued interest. In regards to the then 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. Effective January 20, 2016, Mr. Noble entered into a Purchase Option Agreement with Greencore Capital LLC (“GreenCore”), a firm affiliated with Jay S. Potter, a director of the Company (the “Optionee”), pursuant to which the Optionee has the right to purchase or arrange for the purchase of the Note from Mr. Noble and all of Mr. Noble’s shares in the Company (the “Option”), at any time prior to March 31, 2016, which date was subsequently extended. The Company had consented to the original Purchase Option Agreement. Under a Note Settlement and General Release Agreement, provided that the Option is fully exercised and honored, the Company agreed to extend the expiration date of 1,138,120 warrants to purchase 1,138,120 shares of the Company’s common stock owned by Mr. Noble (the “Warrants”) from December 31, 2016 to December 31, 2017, and agreed to reduce the exercise price of such Warrants from $0.24 to $0.20 per share. (see Note 15) During the fourth quarter of 2016, the Company was notified that a transaction, or series of transactions, arranged by GreenCore, had officially closed whereas the convertible note and the “Noble” shares were ultimately obtained by a group of various shareholders, some of which are related parties to the Company. As the note was partially held by a related party shareholder and was held by other related party shareholders during the year, the note was classified as Convertible Notes Payable- Related Parties in the accompanying balance sheets. Effective as of February 15, 2017, the Company received conversion notices from all the then current note holders effecting the conversion of the entire principal balance of the note amounting to $600,000 and accrued and unpaid interest, as of February 15, 2017, amounting to $104,709. The Company issued 4,698,060 shares of common stock at the contracted conversion price of $0.15 per share, to retire the entirety of this convertible note (See Notes 14 and 17). At December 31, 2017, there is no outstanding balance owed for this convertible note. 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, 2016: Carrying Value at Fair Value Measurements at December 31, 2016 December 31, 2016 (Level 1) (Level 2) (Level 3) Embedded Conversion Option Liability $ 107,081 $ – $ – $ 107,081 As a result of the February 2017 conversion discussed above, there was no embedded conversion option liability as of December 31, 2017. The following is a summary of activity of Level 3 liabilities for the periods ended December 31, 2016 and 2017: Balance at December 31, 2015 $ 87,992 Change in fair value 19,089 Balance at December 31, 2016 $ 107,081 Gain on debt extinguishment (107,081 ) Balance at December 31, 2017 $ – 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, 2016: Assumptions December 31, 2016 Expected remaining term 0.25 Expected Volatility 103% Risk free rate 0.50% Dividend Yield 0.00% There were no changes in the valuation techniques during 2017. In 2016, the Company did compute the valuation of this derivative liability using a binomial lattice model noting no material differences in valuation results. The weighted average interest rate for short term notes as of December 31, 2017 was 10%. |
11. CONVERTIBLE NOTES PAYABLE
11. CONVERTIBLE NOTES PAYABLE | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Convertible Notes Payable | ||
CONVERTIBLE NOTES PAYABLE | As of March 31, 2018, the following summarizes amounts owed under convertible notes payable: Convertible Notes Payable, Amount Discount net of discount Pegasus Note $ 100,000 $ – $ 100,000 “Lender” Note 1,500,000 115,141 1,384,859 $ 1,600,000 $ 115,141 $ 1,484,859 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. 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, 2016, and waived, through December 31, 2015, the requirement to pay down the note with financing proceeds received by the Company. As of March 31, 2018, the note is past due and had a balance of $100,000 with accrued and unpaid interest amounting to $82,658 which is included in accrued expenses (See Note 4). “Lender” Note On September 18, 2017, in addition to entering into a revolving convertible line of credit (See Note 5), the Company also entered into a $1,500,000 secured convertible promissory note with the same unaffiliated lender (the “Lender”). The Note bears simple interest at the floating rate per annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 400 basis points (the “Interest Rate”). The Interest Rate will be adjusted on the first day of each calendar month during the term of the Note to reflect any changes in the 12 month LIBOR rate as quoted at on that day, or if that day is not a business day, on the next business day thereafter. Interest will only accrue on outstanding principal. Accrued unpaid interest is payable monthly on the first calendar day of each month for interest accrued during the previous month, with all outstanding principal and accrued unpaid interest payable in full on or before September 17, 2018 to the extent not converted into shares of the Company’s common stock. The Note is secured by a perfected recorded first priority security interest in all of the Company’s assets, as set forth in a certain Security Agreement by and between the Company and the Lender, dated September 18, 2017. At any time until the Maturity Date, and provided Lender gives the Company written notice of Lender’s election to convert prior to any prepayment of this Note by the Company with respect to converting that portion of this Note covered by the prepayment, the Lender has the right to convert all or any portion of the outstanding principal and accrued interest (the “Conversion Amount”), into such number of fully paid and nonassessable shares of the Company’s common stock as is determined by dividing the Conversion Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the Lender’s written notice of its election to convert. As additional consideration for the loan evidenced by the Note, the Company agreed to issue to the Lender common stock purchase warrants exercisable for a period of three years from the date of issuance with an exercise price equal to $0.15 per share. The number of warrants issuable to the Lender is equal to 25% of the loan Amount divided by fifteen cents ($0.15). As of September 18, 2017, the Company issued 2,500,000 common stock purchase warrants under this provision having a fair value of $187,142 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price. As a result of this transaction, the Company recorded $232,767 of debt discount consisting of the relative fair value of the warrants of $166,384 and a beneficial conversion feature of $66,384, which is being amortized to interest expense over the term of the note. During any time when the Note is outstanding, or when the Lender holds any Company stock, or any warrants to acquire Company stock where the combination of both could result in the Lender owning stock with a current value of one million dollars or greater, in the Company, the Lender will have certain review and consulting rights as described in the Note. As of March 31, 2018, the convertible note had a balance, net of $115,141 of debt discount, amounting to $1,384,859. | As of December 31, 2016, the $100,000 owed under convertible notes payable consisted only of the Pegasus note. As of December 31, 2017, the following summarizes amounts owed under convertible notes payable: Amount Discount Convertible Notes Payable, net of discount Pegasus Note $ 100,000 $ – $ 100,000 “Lender” Note 1,500,000 175,668 1,324,332 $ 1,600,000 $ 175,668 $ 1,424,332 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, 2016, and waived, through December 31, 2015, the requirement to pay down the note with financing proceeds received by the Company. As of December 31, 2017, the note is past due and had a balance of $100,000 with accrued and unpaid interest amounting to $80,164 which is included in accrued expenses (See Note 7). “Lender” Note On September 18, 2017, in addition to entering into a revolving convertible line of credit (See Note 9), the Company also entered into a secured convertible promissory note with an unaffiliated lender (the “Lender”). The Note bears simple interest at the floating rate per annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 400 basis points (the “Interest Rate”). The Interest Rate will be adjusted on the first day of each calendar month during the term of the Note to reflect any changes in the 12 month LIBOR rate as quoted at on that day, or if that day is not a business day, on the next business day thereafter. Interest will only accrue on outstanding principal. Accrued unpaid interest is payable monthly on the first calendar day of each month for interest accrued during the previous month, with all outstanding principal and accrued unpaid interest payable in full on or before September 17, 2018 to the extent not converted into shares of the Company’s common stock. The Note is secured by a perfected recorded first priority security interest in all of the Company’s assets, as set forth in a certain Security Agreement by and between the Company and the Lender, dated September 18, 2017. At any time until the Maturity Date, and provided Lender gives the Company written notice of Lender’s election to convert prior to any prepayment of this Note by the Company with respect to converting that portion of this Note covered by the prepayment, the Lender has the right to convert all or any portion of the outstanding principal and accrued interest (the “Conversion Amount”), into such number of fully paid and nonassessable shares of the Company’s common stock as is determined by dividing the Conversion Amount by the greater of (i) fifteen cents ($0.15) or (ii) 75% of the Volume Weighted Average Price of the Company’s common stock that is quoted on a public securities trading market (if more than one, the one with the then highest trading volume), during the five (5) consecutive trading days immediately prior to the date of the Lender’s written notice of its election to convert. As additional consideration for the loan evidenced by the Note, the Company agreed to issue to the Lender common stock purchase warrants exercisable for a period of three years from the date of issuance with an exercise price equal to $0.15 per share. The number of warrants issuable to the Lender is equal to 25% of the loan Amount divided by fifteen cents ($0.15). As of September 18, 2017, the Company issued 2,500,000 common stock purchase warrants under this provision having a value of $187,142 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price (See Note 15). As a result of this transaction, and including the value of the issued warrants, the Company recorded $232,767 of value of beneficial conversion features, which is recorded as debt discount on the accompanying balance sheet, and is being amortized to interest expense over the term of the note. During any time when the Note is outstanding, or when the Lender holds any Company stock, or any warrants to acquire Company stock where the combination of both could result in the Lender owning stock with a current value of one million dollars or greater, in the Company, the Lender will have certain review and consulting rights as described in the Note. |
12. NOTE PAYABLE AND AUTO LOAN
12. NOTE PAYABLE AND AUTO LOAN | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Notes Payable [Abstract] | ||
NOTE PAYABLE AND 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 March 31, 2018, the loan has a short-term portion of $10,057 and a long-term portion of $17,259. | 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. Through a series of amendments, the maturity date of the note was extended through June 30, 2016. There were no accounting effects for these amendments. In December 2017 the Company made a $40,000 settlement payment to pay off this note, and all accrued interest, in full. The Company recorded a gain on debt settlement of $25,352 related to this transaction. 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, 2017, the loan had a short-term portion of $9,862 and a long-term portion of $20,620. |
13. COMMITMENTS AND CONTINGENCI
13. COMMITMENTS AND CONTINGENCIES | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | 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 March 31, 2018, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations. Leases: In August 2016, the Company entered into a sublease for its current corporate headquarters and manufacturing facility. The sublease expires in August 2020 which is the same term of the master lease for which the Company is the subtenant. Monthly lease payments range from $46,800 per month currently increasing to $50,619 per month for the final year of the lease. Other Commitments: The Company enters into various contracts or agreements in the normal course of business whereby such contracts or agreements may contain commitments. Since inception, the Company entered into agreements to act as a reseller for certain vendors; joint development contracts with third parties; referral agreements where the Company would pay a referral fee to the referrer for business generated; 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 agree to cooperate and provide business opportunities to each other and in some instances, provide for a right of first refusal with respect to certain projects of the other parties; agreements with vendors where the vendor may provide marketing, investor relations, public relations, technical consulting or subcontractor services, vendor arrangements with non binding minimum purchasing provisions, and financial advisory agreements where the financial advisor would receive a fee and/or commission for 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, there are no firm commitments in such agreements. | Leases: In August 2016, the Company entered into a sublease for its current corporate headquarters and manufacturing facility. The sublease expires in August 2020 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 $146,091 deposit to the landlord which will be reduced in months nineteen and thirty-one of the sublease, as defined, in lieu of rent payments. At the end of the lease period, $50,619 of the deposit will remain as security for the surrender of the premises. Future annual minimum lease payments related to our facility lease are as follows: 2018 $ 522,288 2019 543,180 2020 404,952 Total $ 1,470,420 Administrative rent expense was $112,675 and $59,228 for the years ended December 31, 2017 and 2016, respectively. Further, for the years ended December 31, 2017 and 2016, respectively, $446,618 and $337,287 of rent was capitalized into inventory as manufacturing overhead costs. As of December 31, 2017, there are no other lease agreements with non-cancelable terms in excess of one year. 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, 2017, 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 2017 and 2016, the Company has agreements to act as a reseller for certain vendors; 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, 2017. 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. |
14. COMMON STOCK
14. COMMON STOCK | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Equity [Abstract] | ||
COMMON STOCK | Stock Issued in Cash Sales During the three months ended March 31, 2018 pursuant to a private placement, the Company issued 1,933,333 shares of common stock for cash with a per share price of $0.15 per share or $290,000 and the Company incurred $12,000 of capital raising fees that were paid in cash and charged to additional paid-in-capital. Additionally, the Company issued 273,333 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. (See Note 11) Director Compensation During the three month period ended March 31, 2018, the Company released a total of 187,500 vested shares of common stock with a per share fair value of $0.15, or $28,125 (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 13). As of March 31, 2018, there were unreleased shares of common stock representing $196,875 of unrecognized restricted stock grant expense related to these Restricted Stock Grant Agreements. Effective March 27, 2018, based on authorization initially approved by the Board of Directors on December 19, 2017, and confirmed by resolutions adopted by the Board on March 27, 2018, the Company granted a total of 750,000 shares of common stock with a per share value of $0.15 per share (based on contemporaneous cash sales prices), or $112,500, to three directors for performance of their duties. These shares are being issued from a pool of 750,000 shares of common stock for each director of previously authorized restricted stock grant awards for performance that are awarded if specific performance criteria are achieved or the Board authorizes their award and vesting by specific resolutions (See Note 12). | Shares Issued Issuances of the Company’s common stock during the years ended December 31, 2017 and 2016, respectively, are as follows: 2017 Stock Issued in Cash Sales During the year ended December 31, 2017 pursuant to private placements, the Company issued 15,633,327 shares of common stock for cash with a per share price of $0.15 per share or $2,345,000 and the Company incurred $53,600 of capital raising fees that were paid in cash and charged to additional paid-in capital. Additionally, as of December 31, 2017, related to the Company’s private placement, the company is obligated to issue 223,337 common stock purchase warrants to the placement agents. There will be no financial statement 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 recording the issuance of these warrants (see Note 15). Stock Issued for Loan Conversion During the year ended December 31, 2017, and effective as of February 15, 2017, the Company issued 4,698,060 shares of common stock at the contracted conversion price of $0.15 per share, or $704,709 effecting the conversion of the entire principal balance of the note amounting to $600,000 and accrued and unpaid interest, as of February 15, 2017, amounting to $104,709 (See Note 10). Stock Issued for Services During the year ended December 31, 2017, as payment for professional services provided, the Company issued 15,000 shares of the Company’s common stock with a per share fair value of $0.15 (based on contemporaneous cash sales prices) or $2,250. These shares were fully earned, and were expensed, upon issuance. 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, 2017, the Company issued 180,000 shares of the Company’s common stock with a per share fair value of $0.15 (based on contemporaneous cash sales prices) or $27,000. Jay Potter, our director, is the managing member of GreenCore and the individual performing the services. (See Note 17) Stock Issued for Director Services As of December 31, 2016, the board approved a modified compensation program, effective January 1, 2017, for all non-executive directors where each director would receive 750,000 restricted shares of common stock, pursuant to a restricted stock grant agreement (“New Program RSA”) with vesting 62,500 per quarter over a 36 month period commencing on March 31, 2017 or upon the date for which a new director is named, issuable on the last day of each calendar quarter so long as such director serves as a director of the Company at that time. Each director that had a previous agreement agreed to terminate their rights to any previously issued shares and cancel such previous agreements. As such, the Company granted 2,250,000 shares to directors on January 1, 2017 having a total value of $337,500. The Company intends to grant up to an additional 750,000 shares of its common stock to each director based on their achieving certain performance criteria to be agreed upon by the Board of Directors after discussion with senior management. During the year ended December 31, 2017, the Company released 750,000 shares of common stock with a per share fair value of $0.15, or $112,500 (based on the market price at the time of the agreements), to three directors for their service as defined in their respective restricted stock grant agreements. The payments were expensed at issuance (See Note 17 and 18). The total unrecognized restricted stock grant expense related to the Restricted Stock Agreements of our directors amounted to $225,000 at December 31, 2017. Stock Issued for Loan Guaranty During the year ended December 31, 2017, and in consideration for the continued Guaranty of the Company’s obligations extended under a now terminated line of credit, the Company issued 453,857 shares of its common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices) or $68,078 to Keshif Ventures LLC, a related party, pursuant to a stock purchase agreement. These shares were expensed to interest expense over the term of the Guaranty period. The Company recorded a gain on debt settlement of $172 related to this transaction. (See Notes 8 and 17) 2016 Stock Issued in Cash Sales During the year ended December 31, 2016 pursuant to private placements, the Company issued 12,133,333 shares of common stock for cash with a per share price of $0.15 per share or $1,820,000 and the Company incurred $68,800 of capital raising fees that were paid in cash and charged to additional paid-in capital. Stock Issued for Services For professional services provided per the terms of a consulting agreement with an investor relations consulting firm, the Company issued 1,000,000 shares of the Company’s common stock with a per share fair value of $0.15 per share (based on contemporaneous cash sales prices) or $150,000. These payments were expensed over the term of the agreement. As of December 31, 2016, $46,875 was recorded in prepaid expenses (See note 4) and expensed in 2017. 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, 2016, the Company issued 464,115 shares of the Company’s common stock with a per share fair value between $0.14 and $0.17 (based on an average market value of the stock when earned as defined in the agreement) or $69,603. The Company recorded a gain on debt settlement of $2,396 on these transactions. 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 February 12, 2016, the Board approved a compensation program for all non-executive directors that did 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. 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. Posawatz’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 grantee’s right to waive vesting and issuance on a quarterly basis. On September 8, 2016, Mr. Peter Davidson accepted an appointment as a new director of the Company effective September 8, 2016. In consideration for Mr. Davidson’s acceptance to serve as a director of the Company, the Company granted 750,000 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: 62,500 shares or prorate portion thereof per calendar quarter over a 36 month period commencing on September 30, 2016. The value of this stock grant is $0.15 per share (based on contemporaneous cash sales prices) or $112,500, and is being expensed proportionately as the shares vest. The Company intends to grant up to an additional 750,000 shares of its common stock to Mr. Davidson based on Mr. Davidson’s achieving certain performance criteria to be agreed upon by the Board of Directors after discussion with senior management at a future date. During the year ended December 31, 2016, the Company released 1,152,776 shares of common stock with a per share fair value of $0.15, or $172,916 (based on the market price at the time of the agreement), to five directors for their service as defined in their respective Restricted Stock Grant Agreements and as discussed above. 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 $337,500 at December 31, 2016. Stock Issued for Loan Guaranty -Related Party During the year ended December 31, 2016, and in consideration for the continued Guaranty of the Company’s obligations extended under a line of credit, the Company issued 147,493 shares of its common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices) or $22,123 to Keshif Ventures LLC, a related party, pursuant to a stock purchase agreement. These shares were expensed to interest expense over the term of the Guaranty period. The Company recorded a gain on debt settlement of $2,877 related to this transaction. (See Notes 8 and 17) |
15. STOCK OPTIONS AND WARRANTS
15. STOCK OPTIONS AND WARRANTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
STOCK OPTIONS AND WARRANTS | Stock Options There were no stock options issued during the three months ended March 31, 2018. During the three months ended March 31, 2018, the Company recorded stock option based compensation of $4,342 related to prior grants. As of March 31, 2018, there is $29,187 of unrecognized stock option based compensation expense that will be recognized over the next two years. Warrants As a part of the Company’s private placement, the Company effectively issued 273,333 warrants during the three months ended March 31, 2018 to the placement agents. These warrants, valued at $26,206, are exercisable for 5 years at an exercise price of $0.15 per share. The Company estimated the fair value of the warrants utilizing the Black-Scholes pricing model. The assumptions used in the valuation of these warrants include volatility of 79.39%, expected dividends of 0.0%, a discount rate of 1.50%, and expected term of 5 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 (See Note 10). In connection with a Draw Down of a convertible line of credit, as of February 20, 2018, the Company issued 407,784 common stock purchase warrants with a total value of $61,282 and each with a $0.15 exercise price and 3 year term. The Company estimated the fair value of the warrants utilizing the Black-Scholes pricing model. The assumptions used in the valuation of these warrants include volatility of 82.55%, expected dividends of 0.0%, a discount rate of 1.50%, and expected term of 3 years. (See Note 5). | 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 31,500,000 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 $220,084 and $442,871 for the years ended December 31, 2017 and 2016, respectively, and there was $33,529 of total unrecognized compensation cost related to unvested options granted under the Company’s options plans as of December 31, 2017. This stock option expense will be recognized through March 2020. 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, 2016 through December 31, 2016, the Company issued 5,380,000 stock options under the plans with a total valuation of $622,109. Of these stock options, 200,000 have a 5 year term while the remaining 5,180,000 have a 10 year term. From January 1, 2017 through December 31, 2017, the Company issued 645,000 stock options under the plans with a total valuation of $61,632. All of these options have a 10 year term. We used the following assumptions for options granted in fiscal 2017 and 2016: 2017 2016 Expected volatility 81.05% 103.59% -114.93% Expected term 5 Years 2.5-6.5 Years Risk-free interest rate 0.15% 0.16% -0.50% 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, 2017 and 2016 under the 2008 and 2011 Plans are as follows: Number of Options Weighted Average Exercise Price Outstanding at December 31, 2015 15,337,007 $ 0.28 Granted 5,380,000 0.15 Exercised – – Forfeited (800,000 ) 0.19 Expired – – Outstanding at December 31, 2016 19,917,007 $ 0.25 Granted 645,000 0.16 Exercised – – Forfeited (1,095,000 ) 0.19 Expired (4,250,343 ) 0.33 Outstanding at December 31, 2017 15,216,664 $ 0.23 Exercisable at December 31, 2017 13,479,165 $ 0.24 Weighted average grant date fair value $ 0.10 The following table summarizes information about employee stock options outstanding at December 31, 2017: Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding at Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Weighted Average Exercise Price Aggregate Intrinsic Value $ 0.13-1.31 15,216,664 5.45 Years $ 0.23 $ – 13,479,165 $ 0.24 $ – 15,216,664 5.45 Years $ 0.23 $ – 13,479,165 $ 0.24 $ – As the Company’s stock price was lower than the weighted average exercise price at December 31, 2017, there is no aggregate intrinsic value of the options. Options exercisable have a weighted average remaining contractual life of 5.02 years as of December 31, 2017. Warrants 2017 During the year ended December 31, 2017 as a result of Draw Downs on our Convertible Line of Credit with Lender, the Company issued 1,916,667 common stock purchase warrants having a value of $179,612 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price and three year term (See Note 9). The assumptions used in the valuation of these warrants include volatility of 83.67-85.78, expected dividends of 0.0%, a discount rate of 1.50%, and expected term of 3 years. As of December 31, 2017, related to the Company’s private placement, the company is obligated to issue 223,337 common stock purchase warrants to the placement agents. There will be no financial statement 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 recording the issuance of these warrants. During the twelve months ended December 31, 2017, 26,831,589 warrants had expired. 2016 During the twelve months ended December 31, 2016, 1,314,286 warrants had expired. Warrant activity for the years ended December 31, 2017 and 2016 are as follows: Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2015 29,219,441 $ 0.18 Granted 291,667 0.15 Exercised – – Forfeited – – Expired (1,314,286 ) 0.33 Outstanding at December 31, 2016 28,196,822 $ 0.17 Granted 4,416,667 $ 0.15 Exercised – – Forfeited – – Expired (26,831,589 ) 0.16 Outstanding at December 31, 2017 5,781,900 $ 0.17 Exercisable at December 31, 2017 5,781,900 $ 0.17 Weighted average grant date fair value $ 0.08 Warrants exercisable have a weighted average remaining contractual life of 2.46 years as of December 31, 2017. |
16. INCOME TAXES
16. INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | There was no Federal income tax expense for the years ended December 31, 2017 and 2016 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, 2017 2016 Computed “expected” tax expense (benefit) $ (1,034,086 ) $ (895,395 ) State taxes, net of federal benefit (171,202 ) (154,764 ) Goodwill impairment and other non-deductible items 643,016 (31,134 ) Change in federal tax rates 4,145,380 – Change in deferred tax asset valuation allowance (3,583,108 ) 1,081,293 Income tax expense $ – $ – 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: 2017 2016 Deferred tax assets: Charitable contributions $ 2,900 $ 4,128 Reserve for bad debt 17,948 25,548 Stock options 3,416,792 4,776,104 Depreciation 6,920 33,638 Other 17,674 25,159 Net operating loss carryforward 6,957,507 9,167,042 Total gross deferred tax assets 10,419,741 14,031,619 Less: Deferred tax asset valuation allowance (10,351,807 ) (13,934,915 ) Total net deferred tax assets 67,934 96,704 Deferred tax liabilities: Accrued salaries (67,934 ) (96,704 ) Total deferred tax liabilities (67,934 ) (96,704 ) Total net deferred taxes $ – $ – As a result of the Company’s history of incurring operating losses, a full valuation allowance has been established. The valuation allowance at December 31, 2017 was $10,351,807. The decrease in the valuation allowance during 2017 was $3,583,108. At December 31, 2017, the Company has a net operating loss carry forward of $24,862,803 available to offset future net income through 2037. The NOL expires during the years 2017 to 2037. 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. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (Act). The Act makes significant modifications to the provisions of the Internal Revenue Code, including but not limited to, a corporate tax rate decrease to 21% effective as of January 1, 2018. The Company’s net deferred tax assets and liabilities have been revalued at the newly enacted U.S. Corporate rate in the year of enactment. The adjustment related to the revaluation of the deferred tax asset and liability balances is a net charge of approximately $4.1 million. This expense is fully offset by a change in valuation allowance. Accordingly, there is no impact on income tax expense as of December 31, 2017. |
12. REVENUES
12. REVENUES | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
REVENUES | For each of the identified periods, revenues can be categorized into the following: For the three months ended March 31 2018 2017 Product Sales $ 2,868,630 $ 367,089 Maintenance Fees 5,448 3,600 Professional Services 1,894 – Total Revenues $ 2,875,972 $ 370,689 At March 31, 2018 and December 31, 2017, deferred revenue amounted to $55,649 and $77,514 respectively. At March 31, 2018, the Company has received an initial deposit to plan and manufacture two Solar Tree® units in addition to deposits for multi-year maintenance plans for previously sold products. As of March 31, 2018, deferred revenue associated with product deposits are $26,304 and the delivery of such products are expected within the following six months, while deferred maintenance fees amounted to $29,344 and pertain to services to be provided through the fourth quarter of 2021. |
17. RELATED PARTY TRANSACTIONS
17. RELATED PARTY TRANSACTIONS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | During the three months ended March 31, 2018, the Company released a total of 937,500 shares of common stock with a total value of $140,625, to three directors. These payments were expensed at issuance (See Note 10). 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, 2017. During the three months ended March 31, 2018, in lieu of interest payments, the Company made principal payments on this note amounting to $3,000. As of March 31, 2018, the note is past due and has a balance of $59,616 with accrued and unpaid interest amounting to $64,222 (See Notes 4, and 6). Although as of December 31, 2016 Mr. Evey is no longer a director, because he was our Chairman and a prior related party, we have continued to classify this note as a Convertible note payable - related parties in the accompanying balance sheet. On October 18, 2016, the Company entered into a five year employment agreement, effective as of January 1, 2016, with Mr. Desmond Wheatley, the Chief Executive Officer, President, and Chairman of the Company (the “Agreement”). Pursuant to the Agreement, Mr. Wheatley will receive an annual deferred salary of $50,000 which Mr. Wheatley will defer until such time as Mr. Wheatley and the Board of Directors agree that payment of the deferred salary and/or cessation of the deferral is appropriate. Additionally, on March 29, 2017 the board of directors granted Mr. Wheatley a $35,000 bonus for which Mr. Wheatley agreed to defer such bonus under the same terms of his salary deferral. All deferred amounts are evidenced by an unsecured convertible promissory note payable by the Company to Mr. Wheatley. The balance of the note as of March 31, 2018, is $147,500 with accrued and unpaid interest amounting to $15,769 which is included in accrued expenses (See Notes 4 and 6). | Accounts Payable and Related Party Vendor Payments During the year ended December 31, 2016, the Company made cash payments totaling $69,500, and issued 464,115 shares of the Company’s common stock with a total value of $69,603 to GreenCore for professional services provided to the Company as detailed in a March 28, 2014 consulting agreement. Additionally, as of December 31, 2016, the Company had an accounts payable balance of $27,000 owed to Greencore. During the year ended December 31, 2017, the Company made cash payments totaling $54,000, and issued 180,000 shares of the Company’s common stock with a total value of $27,000 to GreenCore under this same agreement. There were no balances owed to GreenCore as of December 31, 2017. Jay Potter, our director, is the managing member of GreenCore (See Note 14). 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, vested 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. During the year ended December 31, 2016, the Company released 1,152,776 shares of common stock with a per share fair value of $0.15, or $172,916 (based on the market price at the time of the agreement), to five directors for their service as defined in their respective Restricted Stock Grant Agreements. The payments were expensed at issuance (See Note 14). On or about December 31, 2016, Mr. Jay S. Potter, Mr. Tony Posawatz, and Mr. Peter Davidson, all directors of the Company, each entered into an Amendment to their Restricted Stock Agreement with the Company (each an “Amendment”). Pursuant to their Amendments, each director agreed to terminate his rights to unvested restricted shares of the Company’s common stock under their previous respective Restricted Stock Agreements, in consideration for which the Company granted to each director 750,000 restricted shares of the Company’s common stock, vesting 1/36 per month over a 36 month period commencing on the date of grant, issuable quarterly on the last day of each calendar quarter (the first vesting is scheduled to occur on January 31, 2017 and be for 20,833 shares and the first issuance is scheduled to occur on March 31, 2017 and be for 62,499 shares) so long as each director serves as a director, employee, consultant or officer of the Company at the time of scheduled vesting. The Company will also grant an additional 750,000 restricted shares of the Company’s common stock to each director to vest in the future from time to time, based on their achieving certain performance criteria to be agreed upon by the Board of Directors after discussion with senior management at a future date. During the year ended December 31, 2017, the Company released 750,000 shares of common stock with a per share fair value of $0.15, or $112,500 (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 and 18). Stock Issued for Loan Guaranty and Cash Sales During the year ended December 31, 2017, and in consideration for the continued Guaranty of the Company’s obligations extended under a now terminated line of credit, the Company issued 453,857 shares of its common stock, with a per share value of $0.15 (based on contemporaneous cash sales prices) or $68,078 to Keshif Ventures LLC, a related party, pursuant to a stock purchase agreement. These shares were expensed to interest expense over the term of the Guaranty period (See Notes 8 and Note 14). Additionally, during the year ended December 31, 2017, pursuant to a private placement, the Company issued 1,333,333 shares of common stock for cash, with a per share price of $0.15 per share or $200,000 to Keshif. During the year ended December 31, 2016, and in consideration for the continuing Guaranty of the Company’s obligations extended under a line of credit, the Company issued 147,493 shares of its common stock or $22,123 to Keshif Ventures LLC pursuant to a stock purchase agreement. Additionally, during the year ended December 31, 2016, pursuant to a private placement, the Company issued 3,333,333 shares of common stock for cash, with a per share price of $0.15 per share or $500,000 to Keshif. 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, 2017. During each of the fiscal years ended December 31, 2017 and 2016, respectively, 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, 2017 is $62,616 with accrued and unpaid interest amounting to $61,242 (See Note 10). Although Mr. Evey is no longer a director as of December 31, 2016, because he was our Chairman and a related party throughout most of 2016, we have continued to classify this note as a Convertible note payable - related parties in the accompanying balance sheet. In June 2015, Gemini Master Fund Ltd sold a 70.0066819% stake in its’ note to Robert Noble, our former Chairman and former 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. Effective January 20, 2016, Mr. Noble entered into a Purchase Option Agreement with a firm affiliated with Jay S. Potter, a director of the Company (the “Optionee”), pursuant to which the Optionee has the right to purchase or arrange for the purchase of the Note from Mr. Noble and all of Mr. Noble’s shares in the Company (the “Option”), at any time until March 31, 2016. This date was subsequently extended. The Company consented to the Purchase Option Agreement. Under a Note Settlement and General Release Agreement, provided that the Option is fully exercised and honored, the Company agreed to grant Mr. Noble the right to acquire, for one dollar, at any time until June 30, 2017, a worldwide, perpetual, irrevocable, nonexclusive, royalty-free license to utilize all of the Company intellectual property developed prior to January 1, 2011, except for the following: (i) EV ARC™ and (ii) EnvisionTrak™. Further, provided the Option was exercised in full and Mr. Noble complied with it, the Company would extend the expiration date of the 1,138,120 warrants to purchase 1,138,120 shares of the Company’s common stock owned by Mr. Noble (the “Warrants”) from December 31, 2016 to December 31, 2017, and will reduce the exercise price of such Warrants from $0.24 to $0.20 per share. During the fourth quarter of 2016, the Company was notified that a transaction, or series of transactions, arranged by GreenCore, had officially closed whereas the convertible note and the “Noble” shares were ultimately obtained by a group of various shareholders, some of which are related parties to the Company. As the note was partially held by a related party shareholder at the end of 2016 and was held by other related party shareholders during its existence, the note was classified as Convertible Notes Payable- Related Parties in the accompanying balance sheets. Effective as of February 15, 2017, the Company received conversion notices from all the current note holders effecting the conversion of the entire principal balance of the note amounting to $600,000 and accrued and unpaid interest, as of February 15, 2017, amounting to $104,709. The Company issued 4,698,060 shares of common stock at the contracted conversion price of $0.15 per share, to retire the entirety of this convertible note. Of these shares, 2,315,940 shares were issued to Keshif Ventures, LLC. (See Notes 10 and 14) |
18. SUBSEQUENT EVENTS
18. SUBSEQUENT EVENTS | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENTS | Subsequent to March 31, 2018, the Company paid down its outstanding borrowing under its Convertible Line of Credit with the Lender amounting to $290,000 (See Note 5). | Line of Credit Drawdown On February 20, 2018, the Company received funds for a Draw Down on our Convertible Line of Credit in the amount of $290,000. As a result of this Draw Down, the Company issued 407,784 common stock purchase warrants having a value of $61,282 using the Black-Scholes valuation methodology, and each with a $0.1778 exercise price (See Note 9). As a result of this transaction, and including the value of the issued warrants, the Company recorded $212,420 of value of beneficial conversion features, which is recorded as debt discount, and is being amortized to interest expense over the term of the loan. Stock and Warrants Issued in Cash Sales Subsequent to December 31, 2017 pursuant to private placements, the Company issued 1,933,333 shares of common stock for cash with a per share price of $0.15 per share or $290,000 and the Company incurred $12,000 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 50,000 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 Effective March 27, 2018, based on authorization initially approved by the Board of Directors on December 19, 2017, and confirmed by resolutions adopted by the Board on March 27, 2018, the Company granted 250,000 shares of common stock with a per share value of $0.15 per share (based on contemporaneous cash sales prices), or $37,500, to each of three directors for excellent performance of their duties. These shares are being issued from a pool of 750,000 shares of common stock for each director of previously authorized restricted stock grant awards for performance that are awarded if specific performance criteria are achieved or the Board authorizes their award and vesting by specific resolutions (see Note 14 and 17). |
CORPORATE ORGANIZATION, NATURE
CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Corporate Organization Nature Of Operations And Summary Of Significant Accounting Policies Policies | ||
CORPORATE ORGANIZATION | CORPORATE ORGANIZATION Envision Solar was incorporated in June 2006 as a limited liability company (“LLC”). Through a series of transactions and mergers, including a series of 2010 transactions where the then existing entity was acquired by an inactive publicly-held company in a transaction treated as a recapitalization of the company, the resulting entity became Envision Solar International, Inc., a Nevada Corporation (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. Additionally, the Company had formed various wholly owned subsidiaries to account for its planned future operations, but these entities were dissolved over the subsequent years. The only remaining subsidiary included in these consolidated financial statements is Envision Solar Construction Company, Inc. which was a non-operational entity officially dissolved in 2017. | |
NATURE OF OPERATIONS | Envision Solar International Inc. (along with its subsidiary, hereinafter the “Company”, “us”, “we”, “our” or “Envision”), a Nevada corporation, invents, designs, and manufactures solar powered products and proprietary technology solutions targeting three verticals: electric vehicle charging infrastructure, out of home advertising infrastructure, and energy security and disaster preparedness. The Company focuses on creating renewably energized platforms for electric vehicle (“EV”) charging, media and branding, and energy security which management believes are attractive, rapidly deployed, and of the highest quality. Management believes that the Company’s chief differentiator is its ability to invent, design, engineer, and manufacture solar products which are a complex integration of our own proprietary technology and other commonly available engineered components. The resulting products are built to have the longest life expectancy in the industry while also delivering valuable amenities and potentially highly attractive revenue opportunities for our customers. Management believes that Envision’s products deliver multiple layers of value such as: impact free renewably energized EV charging; media, branding, and advertising platforms; sustainable and secure energy production; architectural enhancement; reduced carbon footprint; 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. | NATURE OF OPERATIONS Envision invents, designs, and manufactures solar powered products and proprietary technology solutions targeting three verticals: electric vehicle charging infrastructure, out of home advertising infrastructure, and energy security and disaster preparedness. The Company focuses on creating renewably energized platforms for EV charging, media and branding, and energy security which are attractively designed, rapidly deployable, and of the highest quality. Management believes that the Company’s chief differentiator is its ability to invent, design, engineer, and manufacture solar products which are a complex integration of our own proprietary technology and other commonly available engineered components. The resulting products are built to have the longest life expectancy in the industry while also delivering valuable amenities and potentially highly attractive revenue opportunities for our customers. Management believes that Envision’s products deliver multiple layers of value such as: impact free renewably energized EV charging; media, branding, and advertising platforms; sustainable and secure energy production; architectural enhancement; reduced carbon footprint; 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. |
Basis of Presentation | The interim unaudited condensed consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the CompanyÂ’s management, all adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) necessary to present fairly our results of operations and cash flows for the three months ended March 31, 2018 and 2017, and our financial position as of March 31, 2018, have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year. Certain information and disclosures normally included in the notes to the annual consolidated financial statements have been condensed or omitted from these interim financial statements. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2017. The December 31, 2017 consolidated balance sheet is derived from those statements. | |
PRINCIPALS OF CONSOLIDATION | The unaudited condensed 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. | 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 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 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 unaudited condensed consolidated financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment, 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. | 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 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 Financial instruments that potentially subject us to concentrations of credit risk consist of cash and revenues. The Company maintains its cash in banks and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts from inception through March 31, 2018. As of March 31, 2018, there were no amounts greater than the federally insured limits. Concentration of Accounts Receivable As of March 31, 2018, customers that each represented more than 10% of the Company’s net accounts receivable balance were as follows: Customer A 48% Customer B 24% As of December 31, 2017, there was a single customer that represented 94% of the Company’s net accounts receivable balance. Concentration of Revenues For the three months ended March 31, 2018, customers that each represented more than 10% of our net revenues were as follows: Customer A 69% Customer B 15% For the three months ended March 31, 2017, customers that each represented more than 10% of our net revenues were as follows: Customer C 39% Customer D 24% Customer E 17% Customer F 13% | 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, 2017. The Company had approximately $150,000 of bank balances in excess of FDIC insured levels as of December 31, 2017 and no such amounts as of December 31, 2016. Concentration of Accounts Receivable At December 31, 2017 and 2016, customers that each accounted for more than 10% of our accounts receivable were as follows: 2017 2016 Customer 1 94% – Customer 2 – 71% Customer 3 – 25% Concentration of Revenues For the years ended December 31, 2017 and 2016, customers that each represented more than 10% of our revenues were as follows: 2017 2016 Customer A 28% – Customer B 12% 14% Customer C – 26% Customer D – 30% |
CASH AND CASH EQUIVALENTS | For the purposes of the unaudited condensed 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 no cash equivalents at March 31, 2018 and December 31, 2017 respectively. | 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 no cash equivalents at December 31, 2017 and December 31, 2016, respectively. |
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 March 31, 2018, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these 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, 2017 and 2016, 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 net realizable value. 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 annual 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 | The company believes it is in a position to achieve future economic value benefits 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 or abandoned, all accumulated administrative costs will be expensed in the period in which the patent was denied or abandoned. Patent amortization expense was $140 in each of the three-month periods ended March 31, 2018 and 2017. | PATENTS 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. For the years ended December 31, 2017 and 2016 respectively, patent amortization expense was $561 and $561. |
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 | 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 of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on extinguishment. 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. | 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 of a note where the embedded conversion option has been bifurcated and accounted for as a derivative liability, the Company records the shares at fair value, relieves all related notes, derivatives and debt discounts and recognizes a net gain or loss on extinguishment. 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 | As of January 1, 2018, Envision adopted the revenue standards of Financial Accounting Standards Board Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606). The core principle of this Topic is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Revenue is recognized in accordance with that core principle by applying the following five steps: 1) identify the contracts with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as) we satisfy a performance obligation Revenues are primarily derived from the direct sales of manufactured products. Revenues may also consist of maintenance fees for the maintenance of previously sold products, and revenues from sales of professional services. Revenues from inventoried product sales are recognized upon the final delivery of such product to the customer or when legal transfer of ownership takes place. Revenue values are fixed price arrangements determined at the time an order is placed or a contract is entered into. The customer is typically obligated to make payment for such products within a 15-45 day period after delivery. Revenues from maintenance fees are recognized equally over the period of the maintenance term. Revenue values are fixed price arrangements determined at the time an order is placed or a contract is entered into. The customer is typically obligated to make payment for the service in advance of the maintenance period. Revenues from professional services are recognized as services are performed. Revenue values are based upon fixed fee arrangements or hourly fee-based arrangements with agreed to hourly rates of service categories in line with expertise requirements. These services are billed to a customer as such services are provided and the customer will be obligated to make payments for such services typically within a 15-45 day period. Any deposits received from a customer prior to delivery of the purchased product or monies paid prior to the period for which a service is provided are accounted for as deferred revenue on the balance sheet. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. Sales tax is recorded on a net basis and excluded from revenue. The Company generally provides a standard one year warranty on its products for materials and workmanship but will pass on the warranties from its vendors, if any, which generally cover at least such 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 March 31, 2018, the Company has no product warranty accrual given the Company’s de minimis historical financial warranty experience. | REVENUE AND COST RECOGNITION Revenues are primarily derived from the direct sales of products. Revenues may also consist of maintenance fees for previously sold products, design fees for the design of solar systems and arrays, and revenues from sales of professional services. Revenues from leases, maintenance fees, 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 or when legal transfer of ownership takes place. Any deposits received from a customer prior to such delivery are accounted for as deferred revenue on the balance sheet. At December 31, 2017 and December 31, 2016, deferred revenue amounted to $77,514 and $75,323 respectively. At December 31, 2017, the Company has received partial deposits for two undelivered Solar Tree® units, an undelivered EVARC® unit and a multi-year maintenance contract. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. Sales tax is recorded on a net basis and excluded from revenue. 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, 2017, the Company has no product warranty accrual given the Company’s de minimis historical financial 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, not including the minimal amounts of labor associated with research and development projects, of $1,772 for the year ending December 31, 2017 and $3,459 for the year ending December 31, 2016. | |
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 $81,278 in 2017 and $58,149 in 2016. | |
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. | 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 net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common share is computed using 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 notes payable that are convertible into 9,067,752 common shares, options to purchase 15,216,664 common shares and warrants to purchase 6,463,017 common shares were outstanding at March 31, 2018. These shares were not included in the computation of diluted loss per share for the three months ended March 31, 2018 because the effects would have been anti-dilutive. These options and warrants may dilute future earnings per 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 19,846,181 common shares, options to purchase 15,216,664 common shares and warrants to purchase 5,781,900 common shares were outstanding at December 31, 2017. Convertible debt convertible into 6,123,370 common shares, options to purchase 19,917,007 common shares and warrants to purchase 28,196,822 common shares were outstanding at December 31, 2016. Dilutive common stock equivalents were not included in the computation of diluted net loss per share in 2017 and 2016 because the effects would have been anti-dilutive due to the net losses. Due to the net losses in 2017 and 2016, 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 | The Company follows ASC 280-10 for, "Disclosures about Segments of an Enterprise and Related Information." During 2018 and 2017, the Company only operated in one segment; therefore, segment information has not been presented. | SEGMENTS The Company follows the guidance of ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information." During 2017 and 2016, the Company only operated in one segment; therefore, segment information has not been presented. |
RECENT ACCOUNTING PRONOUNCEMENTS | ASU 2018-05 In March 2018, the Financial Accounting Standards Board issued Accounting Standards Update No. 2018-05: "Income Taxes (Topic 805)” ASU 2016-02 In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees will need to recognize almost all leases on their balance sheet as a right of use asset and a lease liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company expects this ASU will increase its current assets and current liabilities but have no net material impact on its consolidated financial statements. ASU 2017-05 In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-05: "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” - ASU 2016-15 In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2014-09 In May 2014, the Financial Accounting Standards Board issued Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” which requires that an entity recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; ii) clarify the guidance relating to performance obligations and licensing; iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transaction; and iv) clarify narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue recognition standard, amended by the updates, becomes effective in the first quarter of 2018 and is to be applied retrospectively using one of two prescribed methods. The Company has adopted the new standard effective January 1, 2018 and the adoption of this standard did not have any impact on the amount or timing of its revenues. | RECENT ACCOUNTING PRONOUNCEMENTS There are no new accounting pronouncements that became effective during the year ended December 31, 2017 that materially 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, 2017, including the pronouncements discussed below, disclose the potential effects on the Company’s consolidated financial position and/or results of its’ operations and financial statement disclosures. ASU 2017-05 In February 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-05: "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)” - ASU 2017-08 In March 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-08: “Receivables – Non-Refundable fees and Other Costs (Subtopic 310-20)” to amend the amortization period for certain purchased callable debt securities held at a premium. The Board is shortening the amortization period for the premium to the earliest call date. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company does not expect this ASU to have a material impact on its consolidated financial statements. ASU 2016-15 In August 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-02 In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-02: “Leases (Topic 842)” whereby lessees will need to recognize almost all leases on their balance sheet as a right of use asset and a lease liability. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company expects this ASU will increase its current assets and current liabilities, but have no net material impact on its consolidated financial statements. ASU 2016-09 In March 2016, the Financial Accounting Standards Board issued Accounting Standards Update No. 2016-09: "Compensation – Stock Compensation (Topic 718) - I ASU 2014-09 In May 2014, the Financial Accounting Standards Board issued Update No. 2014-09: “Revenue from Contracts with Customers (Topic 606)” which requires that an entity recognize revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Since the issuance of the original standard, the FASB has issued several updates to the standard which i) clarify the application of the principal versus agent guidance; ii) clarify the guidance relating to performance obligations and licensing; iii) clarify assessment of the collectability criterion, presentation of sales taxes, measurement date for non-cash consideration and completed contracts at transaction; and iv) clarify narrow aspects of ASC 606 or corrects unintended application of the guidance. The new revenue recognition standard, amended by the updates, becomes effective in the first quarter of 2018 and is to be applied retrospectively using one of two prescribed methods. Early adoption is permitted. The Company currently plans to adopt the new standard effective January 1, 2018 and does not believe the adoption of this standard will have any impact on the amount or timing of its revenues. ASU 2015-17 In November 2015, the FASB issued ASU No. 2015-17, “ Balance Sheet Classification of Deferred Taxes ASU 2014-15 In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Topic 205-40)”, which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard was effective for the Company for its annual period beginning December 31, 2016. The Company has reflected the related disclosure requirements associated with the standard in Note 2. |
CORPORATE ORGANIZATION, NATUR28
CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Corporate Organization Nature Of Operations And Summary Of Significant Accounting Policies Table | ||
Concentration of Credit Risk | Concentration of Accounts Receivable As of March 31, 2018, customers that each represented more than 10% of the Company’s net accounts receivable balance were as follows: Customer A 48% Customer B 24% As of December 31, 2017, there was a single customer that represented 94% of the Company’s net accounts receivable balance. Concentration of Revenues For the three months ended March 31, 2018, customers that each represented more than 10% of our net revenues were as follows: Customer A 69% Customer B 15% | Concentration of Accounts Receivable At December 31, 2017 and 2016, customers that each accounted for more than 10% of our accounts receivable were as follows: 2017 2016 Customer 1 94% – Customer 2 – 71% Customer 3 – 25% Concentration of Revenues For the years ended December 31, 2017 and 2016, customers that each represented more than 10% of our revenues were as follows: 2017 2016 Customer A 28% – Customer B 12% 14% Customer C – 26% Customer D – 30% |
ACCOUNTS RECEIVABLE, AND DEFERR
ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Accounts Receivable And Deferred Revenue Table | |
Accounts receivable | December 31, 2017 December 31, 2016 Accounts receivable $ 5,946 $ 1,161,064 Less: Allowance for doubtful accounts – – Accounts receivable, Net $ 5,946 $ 1,161,064 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Prepaid Expenses And Other Current Assets Table | |
Prepaid expenses and other current assets | December 31, 2017 December 31, 2016 Prepaid insurance $ 25,402 $ 26,124 Deposit on future raw materials 30,272 21,168 Prepaid services – 46,875 Total prepaid expenses and other current assets $ 55,674 $ 94,167 |
INVENTORY (Table)
INVENTORY (Table) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Inventory Table | ||
Schedule of Inventory | March 31, December 31, 2018 2017 Finished Goods $ 121,616 $ 1,716,141 Work in Process 275,506 311,481 Raw Materials 149,904 300,479 Inventory Allowance (8,601 ) (8,601 ) Total Inventory $ 538,425 $ 2,319,500 | December 31, 2017 December 31, 2016 Finished goods $ 1,716,141 $ 22,375 Work in process 311,481 164,915 Raw materials 300,479 93,113 Inventory reserve (8,601 ) (8,601 ) Inventory, net $ 2,319,500 $ 271,802 |
PROPERTY AND EQUIPMENT (Table)
PROPERTY AND EQUIPMENT (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment Table | |
Property and equipment | Est. Useful December 31, December 31, Computer equipment and software 5 years $ 32,666 $ 28,344 Furniture and fixtures 7 years 82,529 82,529 Office equipment 5 years 20,533 20,533 Machinery and equipment 1-5 years 341,583 322,010 Autos 3 years 49,238 49,238 Leasehold improvements 47 months 6,790 6,790 Total property and equipment 533,339 509,444 Less accumulated depreciation (307,227 ) (216,403 ) Property and Equipment, Net $ 226,112 $ 293,041 |
ACCRUED EXPENSES (Table)
ACCRUED EXPENSES (Table) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Accrued Expenses Table | ||
Accrued expense schedule | March 31, December 31, Accrued vacation $ 146,622 $ 152,051 Accrued interest 162,783 175,953 Accrued rent 76,332 77,164 Accrued loss contingency – 44,423 Other accrued expense 51,038 2,333 Total accrued expenses $ 436,775 $ 451,924 | December 31, 2017 December 31, 2016 Accrued vacation $ 152,051 $ 136,410 Accrued interest 175,953 235,776 Accrued loan guaranty – 8,333 Accrued rent 77,164 26,091 Accrued commissions – 18,828 Accrued loss contingency 44,423 – Other accrued expense 2,333 4,995 Total accrued expenses $ 451,924 $ 430,433 |
CONVERTIBLE NOTES PAYABLE _ REL
CONVERTIBLE NOTES PAYABLE – RELATED PARTIES AND FAIR VALUE MEASUREMENTS (Table) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Convertible Notes Payable Related Parties And Fair Value Measurements Table | ||
Short Term Convertible Debt | Amount Evey Note $ 59,616 Wheatley Note 147,500 $ 207,116 | December 31, December 31, 2017 2016 Evey Note $ 62,616 $ 74,616 Wheatley Note 135,000 50,000 Gemini Master Fund – Third Amended and Restated Secured Bridge Note – Current Group – 600,000 $ 197,616 $ 724,616 |
Assets and liabilities measured at fair value on a recurring and non-recurring basis | Carrying Value at Fair Value Measurements at December 31, 2016 December 31, 2016 (Level 1) (Level 2) (Level 3) Embedded Conversion Option Liability $ 107,081 $ – $ – $ 107,081 | |
Summary of activity of Level 3 liabilities | Balance at December 31, 2015 $ 87,992 Change in fair value 19,089 Balance at December 31, 2016 $ 107,081 Gain on debt extinguishment (107,081 ) Balance at December 31, 2017 $ – | |
Assumptions the Company utilized to estimate the fair value of the embedded conversion option | Assumptions December 31, 2016 Expected remaining term 0.25 Expected Volatility 103% Risk free rate 0.50% Dividend Yield 0.00% |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Table) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Convertible Notes Payable Table | ||
Convertible notes payable summary | Convertible Notes Payable, Amount Discount net of discount Pegasus Note $ 100,000 $ – $ 100,000 “Lender” Note 1,500,000 115,141 1,384,859 $ 1,600,000 $ 115,141 $ 1,484,859 | Amount Discount Convertible Notes Payable, net of discount Pegasus Note $ 100,000 $ – $ 100,000 “Lender” Note 1,500,000 175,668 1,324,332 $ 1,600,000 $ 175,668 $ 1,424,332 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Table | |
Annual minimum lease payments | 2018 $ 522,288 2019 543,180 2020 404,952 Total $ 1,470,420 |
STOCK OPTIONS AND WARRANTS (Tab
STOCK OPTIONS AND WARRANTS (Table) | 12 Months Ended |
Dec. 31, 2017 | |
Stock Options And Warrants Table | |
Assumptions for options granted | 2017 2016 Expected volatility 81.05% 103.59% -114.93% Expected term 5 Years 2.5-6.5 Years Risk-free interest rate 0.15% 0.16% -0.50% Expected dividend yield None None |
Rollforward of option activity | Number of Options Weighted Average Exercise Price Outstanding at December 31, 2015 15,337,007 $ 0.28 Granted 5,380,000 0.15 Exercised – – Forfeited (800,000 ) 0.19 Expired – – Outstanding at December 31, 2016 19,917,007 $ 0.25 Granted 645,000 0.16 Exercised – – Forfeited (1,095,000 ) 0.19 Expired (4,250,343 ) 0.33 Outstanding at December 31, 2017 15,216,664 $ 0.23 Exercisable at December 31, 2017 13,479,165 $ 0.24 Weighted average grant date fair value $ 0.10 |
Stock options information by exercise price | Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding at Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Weighted Average Exercise Price Aggregate Intrinsic Value $ 0.13-1.31 15,216,664 5.45 Years $ 0.23 $ – 13,479,165 $ 0.24 $ – 15,216,664 5.45 Years $ 0.23 $ – 13,479,165 $ 0.24 $ – |
Warrant activity | Number of Warrants Weighted Average Exercise Price Outstanding at December 31, 2015 29,219,441 $ 0.18 Granted 291,667 0.15 Exercised – – Forfeited – – Expired (1,314,286 ) 0.33 Outstanding at December 31, 2016 28,196,822 $ 0.17 Granted 4,416,667 $ 0.15 Exercised – – Forfeited – – Expired (26,831,589 ) 0.16 Outstanding at December 31, 2017 5,781,900 $ 0.17 Exercisable at December 31, 2017 5,781,900 $ 0.17 Weighted average grant date fair value $ 0.08 |
INCOME TAXES (Tabble)
INCOME TAXES (Tabble) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tabble | |
Income tax reconciliation | Year ended December 31, 2017 2016 Computed “expected” tax expense (benefit) $ (1,034,086 ) $ (895,395 ) State taxes, net of federal benefit (171,202 ) (154,764 ) Goodwill impairment and other non-deductible items 643,016 (31,134 ) Change in federal tax rates 4,145,380 – Change in deferred tax asset valuation allowance (3,583,108 ) 1,081,293 Income tax expense $ – $ – |
Deferred tax assets and liabilities | 2017 2016 Deferred tax assets: Charitable contributions $ 2,900 $ 4,128 Reserve for bad debt 17,948 25,548 Stock options 3,416,792 4,776,104 Depreciation 6,920 33,638 Other 17,674 25,159 Net operating loss carryforward 6,957,507 9,167,042 Total gross deferred tax assets 10,419,741 14,031,619 Less: Deferred tax asset valuation allowance (10,351,807 ) (13,934,915 ) Total net deferred tax assets 67,934 96,704 Deferred tax liabilities: Accrued salaries (67,934 ) (96,704 ) Total deferred tax liabilities (67,934 ) (96,704 ) Total net deferred taxes $ – $ – |
12. REVENUES (Tables)
12. REVENUES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
Schedule of revenues | For the three months ended March 31 2018 2017 Product Sales $ 2,868,630 $ 367,089 Maintenance Fees 5,448 3,600 Professional Services 1,894 – Total Revenues $ 2,875,972 $ 370,689 |
CORPORATE ORGANIZATION, NATUR40
CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Customer A [Member] | Revenues [Member] | ||||
Concentration risk percentage | 69.00% | 28.00% | 0.00% | |
Customer B [Member] | Revenues [Member] | ||||
Concentration risk percentage | 15.00% | 12.00% | 14.00% | |
Customer C [Member] | Revenues [Member] | ||||
Concentration risk percentage | 39.00% | 0.00% | 26.00% | |
Customer D [Member] | Revenues [Member] | ||||
Concentration risk percentage | 24.00% | 0.00% | 30.00% | |
Customer E [Member] | Revenues [Member] | ||||
Concentration risk percentage | 17.00% | |||
Customer F [Member] | Revenues [Member] | ||||
Concentration risk percentage | 13.00% | |||
Accounts Receivable [Member] | Customer 1 [Member] | ||||
Concentration risk percentage | 94.00% | 0.00% | ||
Accounts Receivable [Member] | Customer 2 [Member] | ||||
Concentration risk percentage | 0.00% | 71.00% | ||
Accounts Receivable [Member] | Customer 3 [Member] | ||||
Concentration risk percentage | 0.00% | 25.00% | ||
Accounts Receivable [Member] | Customer A [Member] | ||||
Concentration risk percentage | 48.00% | |||
Accounts Receivable [Member] | Customer B [Member] | ||||
Concentration risk percentage | 24.00% |
1. CORPORATE ORGANIZATION, NA41
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Uninsured cash | $ 150,000 | $ 0 | ||
Cash equivalents | $ 0 | $ 0 | 0 | |
Property and equipment estimated useful lives | 3 to 7 years | |||
Amortization of intangible asset | $ 561 | 561 | ||
Deferred revenue | 55,649 | 77,514 | 75,323 | |
Accrued warranty reserve | 0 | 0 | ||
Research and development costs | 1,772 | 3,459 | ||
Advertising costs | $ 81,278 | $ 58,149 | ||
Patent amortization expense | $ 140 | $ 140 | ||
Convertible Notes Payable [Member] | ||||
Potentially dilutive stock equivalents outstanding | 9,067,752 | |||
Option Shares [Member] | ||||
Potentially dilutive stock equivalents outstanding | 15,216,664 | |||
Warrant Shares [Member] | ||||
Potentially dilutive stock equivalents outstanding | 6,463,017 | |||
Warrant Shares [Member] | ||||
Potentially dilutive stock equivalents outstanding | 5,781,900 | 28,196,822 | ||
Convertible Debt Shares [Member] | ||||
Potentially dilutive stock equivalents outstanding | 19,846,181 | 6,123,370 | ||
Option Shares [Member] | ||||
Potentially dilutive stock equivalents outstanding | 15,216,664 | 19,917,007 |
2. GOING CONCERN (Details Narra
2. GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | Dec. 31, 2015 | |
Capitalization of accrued interest to convertible notes payable | |||||||
Net losses | $ (1,011,607) | $ (619,573) | $ (3,041,430) | $ (3,041,430) | $ (2,633,516) | $ (2,633,516) | |
Stock based compensation expense | 144,967 | 69,486 | 430,084 | 842,089 | |||
Net cash used in operations | 466,138 | 18,457 | (3,437,312) | (1,798,726) | |||
Working capital | (1,123,045) | (786,621) | |||||
Stockholders' deficit | (725,482) | (349,262) | $ (349,262) | (1,385,104) | $ (1,385,104) | $ (1,408,603) | |
Accumulated deficit | (39,288,486) | (38,276,879) | (38,276,879) | (35,235,449) | |||
Proceeds from offering | $ 290,000 | $ 30,000 | 2,345,000 | 1,820,000 | |||
Proceeds from line of credit | 1,150,000 | $ 0 | |||||
Proceeds from loan facility | 500,000 | ||||||
Line of credit maximum amount | $ 3,000,000 |
3. ACCOUNTS RECEIVABLE, AND D43
3. ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE (Details-Accounts Receivable) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | |||
Accounts receivable | $ 5,946 | $ 1,161,064 | |
Less: Allowance for doubtful accounts | 0 | 0 | |
Accounts receivable, Net | $ 873,769 | $ 5,946 | $ 1,161,064 |
3. ACCOUNTS RECEIVABLE, AND D44
3. ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2018 | |
Receivables [Abstract] | |||
Bad debt expense | $ 0 | $ 510 | |
Deferred revenue | $ 77,514 | $ 75,323 | $ 55,649 |
4. PREPAID EXPENSES AND OTHER45
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |||
Prepaid insurance | $ 25,402 | $ 26,124 | |
Deposit on future raw materials | 30,272 | 21,168 | |
Prepaid services | 0 | 46,875 | |
Total prepaid expenses and other current assets | $ 202,289 | $ 55,674 | $ 94,167 |
5. INVENTORY (Details)
5. INVENTORY (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | |||
Finished goods | $ 121,616 | $ 1,716,141 | $ 22,375 |
Work in process | 275,506 | 311,481 | 164,915 |
Raw materials | 149,904 | 300,479 | 93,113 |
Inventory reserve | (8,601) | (8,601) | (8,601) |
Inventory, net | $ 538,425 | $ 2,319,500 | $ 271,802 |
6. PROPERTY AND EQUIPMENT (Deta
6. PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 31, 2018 | Dec. 31, 2016 | |
Estimated useful lives | 3 to 7 years | ||
Total property and equipment | $ 533,339 | $ 509,444 | |
Less accumulated depreciation | (307,227) | (216,403) | |
Property and Equipment, Net | $ 226,112 | $ 202,673 | 293,041 |
Computer equipment and software [Member] | |||
Estimated useful lives | 5 years | ||
Total property and equipment | $ 32,666 | 28,344 | |
Furniture and fixtures [Member] | |||
Estimated useful lives | 7 years | ||
Total property and equipment | $ 82,529 | 82,529 | |
Office equipment [Member] | |||
Estimated useful lives | 5 years | ||
Total property and equipment | $ 20,533 | 20,533 | |
Machinery and equipment [Member] | |||
Estimated useful lives | 1-5 years | ||
Total property and equipment | $ 341,583 | 322,010 | |
Leasehold Improvements [Member] | |||
Estimated useful lives | 47 months | ||
Total property and equipment | $ 6,790 | 6,790 | |
Autos [Member] | |||
Estimated useful lives | 3 years | ||
Total property and equipment | $ 49,238 | $ 49,238 |
6. PROPERTY AND EQUIPMENT (De48
6. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 68,820 | $ 101,877 |
Depreciation expense capitalized | $ 22,000 | $ 21,600 |
7. ACCRUED EXPENSES (Details)
7. ACCRUED EXPENSES (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | |||
Accrued vacation | $ 146,622 | $ 152,051 | $ 136,410 |
Accrued interest | 162,783 | 175,953 | 235,776 |
Accrued loan guaranty | 0 | 8,333 | |
Accured rent | 76,332 | 77,164 | 26,091 |
Accrued commissions | 0 | 18,828 | |
Accrued loss contingency | 44,423 | 0 | |
Other accrued expense | 51,038 | 2,333 | 4,995 |
Total accrued expenses | $ 436,775 | $ 451,924 | $ 430,433 |
8. LINE OF CREDIT_TERM DEBT -50
8. LINE OF CREDIT/TERM DEBT - SILICON VALLEY BANK (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 10 Months Ended | 12 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Apr. 29, 2017 | Sep. 30, 2017 | Oct. 29, 2016 | Dec. 31, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | |
Line of credit maximum borrowing capacity | $ 3,000,000 | ||||||||
Shares Issued for Loan Guaranty - Related Party (Value) | 68,078 | $ 68,078 | $ 22,123 | $ 22,123 | |||||
Payment of debt issuance costs | 22,283 | 2,400 | |||||||
Unamortized debt discount | $ 120,371 | 232,767 | |||||||
Line of credit outstanding, current | 0 | 1,000,000 | |||||||
Gain on settlement of debt | $ 107,081 | 107,081 | 0 | ||||||
Repayment of credit line | $ 860,000 | $ 0 | |||||||
Keshif Ventures LLC [Member] | |||||||||
Shares Issued for Loan Guaranty - Related Party (Value) | $ 68,078 | $ 22,123 | |||||||
Shares Issued for Loan Guaranty - Related Party (Shares) | 453,857 | 147,493 | |||||||
Loan and Security Agreement [Member] | |||||||||
Line of credit maximum borrowing capacity | $ 1,500,000 | $ 1,000,000 | |||||||
Line of credit maturity date | Mar. 1, 2020 | ||||||||
Line of credit interest rate terms | Monthly interest only payments through December 2017. | ||||||||
Payment of debt issuance costs | $ 9,655 | ||||||||
Line of credit outstanding, current | 0 | ||||||||
Proceeds from line of credit | 500,000 | ||||||||
Repayment of credit line | 1,500,000 | ||||||||
Loan and Security Agreement [Member] | Keshif Ventures, LLC [Member] | |||||||||
Shares Issued for Loan Guaranty - Related Party (Value) | $ 68,078 | $ 22,123 | |||||||
Shares Issued for Loan Guaranty - Related Party (Shares) | 453,857 | 147,493 | |||||||
Gain on settlement of debt | $ 172 | $ 2,877 | |||||||
Loan and Security Agreement [Member] | Loan Guaranty [Member] | Keshif Ventures, LLC [Member] | |||||||||
Stock issued for loan guaranty, shares issued | 234,302 | 219,555 | 147,493 | ||||||
Stock issued for loan guaranty, value | $ 35,145 | $ 32,933 | $ 22,123 | ||||||
Gain on settlement of debt | $ 2,355 | $ (2,183) | $ 2,877 | ||||||
Loan and Security Agreement [Member] | Stock Purchase Agreement [Member] | Keshif Ventures, LLC [Member] | |||||||||
Stock issued for loan guaranty, shares issued | 571,429 | ||||||||
Stock issued for loan guaranty, value | $ 85,714 | ||||||||
Debt issuance costs | $ 11,435 |
9. CONVERTIBLE LINE OF CREDIT (
9. CONVERTIBLE LINE OF CREDIT (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Credit line maximum borrowing | $ 3,000,000 | |||
Proceeds from line of credit | 1,150,000 | $ 0 | ||
Repayment of line of credit | $ 860,000 | $ 0 | ||
Convertible Line of Credit | 169,629 | 923,232 | $ 0 | |
Discount | 120,371 | 232,767 | ||
Revolver One [Member] | ||||
Proceeds from line of credit | $ 300,000 | |||
Warrants issued | 500,000 | |||
Warrants issued fair value | $ 56,620 | |||
Beneficial conversion features | 175,261 | |||
Revolver [Member] | ||||
Credit line maximum borrowing | 3,000,000 | 3,000,000 | ||
Proceeds from line of credit | $ 850,000 | |||
Warrants issued | 1,416,667 | |||
Warrants issued fair value | $ 122,992 | |||
Beneficial conversion features | 243,223 | |||
Convertible Line of Credit | 169,629 | 923,232 | ||
Discount | 120,371 | 226,768 | ||
Accrued and unpaid interest | $ 22,236 | |||
Revolver [Member] | Initial Draw Down [Member] | ||||
Repayment of line of credit | 850,000 | |||
Discount | 243,223 | |||
Revolver [Member] | Second Draw Down [Member] | ||||
Repayment of line of credit | 300,000 | |||
Discount | 212,420 | |||
Revolver [Member] | Second Draw Down [Member] | Warrant Fair Value [Member] | ||||
Discount | 50,591 | |||
Revolver [Member] | Second Draw Down [Member] | Beneficial Conversion Feature [Member] | ||||
Discount | 161,829 | |||
Revolver [Member] | Third Draw Down [Member] | ||||
Proceeds from line of credit | $ 290,000 | |||
Warrants issued | 407,784 | |||
Warrants issued fair value | $ 61,282 | |||
Beneficial conversion features | $ 161,829 |
10. CONVERTIBLE NOTE PAYABLE -
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS (Details-Summary) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible Notes Payable - Related Parties | $ 207,116 | $ 197,616 | $ 724,616 |
Wheatley Note [Member] | |||
Convertible Notes Payable - Related Parties | 147,500 | ||
Evey Note [Member] | |||
Convertible Notes Payable - Related Parties | 59,616 | ||
Evey Note [Member] | Convertible Notes Payable [Member] | |||
Convertible Notes Payable - Related Parties | 59,616 | 62,616 | |
Convertible Notes Payable [Member] | Wheatley Note [Member] | |||
Convertible Notes Payable - Related Parties | $ 147,500 | 135,000 | 50,000 |
Convertible Notes Payable [Member] | Evey Note [Member] | |||
Convertible Notes Payable - Related Parties | 74,616 | ||
Convertible Notes Payable [Member] | Gemini Master Fund - Third Amended [Member] | |||
Convertible Notes Payable - Related Parties | $ 0 | $ 600,000 |
10. CONVERTIBLE NOTE PAYABLE 53
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS (Details-Fair Value Measurements) | Dec. 31, 2016USD ($) |
Fair Value Measurements - Derivative liability | |
Embedded Conversion Option Liability | $ 107,081 |
Fair Value Inputs Level 1 [Member] | |
Fair Value Measurements - Derivative liability | |
Embedded Conversion Option Liability | 0 |
Fair Value Inputs Level 2 [Member] | |
Fair Value Measurements - Derivative liability | |
Embedded Conversion Option Liability | 0 |
Fair Value Inputs Level 3 [Member] | |
Fair Value Measurements - Derivative liability | |
Embedded Conversion Option Liability | $ 107,081 |
10. CONVERTIBLE NOTE PAYABLE 54
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS (Details-Level 3) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||||
Beginning balance | $ 107,081 | $ 107,081 | ||
Change in fair value | 0 | $ 19,089 | ||
Gain on extinguishment of debt | $ (107,081) | $ (107,081) | 0 | |
Ending balance | $ 107,081 |
10. CONVERTIBLE NOTE PAYABLE 55
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS (Details-Assumptions) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | |
Expected remaining term | 3 months |
Expected Volatility | 103.00% |
Risk free rate | 0.50% |
Dividend Yield | 0.00% |
10. CONVERTIBLE NOTE PAYABLE 56
10. CONVERTIBLE NOTE PAYABLE - RELATED PARTIES AND FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | 13 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Feb. 05, 2018 | |
Repayments of related party debt, principal and interest | $ 3,000 | $ 3,000 | |||
Convertible Notes Payable - Related Parties | 207,116 | $ 197,616 | $ 724,616 | ||
Conversion of debt, amount converted | 600,000 | 0 | |||
Conversion of debt, interest converted | $ 104,709 | ||||
Conversion of debt, shares issued | 4,698,060 | ||||
Notes Payable [Member] | |||||
Interest rate on convertible note | 10.00% | ||||
Automobile Loan [Member] | |||||
Interest rate on convertible note | 5.99% | ||||
Wheatley Note [Member] | |||||
Convertible Notes Payable - Related Parties | 147,500 | ||||
Deferred Bonus | $ 35,000 | ||||
Wheatley Note [Member] | Convertible Notes Payable [Member] | |||||
Convertible Notes Payable - Related Parties | 147,500 | $ 135,000 | 50,000 | ||
Accrued and unpaid interest | $ 15,769 | $ 12,312 | |||
Interest rate on convertible note | 10.00% | 10.00% | |||
Evey Note [Member] | |||||
Convertible Notes Payable - Related Parties | $ 59,616 | ||||
Evey Note [Member] | Convertible Notes Payable [Member] | |||||
Convertible Notes Payable - Related Parties | 74,616 | ||||
Gemini Master Fund - Third Amended [Member] | Convertible Notes Payable [Member] | |||||
Convertible Notes Payable - Related Parties | $ 0 | 600,000 | |||
Convertible Notes Payable [Member] | Wheatley Note [Member] | |||||
Debt maturity date | Dec. 31, 2020 | ||||
Convertible Notes Payable [Member] | Evey Note [Member] | |||||
Debt maturity date | Dec. 31, 2017 | Dec. 31, 2017 | |||
Repayments of related party debt, principal and interest | $ 12,000 | ||||
Convertible Notes Payable - Related Parties | $ 59,616 | $ 62,616 | |||
Accrued and unpaid interest | $ 64,222 | $ 61,242 | |||
Interest rate on convertible note | 10.00% | 10.00% | |||
Convertible Notes Payable [Member] | Gemini Master Fund - Third Amended [Member] | |||||
Conversion of debt, amount converted | $ 600,000 | ||||
Conversion of debt, interest converted | $ 104,709 | ||||
Conversion of debt, shares issued | 4,698,060 |
11. CONVERTIBLE NOTE PAYABLE (D
11. CONVERTIBLE NOTE PAYABLE (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Discount | $ 120,371 | $ 232,767 | |
Convertible notes, net | 1,484,859 | 1,424,332 | $ 100,000 |
Convertible Notes Payable [Member] | |||
Convertible notes, gross | 1,600,000 | 1,600,000 | |
Discount | 115,141 | 175,668 | $ 0 |
Convertible notes, net | 1,484,859 | 1,424,332 | |
Convertible Notes Payable [Member] | Pegasus Note [Member] | |||
Convertible notes, gross | 100,000 | ||
Discount | 0 | ||
Convertible notes, net | 100,000 | ||
Convertible Notes Payable [Member] | Lender Note [Member] | |||
Convertible notes, gross | 1,500,000 | ||
Discount | 115,141 | ||
Convertible notes, net | 1,384,859 | ||
Convertible Notes Payable [Member] | Lender Note [Member] | |||
Convertible notes, gross | 1,500,000 | ||
Discount | 175,668 | ||
Convertible notes, net | 1,324,332 | ||
Convertible Notes Payable [Member] | Pegasus Note [Member] | |||
Convertible notes, gross | 100,000 | ||
Discount | 0 | ||
Convertible notes, net | 100,000 | ||
Convertible Line of Credit [Member] | |||
Discount | $ 120,371 | 226,768 | |
Lender Note [Member] | |||
Discount | 232,767 | ||
Convertible notes, net | 1,324,332 | ||
Pegasus Note [Member] | |||
Convertible notes, net | $ 100,000 |
11. CONVERTIBLE NOTES PAYABLE (
11. CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Convertible note balance | $ 1,484,859 | $ 1,424,332 | $ 100,000 |
Accrued interest | 162,783 | 175,953 | 235,776 |
Discount | $ 120,371 | $ 232,767 | |
Convertible Line of Credit [Member] | |||
Warrants issued | 407,784 | 1,916,667 | |
Warrants issued fair value | $ 61,282 | $ 179,612 | |
Discount | 120,371 | 226,768 | |
Convertible Notes Payable [Member] | |||
Convertible note balance | 1,484,859 | 1,424,332 | |
Accrued interest | $ 7,593 | ||
Warrants issued | 2,500,000 | ||
Discount | 115,141 | $ 175,668 | $ 0 |
Pegasus Note [Member] | |||
Convertible note balance | 100,000 | ||
Accrued interest | 80,164 | ||
Lender Note [Member] | |||
Convertible note balance | $ 1,324,332 | ||
Warrants issued | 2,500,000 | ||
Warrants issued fair value | $ 187,142 | ||
Discount | 232,767 | ||
Lender Note [Member] | |||
Convertible note balance | 1,384,859 | $ 1,324,332 | |
Warrants issued | 2,500,000 | ||
Warrants issued fair value | $ 187,142 | ||
Beneficial conversion features | 232,767 | ||
Discount | $ 115,141 | ||
Interest rate | The Note bears simple interest at the floating rate per annum equal to the 12 month USD LIBOR index rate quoted from time to time in New York, New York by the Bloomberg Service plus 400 basis points (the “Interest Rate”). | ||
Lender Note [Member] | Beneficial Conversion Feature [Member] | |||
Beneficial conversion features | 66,384 | ||
Lender Note [Member] | Warrant Fair Value [Member] | |||
Warrants issued fair value | $ 166,384 | ||
Pegasus Note [Member] | |||
Convertible note balance | $ 100,000 | ||
Accrued interest | $ 82,658 |
12. NOTES PAYABLE AND AUTO LOAN
12. NOTES PAYABLE AND AUTO LOAN (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Mar. 31, 2018 | |
Auto loan current | $ 9,862 | $ 10,057 |
Auto loan noncurrent | 20,620 | 17,259 |
Notes Payable [Member] | ||
Debt original amount | $ 160,633 | |
Debt interest rate | 10.00% | |
Payment of notes payable | $ 40,000 | |
Gain on debt settlement | $ 25,352 | |
Automobile Loan [Member] | ||
Debt interest rate | 5.99% | |
Auto loan current | $ 9,862 | 10,057 |
Auto loan noncurrent | $ 20,620 | $ 17,259 |
13. COMMITMENTS AND CONTINGEN60
13. COMMITMENTS AND CONTINGENCIES (Details-Future lease payments ) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum operating lease payments, 2018 | $ 522,288 |
Future minimum operating lease payments, 2019 | 543,180 |
Future minimum operating lease payments, 2020 | 404,952 |
Future minimum operating lease payments | $ 1,470,420 |
13. COMMITMENTS AND CONTINGEN61
13. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Security deposit | $ 146,091 | ||
Administrative rent expense | 112,675 | $ 59,228 | |
Rent capitalized into inventory as manufacturing overhead costs | $ 446,618 | $ 337,287 | |
Current monthly lease payment | $ 46,800 | ||
Lease expiration date | Aug. 31, 2020 |
14. COMMON STOCK (Details Narra
14. COMMON STOCK (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | |
Stock issued for cash, amount | $ 2,345,000 | $ 2,345,000 | $ 1,820,000 | $ 1,820,000 | ||
Cash offering costs | 53,600 | 53,600 | 68,800 | 68,800 | ||
Conversion of debt, amount converted | 600,000 | 0 | ||||
Conversion of debt, interest converted | $ 104,709 | |||||
Conversion of debt, shares issued | 4,698,060 | |||||
Conversion of debt principal amount | $ 704,709 | $ 704,709 | 0 | |||
Stock Issued for Services | 2,250 | 2,250 | 150,000 | 150,000 | ||
Prepaid expenses | 202,289 | 55,674 | 94,167 | |||
Stock Issued for Services - Related Party | 27,000 | 27,000 | 69,603 | 69,603 | ||
Gain on settlement of debt | 107,081 | 107,081 | 0 | |||
Shares Issued for Loan Guaranty - Related Party | 68,078 | $ 68,078 | 22,123 | $ 22,123 | ||
Proceeds from sale of stock | 290,000 | 30,000 | 2,345,000 | 1,820,000 | ||
Stock issuance costs | $ 12,000 | $ 2,400 | 53,600 | 68,800 | ||
Private Placement [Member] | ||||||
Stock issued for cash, shares | 1,933,333 | |||||
Proceeds from sale of stock | $ 290,000 | |||||
Stock issuance costs | $ 12,000 | |||||
Warrants issued | 273,333 | |||||
Strike price of warrants | $ 0.15 | |||||
Restricted Stock [Member] | ||||||
Unrecognized stock expense | 225,000 | 337,500 | ||||
Investor Relations [Member] | ||||||
Stock Issued for Services | $ 150,000 | |||||
Stock Issued for Services (Shares) | 1,000,000 | |||||
Three Directors [Member] | Performance Grants [Member] | ||||||
Stock Issued for Services | $ 112,500 | |||||
Stock Issued for Services (Shares) | 750,000 | |||||
Three Directors [Member] | Restricted Stock [Member] | ||||||
Stock Issued for Services | $ 28,125 | |||||
Stock Issued for Services (Shares) | 187,500 | |||||
Unrecognized stock expense | $ 196,875 | |||||
Stock Issued for Services [Member] | Restricted Stock [Member] | ||||||
Stock Issued for Services | $ 337,500 | |||||
Stock Issued for Services (Shares) | 2,250,000 | |||||
Stock Issued for Services [Member] | Restricted Stock [Member] | Davidson [Member] | ||||||
Stock Issued for Services | $ 112,500 | |||||
Stock Issued for Services (Shares) | 750,000 | |||||
Stock Issued for Services [Member] | Restricted Stock [Member] | Posawatz [Member] | ||||||
Stock Issued for Services | $ 150,000 | |||||
Stock Issued for Services (Shares) | 1,000,000 | |||||
Keshif Ventures LLC [Member] | ||||||
Stock issued for cash, shares | 1,333,333 | 3,333,333 | ||||
Stock issued for cash, amount | $ 200,000 | $ 500,000 | ||||
Shares Issued for Loan Guaranty - Related Party | $ 68,078 | $ 22,123 | ||||
Shares Issued for Loan Guaranty - Related Party (Shares) | 453,857 | 147,493 | ||||
GreenCoreCapitalLLCMember | Stock Issued for Services [Member] | ||||||
Stock Issued for Services - Related Party | $ 27,000 | $ 69,603 | ||||
Stock Issued for Services - Related Party (Shares) | 180,000 | 464,115 | ||||
Gain on settlement of debt | $ 2,396 | |||||
GreenCore Capital [Member] | ||||||
Stock Issued for Services - Related Party | $ 27,000 | $ 69,603 | ||||
Stock Issued for Services - Related Party (Shares) | 180,000 | 464,115 | ||||
Three Directors [Member] | ||||||
Stock Issued for Services | $ 140,625 | |||||
Stock Issued for Services (Shares) | 937,500 | |||||
Three Directors [Member] | Stock Issued for Services [Member] | Restricted Stock [Member] | ||||||
Stock Issued for Services | $ 112,500 | |||||
Stock Issued for Services (Shares) | 750,000 | |||||
Five Directors [Member] | Stock Issued for Services [Member] | Restricted Stock [Member] | ||||||
Stock Issued for Services | $ 172,916 | |||||
Stock Issued for Services (Shares) | 1,152,776 | |||||
Loan and Security Agreement [Member] | Keshif Ventures, LLC [Member] | ||||||
Gain on settlement of debt | $ 172 | $ 2,877 | ||||
Shares Issued for Loan Guaranty - Related Party | $ 68,078 | $ 22,123 | ||||
Shares Issued for Loan Guaranty - Related Party (Shares) | 453,857 | 147,493 | ||||
Private Placement [Member] | ||||||
Stock issued for cash, shares | 15,633,327 | 12,133,333 | ||||
Stock issued for cash, amount | $ 2,345,000 | $ 1,820,000 | ||||
Cash offering costs | $ 53,600 | 68,800 | ||||
Stock issued for purchase of warrants | 223,337 | |||||
Consulting Services [Member] | Investor Relations [Member] | ||||||
Prepaid expenses | $ 46,875 |
15. STOCK OPTIONS AND WARRANTS
15. STOCK OPTIONS AND WARRANTS (Details-Assumptions) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Expected volatility | 81.05% | |
Expected volatility, minimum | 103.59% | |
Expected volatility, maximum | 114.93% | |
Expected remaining term | 5 years | 2.5-6.5 years |
Risk-free interest rate | 0.15% | |
Risk-free interest rate, minimum | 0.16% | |
Risk-free interest rate, maximum | 0.50% | |
Expected dividend yield | 0.00% | 0.00% |
15. STOCK OPTIONS AND WARRANT64
15. STOCK OPTIONS AND WARRANTS (Details-Option Activity) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Options | ||
Number of Options Outstanding, Beginning | 19,917,007 | 15,337,007 |
Number of Options Granted | 645,000 | 5,380,000 |
Number of Options Exercised | 0 | 0 |
Number of Options Forfeited | (1,095,000) | (800,000) |
Number of Options Expired | (4,250,343) | 0 |
Number of Options Outstanding, Ending | 15,216,664 | 19,917,007 |
Number of Options Exercisable, Ending | 13,479,165 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.25 | $ 0.28 |
Weighted Average Exercise Price Granted | 0.16 | 0.15 |
Weighted Average Exercise Price Forfeited | 0.19 | 0.19 |
Weighted Average Exercise Price Expired | 0.33 | |
Weighted Average Exercise Price Outstanding, Ending | 0.23 | $ 0.25 |
Weighted Average Exercise Price Exercisable, Ending | 0.24 | |
Weighted average grant date fair value | $ 0.10 |
15. STOCK OPTIONS AND WARRANT65
15. STOCK OPTIONS AND WARRANTS (Details-Options Outstanding and Exercisable) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Number of Outstanding | 15,216,664 | 19,917,007 | 15,337,007 |
Weighted Average Remaining Contractual Life | 5 years 5 months 12 days | ||
Weighted Average Exercise Price | $ 0.23 | $ 0.25 | $ 0.28 |
Aggregate Intrinsic Value | $ 0 | ||
Number of Exercisable | 13,479,165 | ||
Weighted Average Exercise Price | $ 0.24 | ||
Aggregate Intrinsic Value | $ 0 | ||
0.13-1.31 [Member] | |||
Range of Exercise Price, Lower | $ 0.13 | ||
Range of Exercise Price, Upper | $ 1.31 | ||
Number of Outstanding | 15,216,664 | ||
Weighted Average Remaining Contractual Life | 5 years 5 months 12 days | ||
Weighted Average Exercise Price | $ 0.23 | ||
Aggregate Intrinsic Value | $ 0 | ||
Number of Exercisable | 13,479,165 | ||
Weighted Average Exercise Price | $ 0.24 | ||
Aggregate Intrinsic Value | $ 0 |
15. STOCK OPTIONS AND WARRANT66
15. STOCK OPTIONS AND WARRANTS (Details-Warrant Activity) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Warrants | ||
Number of Warrants Outstanding, Beginning | 28,196,822 | 29,219,441 |
Number of Warrants Granted | 4,416,667 | 291,667 |
Number of Warrants Exercised | 0 | |
Number of Warrants Forfeited | 0 | |
Number of Warrants Expired | (26,831,589) | (1,314,286) |
Number of Warrants Outstanding, Ending | 5,781,900 | 28,196,822 |
Number of Warrants Exercisable, Ending | 5,781,900 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.17 | $ 0.18 |
Weighted Average Exercise Price Granted | 0.15 | 0.15 |
Weighted Average Exercise Price Expired | 0.16 | 0.33 |
Weighted Average Exercise Price Outstanding, Ending | 0.17 | $ 0.17 |
Weighted Average Exercise Price Exercisable | 0.17 | |
Weighted average grant date fair value | $ 0.08 |
15. STOCK OPTIONS AND WARRANT67
15. STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Total unrecognized compensation cost related to unvested options | $ 29,187 | |||
Unrecognized compensation period of recognition | 2 years | |||
Stock options issued, shares | 0 | |||
Stock option expense | $ 4,342 | $ 39,111 | ||
2011 Stock Incentive Plan [Member] | ||||
Shares authorized under plan | 31,500,000 | |||
2008 Equity Incentive Plan [Member] | ||||
Shares authorized under plan | 6,108,571 | |||
Employee Stock Option [Member] | ||||
Stock option compensation expense | $ 220,084 | $ 442,871 | ||
Total unrecognized compensation cost related to unvested options | $ 33,529 | |||
Unrecognized compensation period of recognition | 2 years 3 months | |||
Stock options issued, shares | 645,000 | 5,380,000 | ||
Stock options issued, value | $ 61,632 | $ 622,109 | ||
Weighted average remaining contractual life | 5 years 7 days | |||
Warrants [Member] | ||||
Warrants issued | 4,416,667 | 291,667 | ||
Number of Warrants Expired | (26,831,589) | (1,314,286) | ||
Warrants weighted average remaining contractual life | 2 years 5 months 16 days | |||
Warrants [Member] | Private Placement [Member] | ||||
Warrants issued | 291,667 | |||
Warrants fair value at grant date | $ 30,419 | |||
Private Placement [Member] | ||||
Warrants issued | 273,333 | |||
Warrants issued fair value | $ 26,206 | |||
Strike price of warrants | $ 0.15 | |||
Convertible Line Of Credit [Member] | ||||
Warrants issued | 407,784 | 1,916,667 | ||
Warrants issued fair value | $ 61,282 | $ 179,612 | ||
Strike price of warrants | $ 0.15 | |||
Lender Note [Member] | ||||
Warrants issued | 2,500,000 | |||
Warrants issued fair value | $ 187,142 | |||
Convertible Notes Payable [Member] | ||||
Warrants issued | 2,500,000 |
16. INCOME TAXES (Details-Tax E
16. INCOME TAXES (Details-Tax Expense) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" tax expense (benefit) | $ (1,034,086) | $ (895,395) |
State taxes, net of federal benefit | (171,202) | (154,764) |
Goodwill impairment and other non-deductible items | 643,016 | (31,134) |
Change in federal tax rates | 4,145,380 | 0 |
Change in deferred tax asset valuation allowance | (3,583,108) | 1,081,293 |
Income tax expense | $ 0 | $ 0 |
16. INCOME TAXES (Details-Defer
16. INCOME TAXES (Details-Deferred tax assets and liabilities) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Charitable contributions | $ 2,900 | $ 4,128 |
Reserve for bad debt | 17,948 | 25,548 |
Stock options | 3,416,792 | 4,776,104 |
Depreciation | 6,920 | 33,638 |
Other | 17,674 | 25,159 |
Net operating loss carryforward | 6,957,507 | 9,167,042 |
Total gross deferred tax assets | 10,419,741 | 14,031,619 |
Less: Deferred tax asset valuation allowance | (10,351,807) | (13,934,915) |
Total net deferred tax assets | 67,934 | 96,704 |
Deferred tax liabilities: | ||
Accrued salaries | (67,934) | (96,704) |
Total deferred tax liabilities | (67,934) | (96,704) |
Total net deferred taxes | $ 0 | $ 0 |
16. INCOME TAXES (Details Narra
16. INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Blended federal and state tax rate | 39.83% | |
Federal tax rate | 34.00% | |
Valuation allowance | $ 10,351,807 | $ 13,934,915 |
Decrease in valuation allowance | 3,583,108 | |
Net operating loss carryforward | $ 24,862,803 | |
Operating loss carryforward expiration date | Dec. 31, 2037 | |
Change in deferred tax asset and liability | $ 4,100,000 |
12. REVENUES (Details)
12. REVENUES (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues | $ 2,875,972 | $ 370,689 | $ 1,412,042 | $ 2,781,273 |
Product Sales [Member] | ||||
Revenues | 2,868,630 | 367,089 | ||
Maintenance Fees [Member] | ||||
Revenues | 5,448 | 3,600 | ||
Professional Services [Member] | ||||
Revenues | $ 1,894 | $ 0 |
12. REVENUES (Details Narrative
12. REVENUES (Details Narrative) - USD ($) | Mar. 31, 2018 | Mar. 31, 2017 |
Deferred revenue | $ 55,649 | $ 77,514 |
Product Deposits [Member] | ||
Deferred revenue | 26,304 | |
Maintenance Fees [Member] | ||
Deferred revenue | $ 29,344 |
17. RELATED PARTY TRANSACTIONS
17. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 30, 2017 | Dec. 31, 2016 | Dec. 30, 2016 | |
Stock Issued for Services - Related Party | $ 27,000 | $ 27,000 | $ 69,603 | $ 69,603 | ||
Stock Issued for Director Services, value | 112,500 | 112,500 | 172,916 | 172,916 | ||
Shares Issued for Loan Guaranty - Related Party | 68,078 | 68,078 | 22,123 | 22,123 | ||
Stock Issued for Cash | 2,345,000 | 2,345,000 | 1,820,000 | 1,820,000 | ||
Repayment of convertible note | $ 3,000 | $ 3,000 | 40,000 | 0 | ||
Convertible Note Payable - Related Parties | 207,116 | 197,616 | 724,616 | |||
Accrued interest | 162,783 | 175,953 | 235,776 | |||
Stock issued for services, value | 2,250 | $ 2,250 | 150,000 | $ 150,000 | ||
GreenCore Capital [Member] | ||||||
Payments on related party note | 54,000 | 69,500 | ||||
Stock Issued for Services - Related Party | $ 27,000 | $ 69,603 | ||||
Stock Issued for Services - Related Party (Shares) | 180,000 | 464,115 | ||||
Accounts payable - related party | $ 27,000 | |||||
Keshif Ventures LLC [Member] | ||||||
Shares Issued for Loan Guaranty - Related Party | $ 68,078 | $ 22,123 | ||||
Shares Issued for Loan Guaranty - Related Party (Shares) | 453,857 | 147,493 | ||||
Stock Issued for Cash | $ 200,000 | $ 500,000 | ||||
Stock Issued for Cash (Shares) | 1,333,333 | 3,333,333 | ||||
Wheatley [Member] | ||||||
Convertible Note Payable - Related Parties | 147,500 | |||||
Accrued interest | 15,769 | |||||
Deferred Bonus | $ 35,000 | |||||
Evey [Member] | ||||||
Repayment of convertible note | 3,000 | |||||
Convertible Note Payable - Related Parties | 59,616 | |||||
Accrued interest | $ 64,222 | |||||
Three Directors [Member] | ||||||
Stock issued for services, shares | 937,500 | |||||
Stock issued for services, value | $ 140,625 | |||||
Stock Issued for Services [Member] | GreenCoreCapitalLLCMember | ||||||
Stock Issued for Services - Related Party | $ 27,000 | $ 69,603 | ||||
Stock Issued for Services - Related Party (Shares) | 180,000 | 464,115 | ||||
Loan and Security Agreement [Member] | Keshif Ventures, LLC [Member] | ||||||
Shares Issued for Loan Guaranty - Related Party | $ 68,078 | $ 22,123 | ||||
Shares Issued for Loan Guaranty - Related Party (Shares) | 453,857 | 147,493 | ||||
Directors [Member] | ||||||
Stock Issued for Director Services (Shares) | 750,000 | 1,152,776 |