| Summary of Significant Accounting Policies | Note
2 - Summary of Significant Accounting Policies Basis
of Presentation The
accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial statements (“U.S. GAAP”) and with the instructions to Form 10-Q and
Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain
all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial
statements. In
the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all of the adjustments
necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2023 and the
results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31, 2023 are
not necessarily indicative of the operating results for the full fiscal year or any future period. These
unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on April 14, 2023. Management
acknowledges its responsibility for the preparation of the accompanying unaudited consolidated financial statements which reflect all
adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated
financial position and the consolidated results of its operations for the periods presented. Principles
of Consolidation The
accompanying consolidated financial statements include the financial statements of Greenway and its wholly owned subsidiaries. All intercompany
accounts and transactions are eliminated in consolidation. Business
Segments The
Company uses the “management approach” to identify its reportable segments. The management approach requires companies to
report segment financial information consistent with information used by management for making operating decisions and assessing performance
as the basis for identifying the Company’s reportable segments. The Company has identified one
single reportable operating segment. The Company
manages its business on the basis of one operating and reportable segment. Use
of Estimates Preparing
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues
and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material. Changes
in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other
assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances. Significant
estimates during the three months ended March 31, 2023 and 2022, respectively, include valuation of stock-based compensation, uncertain
tax positions, and the valuation allowance on deferred tax assets. GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) Fair
Value of Financial Instruments The
Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements The
Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring
basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement.
The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining
fair value. The
three tiers are defined as follows:
● Level
1 - Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets;
● Level
2 - Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace
for identical or similar assets and liabilities; and
● Level
3 - Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. The
determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations
often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation
methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the
asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions
of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors
to assist us in determining fair value, as appropriate. Although
the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative
of net realizable value or reflective of future fair values. The
Company’s financial instruments, including cash, accounts payable and accrued expenses, accounts payable and accrued expenses –
related parties, advances and various debt instruments are carried at historical cost. GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) At March
31, 2023 and December 31, 2022, respectively, the carrying amounts of these instruments approximated their fair values because of
the short-term nature of these instruments. ASC
825-10 “Financial Instruments” Equity
Method Investment On
August 29, 2019, the Company entered into a Material Definitive Agreement related to the formation of OPMGE. The
Company contributed a limited license to use its proprietary and patented GTL technology for no actual cost basis in exchange for 42.86 As
of March 31, 2023 and December 31, 2022, respectively, there were no assets within OPMGE. Accordingly, the Company’s receivable
with this entity is fully reserved for as of March 31, 2023 and December 31, 2022. Cash
and Cash Equivalents and Concentration of Credit Risk For
purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less
at the purchase date and money market accounts to be cash equivalents. At
March 31, 2023 and December 31, 2022, respectively, the Company did not The
Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent
account balances exceed the amount insured by the FDIC, which is $ 250,000 not GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) Impairment
of Long-lived Assets Management
evaluates the recoverability of the Company’s identifiable intangible assets and other long-lived assets when events or circumstances
indicate a potential impairment exists, in accordance with the provisions of ASC 360-10-35-15 “Impairment or Disposal of Long-Lived
Assets.” If
impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment to
be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Property
and Equipment Expenditures
for repair and maintenance which do not materially extend the useful lives of property and equipment are charged to operations. When
property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the respective
accounts with the resulting gain or loss reflected in operations. Management
reviews the carrying value of its property and equipment whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable. Derivative
Liabilities The
Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, (“ASC 480”),
“ Distinguishing Liabilities from Equity” Derivatives
and Hedging” Upon
conversion or repayment of a debt instrument in exchange for shares of common stock, where the embedded conversion option has been bifurcated
and accounted for as a derivative liability (generally convertible debt and warrants), the Company records the shares of common stock
at fair value, relieves all related debt, derivatives, and debt discounts, and recognizes a net gain or loss on debt extinguishment. GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) Equity
instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities
at the fair value of the instrument on the reclassification date. At
March 31, 2023 and December 31 no Debt
Discount For
certain notes issued, the Company may provide the debt holder with an original issue discount. The original issue discount is recorded
as a debt discount, reducing the face amount of the note, and is amortized to interest expense over the life of the debt, in the Consolidated
Statements of Operations. Debt
Issue Cost Debt
issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense over the life of the
underlying debt instrument, in the Consolidated Statements of Operations. Income
Taxes The
Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. The
Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using
that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of March 31, 2023 and December 31, 2022, respectively, the Company had
no The
Company recognizes interest and penalties related to uncertain income tax positions in other expense. No GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) Research
and Development The
Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”). Under
ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development
costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or
as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related
to both present and future products are expensed in the period incurred. The
Company incurred research and development expenses of $ 0 16,000 Stock-Based
Compensation The
Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” The
Company uses the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the
fair value of options. The
fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services
is completed (measurement date) and is recognized over the vesting periods. When
determining fair value, the Company considers the following assumptions in the Black-Scholes model:
● Exercise
price,
● Expected
dividends,
● Expected
volatility,
● Risk-free
interest rate; and
● Expected
life of option GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) Stock
Warrants In
connection with certain financing, consulting and collaboration arrangements, the Company may issue warrants to purchase shares of its
common stock. The outstanding warrants are standalone instruments that are not puttable or mandatorily redeemable by the holder and are
classified as equity awards. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the
measurement date. Warrants issued in conjunction with the issuance of common stock are initially recorded at fair value as a reduction
in additional paid-in capital of the common stock issued. All other warrants are recorded at fair value as expense over the requisite
service period or at the date of issuance if there is not a service period. Basic
and Diluted Earnings (Loss) per Share Pursuant
to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock
outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares
of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common
shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common
stock issuable. These common stock equivalents may be dilutive in the future. At
March 31, 2023 and 2022, respectively, the Company had the following common stock equivalents outstanding, which are potentially dilutive
equity securities: Schedule
of Potentially Dilutive Equity Securities
March
31, 2023 March
31, 2022
Convertible
debt 3,689,400 2,083,333
Warrants - 3,000,000
Potentially
dilutive equity securities 3,689,400 5,083,333 GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) Related
Parties Parties
are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with the Company. Related
parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company
and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management
or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests. Recent
Accounting Standards Changes
to accounting principles are established by the Financial Accounting Standards Board in the form of Accounting Standards Updates (“ASU’s”)
to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position,
results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting
pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial
statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements,
when adopted, will have a material impact on the financial statements of the Company. In
August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU
2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards
while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the
new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt
and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is
issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded
conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use
of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is
consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for smaller
reporting companies financial statements issued for fiscal years beginning after December 15, 2022, and interim periods within those
fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. We
adopted this pronouncement on January 1, 2023; however, the adoption of this standard did not have a material effect on the Company’s
financial statements. Reclassifications Certain
prior year amounts have been reclassified for consistency with the current year presentation. The
Company separately reflected amortization of debt discount from interest expense. This
reclassification had no effect on the consolidated results of operations, stockholders’ deficit, or cash flows. GREENWAY
TECHNOLOGIES, INC. AND SUBSIDIARIES NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS MARCH
31, 2023 (UNAUDITED) |
