Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 11, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | ORIGINCLEAR, INC. | |
Entity Central Index Key | 1,419,793 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,016 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 667,749,592 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS | ||
Cash | $ 867,661 | $ 695,295 |
Contracts receivable, less allowance for doubtful accounts of $50,000 and $50,000 respectively | 391,035 | 1,066,223 |
Cost in excess of billing | 29,702 | 16,748 |
Other receivable | 100,000 | |
Work in progress | 94,848 | 95,366 |
Prepaid expenses | 28,680 | 30,477 |
TOTAL CURRENT ASSETS | 1,411,926 | 2,004,109 |
NET PROPERTY AND EQUIPMENT | 169,054 | 197,257 |
OTHER ASSETS | ||
Other asset | 19,538 | 19,538 |
Goodwill | 682,145 | 487,447 |
Trademark | 4,467 | 4,467 |
Security deposit | 3,500 | 9,650 |
TOTAL OTHER ASSETS | 709,650 | 521,102 |
TOTAL ASSETS | 2,290,630 | 2,722,468 |
Current Liabilities | ||
Accounts payable and other payable | 473,081 | 604,393 |
Accrued expenses | 649,197 | 487,734 |
Billing in excess of cost | 28,977 | 503,718 |
Customer deposit | 113,950 | 113,950 |
Warrant reserve | 20,000 | 20,000 |
Deferred income | 150,000 | |
Derivative liabilities | 12,189,026 | 9,317,475 |
Convertible promissory notes, net of discount of $717523 and $161,863, respectively | 3,286,545 | 4,278,315 |
Total Current Liabilities | 16,760,776 | 15,475,585 |
Long Term Liabilities | ||
Convertible promissory notes | 210,000 | |
Total Long Term Liabilities | 210,000 | |
Total Liabilities | 16,970,776 | 15,475,585 |
SHAREHOLDERS' DEFICIT | ||
Common stock, $0.0001 par value, 2,500,000,000 shares authorized 598,617,591 and 232,588,828 shares issued and outstanding, respectively | 59,861 | 23,258 |
Preferred treasury stock,1000 and 0 shares outstanding, respectively | ||
Additional paid in capital | 50,071,887 | 46,307,448 |
Accumulated other comprehensive loss | (64) | (47) |
Accumulated deficit | (64,811,831) | (59,083,777) |
TOTAL SHAREHOLDERS' DEFICIT | (14,680,146) | (12,753,117) |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | 2,290,630 | 2,722,468 |
Series A Preferred Stock | ||
SHAREHOLDERS' DEFICIT | ||
Preferred stock value | ||
Series B Preferred Stock | ||
SHAREHOLDERS' DEFICIT | ||
Preferred stock value | $ 1 | $ 1 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts | $ 50,000 | $ 50,000 |
Discount on debt | $ 717,523 | $ 161,863 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 2,500,000,000 | 2,500,000,000 |
Common stock, shares issued | 598,617,591 | 232,588,828 |
Common stock, shares outstanding | 598,617,591 | 232,588,828 |
Preferred treasury stock shares outstanding | 1,000 | 0 |
Series A Preferred Stock | ||
Preferred stock, shares issued | 1,000 | 1,000 |
Preferred stock, shares outstanding | 1,000 | 1,000 |
Series B Preferred Stock | ||
Preferred stock, shares issued | 10,000 | 10,000 |
Preferred stock, shares outstanding | 10,000 | 10,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Statement [Abstract] | ||||
Sales | $ 1,019,919 | $ 4,000 | $ 4,321,378 | $ 140,280 |
Cost of Goods Sold | 574,105 | 2,899,507 | 86,294 | |
Gross Profit | 445,814 | 4,000 | 1,421,871 | 53,986 |
Operating Expenses | ||||
Selling and marketing expenses | 303,496 | 467,991 | 1,419,566 | 1,616,209 |
General and administrative expenses | 629,455 | 552,167 | 1,860,239 | 1,700,488 |
Research and development | 106,259 | 131,483 | 447,034 | 592,225 |
Depreciation and amortization expense | 11,331 | 4,227 | 33,902 | 13,397 |
Total Operating Expenses | 1,050,541 | 1,155,868 | 3,760,741 | 3,922,319 |
Loss from Operations | (604,727) | (1,151,868) | (2,338,870) | (3,868,333) |
OTHER (EXPENSE) INCOME | ||||
Loss on sale of asset | (1,552) | |||
Foreign exchange (loss) | (6) | (6) | ||
Fair value of debt financing cost | 157,677 | (210,439) | (143,172) | |
Commitment fees | (787,971) | (787,971) | (51,697) | |
Loss on net change in derivative liability | (7,575,427) | (2,324,532) | (1,748,791) | (2,015,792) |
Interest expense | (206,164) | (417,605) | (641,977) | (1,282,302) |
TOTAL OTHER (EXPENSE) INCOME | (8,411,891) | (2,742,137) | (3,389,184) | (3,494,515) |
NET LOSS | $ (9,016,618) | $ (3,894,005) | $ (5,728,054) | $ (7,362,848) |
BASIC DILUTED LOSS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS' | $ (0.02) | $ (0.03) | $ (0.01) | $ (0.05) |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING, | ||||
BASIC AND DILUTED | 480,345,025 | 152,957,321 | 407,561,386 | 135,875,742 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Shareholders' Deficit - 9 months ended Sep. 30, 2016 - USD ($) | Total | Preferred stock | Common stock | Additional Paid-in Capital | Accumulated Other Comprehensive loss | Accumulated Deficit |
Beginning Balance at Dec. 31, 2015 | $ (12,753,117) | $ 1 | $ 23,258 | $ 46,307,448 | $ (47) | $ (59,083,777) |
Beginning Balance (shares) at Dec. 31, 2015 | 11,000 | 232,588,828 | ||||
Common stock issuance for cash | 963,217 | $ 9,632 | 953,585 | |||
Common stock issuance for cash (shares) | 96,321,672 | |||||
Common stock issuance for conversion of debt | 878,040 | $ 12,325 | 865,715 | |||
Common stock issuance for conversion of debt (shares) | 123,247,474 | |||||
Common stock issued at fair value for services | 999,931 | $ 6,501 | 993,430 | |||
Common stock issued at fair value for services (shares) | 65,013,845 | |||||
Common stock issuance of make good shares | 787,971 | $ 8,145 | 779,826 | |||
Common stock issuance of make good shares (shares) | 81,445,772 | |||||
Stock compensation cost | 155,112 | 155,112 | ||||
Beneficial conversion feature | 16,771 | 16,771 | ||||
Accumulated comprehensive loss | (17) | (17) | ||||
Net income for the nine months ended September 30, 2016 | (5,728,054) | (5,728,054) | ||||
Ending Balance at Sep. 30, 2016 | $ (14,680,146) | $ 1 | $ 59,861 | $ 50,071,887 | $ (64) | $ (64,811,831) |
Ending Balance (shares) at Sep. 30, 2016 | 11,000 | 598,617,591 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (5,728,054) | $ (7,362,848) |
Adjustment to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 33,902 | 13,397 |
Common stock and warrants issued for services | 999,931 | 1,004,659 |
Stock and warrant compensation expense | 155,112 | 134,621 |
Loss on net change in valuation of derivative liability | 1,748,791 | 2,015,792 |
Fair value of debt financing cost | 210,439 | 143,172 |
Debt discount and original issue discount recognized as interest expense | 373,434 | 1,022,605 |
Commitment fees | 787,971 | 51,697 |
Loss on sale of asset | 1,552 | |
Accumulated comprehensive loss | (17) | |
(Increase) Decrease in: | ||
Contracts receivable | 675,188 | |
Cost in excess of billing | (12,954) | |
Other receivable | 100,000 | |
Prepaid expenses | 1,797 | 9,015 |
Work in progress | 518 | (8,997) |
Other asset | (188,548) | 597 |
Increase (Decrease) in: | ||
Accounts payable | 299,584 | 394,518 |
Accrued expenses | 257,501 | 223,729 |
Billing in excess of cost | (474,741) | |
Deferred income | (150,000) | 6,420 |
NET CASH USED IN OPERATING ACTIVITIES | (910,146) | (2,350,071) |
CASH FLOWS USED FROM INVESTING ACTIVITIES: | ||
Purchase of fixed assets | (5,699) | (45,168) |
CASH USED IN INVESTING ACTIVITIES | (5,699) | (45,168) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from convertible promissory notes | 125,000 | 1,815,000 |
Contributions made by Non-controlling interest | 100,000 | |
Proceeds for issuance of common stock | 963,217 | 1,220,732 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 1,088,217 | 3,135,732 |
Foreign currency effect on cash flow | (6) | (14) |
NET INCREASE IN CASH | 172,366 | 740,479 |
CASH BEGINNING OF PERIOD | 695,295 | 198,384 |
CASH END OF PERIOD | 867,661 | 938,863 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Interest paid | 2,199 | 548 |
Taxes paid | ||
SUPPLEMENTAL DISCLOSURES OF NON CASH TRANSACTIONS | ||
Conversion of accounts payable into a convertible note | 430,896 | 432,048 |
Beneficial conversion feature on convertible note | 16,771 | |
Common stock issued for supplemental shares | 787,971 | 51,697 |
Common stock issued for conversion of debt | $ 878,040 | $ 1,148,597 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements of OriginClear, Inc. (the “Company”) (formerly OriginOil, Inc.) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. For further information refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the year ended December 31, 2015. Going Concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying condensed financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has not generated significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusion. Management believes the existing shareholders, the prospective new investors and future sales will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core business operations. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing, or cause substantial dilution for our stockholders, in case of equity financing. |
Summary of Significant Accounti
Summary of Significant Accounting Polices | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Polices [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. Principles of Consolidation The accompanying consolidated financial statements include the accounts of OriginClear, Inc. and its wholly owned operating subsidiaries, Progressive Water Treatment, Inc., (PWT) and OriginClear Company, Ltd. All material intercompany transactions have been eliminated upon consolidation of these entities. Revenue Recognition Equipment sales We recognize revenue upon delivery of equipment, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. Title to the equipment is transferred to the customer once the last payment is received. We record revenue as goods are shipped, and the equipment has been fully accepted by the customer. Generally, we extend credit to our customers and do not require collateral. We do not ship a product until we have a purchase agreement signed by the customer with a payment arrangement. Percentage of completion Revenues and related costs on construction contracts are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35 – “ Accounting for Performance of Construction-Type and Certain Production Type Contracts”. The asset “Costs in excess of billings” represents revenues recognized in excess of amounts billed on contracts in progress. The liability “Billings in excess of costs” represents billings in excess of revenues recognized on contracts in progress. Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying balance sheets, as they will be liquidated in the normal course of the contract completion. Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts for the revisions become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements, may result in revisions to costs and income, which are recognized in the period the revisions are determined. Contract Receivable The Company bills its customers in accordance with contractual agreements. The agreements generally require billing to be on a progressive basis as work is completed. Credit is extended based on evaluation of clients financial condition and collateral is not required. The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any customer is unable to make required payments. Management performs a quantitative and qualitative review of the receivables past due from customers on a monthly basis. The Company records an allowance against uncollectible items for each customer after all reasonable means of collection have been exhausted, and the potential for recovery is considered remote. The allowance for doubtful accounts was approximately $50,000 as of September 30, 2016 and 2015, respectively. The net contract receivable balance was $391,035 and $0 at September 30, 2016 and 2015, respectively, due to the acquisition of PWT. Stock-Based Compensation The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. On September 29, 2015, the Company adopted and approved a new incentive stock option plan and reserved 8,000,000 shares of common stock at par value $0.0001 per share of the Corporation for issuance. Fair Value of Financial Instruments Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2016, the balances reported for cash, prepaid expenses, accounts payable, and accrued expenses approximate the fair value because of their short maturities. We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The following table presents certain liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of September 30, 2016: Total (Level 1) (Level 2) (Level 3) Derivative Liability $ 12,189,026 $ - $ - $ 12,189,026 Total liabilities measured at fair value $ 12,189,026 $ - $ - $ 12,189,026 The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value: Beginning balance as of January 1, 2016 $ 9,317,475 Fair value of derivative liabilities issued 1,122,760 Loss on conversion of debt and change in derivative liability 1,748,791 Ending balance as of September 30, 2016 $ 12,189,026 Loss per Share Calculations Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include securities or other contracts to issue common stock that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the nine months ended September 30, 2016, the Company has excluded 113,916,311 stock options, 17,824,259 common stock purchase warrants outstanding, and $4,214,068 convertible notes that are convertible into shares of common stock, because their impact on the loss per share is anti-dilutive. For the nine months ended September 30, 2015, the Company has excluded 3,954,644 stock options, 23,749,549 common stock purchase warrants outstanding, and $4,741,858 convertible notes that are convertible into shares of common stock, because their impact on the loss per share is anti-dilutive. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our stock options, warrants, convertible notes, and common stock issued for services, among other items. Actual results could differ from these estimates. Principles of Consolidation The Company adopted the guidance of ASC Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists. The consolidated financial statements include all accounts of the entities at September 30, 2016. Date of incorporation or Name of consolidated State or other jurisdiction formation (date of acquisition Attributable interest subsidiary or entity of incorporation or organization if applicable at September 30, 2016 OriginClear (HK) Ltd. Hong Kong December 31, 2014 100 % Progressive Water Treatment Texas October 1, 2015 100 % All inter-company balances and transactions have been eliminated. Foreign Currency Matters We adopted ASC Topic 830 – Foreign Currency Matters, Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. Recently Issued Accounting Pronouncements In March 2016, FASB issued accounting standards update ASU-2016-09, “Compensation–Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting”. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payments award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. The Company is currently evaluating the impact of the adoption of ASU 2016-9 on the Company’s financial statements. In March 2016, FASB issued accounting standards update ASU-2016-06, “Derivatives and Hedging (Topic 815) – Contingent Put and Call Options in Debt Instruments”. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. U.S. GAAP provides specific guidance for assessing whether call (put) options that can accelerate the repayment of principal on a debt instrument meet the clearly and closely related criterion. The guidance states that for contingent call (put) options to be considered clearly and closely related, they can be indexed only to interest rates or credit risk. Public companies must apply the new requirements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU 2016-06 on the Company’s financial statements. In May 2016, FASB issued accounting standards update ASU-2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients. These amendments are effective at the same time Topic 606 is effective. Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). The Company is currently evaluating the impact of the adoption of ASU 2016-12 on the Company’s financial statements. In August 2016, FASB issued accounting standards update ASU-2016-15, “Statement of Cash Flows” (Topic 230) – Classification of Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2018, and interim periods with fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of ASU 2016-15 on the Company’s financial statements. Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment for financial reporting purposes, which represents the Company’s core business. |
Business Acquisition
Business Acquisition | 9 Months Ended |
Sep. 30, 2016 | |
Business Acquisition [Abstract] | |
BUSINESS ACQUISITION | 3. BUSINESS ACQUISITION On October 1, 2015, the Company acquired PWT from Marc Stevens through the transfer of all issued and outstanding shares of PWT in exchange (the “Exchange”) for 10,000 shares of a new series of preferred stock, the Series B Preferred Stock, filed with the State of Nevada by the Company on October 1, 2015. Each share of Series B Preferred Stock has a stated value of $150 per share and is convertible into shares of the Company’s common stock in three annual increments beginning 12 months from closing. The conversion price is subject to adjustment in the case of reverse splits, stock dividends, reclassifications and the like. In addition, the conversion price is subject to certain full ratchet anti-dilution protection. The Series B Preferred Stock is entitled to vote with the holders of the Company’s common stock on all corporate actions, including the election of the Company’s directors. The holders of the Series B Preferred Stock are entitled to cast one vote for each share of Series B Preferred Stock owed. This brief description of the Certificate of Designation is only a summary of the material terms. The acquisition was accounted for under ASC 805. PWT is engaged in providing water treatment systems and services for a wide variety of applications and component sales. The acquisition is designed to enhance our services in water treatment. PWT became a wholly-owned subsidiary of the Company. Under the purchase method of accounting, the transactions were valued for accounting purposes at $1,500,000, which was the fair value of PWT at the time of acquisition. The assets and liabilities of PWT were recorded at their respective fair value as of the date of acquisition. Since, the Company determined there were no other separately identifiable intangible assets, any difference between the cost of the acquired entity and the fair value of the assets acquired and liabilities assumed is recorded as goodwill. The acquisition date estimated fair value of the consideration transferred consisted of the following: Convertible promissory note $ 1,500,000 Total purchase price $ 1,500,000 Tangible assets acquired $ 1,549,700 Liabilities assumed (731,845 ) $ 817,855 Goodwill 682,145 Total purchase price $ 1,500,000 As of September 30, 2016, the Company has not identified any intangible assets other than goodwill. However, the above estimated fair value of the intangible assets of PWT is based on a preliminary purchase price allocation prepared by management. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. After the preliminary purchase price allocation period, we record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in our operating results in the period in which the adjustments were determined. Proforma results The following tables set forth the unaudited pro forma results of the Company as if the acquisition of PWT had taken place on the first day of the periods presented. These combined results are not necessarily indicative of the results that may have been achieved had the companies been combined as of the first day of the periods presented. Period Ended 9/30/2015 (unaudited) Total Revenues $ 4,198,368 Net Income (Loss) $ (7,244,377 ) Basic and Diluted Net Loss Per Common Share $ (0.054 ) |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2016 | |
Capital Stock [Abstract] | |
CAPITAL STOCK | 4. CAPITAL STOCK Preferred Stock As of September 30, 2016, the Company’s preferred stock consisted of Series A and Series B shares. There were 25,000,000 preferred shares authorized and 11,000 shares outstanding. The shares have a par value of $0.0001 per share. The Series A preferred stock provides for supermajority voting rights to the holder and the Series B stock is convertible into shares of common stock to the holder. Common Stock During the nine months ended September 30, 2016, the Company issued 123,247,474 shares of common stock for the settlement of convertible promissory notes in an aggregate principal in the amount of $782,000, plus interest in the amount of $96,040, based upon conversion prices per share ranging from $0.0047 to $0.0098. During the nine months ended September 30, 2016, the Company issued 65,013,845 shares of common stock for services at fair value of $999,931. During the nine months ended September 30, 2016, the Company issued 96,321,672 shares of common stock for cash in the amount of $963,217 for the purchase of shares of commons stock at a price of $0.01 per share. During the nine months ended September 30, 2016, the Company issued 81,445,772 shares of common stock for make good shares at fair value of $787,971. |
Convertible Promissory Notes
Convertible Promissory Notes | 9 Months Ended |
Sep. 30, 2016 | |
Convertible Promissory Notes [Abstract] | |
CONVERTIBLE PROMISSORY NOTES | 5. CONVERTIBLE PROMISSORY NOTES On various dates the Company entered into unsecured convertible Notes (the “Convertible Promissory Notes” or “Notes”), that mature between six and nine months from the date of issuance and bear interest at 10% per annum. The Notes mature on various dates through January 25, 2016. The Notes may be converted into shares of the Company’s common stock at conversion prices ranging from the lesser of $0.06 to $0.14 (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or 50% of the lowest trade price on any trade day following issuance of the Notes. The Notes include customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment. In the event of default, the Notes shall become immediately due and payable at the mandatory default amount. The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum. In addition, for as long as the Notes or other convertible notes in effect between the purchaser and the Company are outstanding, if the Company issues any security with terms more favorable than the terms of the Notes or such other convertible notes or a term was not similarly provided to the purchaser of the Notes or such other convertible notes, then such more favorable or additional term shall, at the purchaser’s option, become part of the Notes and such other convertible notes. The conversion feature of the Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. As of December 31, 2015, the outstanding principal balance was $2,535,000. During the nine months ended September 30, 2016, the Company issued 93,866,797 shares of common stock upon conversion of $518,000 in aggregate principal, plus accrued interest of $96,040. As of September 30, 2016, the Notes had an aggregate remaining balance of $2,017,000. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $1,691 during the nine months ended September 30, 2016. On February 24, 2015, the unsecured convertible promissory notes (the “OID Notes”), with an aggregate remaining principle balance of $273,124, plus accrued interest of $13,334 were amended. The OID Notes included an original issue discount and one time interest, which has been fully amortized. The OID Notes were extended and matured on various dates through September 19, 2014. On each maturity date, each note was extended one year from its maturity date through September 19, 2015. On February 24, 2015, the Notes were amended and have a maturity date of December 31, 2015. The Notes were analyzed under ASC 470 (Extinguishment & Modification of debt) The Company entered into various unsecured convertible Notes (the “Convertible Promissory Notes” or “Notes”), for an aggregate amount of $1,900,000. As of September 30, 2016, the Company has received advances in the aggregate of $1,325,000. The notes matured between nine and twelve months from the date of issuance of each advance and bears interest at 10% per annum. The Notes were extended and mature on various dates ending on May 31, 2017. The Notes may be converted into shares of the Company’s common stock at conversion prices ranging from the lesser of $0.02 to $0.08 (subject to adjustment for stock splits, dividends, combinations and other similar transactions) or 50% of the lowest trade price on any trade day following issuance of the Notes. The Notes include customary default provisions related to payment of principal and interest and bankruptcy or creditor assignment. In the event of default, the Notes shall become immediately due and payable at the mandatory default amount. The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum. In addition, for as long as the Notes or other convertible notes in effect between the purchaser and the Company are outstanding, if the Company issues any security with terms more favorable than the terms of the Notes or such other convertible notes or a term was not similarly provided to the purchaser of the Notes or such other convertible notes, then such more favorable or additional term shall, at the purchaser’s option, become part of the Notes and such other convertible notes. The conversion feature of the Notes was considered a derivative in accordance with current accounting guidelines because of the reset conversion features of the Notes. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $96,104 during the nine months ended September 30, 2016. On September 30, 2015, the Company issued a convertible note in exchange for an accounts payable in the amount of $432,048, which could be converted into shares of the Company’s common stock after December 31, 2015. The note was accounted for under ASC 470, whereby, a beneficial conversion feature was recorded at time of issuance. The note did not meet the criteria of a derivative, and was accounted for as a beneficial conversion feature, which was amortized over the life of the note and recognized as interest expense in the financial statements. On January 1, 2016, the note meet the criteria of a derivative and was accounted for under ASC 815.The note has a zero stated interest rate, and the conversion price shall be equal to 75% of the average three lowest last sale prices traded during the 25 trading days immediately prior to conversion. On February 12, 2016, the Company issued 18,910,088 shares of commons stock upon conversion of $175,000 in principal, leaving a remaining balance of $257,048. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $161,574 during the nine months ended September 30, 2016. On March 31, 2016, the Company issued a convertible note in exchange for an accounts payable in the amount of $430,896, which could be converted into shares of the Company’s common stock after September 15, 2016. The note was accounted for under ASC 470, whereby, a beneficial conversion feature was recorded at time of issuance. On September 15, 2016, the note met the criteria of a derivative and was accounted for under ASC 815. The note has a zero stated interest rate, and the conversion price shall be equal to 75% of the average three lowest last sale prices traded during the 25 trading days immediately prior to conversion. The note did not meet the criteria of a derivative at the time it was entered into and was accounted for as a beneficial conversion feature, which was amortized over the life of the note and recognized as interest expense in the financial statements. The conversion feature of the Note was considered a derivative in accordance with current accounting guidelines because of the reset conversion feature of the Note. The Company recorded amortization of debt discount, which was recognized as interest expense in the amount of $114,065 during the nine months ended September 30, 2016. |
Derivative Liabilities
Derivative Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Liabilities [Abstract] | |
DERIVATIVE LIABILITIES | 6. DERIVATIVE LIABILITIES We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The derivative liability is adjusted periodically according to the stock price fluctuations. Risk free interest rate 0.14% - 1.02% Stock volatility factor 4.72% - 189.09% Weighted average expected option life 6 months - 3.4 years Expected dividend yield None The derivative liability recognized in the financial statements as of September 30, 2016 was $12,189,026 |
Options Warrants and Restricted
Options Warrants and Restricted Stock | 9 Months Ended |
Sep. 30, 2016 | |
Options Warrants and Restricted Stock [Abstract] | |
OPTIONS, WARRANTS AND RESTRICTED STOCK | 7. OPTIONS, WARRANTS AND RESTRICTED STOCK Options The Board of Directors adopted the OriginClear, Inc. (formerly OriginOil, Inc.) 2009 Incentive Stock Option Plan (the “2009 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for Five Hundred Thousand (500,000) shares of Common Stock. On May 25, 2012, the Board of Directors adopted a new OriginClear, Inc. (formerly OriginOil, Inc.) 2012 Incentive Stock Option Plan (the “2012 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for One Million (1,000,000) shares of Common Stock. Options granted under the 2012 Plan may be either incentive options or nonqualified options and shall be administered by the Company's Board of Directors. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide. Notwithstanding any other provision of the 2012 Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (10th) anniversary from the effective date of grant. On June 14, 2013, the Board of Directors adopted a new OriginClear, Inc. (formerly OriginOil, Inc.) 2013 Incentive Stock Option Plan (the “2013 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for Four Million (4,000,000) shares of Common Stock. Options granted under the 2013 Plan may be either incentive options or nonqualified options and shall be administered by the Company's Board of Directors. Each Option shall state the number of shares to which it pertains. The exercise price will be determined by the holders percentage owned as follows: If the holder owns more than 10% of the total combined voting power or value of all classes of stock of the Company, then the exercise price will be no less than 110% of the fair market value of the stock as of the date of grant; if the person is not a 10% holder, then the exercise price will be no less than 100% of the fair market value of the stock as of the date of grant. Notwithstanding any other provision of the 2013 Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (10th) anniversary from the date of grant. If the status of an employee terminates for any reason other than disability or death, then the Optionee or their representative shall have the right to exercise the portion of any Options which were exercisable as of the date of such termination, in whole or in part, not less than 30 days nor more than three (3) months after such termination. On October 2, 2015, the Board of Directors adopted a new OriginClear, Inc. 2015 Equity Incentive Stock Option Plan (the “2015 Plan”) for the purposes of granting stock options to its employees and others providing services to the Company, which reserves and sets aside for the granting of options for One Hundred Sixty Million (160,000,000) shares of Common Stock. Options granted under the 2015 Plan may be either incentive options or nonqualified options and shall be administered by the Company's Board of Directors. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide. Notwithstanding any other provision of the 2015 Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the fifth (5th) anniversary from the effective date of grant. Options granted under these Plans may be either incentive options or nonqualified options and shall be administered by the Company's Board of Directors. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective option agreements may provide. Notwithstanding any other provision of the Plan or of any option agreement, each Option shall expire on the date specified in the option agreement, which date shall not be later than the tenth (5th) anniversary from the effective date of grant. If the status of an employee terminates for any reason other than disability or death, then the Optionee or their representative shall have the right to exercise the portion of any Options which were exercisable as of the date of such termination, in whole or in part, not less than thirty (30) days nor more than three (3) months after such termination. With respect to Non-statutory Options granted to employees, directors or consultants, the Board of Directors or Committee may specify such period for exercise that the Option shall automatically terminate following the termination of employment or services as to shares covered by the Option as the Board of Directors or Committee deems reasonable and appropriate. During the nine months ended September 30, 2016, the Company granted 1,000,000 incentive stock options, and recognized compensation costs of $155,112 based on the fair value of the options vested for the nine months ended September 30, 2016. A summary of the Company’s stock option activity and related information follows: September 30, 2016 Weighted Number average of exercise Options price Outstanding, beginning of period 119,404,644 $ 0.05 Granted 1,000,000 $ 0.02 Exercised - - Forfeited/Expired (6,488,333 ) $ 0.07 Outstanding, end of period 113,916,311 $ 0.05 Exercisable at the end of period 75,567,519 $ 0.04 Weighted average fair value of options granted during the period $ - The weighted average remaining contractual life of options outstanding issued under the 2009 Plan, 2012 Plan, and 2013 Plan as of September 30, 2016, was as follows: Weighted Average Stock Stock Remaining Exercisable Options Options Contractual Prices Outstanding Exercisable Life (years) $ 0.19 - 1.70 1,833,645 1,489,894 0.003 -8.02 $ 0.41 - 0.44 1,132,666 849,500 6.96 $ 0.02 - 0.0375 110,950,000 73,228,125 4.02 -4.50 113,916,311 75,567,519 As of September 30, 2016, there was no intrinsic value with regards to the outstanding options. Restricted Stock CEO On May 12, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with its Chief Executive Officer, Riggs Eckelberry, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 60,000,000 shares of the Company’s common stock, with a fair value of $1,218,000 to the CEO, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 30,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 30,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. As of September 30, 2016, no milestones have been met. On August 10, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with its Chief Executive Officer, Riggs Eckelberry, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 60,000,000 shares of the Company’s common stock, with a fair value of $570,000 to the CEO, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period as reported in the Company’s quarterly or annual financial statements filed with the U.S. Securities and Exchange Commission (“SEC Reports”), the Company will issue 30,000,000 shares of common stock; b.) If the Company’s consolidated operating profit (operating profit=operating revenue – cost of goods sold –operating expenses – depreciation & amortization), calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period reported in the Company’s SEC Reports, the Company will issue 30,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. As of September 30, 2016, no milestones have been met. Employees On May 12, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with an employee, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 20,000,000 shares of the Company’s common stock, with a fair value of $406,000 to the employee, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 10,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 10,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. As of September 30, 2016, no milestones have been met. On May 12, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with employee, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 30,000,000 shares of the Company’s common stock, with a fair value of $609,000 to the employee, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 15,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 15,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. As of September 30, 2016, no milestones have been met. On August 10, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with an employee, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 15,000,000 shares of the Company’s common stock, with a fair value of $142,500 to the contractor, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period as reported in the Company’s quarterly or annual financial statements filed with the U.S., Securities and Exchange Commission (SEC Reports), the Company will issue 7,500,000 shares of common stock; b.) If the Company’s consolidated operating profit (Operating Profit=Operating Revenue – Cost of Goods Sold – Operating Expenses – Depreciation & Amortization), calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period as reported in the Company’s SEC Reports, the Company will issue 7,500,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. As of September 30, 2016, no milestones have been met. Contractors On August 10, 2016, the Company entered into a Restricted Stock Grant Agreement (“the RSGA”) with a contractor, to create management incentives to improve the economic performance of the Company and to increase its value and stock price. All shares issuable under the RSGA are performance shares and none have yet vested nor have been issued. The RSGA provides for the issuance of up to 15,000,000 shares of the Company’s common stock, with a fair value of $142,500 to the contractor, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period as reported in the Company’s quarterly or annual financial statements filed with the U.S., Securities and Exchange Commission (SEC Reports), the Company will issue 7,500,000 shares of common stock; b.) If the Company’s consolidated operating profit (Operating Profit=Operating Revenue – Cost of Goods Sold – Operating Expenses – Depreciation & Amortization), calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period as reported in the Company’s SEC Reports, the Company will issue 7,500,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. As of September 30, 2016, no milestones have been met. Warrants During the nine months ended September 30, 2016, the Company did not grant any warrants. A summary of the Company’s warrant activity and related information follows: September 30, 2016 Weighted average exercise Options price Outstanding -January 1, 2016 23,297,108 $ 0.21 Granted - - Exercised - - Forfeited (5,472,849 ) $ 0.09 Outstanding - September 30, 2016 17,824,259 $ 0.19 At September 30, 2016, the weighted average remaining contractual life of warrants outstanding: Weighted Average Remaining Exercisable Warrants Warrants Contractual Prices Outstanding Exercisable Life (years) $ 0.15 - 0.25 16,769,233 16,769,233 0.77- 1.70 $ 0.25 - 1.75 841,692 841,692 0.57 - 1.97 $ 0.90 - 6.90 213,334 213,334 0.01 - 6.13 17,824,259 17,824,259 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 8. COMMITMENTS AND CONTINGENCIES On May 1, 2016, the Company entered into a subtenant agreement with the sub-landlord in the amount of $36,560 to be paid over a period of twelve months starting June 1, 2016. As of September 30, 2016, the balance remaining is $31,636. On May 1, 2016, the Company entered into a Sub-user agreement for commercial space. The term of the agreement is from May 1, 2016 to July 31, 2016. The term will automatically renew for successive periods until terminated in accordance with the agreement. The monthly payment for the space is $3,500. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 9. SUBSEQUENT EVENTS Management evaluated subsequent events as of the date of the financial statements pursuant to ASC TOPIC 855, and reported the following events: On October 14, 2016, a holder of OriginClear, Inc.’s (the “Company”) Series B Preferred Stock converted 3,334 shares of the Company’s Series B Preferred Stock into an aggregate of 50,010,000 shares of the Company’s common stock. The shares of common stock issued included 16,670,000 shares issued upon conversion of the 3,334 shares of Series B Preferred Stock at $0.03 per share and 33,340,000 shares as a one-time make good issuance as per the Certificate of Designation of Series B Preferred Stock and agreement between the Company and the holder. On October 17, 2016 (the “Grant Date”), the Company entered into a Consultant Nonstatutory Stock Option Agreement (the “Option Agreement”) with two consultants pursuant to which the consultants were granted options, subject to vesting to purchase an aggregate of 15,000,000 shares of the Company’s common stock at $0.084 per share. Subject to early termination as provided in the Option Agreements, the options expire five years from the Grant Date. On October 17, 2016 (the “Grant Date”), the Company entered into an Incentive Stock Option Agreement (the “Option Agreement”) with a non-executive officer employee of the Company pursuant to which the employee was granted an option, subject to vesting to purchase 500,000 shares of the Company’s common stock at $0.084 per share. Subject to early termination as provided in the Option Agreement, the option expires five years from the Grant Date. Between October 19, 2016 and October 22, 2016, the Company sold, in a private placement, an aggregate of 14,000,000 shares of its common stock to accredited investors for an aggregate consideration of $140,000 (the “Offering”). The shares issued in this Offering are subject to price protection for a period of one year from the issuance of the shares providing that under certain circumstances, the Company will issue additional shares of common stock of the Company for no additional consideration to the subscribers thereunder. The subscribers agree to the lock-up provision, under which subject to certain terms and conditions therein, the subscribers shall not sell any of their shares of common stock of the Company obtained in this Offering for a period of twelve months. In connection with certain one-time make good agreements, on October 31, 2016, the Company issued an aggregate of 1,596,360 shares of its common stock to certain holders of its common stock. On October 31, 2016, the Company issued to consultants an aggregate of 3,525,641 shares of the Company’s common stock in lieu of cash consideration. |
Summary of Significant Accoun16
Summary of Significant Accounting Polices (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Polices [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of OriginClear, Inc. and its wholly owned operating subsidiaries, Progressive Water Treatment, Inc., (PWT) and OriginClear Company, Ltd. All material intercompany transactions have been eliminated upon consolidation of these entities. |
Revenue Recognition | Revenue Recognition Equipment sales We recognize revenue upon delivery of equipment, provided that evidence of an arrangement exists, title, and risk of loss have passed to the customer, fees are fixed or determinable, and collection of the related receivable is reasonably assured. Title to the equipment is transferred to the customer once the last payment is received. We record revenue as goods are shipped, and the equipment has been fully accepted by the customer. Generally, we extend credit to our customers and do not require collateral. We do not ship a product until we have a purchase agreement signed by the customer with a payment arrangement. Percentage of completion Revenues and related costs on construction contracts are recognized using the “percentage of completion method” of accounting in accordance with ASC 605-35 – “ Accounting for Performance of Construction-Type and Certain Production Type Contracts”. The asset “Costs in excess of billings” represents revenues recognized in excess of amounts billed on contracts in progress. The liability “Billings in excess of costs” represents billings in excess of revenues recognized on contracts in progress. Assets and liabilities related to long-term contracts are included in current assets and current liabilities in the accompanying balance sheets, as they will be liquidated in the normal course of the contract completion. Revisions in cost and profit estimates during the course of the contract are reflected in the accounting period in which the facts for the revisions become known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements, may result in revisions to costs and income, which are recognized in the period the revisions are determined. |
Contract Receivable | Contract Receivable The Company bills its customers in accordance with contractual agreements. The agreements generally require billing to be on a progressive basis as work is completed. Credit is extended based on evaluation of clients financial condition and collateral is not required. The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any customer is unable to make required payments. Management performs a quantitative and qualitative review of the receivables past due from customers on a monthly basis. The Company records an allowance against uncollectible items for each customer after all reasonable means of collection have been exhausted, and the potential for recovery is considered remote. The allowance for doubtful accounts was approximately $50,000 as of September 30, 2016 and 2015, respectively. The net contract receivable balance was $391,035 and $0 at September 30, 2016 and 2015, respectively, due to the acquisition of PWT. |
Stock-Based Compensation | Stock-Based Compensation The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the Financial Accounting Standards Board whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. On September 29, 2015, the Company adopted and approved a new incentive stock option plan and reserved 8,000,000 shares of common stock at par value $0.0001 per share of the Corporation for issuance. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair Value of Financial Instruments, requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of September 30, 2016, the balances reported for cash, prepaid expenses, accounts payable, and accrued expenses approximate the fair value because of their short maturities. We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC Topic 820 established a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The following table presents certain liabilities of the Company’s financial assets measured and recorded at fair value on the Company’s balance sheets on a recurring basis and their level within the fair value hierarchy as of September 30, 2016: Total (Level 1) (Level 2) (Level 3) Derivative Liability $ 12,189,026 $ - $ - $ 12,189,026 Total liabilities measured at fair value $ 12,189,026 $ - $ - $ 12,189,026 The following is a reconciliation of the derivative liability for which Level 3 inputs were used in determining the approximate fair value: Beginning balance as of January 1, 2016 $ 9,317,475 Fair value of derivative liabilities issued 1,122,760 Loss on conversion of debt and change in derivative liability 1,748,791 Ending balance as of September 30, 2016 $ 12,189,026 |
Loss per Share Calculations | Loss per Share Calculations Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include securities or other contracts to issue common stock that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the nine months ended September 30, 2016, the Company has excluded 113,916,311 stock options, 17,824,259 common stock purchase warrants outstanding, and $4,214,068 convertible notes that are convertible into shares of common stock, because their impact on the loss per share is anti-dilutive. For the nine months ended September 30, 2015, the Company has excluded 3,954,644 stock options, 23,749,549 common stock purchase warrants outstanding, and $4,741,858 convertible notes that are convertible into shares of common stock, because their impact on the loss per share is anti-dilutive. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our stock options, warrants, convertible notes, and common stock issued for services, among other items. Actual results could differ from these estimates. |
Principles of Consolidation | Principles of Consolidation The Company adopted the guidance of ASC Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists. The consolidated financial statements include all accounts of the entities at September 30, 2016. Date of incorporation or Name of consolidated State or other jurisdiction formation (date of acquisition Attributable interest subsidiary or entity of incorporation or organization if applicable at September 30, 2016 OriginClear (HK) Ltd. Hong Kong December 31, 2014 100 % Progressive Water Treatment Texas October 1, 2015 100 % All inter-company balances and transactions have been eliminated. |
Foreign Currency Matters | Foreign Currency Matters We adopted ASC Topic 830 – Foreign Currency Matters, Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2016, FASB issued accounting standards update ASU-2016-09, “Compensation –Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting”. The amendments are intended to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payments award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. For public companies, the amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any organization in any interim or annual period. The Company is currently evaluating the impact of the adoption of ASU 2016-9 on the Company’s financial statements. In March 2016, FASB issued accounting standards update ASU-2016-06, “Derivatives and Hedging (Topic 815) – Contingent Put and Call Options in Debt Instruments”. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. U.S. GAAP provides specific guidance for assessing whether call (put) options that can accelerate the repayment of principal on a debt instrument meet the clearly and closely related criterion. The guidance states that for contingent call (put) options to be considered clearly and closely related, they can be indexed only to interest rates or credit risk. Public companies must apply the new requirements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. The Company is currently evaluating the impact of the adoption of ASU 2016-06 on the Company’s financial statements. In May 2016, FASB issued accounting standards update ASU-2016-12, Revenue from Contracts with Customers (Topic 606) – Narrow-Scope Improvements and Practical Expedients. The amendments do not change the core revenue recognition principle in Topic 606. The amendments provide clarifying guidance in certain narrow areas and add some practical expedients. These amendments are effective at the same time Topic 606 is effective. Topic 606 is effective for public entities for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). The Company is currently evaluating the impact of the adoption of ASU 2016-12 on the Company’s financial statements. In August 2016, FASB issued accounting standards update ASU-2016-15, “Statement of Cash Flows” (Topic 230) – Classification of Certain Cash Receipts and Cash Payments”, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU are effective for public and nonpublic entities for fiscal years beginning after December 15, 2018, and interim periods with fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of ASU 2016-15 on the Company’s financial statements. |
Segment Reporting | Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision making group, in deciding the method to allocate resources and assess performance. The Company currently has one reportable segment for financial reporting purposes, which represents the Company’s core business. |
Summary of Significant Accoun17
Summary of Significant Accounting Polices (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Polices [Abstract] | |
Schedule of fair value of financial instruments | Total (Level 1) (Level 2) (Level 3) Derivative Liability $ 12,189,026 $ - $ - $ 12,189,026 Total liabilities measured at fair value $ 12,189,026 $ - $ - $ 12,189,026 |
Schedule of reconciliation of the derivative liability for which Level 3 inputs | Beginning balance as of January 1, 2016 $ 9,317,475 Fair value of derivative liabilities issued 1,122,760 Loss on conversion of debt and change in derivative liability 1,748,791 Ending balance as of September 30, 2016 $ 12,189,026 |
Schedule of consolidated financial statements entities | Date of incorporation or Name of consolidated State or other jurisdiction formation (date of acquisition Attributable interest subsidiary or entity of incorporation or organization if applicable at September 30, 2016 OriginClear (HK) Ltd. Hong Kong December 31, 2014 100 % Progressive Water Treatment Texas October 1, 2015 100 % |
Business Acquisition (Tables)
Business Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Acquisition [Abstract] | |
Schedule of acquisition date estimated fair value of consideration transferred | Convertible promissory note $ 1,500,000 Total purchase price $ 1,500,000 Tangible assets acquired $ 1,549,700 Liabilities assumed (731,845 ) $ 817,855 Goodwill 682,145 Total purchase price $ 1,500,000 |
Schedule of proforma results | Period Ended 9/30/2015 (unaudited) Total Revenues $ 4,198,368 Net Income (Loss) $ (7,244,377 ) Basic and Diluted Net Loss Per Common Share $ (0.054 ) |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Derivative Liabilities [Abstract] | |
Schedule of derivative liabilities using Black Scholes option valuation model | Risk free interest rate 0.14% - 1.02% Stock volatility factor 4.72% - 189.09% Weighted average expected option life 6 months - 3.4 years Expected dividend yield None |
Options Warrants and Restrict20
Options Warrants and Restricted Stock (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Options Warrants and Restricted Stock [Abstract] | |
Schedule of company's stock option activity and related information | September 30, 2016 Weighted Number average of exercise Options price Outstanding, beginning of period 119,404,644 $ 0.05 Granted 1,000,000 $ 0.02 Exercised - - Forfeited/Expired (6,488,333 ) $ 0.07 Outstanding, end of period 113,916,311 $ 0.05 Exercisable at the end of period 75,567,519 $ 0.04 Weighted average fair value of options granted during the period $ - |
Schedule of weighted average remaining contractual life of options outstanding issued under the plan | Weighted Average Stock Stock Remaining Exercisable Options Options Contractual Prices Outstanding Exercisable Life (years) $ 0.19 - 1.70 1,833,645 1,489,894 0.003 -8.02 $ 0.41 - 0.44 1,132,666 849,500 6.96 $ 0.02 - 0.0375 110,950,000 73,228,125 4.02 -4.50 113,916,311 75,567,519 |
Schedule of company's warrant activity and related information | September 30, 2016 Weighted average exercise Options price Outstanding -January 1, 2016 23,297,108 $ 0.21 Granted - - Exercised - - Forfeited (5,472,849 ) $ 0.09 Outstanding - September 30, 2016 17,824,259 $ 0.19 |
Schedule of weighted average remaining contractual life of warrants outstanding | Weighted Average Remaining Exercisable Warrants Warrants Contractual Prices Outstanding Exercisable Life (years) $ 0.15 - 0.25 16,769,233 16,769,233 0.77- 1.70 $ 0.25 - 1.75 841,692 841,692 0.57 - 1.97 $ 0.90 - 6.90 213,334 213,334 0.01 - 6.13 17,824,259 17,824,259 |
Summary of Significant Accoun21
Summary of Significant Accounting Polices (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | $ 12,189,026 | $ 9,317,475 |
Total liabilities measured at fair value | 12,189,026 | |
(Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | ||
Total liabilities measured at fair value | ||
(Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | ||
Total liabilities measured at fair value | ||
(Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liabilities | 12,189,026 | $ 9,317,475 |
Total liabilities measured at fair value | $ 12,189,026 |
Summary of Significant Accoun22
Summary of Significant Accounting Polices (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||||
Beginning balance as of January 1, 2016 | $ 9,317,475 | |||
Loss on conversion of debt and change in derivative liability | $ 7,575,427 | $ 2,324,532 | 1,748,791 | $ 2,015,792 |
Ending balance as of September 30, 2016 | 12,189,026 | 12,189,026 | ||
Level 3 [Member] | ||||
Fair Value, Assets and Liabilities Measured On Recurring and Nonrecurring Basis [Line Items] | ||||
Beginning balance as of January 1, 2016 | 9,317,475 | |||
Fair value of derivative liabilities issued | 1,122,760 | 1,122,760 | ||
Loss on conversion of debt and change in derivative liability | 1,748,791 | |||
Ending balance as of September 30, 2016 | $ 12,189,026 | $ 12,189,026 |
Summary of Significant Accoun23
Summary of Significant Accounting Polices (Details 2) | 9 Months Ended |
Sep. 30, 2016 | |
OriginClear (HK) Ltd. [Member] | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Entity Incorporation, State Country Name | Hong Kong |
Entity Incorporation, Date of Incorporation | Dec. 31, 2014 |
Attributable interest at March 31, 2016 | 100.00% |
Progressive Water Treatment [Member] | |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |
Entity Incorporation, State Country Name | Texas |
Entity Incorporation, Date of Incorporation | Oct. 1, 2015 |
Attributable interest at March 31, 2016 | 100.00% |
Summary of Significant Accoun24
Summary of Significant Accounting Polices (Details Textual) - USD ($) | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Sep. 29, 2015 | |
Summary Of Significant Accounting Policies (Textual) | ||||
Antidilutive securities excluded from computation of earnings per share | 4,214,068 | 4,741,858 | ||
Foreign currency translation adjustments loss | $ 17 | |||
Entity voting percent | 50.00% | |||
Common stock, capital shares reserved for future issuance | 8,000,000 | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | |
Net contracts receivable | $ 391,035 | $ 0 | $ 1,066,223 | |
Allowance for doubtful accounts | $ 50,000 | $ 50,000 | $ 50,000 | |
Warrant [Member] | ||||
Summary Of Significant Accounting Policies (Textual) | ||||
Antidilutive securities excluded from computation of earnings per share | 17,824,259 | 23,749,549 | ||
Stock Option [Member] | ||||
Summary Of Significant Accounting Policies (Textual) | ||||
Antidilutive securities excluded from computation of earnings per share | 113,916,311 | 3,954,644 |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | Oct. 01, 2015 |
Business Acquisition [Abstract] | |||
Convertible promissory note | $ 1,500,000 | ||
Total purchase price | 1,500,000 | ||
Tangible assets acquired | 1,549,700 | ||
Liabilities assumed | (731,845) | ||
Total | 817,855 | ||
Goodwill | $ 682,145 | $ 487,447 | 682,145 |
Total purchase price | $ 1,500,000 |
Business Acquisition (Details 1
Business Acquisition (Details 1) - Pro Forma [Member] | 9 Months Ended |
Sep. 30, 2015USD ($)$ / shares | |
Business Acquisition [Line Items] | |
Total Revenues | $ 4,198,368 |
Net Income (Loss) | $ (7,244,377) |
Basic and Diluted Net Loss Per Common Share | $ / shares | $ (0.054) |
Business Acquisition (Details T
Business Acquisition (Details Textual) - USD ($) | Oct. 01, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||
Preferred stock, per share | $ 0.0001 | $ 0.0001 | |
Purchase price | $ 1,500,000 | ||
Series B Preferred Stock [Member] | |||
Business Acquisition [Line Items] | |||
Preferred stock issued during period of acquisition, shares | 10,000 | ||
Preferred stock, per share | $ 150 |
Capital Stock (Details)
Capital Stock (Details) - USD ($) | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | Oct. 01, 2015 | Jul. 31, 2015 | |
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | |||
Conversion price | $ 0.01 | ||||
Preferred stock, per share | $ 0.0001 | $ 0.0001 | |||
Common stock issued at fair value for services | $ 999,931 | $ 1,004,659 | |||
Common stock of good share fair value | 787,971 | ||||
Common stock issuance for cash | $ 963,217 | ||||
Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares outstanding | 1,000 | 1,000 | |||
Preferred stock, shares issued | 1,000 | 1,000 | |||
Series B Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares outstanding | 10,000 | 10,000 | |||
Preferred stock, shares issued | 10,000 | 10,000 | |||
Conversion price | $ 0.03 | ||||
Preferred stock, per share | $ 150 | ||||
Common Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock issuance for conversion of debt (shares) | 123,247,474 | ||||
Aggregate principal amount | $ 782,000 | ||||
Interest amount | 96,040 | ||||
Common stock issued at fair value for services | $ 6,501 | ||||
Common stock issued at fair value for services (shares) | 65,013,845 | ||||
Common stock of good share fair value | $ 8,145 | ||||
Common stock issuance of make good shares (shares) | 81,445,772 | ||||
Common stock issuance for cash | $ 9,632 | ||||
Common stock issuance for cash (shares) | 96,321,672 | ||||
Common Stock [Member] | Maximum [Member] | |||||
Class of Stock [Line Items] | |||||
Conversion price | $ 0.0098 | ||||
Common Stock [Member] | Minimum [Member] | |||||
Class of Stock [Line Items] | |||||
Conversion price | $ 0.0047 | ||||
Preferred stock [Member] | |||||
Class of Stock [Line Items] | |||||
Common stock issuance for conversion of debt (shares) | |||||
Common stock issued at fair value for services | |||||
Common stock issued at fair value for services (shares) | |||||
Common stock of good share fair value | |||||
Common stock issuance of make good shares (shares) | |||||
Common stock issuance for cash | |||||
Common stock issuance for cash (shares) | |||||
Preferred stock [Member] | Series A Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized | 25,000,000 | ||||
Preferred stock, shares outstanding | 11,000 | ||||
Preferred stock, per share | $ 0.0001 | ||||
Preferred stock [Member] | Series B Preferred Stock [Member] | |||||
Class of Stock [Line Items] | |||||
Preferred stock, shares authorized | 25,000,000 | ||||
Preferred stock, shares outstanding | 11,000 | ||||
Preferred stock, per share | $ 0.0001 |
Convertible Promissory Notes (D
Convertible Promissory Notes (Details) - USD ($) | Feb. 12, 2016 | Feb. 24, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | May 19, 2015 |
Short-term Debt [Line Items] | ||||||
Conversion price of debt | $ 0.01 | |||||
Debt instrument outstanding amount | $ 2,535,000 | |||||
Converted an aggregate principal amount | $ 878,040 | $ 1,148,597 | ||||
Amended Balance Description | On February 24, 2015, the OID Notes with an aggregate remaining principle balance of $273,124, plus accrued interest of $13,334 were amended. | |||||
Convertible Promissory Notes [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt instrument interest rate | 10.00% | |||||
Debt instrument, Maturity date | Jan. 25, 2016 | |||||
Conversion price per share of debt, Description | 50% of the lowest trade price on any trade day following issuance of the Notes. | |||||
Debt instrument debt default | The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum. | |||||
Converted an aggregate principal amount | $ 518,000 | |||||
Interest and extension fee amount | $ 96,040 | |||||
Number of shrares converted into common stock | 93,866,797 | |||||
Aggregate remaining amount | $ 2,017,000 | |||||
Recognized interest expense | $ 1,691 | |||||
Convertible Promissory Notes [Member] | Maximum [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Conversion price of debt | $ 0.14 | |||||
Convertible Promissory Notes [Member] | Minimum [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Conversion price of debt | $ 0.06 | |||||
OID Notes [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt instrument, Maturity date | Sep. 19, 2014 | Dec. 31, 2015 | ||||
Conversion price of debt | $ 0.4375 | $ 0.02 | ||||
Conversion price per share of debt, Description | After the amendment the conversion price changed to the lesser of $0.08 per share, or b) fifty percent (50%) of the lowest trade price of common stock recorded since the original effective date of this note, or c) the lowest effective price per share granted to any person or entity after the effective date. | |||||
Converted an aggregate principal amount | $ 89,000 | |||||
Interest and extension fee amount | $ 13,334 | |||||
Number of shrares converted into common stock | 10,470,588 | |||||
Aggregate remaining amount | $ 184,124 | |||||
Original issue discount on promissory notes | $ 273,124 | |||||
Description of maturity note | On each maturity date, each note was extended one year from its maturity date through September 19, 2015. | |||||
Beneficial conversion feature [member] | ||||||
Short-term Debt [Line Items] | ||||||
Converted an aggregate principal amount | $ 175,000 | |||||
Number of shrares converted into common stock | 18,910,088 | |||||
Aggregate remaining amount | $ 257,048 | |||||
Recognized interest expense | $ 161,574 | |||||
Conversion of accounts payable into a convertible note | $ 430,896 | |||||
Percentage of average of lowest closing prices | 75.00% | |||||
Number of trading days previous to conversion | 25 days | |||||
Unsecured convertible notes 2 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Debt instrument interest rate | 10.00% | |||||
Debt instrument, Maturity date | May 31, 2017 | |||||
Conversion price per share of debt, Description | 50% of the lowest trade price on any trade day following issuance of the Notes. | |||||
Debt instrument debt default | The mandatory default amount is 150% of the Note amount and such mandatory default amount shall bear interest at 10% per annum. | |||||
Converted an aggregate principal amount | $ 1,900,000 | |||||
Recognized interest expense | 96,104 | |||||
Received advances of debt | $ 1,325,000 | |||||
Unsecured convertible notes 2 [Member] | Maximum [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Conversion price of debt | $ 0.08 | |||||
Unsecured convertible notes 2 [Member] | Minimum [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Conversion price of debt | $ 0.02 | |||||
Convertable promissory notes 3 [Member] | ||||||
Short-term Debt [Line Items] | ||||||
Recognized interest expense | $ 114,065 | |||||
Conversion of accounts payable into a convertible note | $ 432,048 | |||||
Percentage of average of lowest closing prices | 75.00% | |||||
Number of trading days previous to conversion | 25 days |
Derivative Liabilities (Details
Derivative Liabilities (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Significant assumptions used for black scholes valuation of the derivative | |
Expected dividend yield | |
Minimum [Member] | |
Significant assumptions used for black scholes valuation of the derivative | |
Risk free interest rate | 0.14% |
Stock volatility factor | 4.72% |
Weighted average expected option life | 6 months |
Maximum [Member] | |
Significant assumptions used for black scholes valuation of the derivative | |
Risk free interest rate | 1.02% |
Stock volatility factor | 189.09% |
Weighted average expected option life | 3 years 4 months 24 days |
Derivative Liabilities (Detai31
Derivative Liabilities (Details Textual) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Derivative Liabilities (Textual) | ||
Fair value of derivative liabilities | $ 12,189,026 | $ 9,317,475 |
Options Warrants and Restrict32
Options Warrants and Restricted Stock (Details) - Stock Option [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |
Number of Options, Outstanding, beginning of period | shares | 119,404,644 |
Number of Options, Granted | shares | 1,000,000 |
Number of Options, Exercised | shares | |
Number of Options, Forfeited/Expired | shares | (6,488,333) |
Number of Options, Outstanding, end of period | shares | 113,916,311 |
Number of Options, Exercisable at the end of period | shares | 75,567,519 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |
Weighted average exercise price, Outstanding, beginning of period | $ 0.05 |
Weighted average exercise price, Granted | 0.02 |
Weighted average exercise price, Exercised | |
Weighted average exercise price, Forfeited/Expired | 0.07 |
Weighted average exercise price, Outstanding, end of period | 0.05 |
Weighted average exercise price, Exercisable at the end of period | 0.04 |
Weighted average fair value of options granted during the period |
Options Warrants and Restrict33
Options Warrants and Restricted Stock (Details 1) - Stock Option - 2009 Plan, 2012 Plan, and 2013 Plan [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Stock Options Outstanding | 113,916,311 |
Stock Options Exercisable | 75,567,519 |
0.19 - 1.70 [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercisable Prices Lower limit | $ / shares | $ 0.19 |
Exercisable Prices Upper limit | $ / shares | $ 1.70 |
Stock Options Outstanding | 1,833,645 |
Stock Options Exercisable | 1,489,894 |
0.19 - 1.70 [Member] | Minimum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 1 day |
0.19 - 1.70 [Member] | Maximum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 8 years 7 days |
0.41 - 0.44 [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercisable Prices Lower limit | $ / shares | $ 0.41 |
Exercisable Prices Upper limit | $ / shares | $ 0.44 |
Stock Options Outstanding | 1,132,666 |
Stock Options Exercisable | 849,500 |
Weighted Average Remaining Contractual Life (years) | 6 years 11 months 16 days |
0.02 - 0.0375 [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercisable Prices Lower limit | $ / shares | $ 0.02 |
Exercisable Prices Upper limit | $ / shares | $ 0.0375 |
Stock Options Outstanding | 110,950,000 |
Stock Options Exercisable | 73,228,125 |
0.02 - 0.0375 [Member] | Minimum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 4 years 7 days |
0.02 - 0.0375 [Member] | Maximum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 4 years 6 months |
Options Warrants and Restrict34
Options Warrants and Restricted Stock (Details 2) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Class Of Warrant Or Right [Roll Forward] | |
Outstanding - January 1, 2016 | shares | 23,297,108 |
Warrants, Granted | shares | |
Warrants, Exercised | shares | |
Warrants, Forfeited | shares | (5,472,849) |
Outstanding - September 30, 2016 | shares | 17,824,259 |
Class Of Warrant Or Right, Weighted Average Exercise Price [Roll Forward] | |
Weighted average exercise price, Outstanding - January 1, 2016 | $ / shares | $ 0.21 |
Weighted average exercise price, Granted | $ / shares | |
Weighted average exercise price, Exercised | $ / shares | |
Weighted average exercise price, Forfeited | $ / shares | 0.09 |
Weighted average exercise price, Outstanding - September 30, 2016 | $ / shares | $ 0.19 |
Options Warrants and Restrict35
Options Warrants and Restricted Stock (Details 3) - Warrant [Member] | 9 Months Ended |
Sep. 30, 2016$ / sharesshares | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Warrants Outstanding | 17,824,259 |
Warrants Exercisable | 17,824,259 |
0.15 - 0.25 [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercisable Prices Lower limit | $ / shares | $ 0.15 |
Exercisable Prices Upper limit | $ / shares | $ 0.25 |
Warrants Outstanding | 16,769,233 |
Warrants Exercisable | 16,769,233 |
0.15 - 0.25 [Member] | Minimum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 9 months 7 days |
0.15 - 0.25 [Member] | Maximum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 1 year 8 months 12 days |
0.25 - 1.75 [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercisable Prices Lower limit | $ / shares | $ 0.25 |
Exercisable Prices Upper limit | $ / shares | $ 1.75 |
Warrants Outstanding | 841,692 |
Warrants Exercisable | 841,692 |
0.25 - 1.75 [Member] | Minimum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 6 months 26 days |
0.25 - 1.75 [Member] | Maximum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 1 year 11 months 19 days |
0.90 - 6.90 [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Exercisable Prices Lower limit | $ / shares | $ 0.90 |
Exercisable Prices Upper limit | $ / shares | $ 6.90 |
Warrants Outstanding | 213,334 |
Warrants Exercisable | 213,334 |
0.90 - 6.90 [Member] | Minimum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 4 days |
0.90 - 6.90 [Member] | Maximum [Member] | |
Share-Based Compensation, Shares Authorized Under Stock Option Plans, Exercise Price Range [Line Items] | |
Weighted Average Remaining Contractual Life (years) | 6 years 1 month 17 days |
Options Warrants and Restrict36
Options Warrants and Restricted Stock (Details Textual) - USD ($) | May 12, 2016 | Jun. 14, 2013 | Aug. 10, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Oct. 02, 2015 | May 25, 2012 |
Options Warrants and Restricted Stock (Textual) | |||||||
Employee termination, description | Not less than thirty (30) days nor more than three (3) months after such termination. | ||||||
Compensation costs | $ 155,112 | $ 134,621 | |||||
Issuance of shares | 1,000,000 | ||||||
Common stock issued at fair value for services | $ 999,931 | $ 1,004,659 | |||||
Restricted Stock Grant Agreement [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Issuance of shares | 30,000,000 | 15,000,000 | |||||
Common stock issued at fair value for services | $ 609,000 | $ 142,500 | |||||
Fair value investment of CEO and employee description | The employee, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 15,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 15,000,000 shares of the Company’s common stock. | The contractor, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period as reported in the Company’s quarterly or annual financial statements filed with the U.S., Securities and Exchange Commission (SEC Reports), the Company will issue 7,500,000 shares of common stock; b.) If the Company’s consolidated operating profit (Operating Profit=Operating Revenue – Cost of Goods Sold – Operating Expenses – Depreciation & Amortization), calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period as reported in the Company’s SEC Reports, the Company will issue 7,500,000 shares of the Company’s common stock. | |||||
Restricted Stock Grant Agreement [Member] | Contractors [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Issuance of shares | 15,000,000 | ||||||
Common stock issued at fair value for services | $ 142,500 | ||||||
Fair value investment of CEO and employee description | The contractor, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period as reported in the Company’s quarterly or annual financial statements filed with the U.S., Securities and Exchange Commission (SEC Reports), the Company will issue 7,500,000 shares of common stock; b.) If the Company’s consolidated operating profit (Operating Profit=Operating Revenue – Cost of Goods Sold – Operating Expenses – Depreciation & Amortization), calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period as reported in the Company’s SEC Reports, the Company will issue 7,500,000 shares of the Company’s common stock. | ||||||
Restricted Stock Grant Agreement [Member] | Employee [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Issuance of shares | 20,000,000 | ||||||
Common stock issued at fair value for services | $ 406,000 | ||||||
Fair value investment of CEO and employee description | The employee, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 10,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 10,000,000 shares of the Company’s common stock. As the performance goals are achieved, the shares shall become eligible for vesting and issuance. | ||||||
Restricted Stock Grant Agreement [Member] | CEO [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Issuance of shares | 60,000,000 | 60,000,000 | |||||
Common stock issued at fair value for services | $ 1,218,000 | $ 570,000 | |||||
Fair value investment of CEO and employee description | The CEO, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period, the Company will issue 30,000,000 shares of common stock; b.) If the Company’s consolidated net profit, calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period, the Company will issue 30,000,000 shares of the Company’s common stock. | The CEO, provided certain milestones are met in the following stages: a.) If the Company’s consolidated gross revenue, calculated in accordance with GAAP, equals or exceeds $15,000,000 for the trailing twelve month period as reported in the Company’s quarterly or annual financial statements filed with the U.S. Securities and Exchange Commission (“SEC Reports”), the Company will issue 30,000,000 shares of common stock; b.) If the Company’s consolidated operating profit (operating profit=operating revenue – cost of goods sold –operating expenses – depreciation & amortization), calculated in accordance to GAAP, equals or exceeds $1,500,000 for the trailing twelve month period reported in the Company’s SEC Reports, the Company will issue 30,000,000 shares of the Company’s common stock. | |||||
2009 Incentive Stock Option Plan [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Common stock shares reserves and sets aside for the granting of options (in shares) | 500,000 | ||||||
2012 Incentive Stock Option Plan [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Common stock shares reserves and sets aside for the granting of options (in shares) | 1,000,000 | ||||||
2013 Incentive Stock Option Plan [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Common stock shares reserves and sets aside for the granting of options (in shares) | 4,000,000 | ||||||
Exercise price, description | The exercise price will be determined by the holders percentage owned as follows: If the holder owns more than 10% of the total combined voting power or value of all classes of stock of the Company, then the exercise price will be no less than 110% of the fair market value of the stock as of the date of grant; if the person is not a 10% holder, then the exercise price will be no less than 100% of the fair market value of the stock as of the date of grant. | ||||||
2015 Equity Incentive Stock Option Plan [Member] | |||||||
Options Warrants and Restricted Stock (Textual) | |||||||
Common stock shares reserves and sets aside for the granting of options (in shares) | 160,000,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | May 01, 2016 | Sep. 30, 2016 |
Commitments and Contingencies [Abstract] | ||
Payment for subtenant agreement with sub-landlord | $ 36,560 | $ 31,636 |
Monthly payment | $ 3,500 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Oct. 31, 2016 | Oct. 31, 2016 | Oct. 22, 2016 | Oct. 14, 2016 | Oct. 17, 2016 | Sep. 30, 2016 | Dec. 31, 2015 | Oct. 01, 2015 | Sep. 29, 2015 |
Subsequent Events (Textual) | |||||||||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 | ||||||
Preferred stock, per share | $ 0.0001 | $ 0.0001 | |||||||
Series B Preferred Stock [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Preferred stock, shares issued | 10,000 | 10,000 | |||||||
Preferred stock, per share | $ 150 | ||||||||
Subsequent Events [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Common stock shares issued | 3,525,641 | 1,596,360 | |||||||
Subsequent Events [Member] | Private Placement [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Common stock shares issued | 14,000,000 | ||||||||
Aggregate consideration value | $ 140,000 | ||||||||
Subsequent Events [Member] | Series B Preferred Stock [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Common stock shares issued | 50,010,000 | ||||||||
Preferred stock, shares issued | 3,334 | ||||||||
Preferred stock, per share | $ 0.03 | ||||||||
Conversion of common stock | 16,670,000 | ||||||||
Issunace of conversion, Description | The shares of common stock issued included 16,670,000 shares issued upon conversion of the 3,334 shares of Series B Preferred Stock at $0.03 per share and 33,340,000 shares as a one-time make good issuance as per the Certificate of Designation of Series B Preferred Stock and agreement between the Company and the holder. | ||||||||
Subsequent Events [Member] | Consultant Nonstatutory Stock Option Agreement [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Number of Options, Granted | 15,000,000 | ||||||||
Options excercise price | $ 0.084 | ||||||||
Option expiry term description | Subject to early termination as provided in the Option Agreements, the options expire five years from the Grant Date. | ||||||||
Subsequent Events [Member] | Incentive Stock Option Agreement [Member] | |||||||||
Subsequent Events (Textual) | |||||||||
Number of Options, Granted | 500,000 | ||||||||
Options excercise price | $ 0.084 | ||||||||
Option expiry term description | Subject to early termination as provided in the Option Agreements, the options expire five years from the Grant Date. |