Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 18, 2019 | Jun. 30, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Envision Solar International, Inc. | ||
Entity Central Index Key | 0001398805 | ||
Document Type | S-1/A | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | true | ||
Amendment Description | minor note changes | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Ex Transition Period | false | ||
Entity Public float | $ 23,818,860 | ||
Entity Common Stock, Shares Outstanding | 145,331,495 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 244,024 | $ 403,475 |
Accounts Receivable, net | 1,290,702 | 5,946 |
Prepaid and other current assets | 256,071 | 55,674 |
Inventory, net | 1,130,966 | 2,319,500 |
Total Current Assets | 2,921,763 | 2,784,595 |
Property and Equipment, net | 133,235 | 226,112 |
Other Assets | ||
Patents, net | 131,625 | 75,279 |
Deposits | 105,541 | 156,588 |
Deferred Equity Offering Costs | 195,028 | 0 |
Total Other Assets | 432,194 | 231,867 |
Total Assets | 3,487,192 | 3,242,574 |
Current Liabilities | ||
Accounts Payable | 1,368,257 | 486,690 |
Accrued Expenses | 614,170 | 451,924 |
Sales Tax Payable | 191 | 46 |
Deferred Revenue | 835,785 | 77,514 |
Convertible Line of Credit, net of discount of $0 and $226,768 at December 31, 2018 and 2017, respectively | 960,000 | 923,232 |
Convertible Notes Payable - Current Portion, net of discount amounting to $446,381 and $175,668 at December 31, 2018 and 2017, respectively | 1,104,235 | 1,486,948 |
Convertible Note Payable - Related Party | 0 | 135,000 |
Note Payable, net of discount of $74,315 at December 31, 2018 | 788,185 | 0 |
Auto Loan-current portion | 10,520 | 9,862 |
Total Current Liabilities | 5,681,343 | 3,571,216 |
Convertible Note Payable -Related Party, net of debt discount amounting to $7,749 at December 31, 2018 | 177,251 | 0 |
Convertible Notes Payable - Long Term Portion | 100,000 | 0 |
Long-term portion of Auto Loan | 9,277 | 20,620 |
Total Long Term Liabilities | 286,528 | 20,620 |
Total Liabilities | 5,967,871 | 3,591,836 |
Stockholders' Deficit | ||
Preferred Stock, $0.001 par value, 10,000,000 authorized, 0 outstanding as of December 31, 2018 and 2017, respectively. | 0 | 0 |
Common Stock, $0.001 par value, 490,000,000 shares authorized, 145,331,495 and 141,835,662 shares issued or issuable and outstanding at December 31, 2018 and 2017, respectively. | 145,331 | 141,836 |
Additional Paid-in-Capital | 39,249,649 | 37,785,781 |
Accumulated Deficit | (41,875,659) | (38,276,879) |
Total Stockholders' Deficit | (2,480,679) | (349,262) |
Total Liabilities and Stockholders' Deficit | $ 3,487,192 | $ 3,242,574 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock par value (in Dollars per share) | $ 0.001 | $ 0.001 |
Common Stock shares authorized | 490,000,000 | 490,000,000 |
Common Stock shares issued | 145,331,495 | 141,835,662 |
Common Stock shares outstanding | 145,331,495 | 141,835,662 |
Convertible Note Payable - Related Party [Member] | ||
Unamortized discount | $ 7,749 | |
Convertible Line of Credit [Member] | ||
Unamortized discount | 0 | $ 226,768 |
Note Payable [Member] | ||
Unamortized discount | 74,315 | |
Convertible Notes Payable [Member] | ||
Unamortized discount | 446,381 | 175,668 |
Notes Payable, Other Payables [Member] | ||
Unamortized discount | $ 74,315 | |
Lender Note [Member] | ||
Unamortized discount | $ 232,768 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Revenues | $ 6,162,402 | $ 1,412,042 |
Cost of Revenues | 6,354,502 | 1,884,793 |
Gross Loss | (192,100) | (472,751) |
Operating Expenses (including stock based compensation expense of $349,072 and $430,084 for the years ended December 31, 2018 and 2017, respectively) | 2,337,446 | 2,227,645 |
Loss From Operations | (2,529,546) | (2,700,396) |
Other Income (Expense) | ||
Other Income | 3,729 | 1,762 |
Gain on sale of Fixed Assets | 16,260 | 0 |
Gain on Debt Settlement, net | 0 | 25,524 |
Interest Expense | (1,089,223) | (474,601) |
Gain on debt extinguishment | 0 | 107,081 |
Total Other Income (Expense) | (1,069,234) | (340,234) |
Loss Before Tax Expense | (3,598,780) | (3,040,630) |
Tax Expense | 0 | 800 |
Net Loss | $ (3,598,780) | $ (3,041,430) |
Net Loss Per Share- Basic and Diluted | $ (0.02) | $ (0.02) |
Weighted Average Shares Outstanding - Basic and Diluted | 144,564,006 | 127,470,749 |
Consolidated Statements of Op_2
Consolidated Statements of Operations (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||
Stock based compensation | $ 349,072 | $ 430,084 |
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, 2016 | 0 | 120,105,418 | |||
Beginning balance, value at Dec. 31, 2016 | $ 0 | $ 120,105 | $ 33,730,240 | $ (35,235,449) | $ (1,385,104) |
Stock Issued for Cash, shares | 15,633,327 | ||||
Stock Issued for Cash, value | $ 15,634 | 2,329,366 | 2,345,000 | ||
Cash Offering Costs | (53,600) | (53,600) | |||
Stock Issued for Loan Conversion, shares | 4,698,060 | ||||
Stock Issued for Loan Conversion, value | $ 4,698 | 700,011 | 704,709 | ||
Stock Issued for Services, shares | 15,000 | ||||
Stock Issued for Services, value | $ 15 | 2,235 | 2,250 | ||
Stock Issued for Services - Related Party, shares | 180,000 | ||||
Stock Issued for Services - Related Party, value | $ 180 | 26,820 | 27,000 | ||
Stock Issued for Director Services, shares | 750,000 | ||||
Stock Issued for Director Services, value | $ 750 | 111,750 | 112,500 | ||
Shares Issued for Loan Guaranty - Related Party, shares | 453,857 | ||||
Shares Issued for Loan Guaranty - Related Party | $ 454 | 67,624 | 68,078 | ||
Value of Warrants and Beneficial Conversion Features Related to Debt Instruments | 651,251 | 651,251 | |||
Stock Option Expense | 220,084 | 220,084 | |||
Net Loss | (3,041,430) | (3,041,430) | |||
Ending balance, shares at Dec. 31, 2017 | 0 | 141,835,662 | |||
Ending balance, value at Dec. 31, 2017 | $ 0 | $ 141,836 | 37,785,781 | (38,276,879) | (349,262) |
Stock Issued for Cash, shares | 1,933,333 | ||||
Stock Issued for Cash, value | $ 1,933 | 288,067 | 290,000 | ||
Cash Offering Costs | (12,000) | (12,000) | |||
Stock Issued for Director Services, shares | 1,562,500 | ||||
Stock Issued for Director Services, value | $ 1,562 | 235,938 | 237,500 | ||
Value of Warrants and Beneficial Conversion Features Related to Debt Instruments | 840,291 | 840,291 | |||
Stock Option Expense | 111,572 | 111,572 | |||
Net Loss | (3,598,780) | (3,598,780) | |||
Ending balance, shares at Dec. 31, 2018 | 145,331,495 | ||||
Ending balance, value at Dec. 31, 2018 | $ 145,331 | $ 39,249,649 | $ (41,875,659) | $ (2,480,679) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Loss | $ (3,598,780) | $ (3,041,430) |
Adjustments to Reconcile Net loss to Net Cash Used in Operating Activities: | ||
Depreciation and Amortization | 62,839 | 69,381 |
Common Stock Issued for Loan Guaranty | 0 | 68,250 |
Common Stock Issued for Services | 237,500 | 141,750 |
Gain on Debt Settlement, net | 0 | (25,524) |
Compensation Expense Related to Grant of Stock Options | 111,572 | 220,084 |
Gain on Debt Extinguishment | 0 | (107,081) |
Gain on Sale of Fixed Assets | (16,260) | 0 |
Amortization of Debt Discount | 861,782 | 271,098 |
Amortization of Debt Issue Costs | 0 | 800 |
Changes in assets and liabilities: (Increase) decrease in: | ||
Accounts Receivable | (1,284,756) | 1,155,118 |
Prepaid Expenses and Other Current Assets | (230,669) | 19,659 |
Inventory | 1,241,040 | (2,004,526) |
Deposits | 51,047 | (1,810) |
Increase (decrease) in: | ||
Accounts Payable | 881,567 | (386,322) |
Accrued Expenses | 162,246 | 146,185 |
Convertible Note Payable Issued in Lieu of Salary - Related Party | 50,000 | 85,000 |
Sales Tax Payable | 145 | (50,135) |
Deferred Revenue | 758,271 | 2,191 |
NET CASH USED IN OPERATING ACTIVITIES | (712,456) | (3,437,312) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of Equipment | (23,470) | (23,895) |
Sale of Equipment | 50,267 | 0 |
Funding of Patent Costs | (59,079) | (2,470) |
NET CASH USED IN INVESTING ACTIVITIES | (32,282) | (26,365) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from Sale of Common Stock | 290,000 | 2,345,000 |
Payments of Offering Costs Related to Sale of Common Stock | (12,000) | (53,600) |
Borrowings on Convertible Note Payable | 0 | 1,500,000 |
Borrowings (Repayments) on Convertible Line of Credit, Net | (190,000) | 1,150,000 |
Payments on Line of Credit, Net | 0 | (1,000,000) |
Repayments of Convertible Notes Payable | (12,000) | (12,000) |
Borrowings (Repayments) on Notes Payable | 750,000 | (40,000) |
Repayments of Auto Loan | (10,685) | (8,533) |
Payments of Deferred Equity Offering Costs | (195,028) | 0 |
Payments of Loan Offering Costs | (35,000) | (22,283) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 585,287 | 3,858,584 |
NET INCREASE (DECREASE) IN CASH | (159,451) | 394,907 |
CASH AT BEGINNING OF YEAR | 403,475 | 8,568 |
CASH AT END OF YEAR | 244,024 | 403,475 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid for interest | 163,555 | 73,409 |
Cash paid for tax | 0 | 800 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Shares Issued for Debt Conversion | 0 | 704,709 |
Recording of Debt Discount | 840,291 | 715,829 |
Recording of Payment Premium on Note Payable | 112,500 | 0 |
Shares Issued for Loan Guarantee - Related Party | 0 | 68,250 |
Transfer of prepaid asset to inventory | 30,272 | 21,168 |
Depreciation transferred to inventory | 22,234 | 22,004 |
Prepaid insurance financed by a third party | $ 0 | $ 2,334 |
1. CORPORATE ORGANIZATION, NATU
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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"). 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 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: environmental 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 inactive 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 and standard cost allocations, depreciable lives of property and equipment, estimates of loss contingencies, 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 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, 2018. The Company did not have any bank balances in excess of FDIC insured levels as of December 31, 2018 and had approximately $150,000 as of December 31, 2017. Concentration of Accounts Receivable At December 31, 2018 and 2017, customers that each accounted for more than 10% of our accounts receivable were as follows: 2018 2017 Customer A 82% – Customer B – 94% Concentration of Revenues For the years ended December 31, 2018 and 2017, customers that each represented more than 10% of our revenues were as follows: 2018 2017 Customer A 50% 28% Customer C – 12% 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, 2018 nor 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 December 31, 2018 and 2017, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. 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 and 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 net realizable 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, 2018 and 2017 respectively, patent amortization expense was $2,733 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 On 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 30-45 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 30-45 day period. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. Any deposits received from a customer prior to delivery of the purchased product or monies paid to us prior to the period for which a service is provided are accounted for as deferred revenue on the balance sheet. 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, but may provide multiple year warranties as negotiated, 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, 2018, the Company has no product warranty accrual given the Company’s de minimis historical financial warranty experience. COST OF REVENUES The Company records direct material and component costs, direct labor and associated benefits, and manufacturing overhead costs such as supervision, manufacturing equipment depreciation, rent, and utility costs, all of which are included in inventory prior to a sale, as costs of revenues. The Company further includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. 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 minimal amounts of labor associated with research and development projects, of $3,585 for the year ending December 31, 2018 and $1,772 for the year ending December 31, 2017. 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 $114,408 in 2018 and $81,278 in 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. 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 20,914,405 common shares, options to purchase 14,820,589 common shares and warrants to purchase 6,717,950 common shares were outstanding at December 31, 2018. 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. Dilutive common stock equivalents were not included in the computation of diluted net loss per share in 2018 and 2017 because the effects would have been anti-dilutive due to the net losses. Due to the net losses in 2018 and 2017, 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 2018 and 2017, the Company only operated in one segment; therefore, segment information has not been presented. RECLASSIFICATIONS Certain reclassifications have been made on prior period balances to conform to the current year presentation. At December 31, 2017, $62,616 was reclassified from Convertible Notes Payable – Related Parties to Convertible Notes Payable as the lender is no longer a related party. This reclassification had no impact on net loss, shareholders’ equity or cash flows as previously reported. RECENT ACCOUNTING PRONOUNCEMENTS Other than the adoption of ASC 606 “Revenue from Contracts with Customers,” there are no new accounting pronouncements that became effective during the year ended December 31, 2018 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, 2018, 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 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 2018-07 In June 2018, the Financial Accounting Standards Board issued Accounting Standards Update No. 2018-07: “Compensation -Stock Compensation (Topic 718)” which is meant to simplify and align the accounting for non-employee share-based payment transactions to the accounting for share-based payments for employees. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company expects adoption of this ASU will not have a material impact on its consolidated financial statements. |
2. GOING CONCERN
2. GOING CONCERN | 12 Months Ended |
Dec. 31, 2018 | |
Capitalization of accrued interest to convertible notes payable | |
GOING CONCERN | 2. GOING CONCERN As reflected in the accompanying consolidated financial statements for the years ended December 31, 2018 and 2017, the Company had net losses of $3,598,780 (which includes $349,072 of stock-based compensation expense) and $3,041,430 (which includes $430,084 of stock-based compensation expense), respectively, and net cash used in operating activities of $712,456 and $3,437,312, respectively. Additionally, at December 31, 2018, the Company had a working capital deficit of $2,759,580, stockholders’ deficit of $2,480,679, and accumulated deficit of $41,875,659. It is managements opinion that these factors raise substantial doubt about the Company’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 public offering of its common stock 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 become due in 2019. 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 Company’s liabilities over the next twelve months or provide additional working capital. From January 1, 2018 through December 31, 2018, the Company raised $290,000 from a private securities offering, borrowed a net $750,000 from a certain loan facility but additionally, made payments on other debt facilities totaling $212,685. 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, 2018 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE | 3. 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, 2018 and 2017, accounts receivables were as follows: December 31, 2018 December 31, 2017 Accounts receivable $ 1,290,702 $ 5,946 Less: Allowance for doubtful accounts – – Accounts receivable, Net $ 1,290,702 $ 5,946 There was no bad debt expense for either 2018 nor 2017. 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 and 16). Deferred revenue was $835,785 and $77,514 at December 31, 2018 and December 31, 2017, respectively. |
4. PREPAID EXPENSES AND OTHER C
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 4. PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets are summarized as follows: December 31, 2018 December 31, 2017 Prepaid insurance $ 29,524 $ 25,402 Deposit on future raw material purchases 226,547 30,272 Total prepaid expenses and other current assets $ 256,071 $ 55,674 |
5. INVENTORY
5. INVENTORY | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORY | 5. INVENTORY Inventories are stated at the lower of cost or net realizable value. Costs are determined using the first in- first out (FIFO) method. As of December 31, 2018 and 2017, inventory consists of the following: December 31, December 31, 2018 2017 Finished goods $ – $ 1,716,141 Work in process 443,701 311,481 Raw materials 698,689 300,479 Inventory reserve (11,424 ) (8,601 ) Inventory, net $ 1,130,966 $ 2,319,500 |
6. PROPERTY AND EQUIPMENT
6. PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT Property and equipment consists of the following: Est. Useful Lives December 31, 2018 December 31, 2017 Computer equipment and software 5 years $ 32,666 $ 32,666 Furniture and fixtures 7 years 82,529 82,529 Office equipment 5 years 3,039 20,533 Machinery and equipment 1-5 years 305,337 341,583 Autos 3 years 49,238 49,238 Leasehold improvements 47 months 6,790 6,790 Total property and equipment 479,599 533,339 Less accumulated depreciation (346,364 ) (307,227 ) Property and Equipment, Net $ 133,235 $ 226,112 Depreciation expense for 2018 and 2017 was $60,106 and $68,820, respectively. In 2018 and 2017, respectively, approximately $22,200 and $22,000 of depreciation was capitalized into inventory as manufacturing overhead costs. |
7. ACCRUED EXPENSES
7. ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | 7. ACCRUED EXPENSES The major components of accrued expenses are summarized as follows: December 31, 2018 December 31, 2017 Accrued vacation $ 196,888 $ 152,051 Accrued interest 239,838 175,953 Accrued rent 66,349 77,164 Accrued loss contingency 71,744 44,423 Other accrued expense 39,351 2,333 Total accrued expenses $ 614,170 $ 451,924 |
8. LINE OF CREDIT_TERM DEBT - S
8. LINE OF CREDIT/TERM DEBT - SILICON VALLEY BANK | 12 Months Ended |
Dec. 31, 2018 | |
Line Of Credit | |
LINE OF CREDIT/TERM DEBT - SILICON VALLEY BANK | 8. LINE OF CREDIT/TERM DEBT – SILICON VALLEY BANK AND CONVERTIBLE 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. 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 the 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”). 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. On 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 18). 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 10, and the Guaranty and all other contractual rights related to this debt facility were cancelled. Convertible Line of Credit On September 18, 2017, in addition to a convertible “Lender” note (See Note 10), 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 originally terminating 300 days after the date of the Revolver, but subsequently extended through December 31, 2019. 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 (See Note 15). 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 consolidated 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 (See Note 15). 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 consolidated 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. As of December 31, 2017, the convertible line of credit had a balance, net of a $226,768 debt discount, amounting to $923,232. 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 15). 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 was amortized to interest expense over the term of the Draw Down. This drawn down was paid back to the Lender during the three month period ended June 30, 2018. During the year ended December 31, 2018, the Company received other funds on drawdowns totaling $1,513,013 and paid back drawdowns amounting to $553,013. No warrants were owed on these drawdowns. As of December 31, 2018, the convertible line of credit had a principal balance outstanding amounting to $960,000 with accrued interest amounting to $12,909 which is included in accrued expenses (See Note 7). |
9. CONVERTIBLE NOTE PAYABLE - R
9. CONVERTIBLE NOTE PAYABLE - RELATED PARTY | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTE PAYABLE - RELATED PARTY | 9. CONVERTIBLE NOTE PAYABLE – RELATED PARTY 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 would have deferred until such time as Mr. Wheatley and the Board of Directors agreed that payment of the deferred salary and/or cessation of the deferral was appropriate. In certain circumstances upon the Company achieving specified milestones, which are described in the Agreement, Mr. Wheatley could have demanded payment of all or any portion of the deferred amount, and the Company must comply with such demand. In August 2018 this agreement was amended to where his salary shall defer until the earliest to occur of the following: (i) a permissable event specified in Section 409A of the Code, or (ii) December 31, 2020, or (iii) an event specified in Section 8.1(a) or 8.1(b) of the Agreement. In the case of a cessation of the deferral, the Company’s Board of Directors may unilaterally affect such a result by a resolution duly adopted by it without the agreement or participation of the Employee and with Employee recusing himself from the vote. Employee will be paid all of the deferred amount upon the occurrence of (a) if and when the Company experiences a “change of control” whereby more than 50% of the outstanding equity of the Company changes ownership in a single transaction or series of related transactions, or otherwise as defined in Section 15.6 of the Original Agreement, (b) a sale of all or substantially all of the assets of the Company, (c) a permissible event specified in Section 409A of the Code, or (d) on December 31, 2020. All deferred amounts are evidenced by an unsecured convertible promissory note payable by the Company to Mr. Wheatley amended and signed in October 2018, 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. As the conversion price was equivalent to the fair value of the common stock at various salary deferral dates prior to June 30, 2018, there was no beneficial conversion feature to this note through this date. Subsequent to June 30, 2018 and through December 31, 2018, and based on the average daily closing price of Our common stock, the Company recorded $8,672 of debt discount for the beneficial conversion feature value which is being amortized to interest expense over the term of the 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. The balance of the note as of December 31, 2018, is $177,251, net of debt discount amounting to $7,749, with accrued and unpaid interest amounting to $28,220 which is included in accrued expenses (See Notes 7 and 18). This Note is classified as short term as of December 31, 2017 and long term as of December 31, 2018 on the accompanying consolidated balance sheet as a result of the August 2018 amendment changing the due date to December 1, 2020. |
10. CONVERTIBLE NOTES PAYABLE A
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS | 10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS As of December 31, 2017, the following summarizes amounts owed under convertible notes payable: Amount Discount Convertible Notes Payable, net of discount Evey Note $ 62,616 $ – $ 62,616 Pegasus Note 100,000 – 100,000 “Lender” Note 1,500,000 175,668 1,324,332 $ 1,662,616 $ 175,668 $ 1,486,948 As of December 31, 2018, the following summarizes amounts owed under convertible notes payable: Amount Unamortized Discount Convertible Notes Payable, net of discount Evey Note $ 50,616 $ 15,480 $ 35,136 “Lender” Note 1,500,000 430,901 1,069,099 Convertible Notes Payable - Current Portion $ 1,550,616 $ 446,381 $ 1,104,235 Pegasus Note $ 100,000 $ – $ 100,000 Convertible Notes Payable - Long Term Portion $ 100,000 $ – $ 100,000 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. Through a series of amendments, the Company modified the 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 former 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. 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 were related parties to the Company. 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 18). At December 31, 2017, there is no outstanding balance owed for this convertible note. 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. Effective June 27, 2018, the Company entered into a further extension agreement to extend the maturity date of this note to July 1, 2019. Additionally, Mr. Evey agreed not to offer for sale, issue, sell, contract to sell, or otherwise dispose of any of our common stock or securities convertible into common stock on or before December 31, 2018 and not to offer for sale, issue, sell, contract to sell, pledge, or otherwise dispose of any of our common stock issuable upon the conversion of the note, on or before July 1, 2019. 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 Company recorded debt discount amounting to $30,960 for the value of the beneficial conversion feature and is amortizing this to interest expense over the remaining term of the loan. For the year ended December 31, 2018, in lieu of interest payments, the Company made principal payments totaling $12,000. As of December 31, 2018, this note has a balance, net of $15,480 of discount, amounting to $35,136 with accrued interest amounting to $73,382 which is included in accrued expenses (See Note 7). The note continues to bear interest at a rate of 10% . 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. Effective June 13, 2018, the Company entered into a further amendment to extend the maturity date of this note to December 31, 2019 and waive the past requirements to pay the note with financing proceeds received by the Company. Additionally, the note holders agreed not to offer for sale, issue, sell, contract to sell, pledge or otherwise dispose of any of our common stock or securities convertible into common stock, before December 31, 2019. There were no additional fees or discounts associated with this amendment. 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. As of December 31, 2018, the note had a balance of $100,000 with accrued and unpaid interest amounting to $90,137 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 8), the Company also entered into a $1,500,000 secured convertible promissory note with the same unaffiliated lender (the “Lender”). The proceeds from this funding were used to pay off the Line of Credit/Term Debt – Silicon Valley Bank (See Note 8). This 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 originally payable in full on or before September 17, 2018 to the extent not converted into shares of the Company’s common stock. This note was initially amended to be payable in full by December 1, 2018 but the Company did not make the December 1, 2018 principal payment which non payment was a defined event of default. In March 2019, but effective December 1, 2018, the Company entered into second amendment to extend the term of the note to be payable in full by the earlier of (i) June 30, 2019 or (ii) the closing of the public offering by borrower. This modification was treated as a debt 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 Company recorded debt discount amounting to $472,718 for the value of the beneficial conversion feature and is amortizing this to interest expense over the remaining term of the note. Additionally, the Company paid $30,000 of lender fees which were also recorded as debt discount and are also being amortized to interest expense over the term of the note. 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 $232,768 of debt discount consisting of the relative fair value of the warrants of $166,384 and a beneficial conversion feature of $66,384, which was amortized to interest expense over the original term of the note (See Note 15). 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 December 31, 2018, the convertible note had a balance, net of $430,901 of discount, amounting to $1,069,099 with accrued and unpaid interest amounting to $9,094 which is included in accrued expenses (See Note 7). Fair Value Measurements – Derivative Liability – relating to the Gemini Third Amended and Restated Secured Bridge Note – Current Group discussed above 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. 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, 2017: 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. |
11. NOTE PAYABLE
11. NOTE PAYABLE | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
NOTE PAYABLE | 11. NOTES PAYABLE Gemini Special Opportunities Fund, LP On August 27, 2018, the Company entered into an unsecured promissory note (the “Note”) in the amount of $750,000 (the “Principal Amount”) with Gemini Special Opportunities Fund, LP (the “Lender”). The Note bears simple interest at an annual rate of 10% and is subject to a Securities Purchase Agreement, dated August 27, 2018. This Note is due and payable on February 28, 2019 (the “Maturity Date”) (See Note 19). The Company may prepay the Note, provided if the Company repaid the Note on or prior to November 28, 2018, the Company shall pay 105% of the Principal Amount plus accrued interest, and if the Company repays the Note after November 28, 2018, including repayment on the Maturity Date, the Company shall pay 115% of the Principal Amount plus accrued interest. During the year ending December 31, 2018, the Company recorded an increase in the Note Payable balance of $112,500 with offsetting debt discount related to this repayment premium which is being amortized to interest expense over the term of the note. Additionally, the Company paid $5,000 of lender fees which were also recorded as debt discount and are also being amortized to interest expense over the term of the note. As additional consideration for the loan evidenced by the Note, the Company issued to the Lender 900,000 common stock purchase warrants exercisable for a period of five years from the date of issuance with an exercise price equal to $0.25 per share. These warrants had a fair value of $115,521 using the Black-Sholes valuation methodology. As a result of this transaction, the Company recorded $100,102 of debt discount consisting of the relative fair value of the warrants which is being amortized to interest expense over the term of the note (See Note 15). As of December 31, 2018, this note has a balance, net of $74,315 of unamortized discount, amounting to $788,185 with accrued interest amounting to $26,096 which is included in accrued expenses (See Note 7). Vendor 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. |
12. AUTO LOAN
12. AUTO LOAN | 12 Months Ended |
Dec. 31, 2018 | |
Notes Payable [Abstract] | |
AUTO LOAN | 12. 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 has a short-term portion of $9,862 and a long-term portion of $20,620. As of December 31, 2018, the loan has a short-term portion of $10,520 and a long-term portion of $9,277. |
13. COMMITMENTS AND CONTINGENCI
13. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES 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: 2019 $ 543,180 2020 404,952 Total $ 948,132 Administrative rent expense was $111,655 for each of the years ended December 31, 2018 and 2017, respectively. Further, for each of the years ended December 31, 2018 and 2017, $446,618 of rent was capitalized into inventory as manufacturing overhead costs. Additionally, at December 31, 2018 the Company owed two month’s rent totaling $97,344 which is recorded in Accounts Payable in the accompanying balance sheet. As of December 31, 2018, 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, 2018, 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 2018 and 2017, 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, 2018. 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 | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
COMMON STOCK | 14. COMMON STOCK Shares Issued Issuances of the Company’s common stock during the years ended December 31, 2018 and 2017, respectively, are as follows: 2018 Stock Issued in Cash Sales During the year ended December 31, 2018 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. Additionally, 50,000 common stock purchase warrants were issued as offering costs to the placement agents (see Note 15). Stock Issued for Director Services During the year ended December 31, 2018, the Company released and issued a total of 625,000 vested shares of common stock (related to previous years grants to each of three directors of 750,000 shares which vest on a pro rata basis over a three year period), with a per share fair value of $0.15, or $93,750 (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 $93,750 was expensed during the year ended December 31, 2018 (See Note 18). 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 the market price at the time of the agreement), 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 18). These shares were immediately expensed. On July 19, 2018, Mr. Jay S. Potter resigned as a director of Envision Solar International, and the Company accepted Mr. Potter’s resignation effective on the same date. In recognition of Mr. Potter’s long and valuable service to the Company, the Board of Directors authorized the immediate vesting and issuance to Mr. Potter of the balance of the nonperformance restricted stock award scheduled to be issued to him through December 31, 2018. As such, the Company released and issued a total of 125,000 vested shares of common stock with a per share fair value of $0.15, or $18,750 (based on the market price at the time of the agreement), which was expensed on July 19, 2018 (See Note 18). On August 22, 2018, Mr. Robert C. Schweitzer accepted an appointment as a new director of the Company effective August 22, 2018. Mr. Schweitzer is an independent director who has also accepted an appointment to serve as the chairman of the Company’s audit committee. In consideration for Mr. Schweitzer’s acceptance to serve as a director of the Company, the Company agreed to grant 1,500,000 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 per quarter, prorata, over a 36 month period commencing on September 30, 2018, issuable quarterly on the last day of each calendar quarter; provided, that the first release will be of 62,500 shares on December 31, 2018 and the last release will be of 62,500 shares on September 30, 2021; and 750,000 shares based on the achievement by the Company of certain performance goals in accordance with the Agreement . As of December 31, 2018, there were unreleased shares of common stock representing $512,500 of unrecognized restricted stock grant expense related to the Restricted Stock Grant Agreements for our Directors. 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 was obligated to issue 223,337 common stock purchase warrants to the placement agents which were issued in 2018 upon the closing of the offering. There was no financial statement accounting effect for the issuance of these warrants as their fair value was 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) $27,000. Jay Potter, our director, is the managing member of GreenCore and the individual performing the services. (See Note 18) 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 intended 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 18). The total unrecognized restricted stock grant expense related to the Restricted Stock Agreements of our directors amounted to $562,500 at December 31, 2017. Nonvested Shares A summary of activity of the nonvested shares as of December 31, 2017 and 2018 is as follows: Nonvested Shares Weighted-Average Grant-Date Fair Value Nonvested at December 31, 2017 3,750,000 $0.15 Granted 1,500,000 $0.20 Vested (1,562,500) $0.15 Forfeited (750,000) $0.15 Nonvested at December 31, 2018 2,937,500 $0.17 |
15. STOCK OPTIONS AND WARRANTS
15. STOCK OPTIONS AND WARRANTS | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS AND WARRANTS | 15. STOCK OPTIONS AND WARRANTS On August 10, 2011, the Company’s Board of Directors approved and caused the Company to adopt the Envision Solar International, Inc. 2011 Stock Incentive Plan (the “Plan”), which authorizes the issuance of up to 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 $111,572 and $220,084 for the years ended December 31, 2018 and 2017, respectively, and there was $6,638 of total unrecognized compensation cost related to unvested options granted under the Company’s options plans as of December 31, 2018. This stock option expense will be recognized through December 2019. The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model. This model incorporates certain assumptions for inputs including a risk-free market interest rate, expected dividend yield of the underlying common stock, expected option life and expected volatility in the market value of the underlying common stock. From January 1, 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. From January 1, 2018 through December 31, 2018, the Company issued 707,500 stock options under the plans with a total valuation of $94,204. All of these options have a 10 year term. We used the following assumptions for options granted in fiscal 2018 and 2017: 2018 2017 Expected volatility 82.40% 81.05% Expected term 5 Years 5 Years Risk-free interest rate 2.59% 1.5% 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, 2018 and 2017 under the 2008 and 2011 Plans are as follows: Number of Options Weighted Average Exercise Price 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 Granted 707,500 0.20 Exercised – – Forfeited (1,015,000 ) 0.19 Expired (88,575 ) 0.63 Outstanding at December 31, 2018 14,820,589 $ 0.23 Exercisable at December 31, 2018 14,674,758 $ 0.23 Weighted average grant date fair value $ 0.13 The following table summarizes information about employee stock options outstanding at December 31, 2018: Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding at December 31, 2018 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Exercisable at December 31, 2018 Weighted Average Exercise Price Aggregate Intrinsic Value $0.13-0.33 14,820,589 4.75 Years $ 0.23 $ – 14,674,758 $ 0.23 $ – 14,820,589 4.75 Years $ 0.23 $ – 14,674,758 $ 0.23 $ – As the Company’s stock price was lower than the weighted average exercise price at December 31, 2018, there is no aggregate intrinsic value of the options. Options exercisable have a weighted average remaining contractual life of 4.73 years as of December 31, 2018. The weighted average grant date fair value of options granted in 2018 and 2017 was $0.13 and $0.10 respectively. Warrants 2018 For the year ended December 31, 2018, as a part of the Company’s private placement, the Company issued 273,333 warrants to the placement agents (See Note 14). 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. During the year ended December 31, 2018 as a result of Draw Downs on our Convertible Line of Credit with Lender, the Company issued 407,784 common stock purchase warrants with a total value of $61,282 and each with a $0.1778 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. As a result of this transaction, the Company recorded $50,591 of debt discount consisting of the relative fair value of the warrants which is being amortized to interest expense over the term of the drawdown (See Note 8). In connection to the issuance of a Note Payable on August 27, 2018, the Company issued 900,000 common stock purchase warrants with a total value of $115,521 and each with a $0.25 exercise price and a 5 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 82.68%, expected dividends of 0.0%, a discount rate of 2.35%, and expected term of 5 years. As a result of this transaction, the Company recorded $100,102 of debt discount consisting of the relative fair value of the warrants which is being amortized to interest expense over the term of the note (See Note 11). During the year ended December 31, 2018, 645,067 warrants had expired. 2017 During the year ended December 31, 2017, and as additional consideration for the funding of the Convertible Note payable by the Lender, the Company issued 2,500,000 common stock purchase warrants having a value of $187,142 using the Black-Scholes valuation methodology, and each with a $0.15 exercise price and a three year term (See Note 10). The assumptions used in the valuation of these warrants include volatility of 85.78%, expected dividends of 0.0%, a discount rate of 1.50%, and expected term of 3 years. During the year ended December 31, 2017 as a result of Draw Downs on our Convertible Line of Credit with the 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 8). 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 was obligated to issue 223,337 common stock purchase warrants to the placement agents which were issued in 2018. There was no financial statement accounting effect for the issuance of these warrants as their fair value was 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 year ended December 31, 2017, 26,831,589 warrants had expired. Warrant activity for the years ended December 31, 2018 and 2017 are as follows: Number of Warrants Weighted Average Exercise Price 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 Granted 1,581,117 $ 0.21 Exercised – – Forfeited – – Expired (645,067 ) 0.25 Outstanding at December 31, 2018 6,717,950 $ 0.17 Exercisable at December 31, 2018 6,717,950 $ 0.17 Weighted average grant date fair value $ 0.13 Warrants exercisable have a weighted average remaining contractual life of 2.22 years as of December 31, 2018. The weighted average grant date fair value of options granted in 2018 and 2017 was $0.13 and $0.10 respectively. |
16. REVENUES
16. REVENUES | 12 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | 16. REVENUES For each of the identified periods, revenues can be categorized into the following: For the year ended December 31, 2018 2017 Product Sales $ 6,144,251 $ 1,401,103 Maintenance Fees 7,576 7,114 Professional Services 10,575 3,825 Total Revenues $ 6,162,402 $ 1,412,042 At December 31, 2018 and December 31, 2017, deferred revenue amounted to $835,785 and $77,514 respectively. At December 31, 2018, the Company has received an initial deposit to plan and manufacture two Solar Tree® units, and a deposit for two of our new HP EVARC units, in addition to deposits for multi-year maintenance plans for previously sold products. As of December 31, 2018, deferred revenue associated with product deposits are $791,913 and the delivery of such products are expected within the following six months, while deferred maintenance fees amounted to $43,872 and pertain to services to be provided through the second quarter of 2022. |
17. INCOME TAXES
17. INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 17. INCOME TAXES There was no Federal income tax expense for the years ended December 31, 2018 and 2017 due to the Company’s net losses. Income tax expense represents minimum state taxes due. The blended Federal and State tax rate of 27.98% 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 21% to loss before taxes), as follows: Year ended December 31, 2018 2017 Computed “expected” tax expense (benefit) $ (755,744 ) $ (1,034,086 ) State taxes, net of federal benefit (251,217 ) (171,202 ) Goodwill impairment and other non-deductible items (74,120 ) 643,016 Change in federal tax rates – 4,145,380 Change in deferred tax asset valuation allowance 1,081,081 (3,583,108 ) 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: 2018 2017 Deferred tax assets: Charitable contributions $ 2,900 $ 2,900 Reserve for bad debt 17,805 17,948 Stock options 3,448,014 3,416,792 Deferred Revenue 233,883 – Depreciation 22,937 6,920 Other 19,661 17,674 Net operating loss carryforward 7,755,622 6,957,507 Total gross deferred tax assets 11,500,822 10,419,741 Less: Deferred tax asset valuation allowance (11,432,888 ) (10,351,807 ) Total net deferred tax assets 67,934 67,934 Deferred tax liabilities: Accrued salaries (67,934 ) (67,934 ) Total deferred tax liabilities (67,934 ) (67,934 ) 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, 2018 was $11,432,888. The increase in the valuation allowance during 2018 was $1,081,081. At December 31, 2018, the Company has a net operating loss carry forward of $27,714,883 of which $24,862,803 is available to offset future net income through 2037 and $2,852,080 may be carried forward indefinitely subject to IRS defined annual usage limitations. The NOL expires during the years 2018 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 nor 2018. |
18. RELATED PARTY TRANSACTIONS
18. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS Accounts Payable and Related Party Vendor Payments 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 for professional services provided to the Company as detailed in a March 28, 2014 consulting agreement. There were no balances owed to GreenCore as of December 31, 2017. Jay Potter, our former director at the time of such payments, is the managing member of GreenCore (See Note 14). Director Compensation 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 may 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). During the year ended December 31, 2018, the Company released and issued a total of 625,000 vested shares of common stock (related to previous years grants to each of three directors of 750,000 shares which vest on a pro rata basis over a three year period), with a per share fair value of $0.15, or $93,750 (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 (See Note 14). The $93,750 was expensed during the year ended December 31, 2018. 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 the market price at the time of the agreement), or $112,500, split between 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 14). These shares were immediately expensed. On July 19, 2018, Mr. Jay S. Potter resigned as a director of Envision Solar International, and the Company accepted Mr. Potter’s resignation effective on the same date. In recognition of Mr. Potter’s long and valuable service to the Company, the Board of Directors authorized the immediate vesting and issuance to Mr. Potter of the balance of the nonperformance restricted stock award scheduled to be issued to him through December 31, 2018. As such, the Company released and issued a total of 125,000 vested shares of common stock with a per share fair value of $0.15, or $18,750 (based on the market price at the time of the agreement), which was expensed on July 19, 2018 (See Note 14). On August 22, 2018, Mr. Robert C. Schweitzer accepted an appointment as a new director of the Company effective August 22, 2018. Mr. Schweitzer is an independent director who has also accepted an appointment to serve as the chairman of the Company’s audit committee. In consideration for Mr. Schweitzer’s acceptance to serve as a director of the Company, the Company agreed to grant 1,500,000 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 per quarter, prorata, over a 36 month period commencing on September 30, 2018, issuable quarterly on the last day of each calendar quarter; provided, that the first release will be of 62,500 shares on December 31, 2018 and the last release will be of 62,500 shares on September 30, 2021; and 750,000 shares based on the achievement by the Company of certain performance goals in accordance with the Agreement. During the year ended December 31, 2018, the Company released and issued a total of 62,500 vested shares of common stock to Mr. Schweitzer with a per share fair value of $0.20, or $12,500 (based on the market price at the time of the agreement), for his service as defined in his respective Restricted Stock Grant Agreement. The $12,500 was expensed during the year ended December 31, 2018 (See Note 14). 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. 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 (See Note 8). Convertible Notes Payable to Related Parties 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 December 31, 2017 is $135,000. The balance of the note as of December 31, 2018, net of discount amounting to $7,749, is $177,251, with accrued and unpaid interest amounting to $28,220 which is included in accrued expenses (See Notes 7 and 9). This Note is classified as short term as of December 31, 2017 and long term as of December 31, 2018 on the accompanying consolidated balance sheet. 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 a convertible note outstanding and owed by the Company 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. |
19. SUBSEQUENT EVENTS
19. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS The Note Payable with Gemini Special Operations Fund, LP became due as of February 28, 2019 and thus is in technical default (See Note 11). However, effective that date, an oral forbearance agreement was granted by lender for any defaults, confirmed in writing, and is meant to be in effect until the Lender and the Company complete an amendment extending the maturity date of the note, or the note is sooner repaid by the Company. |
1. CORPORATE ORGANIZATION, NA_2
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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"). 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 | 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 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: environmental 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 | PRINCIPALS OF CONSOLIDATION The consolidated financial statements include the accounts of Envision Solar International, Inc. and its inactive wholly-owned subsidiary, Envision Solar Construction Company, Inc. All inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | USE OF ESTIMATES The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying consolidated financial statements include the allowance for doubtful accounts receivable, valuation of inventory and standard cost allocations, depreciable lives of property and equipment, estimates of loss contingencies, valuation of beneficial conversion features in convertible debt, valuation of share-based payments, and the valuation allowance on deferred tax assets. |
Concentrations | CONCENTRATIONS Concentration of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist of cash and revenues. 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, 2018. The Company did not have any bank balances in excess of FDIC insured levels as of December 31, 2018 and had approximately $150,000 as of December 31, 2017. Concentration of Accounts Receivable At December 31, 2018 and 2017, customers that each accounted for more than 10% of our accounts receivable were as follows: 2018 2017 Customer A 82% – Customer B – 94% Concentration of Revenues For the years ended December 31, 2018 and 2017, customers that each represented more than 10% of our revenues were as follows: 2018 2017 Customer A 50% 28% Customer C – 12% |
Cash and Cash Equivalents | CASH AND CASH EQUIVALENTS For the purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at December 31, 2018 nor December 31, 2017, respectively. |
Fair Value of Financial Instruments | 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, 2018 and 2017, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments. |
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. 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 Inventory is stated at the lower of cost and 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 net realizable value of such inventory may be below the carrying value. |
Property, Equipment and Depreciation | PROPERTY, EQUIPMENT AND DEPRECIATION Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of 3 to 7 years. Expenditures for maintenance and repairs, along with fixed assets below our capitalization threshold, are expensed as incurred. |
Patents | PATENTS 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, 2018 and 2017 respectively, patent amortization expense was $2,733 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 | 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 | REVENUE AND COST RECOGNITION On 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 30-45 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 30-45 day period. The Company includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. Any deposits received from a customer prior to delivery of the purchased product or monies paid to us prior to the period for which a service is provided are accounted for as deferred revenue on the balance sheet. 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, but may provide multiple year warranties as negotiated, 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, 2018, the Company has no product warranty accrual given the Company’s de minimis historical financial warranty experience. |
Cost of Revenues | COST OF REVENUES The Company records direct material and component costs, direct labor and associated benefits, and manufacturing overhead costs such as supervision, manufacturing equipment depreciation, rent, and utility costs, all of which are included in inventory prior to a sale, as costs of revenues. The Company further includes shipping and handling fees billed to customers as revenues, and shipping and handling costs as cost of revenues. |
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 minimal amounts of labor associated with research and development projects, of $3,585 for the year ending December 31, 2018 and $1,772 for the year ending December 31, 2017. |
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 $114,408 in 2018 and $81,278 in 2017. |
Stock-based compensation | STOCK-BASED COMPENSATION The Company follows ASC 718, “Compensation – Stock Compensation.” ASC 718 requires companies to estimate and recognize the fair value of stock-based awards to employees and directors. The fair value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees”. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option pricing model. |
Income taxes | INCOME TAXES The Company accounts for income taxes pursuant to the provisions of ASC Topic 740, “Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company follows the provisions of ASC 740-10-25-5, “ .” The Company recognizes the benefit of a tax position when it is effectively settled. ASC 740-10-25-10, “Basic Recognition Threshold” provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. ASC 740-10-25-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority. For tax positions considered effectively settled, the Company recognizes the full amount of the tax benefit. |
Basic and Diluted Net Loss per Common Share | BASIC AND DILUTED NET LOSS PER COMMON SHARE Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. Convertible debt convertible into 20,914,405 common shares, options to purchase 14,820,589 common shares and warrants to purchase 6,717,950 common shares were outstanding at December 31, 2018. 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. Dilutive common stock equivalents were not included in the computation of diluted net loss per share in 2018 and 2017 because the effects would have been anti-dilutive due to the net losses. Due to the net losses in 2018 and 2017, basic and diluted net loss per share amounts are the same. These potential common shares may dilute future earnings per share. |
Contingencies | CONTINGENCIES Certain conditions may exist as of the date the consolidated financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed. The Company does not include legal costs in its estimates of amounts to accrue. |
Segments | SEGMENTS The Company follows the guidance of ASC 280-10 for “Disclosures about Segments of an Enterprise and Related Information." During 2018 and 2017, the Company only operated in one segment; therefore, segment information has not been presented. |
Reclassifications | RECLASSIFICATIONS Certain reclassifications have been made on prior period balances to conform to the current year presentation. At December 31, 2017, $62,616 was reclassified from Convertible Notes Payable – Related Parties to Convertible Notes Payable as the lender is no longer a related party. This reclassification had no impact on net loss, shareholders’ equity or cash flows as previously reported. |
Recent Accounting Pronouncements | RECENT ACCOUNTING PRONOUNCEMENTS Other than the adoption of ASC 606 “Revenue from Contracts with Customers,” there are no new accounting pronouncements that became effective during the year ended December 31, 2018 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, 2018, 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 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 2018-07 In June 2018, the Financial Accounting Standards Board issued Accounting Standards Update No. 2018-07: “Compensation -Stock Compensation (Topic 718)” which is meant to simplify and align the accounting for non-employee share-based payment transactions to the accounting for share-based payments for employees. This guidance is effective for interim and annual reporting periods beginning after December 15, 2018. The Company expects adoption of this ASU will not have a material impact on its consolidated financial statements. |
1. CORPORATE ORGANIZATION, NA_3
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Concentration of Credit Risk | Concentration of Accounts Receivable At December 31, 2018 and 2017, customers that each accounted for more than 10% of our accounts receivable were as follows: 2018 2017 Customer A 82% – Customer B – 94% Concentration of Revenues For the years ended December 31, 2018 and 2017, customers that each represented more than 10% of our revenues were as follows: 2018 2017 Customer A 50% 28% Customer C – 12% |
3. ACCOUNTS RECEIVABLE, AND D_2
3. ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Receivables [Abstract] | |
Accounts receivable | At December 31, 2018 and 2017, accounts receivables were as follows: December 31, 2018 December 31, 2017 Accounts receivable $ 1,290,702 $ 5,946 Less: Allowance for doubtful accounts – – Accounts receivable, Net $ 1,290,702 $ 5,946 |
4. PREPAID EXPENSES AND OTHER_2
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 December 31, 2017 Prepaid insurance $ 29,524 $ 25,402 Deposit on future raw material purchases 226,547 30,272 Total prepaid expenses and other current assets $ 256,071 $ 55,674 |
5. INVENTORY (Tables)
5. INVENTORY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventories are stated at the lower of cost or net realizable value. Costs are determined using the first in- first out (FIFO) method. As of December 31, 2018 and 2017, inventory consists of the following: December 31, December 31, 2018 2017 Finished goods $ – $ 1,716,141 Work in process 443,701 311,481 Raw materials 698,689 300,479 Inventory reserve (11,424 ) (8,601 ) Inventory, net $ 1,130,966 $ 2,319,500 |
6. PROPERTY AND EQUIPMENT (Tabl
6. PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | Property and equipment consists of the following: Est. Useful Lives December 31, 2018 December 31, 2017 Computer equipment and software 5 years $ 32,666 $ 32,666 Furniture and fixtures 7 years 82,529 82,529 Office equipment 5 years 3,039 20,533 Machinery and equipment 1-5 years 305,337 341,583 Autos 3 years 49,238 49,238 Leasehold improvements 47 months 6,790 6,790 Total property and equipment 479,599 533,339 Less accumulated depreciation (346,364 ) (307,227 ) Property and Equipment, Net $ 133,235 $ 226,112 |
7. ACCRUED EXPENSES (Tables)
7. ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accrued expense schedule | The major components of accrued expenses are summarized as follows: December 31, 2018 December 31, 2017 Accrued vacation $ 196,888 $ 152,051 Accrued interest 239,838 175,953 Accrued rent 66,349 77,164 Accrued loss contingency 71,744 44,423 Other accrued expense 39,351 2,333 Total accrued expenses $ 614,170 $ 451,924 |
10. CONVERTIBLE NOTES PAYABLE_2
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Convertible Notes Payable - Related Parties And Fair Value Measurements | |
Convertible notes payable summary | As of December 31, 2017, the following summarizes amounts owed under convertible notes payable: Amount Discount Convertible Notes Payable, net of discount Evey Note $ 62,616 $ – $ 62,616 Pegasus Note 100,000 – 100,000 “Lender” Note 1,500,000 175,668 1,324,332 $ 1,662,616 $ 175,668 $ 1,486,948 As of December 31, 2018, the following summarizes amounts owed under convertible notes payable: Amount Unamortized Discount Convertible Notes Payable, net of discount Evey Note $ 50,616 $ 15,480 $ 35,136 “Lender” Note 1,500,000 430,901 1,069,099 Convertible Notes Payable - Current Portion $ 1,550,616 $ 446,381 $ 1,104,235 Pegasus Note $ 100,000 $ – $ 100,000 Convertible Notes Payable - Long Term Portion $ 100,000 $ – $ 100,000 |
Summary of activity of Level 3 liabilities | The following is a summary of activity of Level 3 liabilities for the periods ended December 31, 2017: Balance at December 31, 2016 $ 107,081 Gain on debt extinguishment (107,081 ) Balance at December 31, 2017 $ – |
13. COMMITMENTS AND CONTINGEN_2
13. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Annual minimum lease payments | Future annual minimum lease payments related to our facility lease are as follows: 2019 $ 543,180 2020 404,952 Total $ 948,132 |
14. COMMON STOCK (Tables)
14. COMMON STOCK (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Nonvested Shares Activity Table | Nonvested Shares Weighted-Average Grant-Date Fair Value Nonvested at December 31, 2017 3,750,000 $0.15 Granted 1,500,000 $0.20 Vested (1,562,500) $0.15 Forfeited (750,000) $0.15 Nonvested at December 31, 2018 2,937,500 $0.17 |
15. STOCK OPTIONS AND WARRANTS
15. STOCK OPTIONS AND WARRANTS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Assumptions for options granted | We used the following assumptions for options granted in fiscal 2018 and 2017: 2018 2017 Expected volatility 82.40% 81.05% Expected term 5 Years 5 Years Risk-free interest rate 2.59% 1.5% Expected dividend yield None None |
Rollforward of option activity | Option activity for the years ended December 31, 2018 and 2017 under the 2008 and 2011 Plans are as follows: Number of Options Weighted Average Exercise Price 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 Granted 707,500 0.20 Exercised – – Forfeited (1,015,000 ) 0.19 Expired (88,575 ) 0.63 Outstanding at December 31, 2018 14,820,589 $ 0.23 Exercisable at December 31, 2018 14,674,758 $ 0.23 Weighted average grant date fair value $ 0.13 |
Stock options information by exercise price | The following table summarizes information about employee stock options outstanding at December 31, 2018: Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding at December 31, 2018 Weighted Average Remaining Contractual Life Weighted Average Exercise Price Aggregate Intrinsic Value Number Exercisable at December 31, 2018 Weighted Average Exercise Price Aggregate Intrinsic Value $0.13-0.33 14,820,589 4.75 Years $ 0.23 $ – 14,674,758 $ 0.23 $ – 14,820,589 4.75 Years $ 0.23 $ – 14,674,758 $ 0.23 $ – |
Warrant activity | Warrant activity for the years ended December 31, 2018 and 2017 are as follows: Number of Warrants Weighted Average Exercise Price 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 Granted 1,581,117 $ 0.21 Exercised – – Forfeited – – Expired (645,067 ) 0.25 Outstanding at December 31, 2018 6,717,950 $ 0.17 Exercisable at December 31, 2018 6,717,950 $ 0.17 Weighted average grant date fair value $ 0.13 |
16. REVENUES (Tables)
16. REVENUES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Notes to Financial Statements | |
Schedule of revenues | For each of the identified periods, revenues can be categorized into the following: For the year ended December 31, 2018 2017 Product Sales $ 6,144,251 $ 1,401,103 Maintenance Fees 7,576 7,114 Professional Services 10,575 3,825 Total Revenues $ 6,162,402 $ 1,412,042 |
17. INCOME TAXES (Tables)
17. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income tax reconciliation | Year ended December 31, 2018 2017 Computed “expected” tax expense (benefit) $ (755,744 ) $ (1,034,086 ) State taxes, net of federal benefit (251,217 ) (171,202 ) Goodwill impairment and other non-deductible items (74,120 ) 643,016 Change in federal tax rates – 4,145,380 Change in deferred tax asset valuation allowance 1,081,081 (3,583,108 ) Income tax expense $ – $ – |
Deferred tax assets and liabilities | 2018 2017 Deferred tax assets: Charitable contributions $ 2,900 $ 2,900 Reserve for bad debt 17,805 17,948 Stock options 3,448,014 3,416,792 Deferred Revenue 233,883 – Depreciation 22,937 6,920 Other 19,661 17,674 Net operating loss carryforward 7,755,622 6,957,507 Total gross deferred tax assets 11,500,822 10,419,741 Less: Deferred tax asset valuation allowance (11,432,888 ) (10,351,807 ) Total net deferred tax assets 67,934 67,934 Deferred tax liabilities: Accrued salaries (67,934 ) (67,934 ) Total deferred tax liabilities (67,934 ) (67,934 ) Total net deferred taxes $ – $ – |
1. CORPORATE ORGANIZATION, NA_4
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Customer B [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 0.00% | 94.00% |
Customer C [Member] | Sales Revenue, Net [Member] | ||
Concentration risk percentage | 0.00% | 12.00% |
Customer A [Member] | Accounts Receivable [Member] | ||
Concentration risk percentage | 82.00% | 0.00% |
Customer A [Member] | Sales Revenue, Net [Member] | ||
Concentration risk percentage | 50.00% | 28.00% |
1. CORPORATE ORGANIZATION, NA_5
1. CORPORATE ORGANIZATION, NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Uninsured cash | $ 0 | $ 150,000 |
Cash equivalents | $ 0 | 0 |
Property and equipment estimated useful lives | 3 to 7 years | |
Amortization of intangible asset | $ 2,733 | 561 |
Accrued warranty reserve | 0 | 0 |
Research and development costs | 3,585 | 1,772 |
Advertising costs | $ 114,408 | $ 81,278 |
Warrant Shares [Member] | ||
Potentially dilutive stock equivalents outstanding | 6,717,950 | 5,781,900 |
Convertible Debt Shares [Member] | ||
Potentially dilutive stock equivalents outstanding | 20,914,405 | 19,846,181 |
Option Shares [Member] | ||
Potentially dilutive stock equivalents outstanding | 14,820,589 | 15,216,664 |
2. GOING CONCERN (Details Narra
2. GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Capitalization of accrued interest to convertible notes payable | |||
Net losses | $ (3,598,780) | $ (3,041,430) | |
Stock based compensation expense | 349,072 | 430,084 | |
Net cash used in operations | (712,456) | (3,437,312) | |
Working capital | (2,759,580) | ||
Stockholders' deficit | (2,480,679) | (349,262) | $ (1,385,104) |
Accumulated deficit | (41,875,659) | (38,276,879) | |
Proceeds from offering | 290,000 | $ 2,345,000 | |
Borrowings on line of credit, net | 750,000 | ||
Payments of other debt facilities | $ 212,685 |
3. ACCOUNTS RECEIVABLE, AND D_3
3. ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE (Details-Accounts Receivable) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Receivables [Abstract] | ||
Accounts receivable | $ 1,290,702 | $ 5,946 |
Less: Allowance for doubtful accounts | 0 | 0 |
Accounts receivable, Net | $ 1,290,702 | $ 5,946 |
3. ACCOUNTS RECEIVABLE, AND D_4
3. ACCOUNTS RECEIVABLE, AND DEFERRED REVENUE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Receivables [Abstract] | ||
Bad debt expense | $ 0 | $ 0 |
Deferred revenue | $ 835,785 | $ 77,514 |
4. PREPAID EXPENSES AND OTHER_3
4. PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 29,524 | $ 25,402 |
Deposit on future raw material purchases | 226,547 | 30,272 |
Total prepaid expenses and other current assets | $ 256,071 | $ 55,674 |
5. INVENTORY (Details)
5. INVENTORY (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 0 | $ 1,716,141 |
Work in process | 443,701 | 311,481 |
Raw materials | 698,689 | 300,479 |
Inventory reserve | (11,424) | (8,601) |
Inventory, net | $ 1,130,966 | $ 2,319,500 |
6. PROPERTY AND EQUIPMENT (Deta
6. PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Estimated useful lives | 3 to 7 years | |
Total property and equipment | $ 479,599 | $ 533,339 |
Less accumulated depreciation | (346,364) | (307,227) |
Property and Equipment, Net | $ 133,235 | 226,112 |
Computer equipment and software [Member] | ||
Estimated useful lives | 5 years | |
Total property and equipment | $ 32,666 | 32,666 |
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 | $ 3,039 | 20,533 |
Machinery and equipment [Member] | ||
Estimated useful lives | 1-5 years | |
Total property and equipment | $ 305,337 | 341,583 |
Autos [Member] | ||
Estimated useful lives | 3 years | |
Total property and equipment | $ 49,238 | 49,238 |
Leasehold Improvements [Member] | ||
Estimated useful lives | 47 months | |
Total property and equipment | $ 6,790 | $ 6,790 |
6. PROPERTY AND EQUIPMENT (De_2
6. PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 60,106 | $ 68,820 |
Depreciation expense capitalized | $ 22,200 | $ 22,000 |
7. ACCRUED EXPENSES (Details)
7. ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued vacation | $ 196,888 | $ 152,051 |
Accrued interest | 239,838 | 175,953 |
Accrued rent | 66,349 | 77,164 |
Accrued loss contingency | 71,744 | 44,423 |
Other accrued expense | 39,351 | 2,333 |
Total accrued expenses | $ 614,170 | $ 451,924 |
8. LINE OF CREDIT_TERM DEBT -_2
8. LINE OF CREDIT/TERM DEBT - SILICON VALLEY BANK AND CONVERTIBLE LINE OF CREDIT (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Apr. 29, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | |
Gain on settlement of debt | $ 0 | $ 107,081 | |||
Proceeds from line of credit | 750,000 | ||||
Convertible Line of Credit | $ 960,000 | 923,232 | |||
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. | ||||
Commitment fee paid | $ 2,500 | ||||
Reimbursement of bank expenses for documentation | 10,000 | ||||
Reimbursement of filing fees | $ 1,836 | ||||
Payment of debt issuance costs | 9,655 | ||||
Proceeds from line of credit | 500,000 | ||||
Repayment of credit line | 1,500,000 | ||||
Loan and Security Agreement [Member] | Loan Guaranty [Member] | Keshif Ventures, LLC [Member] | |||||
Stock issued for loan guaranty, shares issued | 219,555 | 234,302 | |||
Stock issued for loan guaranty, value | $ 32,933 | $ 35,145 | |||
Gain on settlement of debt | $ (2,183) | $ 2,355 | |||
Notes Payable, Other Payables [Member] | |||||
Payment of debt issuance costs | 5,000 | ||||
Unamortized discount | 74,315 | ||||
Convertible Line of Credit [Member] | |||||
Warrants issued | 1,916,667 | ||||
Warrants issued fair value | $ 179,612 | ||||
Unamortized discount | 0 | $ 226,768 | |||
Lender Note [Member] | |||||
Warrants issued | 2,500,000 | ||||
Warrants issued fair value | $ 187,142 | ||||
Beneficial conversion features | 66,384 | ||||
Unamortized discount | 232,768 | ||||
Unsecured Convertible Promissory note [Member] | Desmond Wheatley [Member] | |||||
Unamortized discount | 7,749 | ||||
Accrued interest | 28,220 | ||||
Pegasus Note [Member] | |||||
Accrued interest | 90,137 | ||||
Convertible Note Payable - Related Party [Member] | |||||
Unamortized discount | 7,749 | ||||
Note Payable [Member] | |||||
Unamortized discount | 74,315 | ||||
Convertible Notes Payable [Member] | |||||
Unamortized discount | 446,381 | 175,668 | |||
Revolver [Member] | |||||
Line of credit maximum borrowing capacity | $ 3,000,000 | ||||
Line of credit maturity date | Dec. 31, 2019 | ||||
Convertible Line of Credit | $ 960,000 | 923,232 | |||
Unamortized discount | 226,768 | ||||
Accrued interest | 12,909 | ||||
Revolver [Member] | Third Drawdown [Member] | |||||
Proceeds from line of credit | $ 290,000 | ||||
Warrants issued | 407,784 | ||||
Warrants issued fair value | $ 61,282 | ||||
Beneficial conversion features | 161,829 | ||||
Unamortized discount | 212,420 | ||||
Revolver [Member] | Other Drawdowns [Member] | |||||
Proceeds from line of credit | 1,513,013 | ||||
Repayment of credit line | $ 553,013 | ||||
Revolver [Member] | Second Draw Down [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] | Initial Draw Down [Member] | |||||
Proceeds from line of credit | $ 850,000 | ||||
Warrants issued | 1,416,667 | ||||
Warrants issued fair value | $ 122,992 | ||||
Beneficial conversion features | $ 243,223 |
9. CONVERTIBLE NOTE PAYABLE -_2
9. CONVERTIBLE NOTE PAYABLE - RELATED PARTY (Details Narrative) - USD ($) | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Convertible note payable - related parties | $ 0 | $ 135,000 |
Wheatley Note [Member] | ||
Convertible note payable - related parties | 177,251 | $ 135,000 |
Accrued and unpaid interest | 28,220 | |
Beneficial conversion features | 8,672 | |
Unamortized discount | $ 7,749 |
10. CONVERTIBLE NOTES PAYABLE_3
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details - Convertible notes payable) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 |
Convertible notes payable, net - current portion | $ 1,104,235 | $ 1,486,948 | |
Convertible notes payable, net - long term portion | 100,000 | 0 | |
Convertible Notes Payable [Member] | |||
Convertible notes payable, current portion | 1,550,616 | 1,662,616 | |
Unamortized discount | 446,381 | 175,668 | |
Convertible notes payable, net - current portion | 1,104,235 | 1,486,948 | |
Convertible notes payable, net - long term portion | 100,000 | ||
Pegasus Note [Member] | |||
Convertible notes payable, net - current portion | 100,000 | ||
Notes Payable, Other Payables [Member] | |||
Unamortized discount | 74,315 | ||
Convertible Note Payable - Related Party [Member] | |||
Unamortized discount | 7,749 | ||
Note Payable [Member] | |||
Unamortized discount | 74,315 | ||
Convertible Line of Credit [Member] | |||
Unamortized discount | 0 | 226,768 | |
Lender Note [Member] | |||
Unamortized discount | 232,768 | ||
Convertible notes payable, net - current portion | 1,500,000 | ||
Evey Note [Member] | Convertible Notes Payable [Member] | |||
Convertible notes payable, current portion | 50,616 | 62,616 | |
Unamortized discount | 15,480 | 0 | |
Convertible notes payable, net - current portion | 35,136 | 62,616 | |
Lender Note [Member] | Convertible Notes Payable [Member] | |||
Convertible notes payable, current portion | 1,500,000 | 1,500,000 | |
Unamortized discount | 430,901 | 175,668 | |
Convertible notes payable, net - current portion | 1,069,099 | 1,324,332 | |
Pegasus Note [Member] | Convertible Notes Payable [Member] | |||
Convertible notes payable, current portion | 100,000 | ||
Unamortized discount | 0 | ||
Convertible notes payable, net - current portion | 100,000 | ||
Convertible notes payable, net - long term portion | $ 100,000 | ||
Gemini Master Fund - Third Amended [Member] | Convertible Notes Payable [Member] | |||
Convertible notes payable, net - current portion | $ 0 | $ 600,000 |
10. CONVERTIBLE NOTES PAYABLE_4
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details-Level 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract] | ||
Beginning balance | $ 0 | $ 107,081 |
Gain on extinguishment of debt | $ 0 | (107,081) |
Ending balance | $ 0 |
10. CONVERTIBLE NOTES PAYABLE_5
10. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||
Feb. 05, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | |
Convertible note balance | $ 1,104,235 | $ 1,104,235 | $ 1,486,948 | ||
Conversion of debt, amount converted | 600,000 | ||||
Conversion of debt, interest converted | $ 104,709 | ||||
Conversion of debt, shares issued | 4,698,060 | ||||
Payments on convertible note | 12,000 | $ 12,000 | |||
Wheatley Note [Member] | |||||
Debt discount | 7,749 | 7,749 | |||
Accrued and unpaid interest | 28,220 | 28,220 | |||
Beneficial conversion features | 8,672 | ||||
Lender Note [Member] | |||||
Convertible note balance | 1,500,000 | ||||
Debt discount | $ 232,768 | ||||
Warrants issued | 2,500,000 | ||||
Warrants issued fair value | $ 187,142 | ||||
Beneficial conversion features | 66,384 | ||||
Lender Note [Member] | December Amendment [Member] | |||||
Convertible note balance | 1,069,099 | 1,069,099 | |||
Debt discount | 430,901 | 430,901 | |||
Lenders fees recorded as debt discount | 30,000 | 30,000 | |||
Accrued and unpaid interest | 9,094 | $ 9,094 | |||
Debt maturity date | Jun. 30, 2019 | ||||
Notes Payable, Other Payables [Member] | |||||
Debt discount | $ 74,315 | $ 74,315 | |||
Interest rate on convertible note | 10.00% | 10.00% | |||
Debt maturity date | Feb. 28, 2019 | ||||
Convertible Line of Credit [Member] | |||||
Debt discount | $ 0 | $ 0 | $ 226,768 | ||
Warrants issued | 1,916,667 | ||||
Warrants issued fair value | $ 179,612 | ||||
Convertible Notes Payable [Member] | |||||
Convertible note balance | 1,104,235 | 1,104,235 | 1,486,948 | ||
Debt discount | 446,381 | 446,381 | 175,668 | ||
Convertible Note Payable - Related Party [Member] | |||||
Debt discount | 7,749 | 7,749 | |||
Note Payable [Member] | |||||
Debt discount | $ 74,315 | $ 74,315 | |||
Automobile Loan [Member] | |||||
Interest rate on convertible note | 5.99% | 5.99% | |||
Pegasus Note [Member] | |||||
Convertible note balance | $ 100,000 | $ 100,000 | |||
Accrued and unpaid interest | 90,137 | $ 90,137 | |||
Gemini Master Fund - Third Amended [Member] | Convertible Notes Payable [Member] | |||||
Conversion of debt, amount converted | $ 600,000 | ||||
Conversion of debt, interest converted | $ 104,709 | ||||
Conversion of debt, shares issued | 4,698,060 | ||||
Gemini Master Fund - Third Amended [Member] | Convertible Notes Payable [Member] | |||||
Convertible note balance | 0 | $ 600,000 | |||
Evey Note [Member] | Convertible Notes Payable [Member] | |||||
Debt maturity date | Jul. 1, 2019 | ||||
Payments on convertible note | $ 12,000 | ||||
Evey Note [Member] | Convertible Notes Payable [Member] | |||||
Convertible note balance | 35,136 | 35,136 | 62,616 | ||
Debt discount | 15,480 | 15,480 | 0 | ||
Accrued and unpaid interest | $ 73,382 | $ 73,382 | |||
Interest rate on convertible note | 10.00% | 10.00% | |||
Lender Note [Member] | Convertible Notes Payable [Member] | |||||
Convertible note balance | $ 1,069,099 | $ 1,069,099 | 1,324,332 | ||
Debt discount | $ 430,901 | $ 430,901 | 175,668 | ||
Pegasus Note [Member] | Convertible Notes Payable [Member] | |||||
Convertible note balance | 100,000 | ||||
Debt discount | $ 0 |
11. NOTE PAYABLE (Details Narra
11. NOTE PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Note Payable | $ 788,185 | $ 0 |
Accrued interest | 239,838 | 175,953 |
Notes Payable, Other Payables [Member] | ||
Debt original amount | $ 750,000 | |
Debt interest rate | 10.00% | |
Maturity Date | Feb. 28, 2019 | |
Increase in note payable balance | $ 112,500 | |
Lender fees recorded as debt discount | $ 5,000 | |
Warrants issued, shares | 900,000 | |
Warrant term | 5 years | |
Warrant exercise price | $ 0.25 | |
Fair value of warrants | $ 115,521 | |
Amortized of debt discount | 100,102 | |
Note Payable | 788,185 | |
Unamortized discount | 74,315 | |
Accrued interest | $ 26,096 | |
Vendor Note Payable [Member] | ||
Payment of notes payable | 40,000 | |
Gain on debt settlement | 25,352 | |
Automobile Loan [Member] | ||
Debt interest rate | 5.99% | |
Convertible Note Payable - Related Party [Member] | ||
Unamortized discount | $ 7,749 | |
Note Payable [Member] | ||
Unamortized discount | 74,315 | |
Convertible Line of Credit [Member] | ||
Unamortized discount | 0 | 226,768 |
Convertible Notes Payable [Member] | ||
Unamortized discount | $ 446,381 | 175,668 |
Lender Note [Member] | ||
Unamortized discount | $ 232,768 |
12. AUTO LOAN (Details Narrativ
12. AUTO LOAN (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Automobile Loan [Member] | ||
Debt interest rate | 5.99% | |
Auto loan current | $ 10,520 | $ 9,862 |
Auto loan noncurrent | $ 9,277 | $ 20,620 |
Notes Payable, Other Payables [Member] | ||
Debt interest rate | 10.00% |
13. COMMITMENTS AND CONTINGEN_3
13. COMMITMENTS AND CONTINGENCIES (Details - Future lease payments) | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum operating lease payments, 2019 | $ 543,180 |
Future minimum operating lease payments, 2020 | 404,952 |
Future minimum operating lease payments | $ 948,132 |
13. COMMITMENTS AND CONTINGEN_4
13. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Security deposit | $ 146,091 | |
Administrative rent expense | 111,655 | $ 111,655 |
Rent capitalized into inventory as manufacturing overhead costs | 446,618 | $ 446,618 |
Lease Agreements [Member] | ||
Leases payable | $ 97,344 |
14. COMMON STOCK (Details)
14. COMMON STOCK (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Common Stock | Nonvested Shares [Member] | ||
Number of Nonvested Shares | ||
Number of Nonvested Shares Outstanding, Beginning | 3,750,000 | |
Number of Nonvested Shares Granted | 1,500,000 | |
Number of Nonvested Shares Vested | (1,562,000) | |
Number of Nonvested Shares Forfeited | (750,000) | |
Number of Nonvested Shares Outstanding, Ending | 2,937,500 | 3,750,000 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.15 | |
Weighted Average Exercise Price Granted | 0.20 | |
Weighted Average Exercise Price Vested | 0.15 | |
Weighted Average Exercise Price Forfeited | 0.15 | |
Weighted Average Exercise Price Outstanding, Ending | $ 0.17 | $ 0.15 |
Employee Stock Option [Member] | ||
Number of Nonvested Shares | ||
Number of Nonvested Shares Granted | 707,500 | 645,000 |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Granted | $ 0.20 | $ 0.16 |
14. COMMON STOCK (Details Narra
14. COMMON STOCK (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock issued for cash, value | $ 290,000 | $ 2,345,000 |
Cash offering costs | 12,000 | 53,600 |
Conversion of debt, amount converted | 600,000 | |
Conversion of debt, interest converted | $ 104,709 | |
Conversion of debt, shares issued | 4,698,060 | |
Conversion of debt principal amount | $ 704,709 | |
Stock Issued for Services, value | 2,250 | |
Stock Issued for Services - Related Party,value | 27,000 | |
Gain on settlement of debt | $ 0 | 107,081 |
Shares Issued for Loan Guaranty - Related Party. value | $ 68,078 | |
Private Placement [Member] | ||
Stock issued for cash, shares | 15,633,327 | |
Stock issued for cash, value | $ 2,345,000 | |
Cash offering costs | $ 53,600 | |
Stock issued for purchase of warrants | 223,337 | |
Service [Member] | ||
Stock Issued for Services, shares | 15,000 | |
Stock Issued for Services, value | $ 2,250 | |
Jay Potter [Member] | ||
Stock Issued for Services - Related Party, shares | 125,000 | |
Stock Issued for Services - Related Party,value | $ 18,750 | |
Keshif Ventures LLC [Member] | ||
Stock issued for cash, shares | 1,333,333 | |
Stock issued for cash, value | $ 200,000 | |
Conversion of debt, shares issued | 2,315,940 | |
GreenCoreCapitalLLCMember | Stock Issued for Services [Member] | ||
Stock Issued for Services - Related Party, shares | 180,000 | |
Stock Issued for Services - Related Party,value | $ 27,000 | |
GreenCore Capital [Member] | ||
Stock Issued for Services - Related Party, shares | 180,000 | |
Stock Issued for Services - Related Party,value | $ 27,000 | |
Warrants [Member] | Private Placement [Member] | ||
Stock issued for cash, shares | 1,933,333 | |
Stock issued for cash, value | $ 290,000 | |
Cash offering costs | $ 12,000 | |
Stock issued for purchase of warrants | 50,000 | |
Restricted Stock [Member] | ||
Unrecognized stock expense | $ 562,500 | $ 562,500 |
Restricted Stock [Member] | Stock Issued for Services [Member] | ||
Stock Issued for Services, shares | 2,250,000 | |
Stock Issued for Services, value | $ 337,500 | |
Restricted Stock [Member] | Three Directors [Member] | Stock Issued for Services [Member] | ||
Stock Issued for Services, shares | 625,000 | |
Stock Issued for Services, value | $ 93,750 | |
Stock issued for performance of duties, shares | 750,000 | |
Stock issued for performance of duties, value | $ 112,500 | |
Schweitzer [Member] | ||
Stock Issued for Services, shares | 62,500 | |
Stock Issued for Services, value | $ 12,500 | |
Potter [Member] | ||
Stock Issued for Services, shares | 125,000 | |
Stock Issued for Services, value | $ 18,750 |
15. STOCK OPTIONS AND WARRANT_2
15. STOCK OPTIONS AND WARRANTS (Details-Assumptions) - Employee Stock Option [Member] | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Expected volatility | 82.40% | 81.05% |
Expected remaining term | 5 Years | 5 Years |
Risk-free interest rate | 2.59% | 1.50% |
Expected dividend yield | 0.00% | 0.00% |
15. STOCK OPTIONS AND WARRANT_3
15. STOCK OPTIONS AND WARRANTS (Details-Option Activity) - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted Average Exercise Price | ||
Weighted average grant date fair value | $ 0.13 | $ 0.10 |
Employee Stock Option [Member] | ||
Number of Options | ||
Number of Options Outstanding, Beginning | 15,216,664 | 19,917,007 |
Number of Options Granted | 707,500 | 645,000 |
Number of Options Exercised | 0 | 0 |
Number of Options Forfeited | (1,015,000) | (1,095,000) |
Number of Options Expired | (88,575) | (4,250,343) |
Number of Options Outstanding, Ending | 14,820,589 | 15,216,664 |
Number of Options Exercisable, Ending | 14,674,758 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.23 | $ 0.25 |
Weighted Average Exercise Price Granted | 0.20 | 0.16 |
Weighted Average Exercise Price Exercised | 0 | 0 |
Weighted Average Exercise Price Forfeited | 0.19 | 0.19 |
Weighted Average Exercise Price Expired | 0.63 | 0.33 |
Weighted Average Exercise Price Outstanding, Ending | 0.23 | 0.23 |
Weighted Average Exercise Price Exercisable, Ending | 0.23 | |
Weighted average grant date fair value | $ 0.13 | $ 0.10 |
15. STOCK OPTIONS AND WARRANT_4
15. STOCK OPTIONS AND WARRANTS (Details-Options Outstanding and Exercisable) - Employee Stock Option [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Number of Outstanding | 14,820,589 | 15,216,664 | 19,917,007 |
Weighted Average Remaining Contractual Life | 4 years 9 months | ||
Weighted Average Exercise Price | $ 0.23 | $ 0.23 | $ 0.25 |
Aggregate Intrinsic Value | $ 0 | ||
Number of Exercisable | 14,674,758 | ||
Weighted Average Exercise Price | $ 0.23 | ||
Aggregate Intrinsic Value | $ 0 | ||
0.13-0.33 [Member] | |||
Range of Exercise Price, Lower | $ 0.13 | ||
Range of Exercise Price, Upper | $ 0.33 | ||
Number of Outstanding | 14,820,589 | ||
Weighted Average Remaining Contractual Life | 4 years 9 months | ||
Weighted Average Exercise Price | $ 0.23 | ||
Aggregate Intrinsic Value | $ 0 | ||
Number of Exercisable | 14,674,758 | ||
Weighted Average Exercise Price | $ 0.23 | ||
Aggregate Intrinsic Value | $ 0 |
15. STOCK OPTIONS AND WARRANT_5
15. STOCK OPTIONS AND WARRANTS (Details-Warrant Activity) - Warrants [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Number of Warrants | ||
Number of Warrants Outstanding, Beginning | 5,781,900 | 28,196,822 |
Number of Warrants Granted | 0 | 4,416,667 |
Number of Warrants Exercised | 0 | 0 |
Number of Warrants Forfeited | 0 | 0 |
Number of Warrants Expired | (645,067) | (26,831,589) |
Number of Warrants Outstanding, Ending | 6,717,950 | 5,781,900 |
Number of Warrants Exercisable, Ending | 6,717,950 | |
Weighted Average Exercise Price | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 0.17 | $ 0.17 |
Weighted Average Exercise Price Granted | 0.21 | 0.15 |
Weighted Average Exercise Price Exercised | ||
Weighted Average Exercise Price Forfeited | ||
Weighted Average Exercise Price Expired | 0.25 | 0.16 |
Weighted Average Exercise Price Outstanding, Ending | 0.17 | $ 0.17 |
Weighted Average Exercise Price Exercisable | 0.17 | |
Weighted average grant date fair value | $ 0.13 |
15. STOCK OPTIONS AND WARRANT_6
15. STOCK OPTIONS AND WARRANTS (Details Narrative) - USD ($) | 8 Months Ended | 12 Months Ended | |
Aug. 27, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted average grant date fair value | $ 0.13 | $ 0.10 | |
2008 Equity Incentive Plan [Member] | |||
Shares authorized under plan | 6,108,571 | ||
2011 Stock Incentive Plan [Member] | |||
Shares authorized under plan | 31,500,000 | ||
Convertible Line of Credit [Member] | |||
Warrants issued | 1,916,667 | ||
Warrants issued fair value | $ 179,612 | ||
Lender Note [Member] | |||
Warrants issued | 2,500,000 | ||
Warrants issued fair value | $ 187,142 | ||
Warrants [Member] | |||
Warrants issued | 0 | 4,416,667 | |
Number of Warrants Expired | 645,067 | 26,831,589 | |
Warrants weighted average remaining contractual life | 2 years 2 months 19 days | ||
Warrants [Member] | Private Placement [Member] | |||
Warrants issued | 273,333 | ||
Warrants issued fair value | $ 26,206 | ||
Warrants [Member] | Note Payable [Member] | |||
Warrants issued fair value | $ 115,521 | ||
Warrants [Member] | Convertible Line of Credit [Member] | |||
Warrants issued | 407,784 | ||
Warrants issued fair value | $ 61,282 | ||
Employee Stock Option [Member] | |||
Stock option compensation expense | 111,572 | $ 220,084 | |
Total unrecognized compensation cost related to unvested options | $ 6,638 | ||
Stock options issued, shares | 707,500 | 645,000 | |
Stock options issued, value | $ 94,204 | $ 61,632 | |
Weighted average remaining contractual life | 4 years 8 months 23 days | ||
Weighted average grant date fair value | $ 0.13 | $ 0.10 |
16. REVENUES (Details)
16. REVENUES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 6,162,402 | $ 1,412,042 |
Professional Services [member] | ||
Revenues | 10,575 | 3,825 |
Product Sales [Member] | ||
Revenues | 6,144,251 | 1,401,103 |
Maintenance Fees [Member] | ||
Revenues | $ 7,576 | $ 7,114 |
16. REVENUES (Details Narrative
16. REVENUES (Details Narrative) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred revenue | $ 835,785 | $ 77,514 |
Maintenance Fees [Member] [Default Label] | ||
Deferred revenue | 43,872 | |
Product Deposits [Member] | ||
Deferred revenue | $ 791,913 |
17. INCOME TAXES (Details-Tax E
17. INCOME TAXES (Details-Tax Expense) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Computed "expected" tax expense (benefit) | $ (755,744) | $ (1,034,086) |
State taxes, net of federal benefit | (251,717) | (171,202) |
Goodwill impairment and other non-deductible items | (74,120) | 643,016 |
Change in federal tax rates | 0 | 4,145,380 |
Change in deferred tax asset valuation allowance | 1,081,081 | (3,583,108) |
Income tax expense | $ 0 | $ 0 |
17. INCOME TAXES (Details-Defer
17. INCOME TAXES (Details-Deferred tax assets and liabilities) - USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Charitable contributions | $ 2,900 | $ 2,900 |
Reserve for bad debt | 17,805 | 17,948 |
Stock options | 3,448,014 | 3,416,792 |
Deferred Revenue | 233,883 | 0 |
Depreciation | 22,937 | 6,920 |
Other | 19,661 | 17,674 |
Net operating loss carryforward | 7,755,622 | 6,957,507 |
Total gross deferred tax assets | 11,500,822 | 10,419,741 |
Less: Deferred tax asset valuation allowance | (11,432,888) | (10,351,807) |
Total net deferred tax assets | 67,934 | 67,934 |
Deferred tax liabilities: | ||
Accrued salaries | (67,934) | (67,934) |
Total deferred tax liabilities | (67,934) | (67,934) |
Total net deferred taxes | $ 0 | $ 0 |
17. INCOME TAXES (Details Narra
17. INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Blended federal and state tax rate | 27.98% | |
Federal tax rate | 21.00% | |
Valuation allowance | $ 11,432,888 | $ 10,351,807 |
Decrease in valuation allowance | 1,081,081 | |
Net operating loss carryforward | $ 27,714,883 | |
Operating loss carryforward expiration date | Dec. 31, 2037 | |
Change in deferred tax asset and liability | $ 4,100,000 |
18. RELATED PARTY TRANSACTIONS
18. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Stock Issued for Services - Related Party, value | $ 27,000 | |
Stock Issued for Director Services, value | $ 237,500 | 112,500 |
Shares Issued for Loan Guaranty - Related Party, value | 68,078 | |
Stock Issued for Cash, value | 290,000 | 2,345,000 |
Stock based compensation expense | 349,072 | 430,084 |
Note payable - related party | 0 | 135,000 |
Note payable - related party | $ 177,251 | 0 |
Debt converted, amount converted | $ 600,000 | |
Debt converted, shares issued | 4,698,060 | |
Jay Potter [Member] | ||
Stock Issued for Services - Related Party, shares | 125,000 | |
Stock Issued for Services - Related Party, value | $ 18,750 | |
Stock based compensation expense | $ 18,750 | |
Robert Schweitzer [Member] | ||
Restricted stock issued, shares | 1,500,000 | |
Restricted stock vested, shares | 62,500 | |
Stock based compensation expense | $ 12,500 | |
GreenCore Capital [Member] | ||
Payments on related party note | $ 54,000 | |
Stock Issued for Services - Related Party, shares | 180,000 | |
Stock Issued for Services - Related Party, value | $ 27,000 | |
Accounts payable - related party | $ 0 | |
Keshif Ventures LLC [Member] | ||
Stock Issued for Cash, shares | 1,333,333 | |
Stock Issued for Cash, value | $ 200,000 | |
Debt converted, shares issued | 2,315,940 | |
Notes Payable, Other Payables [Member] | ||
Unamortized discount | 74,315 | |
Convertible Notes Payable [Member] | ||
Unamortized discount | 446,381 | $ 175,668 |
Convertible Note Payable - Related Party [Member] | ||
Unamortized discount | 7,749 | |
Unsecured Convertible Promissory note [Member] | Desmond Wheatley [Member] | ||
Note payable - related party | 135,000 | |
Note payable - related party | 177,251 | |
Unamortized discount | 7,749 | |
Accrued interest | 28,220 | |
Convertible Line of Credit [Member] | ||
Unamortized discount | 0 | 226,768 |
Note Payable [Member] | ||
Unamortized discount | 74,315 | |
Pegasus Note [Member] | ||
Accrued interest | $ 90,137 | |
Lender Note [Member] | ||
Unamortized discount | 232,768 | |
Convertible notes outstanding [Member] | ||
Debt converted, amount converted | 600,000 | |
Interest converted, amount converted | $ 104,709 | |
Debt converted, shares issued | 4,698,060 | |
Three Directors [Member] | Restricted Stock Grant Agreements [Member] | ||
Stock Issued for Director Services, shares | 625,000 | 750,000 |
Stock Issued for Director Services, value | $ 93,750 | $ 112,500 |
Stock based compensation expense | $ 93,750 | 112,500 |
Three Directors [Member] | Performance Bonus [Member] | ||
Stock Issued for Director Services, shares | 750,000 | |
Stock Issued for Director Services, value | $ 112,500 | |
Stock based compensation expense | 112,500 | |
Lender Note [Member] | Convertible Notes Payable [Member] | ||
Unamortized discount | 430,901 | 175,668 |
Evey Note [Member] | Convertible Notes Payable [Member] | ||
Unamortized discount | 15,480 | 0 |
Accrued interest | $ 73,382 | |
Pegasus Note [Member] | Convertible Notes Payable [Member] | ||
Unamortized discount | $ 0 |