Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 15, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Water Now, Inc. | |
Entity Central Index Key | 0001713909 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity Emerging Growth Company? | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 52,410,817 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2019 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Current Assets | ||
Cash | $ 127,129 | $ 53,106 |
Accounts receivable | 297,050 | 1,250 |
Other receivables | 30,000 | |
Inventory | 521,019 | 506,845 |
Prepaid expenses | 5,663 | |
Total Currents Assets | 980,861 | 561,201 |
Property and equipment - net | 1,935,066 | 382,551 |
Operating lease right-of-use assets | 813,393 | |
Distributorship agreement, net | 816,667 | 966,667 |
Security deposit | 34,330 | 10,849 |
Total Assets | 4,580,317 | 1,921,268 |
Current Liabilities | ||
Accounts payable | 1,265,916 | 417,972 |
Accrued expenses | 462,133 | 598,564 |
Distributorship accrued expense | 250,000 | 650,000 |
Derivative liability | 1,004,199 | |
Advances from related parties | 20,000 | 302,497 |
Current portion of operating lease liabilities | 277,309 | |
Current portion of convertible notes payable | 2,346,196 | 428,257 |
Notes payable – stockholders | 200,000 | |
Total Current Liabilities | 5,825,753 | 2,397,290 |
Long-term convertible notes payable | 82,519 | |
Operating lease liabilities | 550,308 | |
Revenue sharing liabilities | 3,517,777 | 319,500 |
Total Liabilities | 9,893,838 | 2,799,309 |
Commitments and Contingencies | ||
Stockholders' Deficit | ||
Preferred stock – no par value, 10,000,000 shares authorized, zero issued and outstanding at September 30, 2019 and December 31, 2018 | ||
Common stock - no par value, 90,000,000 shares authorized, 46,682,976 and 36,013,000 shares issued and 46,486,784 and 35,816,808 shares outstanding as of September 30, 2019 and December 31, 2018, respectively | 8,877,325 | 6,463,705 |
Additional paid-in capital | 1,408,474 | 687,431 |
Subscription receivable | (50,000) | (50,000) |
Accumulated deficit | (15,549,320) | (7,979,177) |
Total Stockholders' Deficit | (5,313,521) | (878,041) |
Total Liabilities and Stockholders' Deficit | $ 4,580,317 | $ 1,921,268 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common Stock, par or stated value | $ 0 | $ 0 |
Common Stock, shares authorized | 90,000,000 | 90,000,000 |
Common Stock, shares issued | 46,682,976 | 36,013,000 |
Common Stock, shares outstanding | 46,486,784 | 35,816,808 |
Preferred Stock, par or stated value | $ 0 | $ 0 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 20,092 | $ (19,995) | $ 334,393 | $ 39,200 |
Cost of goods sold | 16,553 | (10,742) | 281,080 | 25,935 |
Gross Profit (Loss) | 3,539 | (9,253) | 53,313 | 13,265 |
Operating expenses | ||||
Salaries and wages | 398,579 | 586,486 | 1,310,049 | 1,205,421 |
Professional fees | 271,661 | 170,206 | 812,417 | 959,196 |
Selling, general and administrative | 385,772 | 130,264 | 1,087,673 | 528,896 |
Gain on sale of assets | (4,070) | |||
Total operating expenses | 1,056,012 | 886,956 | 3,206,069 | 2,693,513 |
Loss from operations | (1,052,473) | (896,209) | (3,152,756) | (2,680,248) |
Other expense | ||||
Interest expense | (3,760,191) | (89,272) | (4,885,981) | (96,608) |
Change in fair value of derivative liability | 832,566 | 646,557 | ||
Loss on extinguishment of debt | (130,052) | (182,877) | ||
Total other expense | (3,057,677) | (89,272) | (4,422,301) | (96,608) |
Loss before provision for income taxes | (4,110,150) | (985,481) | (7,575,057) | (2,776,856) |
Provision for income taxes | ||||
Net Loss | $ (4,110,150) | $ (985,481) | $ (7,575,057) | $ (2,776,856) |
Loss per share | ||||
basic and fully diluted | $ (0.1) | $ (0.03) | $ (0.2) | $ (0.09) |
Weighted-average number of shares of common stock | ||||
basic and fully diluted | 41,444,725 | 33,572,678 | 38,469,731 | 32,563,861 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Subscription Receivable [Member] | Total |
Beginning Balance Common Stock, Shares at Dec. 31, 2017 | 30,325,808 | ||||
Beginning Balance Common Stock, Value at Dec. 31, 2017 | $ 3,831,205 | $ (3,609,121) | $ 222,084 | ||
Common stock issuances for cash, Shares | 2,941,000 | ||||
Common stock issuances for cash, Value | $ 1,470,500 | 1,470,500 | |||
Common stock issuances for services, compensation and distributorship agreement, Shares | 2,310,000 | ||||
Common stock issuances for services, compensation and distributorship agreement, Value | $ 1,453,781 | 1,453,781 | |||
Common stock cancelled as payment for legal services, Shares | (1,250,000) | ||||
Common stock cancelled as payment for legal services, Value | $ (625,000) | (625,000) | |||
Shares subscribed for services, Shares | |||||
Shares subscribed for services, Value | $ 50,000 | (50,000) | |||
Net loss | (2,776,586) | (2,776,586) | |||
Ending Balance Common Stock, Shares at Sep. 30, 2018 | 34,326,808 | ||||
Ending Balance Common Stock, Value at Sep. 30, 2018 | $ 6,180,486 | (6,385,977) | (50,000) | (255,491) | |
Beginning Balance Common Stock, Shares at Dec. 31, 2018 | 35,816,808 | ||||
Beginning Balance Common Stock, Value at Dec. 31, 2018 | $ 6,463,705 | 687,431 | (7,979,177) | (50,000) | (878,041) |
Common stock issuances for cash, Shares | 1,180,000 | ||||
Common stock issuances for cash, Value | $ 299,387 | 299,387 | |||
Net loss | (7,575,057) | (7,575,057) | |||
Common stock issuances for services and compensation, Shares | 1,125,000 | ||||
Common stock issuances for services and compensation, Value | $ 370,275 | 370,275 | |||
Reduction of derivative liability from conversion/redemption | 1,114,472 | 1,114,472 | |||
Shares issued in settlement of claim, Shares | 1,502,389 | ||||
Shares issued in settlement of claim, Value | $ 585,932 | 585,932 | |||
Beneficial conversion feature | (393,429) | (393,429) | |||
Adoption of lease accounting | 4,914 | 4,914 | |||
Common stock issued for conversion of debt, Shares | 5,672,203 | ||||
Common stock issued for conversion of debt, Value | $ 585,168 | 585,168 | |||
Share issued for debt issuance costs, Shares | 1,190,384 | ||||
Share issued for debt issuance costs, Value | $ 572,858 | 572,858 | |||
Ending Balance Common Stock, Shares at Sep. 30, 2019 | 46,486,784 | ||||
Ending Balance Common Stock, Value at Sep. 30, 2019 | $ 8,877,325 | $ 1,408,474 | $ (15,549,320) | $ (50,000) | $ (5,313,521) |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net loss | $ (7,575,057) | $ (2,776,586) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock issued as payment for services and employees’ compensation | 370,275 | 1,005,000 |
Depreciation and amortization | 192,338 | 20,705 |
Non-cash interest expense | 4,626,988 | 77,827 |
Gain on sale of assets | (4,070) | |
Change in fair value of derivative liability | (646,557) | |
Loss on extinguishment of debt | 182,877 | |
Changes in operating working capital items: | ||
Accounts receivable | (295,800) | (5,250) |
Other receivables | (30,000) | |
Inventory | (14,174) | (89,037) |
Prepaid expenses | (5,663) | |
Security deposit | (23,481) | (1,700) |
Accounts payable | 847,944 | (14,078) |
Accrued expenses | (136,581) | 257,360 |
Net cash used in operating activities | (2,505,897) | (1,526,029) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,650,783) | |
Proceeds from sale of assets | 60,000 | |
Payment for distributorship agreement | (400,000) | |
Net cash used in investing activities | (1,990,783) | |
Cash flows from financing activities: | ||
Outstanding checks in excess of bank balance | (6,597) | |
Repayments on notes payable stockholders | (430,000) | |
Net borrowings on notes payable stockholders | 630,000 | |
Net advances (repayments) to related party | (282,497) | 20,386 |
Borrowings on convertible notes payable | 2,562,935 | 583,600 |
Payments on convertible notes payable | (945,122) | |
Issuances of common stock | 299,387 | 1,470,500 |
Repurchase of common stock | (525,000) | |
Borrowings on revenue sharing liabilities | 2,736,000 | |
Net cash provided by financing activities | 4,570,703 | 1,542,889 |
Net increase in cash | 74,023 | 16,860 |
Cash at beginning of period | 53,106 | 2,049 |
Cash at end of period | 127,129 | 18,909 |
Supplemental Disclosure of Interest and Income Taxes Paid: | ||
Interest paid during the period | 132,507 | 15,705 |
Income taxes paid during the period | ||
Non-cash disclosures: | ||
Conversion of convertible notes payable into common shares | 585,168 | |
Issuance of common stock for debt issuance costs | 53,400 | |
Reclass of derivative upon settlement | 1,114,472 | |
Original Issue Discount | 231,565 | |
Discount from derivative | 145,000 | |
Discount from shares issued for issuance costs | $ 572,858 |
1. Basis of Presentation
1. Basis of Presentation | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited financial statements of Water Now, Inc. and subsidiary (collectively, the “Company”) have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, or the SEC, including the instructions to Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements for the year ended December 31, 2018. In the opinion of the management of the Company, all adjustments, which are of a normal recurring nature, necessary for a fair statement of the results for the three-month period have been made. Results for the interim period presented are not necessarily indicative of the results that might be expected for the entire fiscal year. When used in these notes, the terms “Company”, “we”, “us” or “our” mean Water Now, Inc. and subsidiary. Certain amounts in our Condensed Consolidated Statement of Operations for the period ended September 30, 2018 have been reclassified to conform with the current period presentation. Fair Value Measurements ASC Topic 820, “ Fair Value Measurement” “Financial Instruments.” Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred. The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2019 and 2018. The Derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities during the nine months ended September 30, 2019: Derivative liability balance at December 31, 2018 $ — Additions to derivative liability for new debt 2,765,228 Reclass to equity upon conversion/cancellation (1,114,472 ) Change in fair value (646,557 ) Balance at September 30, 2019 $ 1,004,199 At September 30, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.16, a risk-free interest rate of 1.88%, and expected volatility of the Company’s common stock of 213.76%, and the various estimated reset exercise prices weighted by probability. Recently Adopted Accounting Pronouncements Effective January 1, 2019, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases Targeted Improvements to ASC 842 Leases Additional information and disclosures required by this new standard are contained in Note 10. |
2. Going Concern
2. Going Concern | 9 Months Ended |
Sep. 30, 2019 | |
Going Concern | |
Going Concern | 2. Going Concern At September 30, 2019, the Company had approximately $127,000 in cash and had net working capital deficit of approximately $4,845,000. The Company, which generated a net loss of approximately $7,575,000 and $2,777,000 for the nine months ended September 30, 2019 and 2018, respectively, may not have sufficient cash to fund its current and future operations. There is no assurance that future operations will result in profitability. No assurance can be given that management will be successful in its efforts to raise additional capital. The failure to raise additional capital needed to achieve its business plans will have a material adverse effect on the Company’s financial position, results of operations, and ability to continue as a going concern. |
3. Revenues
3. Revenues | 9 Months Ended |
Sep. 30, 2019 | |
Revenues [Abstract] | |
Revenues | 3. Revenues The Company’s revenues are generated from the sales of water purification products and the sales of hydrocarbons derived from the deployment and operation of Company owned oil recovery systems. The Company obtains purchase orders from its water purification customers for the sale of its products which sets forth the general terms and conditions including line item pricing and payment terms (generally due upon receipt). The Company recognizes revenue when its customers obtain control over the assets (generally when the title passes upon shipment) and it is probable that the Company will collect substantially all the amounts due. Individual promised goods are the Company’s only performance obligation. The Company earns revenue each month that the oil recovery systems are in place and operating. The Company generally receives 50% of the proceeds of the sales of oil recovered using its systems. Water purification products that have been sold are not subject to returns unless the product is deemed defective. Credits or refunds are recognized when they are probable and reasonably estimated. The Company’s management reduces revenue to account for estimates of the Company’s credits and refunds. The Company included shipping and handling fees in net revenues. Shipping and handling costs are associated with outbound freight after control over a product has transferred to a customer. These costs are accounted for as a fulfillment cost and are included in cost of goods sold. Revenues, as disaggregated by revenue type and reportable segment (see Note 12), are shown below. For the three months ended For the nine months ended September 30, September 30, 2019 2018 2019 2018 Revenues Water purification products $ — $ (19,995 ) $ 308,744 $ 39,200 Oil recovery systems 20,092 — 25,649 — $ 20,092 $ (19,995 ) $ 334,393 $ 39,200 |
4. Distributorship Agreement
4. Distributorship Agreement | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Distributorship Agreement | 4. Distributorship Agreement On October 31, 2018, the Company entered into an Exclusive Sales Distribution Agreement (the “Agreement”) with African Horizon Technologies (Pty) Ltd (“AHT”) whereby the Company serves as AHT’s exclusive distributor of the Hydraspin Hydro Cyclone technology in the United States of America. The Company was obligated to pay AHT $500,000 and issue AHT 500,000 shares valued at $250,000 based on the closing price of the Company’s shares of $0.50 on the date of the Agreement. In addition, the Company will issue AHT 500,000 shares at the earlier of 24 months from the commencement date of the Agreement or the sale of 50 units to the Company. The Company will also pay AHT a royalty of 2% of total net profits generated by the Company from the sale of oil generated using the Hydraspin units. The term of the Agreement is for five years with an automatic renewal term of five years unless terminated prior to the expiration of the current term. The Company recorded the value of the Agreement of $1,000,000 as an other asset and is amortizing the asset to expense over the life of the Agreement of five years. As of September 30, 2019, $500,000 was paid and the remaining 500,000 shares to be issued is included as an accrued expense. |
5. Notes Payable - Stockholders
5. Notes Payable - Stockholders | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable-Stockholders | 5. Notes Payable – Stockholders The Company borrowed $200,000 and $100,000 from two stockholders on March 25, 2019. The notes bear interest at 18% and are payable beginning on April 25, 2019, at which time the entire amount of principal and any accrued interest was due and payable. The notes are unsecured, and the $200,000 note is guaranteed by the Company’s Chief Executive Officer. As of September 30, 2019, the $100,000 note was paid and the $200,000 note remains outstanding. |
6. Convertible Notes Payable
6. Convertible Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Convertible Notes Payable | 6. Convertible Notes Payable The Company borrowed $68,000 from a lender on September 4, 2018. The note bears interest at 8% and matures on September 4, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 170 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. This note was paid in full on January 3, 2019 and the Company recorded a gain on extinguishment of this debt of $19,114. The Company has no further obligations with respect to this loan. The Company borrowed $200,000 from a lender on September 17, 2018. The note does not bear interest and matures September 17, 2021, at which time the entire amount of principal is due and payable. The note is unsecured. The outstanding principal amount is convertible by the holder into shares of the Company’s common stock at any time prior to the maturity date at a price per share equal to $0.75 per share if before 180 days after the issuance date, or if 180 days after the issuance date, the lesser of $0.75 per share or seventy percent of the second lowest trading price of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company granted 60,000 shares of the Company’s common stock valued at $53,400 based on the Company’s share price on the date of the note agreement, paid $34,400 as a discount for interest on the note, and paid $5,000 for debt issuance costs. Through September 30, 2019, the Company paid $142,000 of principal and prepayment penalties of $58,000 recorded as interest expense. The lender converted the remaining $58,000 of principal into 332,500 shares of the Company’s common stock. The Company has no further obligations with respect to this loan. The Company borrowed $100,000 from a shareholder on August 30, 2018. The note bears interest at 10% and is payable in one lump sum on March 4, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock at any time prior to the maturity date at the conversion price of $0.50 per share. This note was converted into 200,000 shares of the Company’s common stock on March 28, 2019. The Company has no further obligations with respect to this loan. The Company borrowed $42,500 from a lender on October 15, 2018. The note bears interest at 8% and is payable in one lump sum on October 15, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 170 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on March 26, 2019 and the Company recorded a loss on extinguishment of this debt of $17,841. The Company has no further obligations with respect to this loan. The Company borrowed $86,500 from a lender on January 2, 2019. The note bears interest at 8% and is payable in one lump sum on January 2, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on July 8, 2019 and the Company recorded a loss on extinguishment of this debt of $32,592. The Company has no further obligations with respect to this loan. The Company borrowed $102,500 from a lender on February 14, 2019. The note bears interest at 8% and is payable in one lump sum on February 14, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on August 20, 2019 and the Company recorded a gain on extinguishment of this debt of $38,143. The Company has no further obligations with respect to this loan. The Company borrowed $100,000 from a lender on February 20, 2019. The note bears interest at 10%, and is payable in one lump sum on February 20, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal amount is convertible by the holder into shares of the Company’s common stock beginning six months after the issuance date and prior to the maturity date at a price per share equal to sixty percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $164,490, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.23, a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock of 178.56%, and the various estimated reset exercise prices weighted by probability. This resulted in the calculated fair value of the debt discount being greater than the face amount of the debt, and the excess amount of $64,490 was immediately expensed as financing costs. In addition, the Company paid $5,000 for debt issuance costs. Through September 30, 2019, the Company paid $85,000 of principal, prepayment penalties and accrued interest totaling $45,000 recorded as interest expense, and recorded a loss on extinguishment of this debt of $42,629. The lender also converted $15,748 of principal and interest into 159,070 shares of the Company’s common stock. The Company has no further obligations with respect to this loan. The Company borrowed $560,000 from a lender on February 21, 2019. The note bears interest at 12% and is payable in one lump sum on August 21, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $1,185,397, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.18, a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock of 213.76%, and the various estimated reset exercise prices weighted by probability. During the third quarter of 2019, in two separate conversions, the holder converted $151,000 of principal and interest into 2,106,044 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall increase in the fair value of $615,000 recognized, with the fair value of the derivative liability related to the converted portion of $287,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.20 and $0.23, a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock, of 213.76%, and the various estimated reset exercise prices weighted by probability. The Company borrowed $42,500 from a lender on March 11, 2019. The note bears interest at 8% and is payable in one lump sum on March 11, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on September 9, 2019 and the Company recorded a loss on extinguishment of this debt of $16,689. The Company has no further obligations with respect to this loan. The Company borrowed $150,000 from a lender on March 18, 2019. The note bears interest at 12% and is payable in one lump sum on September 18, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $433,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.28, a risk-free interest rate of 1.87% and expected volatility of the Company’s common stock of 167.00%, and the various estimated reset exercise prices weighted by probability. During the third quarter of 2019, the holder converted $56,000 of principal and interest into 1,000,000 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversion with an overall decrease in the fair value of $91,000 recognized, with the fair value of the derivative liability related to the converted portion, of $99,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the date of conversion, of $0.19; a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock, of 213.76%, and the various estimated reset exercise prices weighted by probability. The Company borrowed $45,000 from a lender on November 6, 2018. The note bears interest at 8% and is payable in one lump sum on November 6, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 170 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $2,500 for debt issuance costs. This note was paid in full on April 5, 2019 and the Company recorded a loss on extinguishment of this debt of $15,870. The Company has no further obligations with respect to this loan. The Company borrowed $82,500 from a shareholder on October 11, 2018. The note bears interest at 8% and is payable in one lump sum on April 11, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock at any time prior to the maturity date at the conversion price of $0.50 per share. In addition, the Company paid $13,500 for debt issuance costs. This note was paid in full on April 12, 2019 and the Company recorded additional interest expense of $38,940. The Company has no further obligations with respect to this loan. The Company borrowed $100,000 from a lender on December 13, 2018. The note bears interest at 10%, and is payable in one lump sum on December 13, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning six months after the issuance date and prior to the maturity date at a price per share equal to sixty percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $150,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.29, a risk-free interest rate of 2.40% and expected volatility of the Company’s common stock of 156.33%, and the various estimated reset exercise prices weighted by probability. During June and July 2019, in two separate conversions, the holder converted $36,000 of principal and interest into 333,535 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall decrease in the fair value of $32,000 recognized, with the fair value of the derivative liability related to the converted portion, of $117,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.32 and $0.22; a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock, of 146.06%, and the various estimated reset exercise prices weighted by probability. The Company borrowed $77,000 from a lender on October 12, 2018. The note allows borrowing up to $231,000, bears interest at 12%, and is payable in one lump sum on October 12, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock prior to the maturity date at a price per share equal to sixty-five percent of the lowest trading price of the Company’s common stock for the twenty trading days prior to the conversion date. If at any time while this note is outstanding, the conversion price is equal to or lower than $0.50, then an additional fifteen percent discount shall be factored into the conversion price until the note is no longer outstanding. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $115,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.33, a risk-free interest rate of 2.56% and expected volatility of the Company’s common stock of 172.94%, and the various estimated reset exercise prices weighted by probability. From April through August 2019, in several separate conversions, the holder converted $89,000 of principal and interest into 921,346 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall decrease in the fair value of $115,000 recognized, with the fair value of the derivative liability related to the converted portion of $150,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.27 to $0.40, a risk-free interest rate of 1.88% and expected volatility of the Company’s common stock, of 213.76%, and the various estimated reset exercise prices weighted by probability. In addition, the Company paid $2,000 for debt issuance costs. On May 20, 2019, the Company borrowed an additional $51,500 on this note. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $149,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.40, a risk-free interest rate of 2.37% and expected volatility of the Company’s common stock of 154.69%, and the various estimated reset exercise prices weighted by probability. In addition, the Company paid $1,500 for debt issuance costs. The principal balance at September 30, 2019 is $51,500. The Company borrowed $80,000 from a lender on December 17, 2018. The note bears interest at 10%, and is payable in one lump sum on December 17, 2019, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock prior to the maturity date at a price per share equal to sixty-five percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The conversion feature meets the definition of a derivative and therefore requires bifurcation and is accounted for as a derivative liability. The Company estimated the aggregate fair value of the conversion feature derivatives embedded in the debenture at the date the debt becomes convertible at $160,000, based on weighted probabilities of assumptions used in the Black Scholes pricing model. The key valuation assumptions used consist, in part, of the price of the Company’s common stock of $0.39, a risk-free interest rate of 2.40% and expected volatility of the Company’s common stock of 156.33%, and the various estimated reset exercise prices weighted by probability. From June through August 2019, in several separate conversions, the holder converted $84,000 of principal and interest into 696,503 shares of common stock of the Company. As a result of the conversions the derivative liability related to the debenture was remeasured immediately prior to the conversions with an overall decrease in the fair value of $91,000 recognized, with the fair value of the derivative liability related to the converted portion, of $101,000 being reclassified to equity. The key valuation assumptions used consist, in part, of the price of the Company’s common stock on the dates of conversion, of $0.19 to $0.35, a risk-free interest rate of 2.00% and expected volatility of the Company’s common stock of 145.37% to 156.33%, and the various estimated reset exercise prices weighted by probability. The Company borrowed $175,000 from a lender on April 9, 2019. The note bears interest at 12%, and is payable in one lump sum on January 9, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to the lesser of the lowest trading price of the Company’s common stock for the twenty-five trading days prior to the note issuance date, and the variable conversion price equal to fifty-five percent of the lowest trading price of the Company’s common stock for the twenty-five trading days prior to the conversion date. If at any time while this note is outstanding a 3 rd The Company borrowed $102,500 from a lender on April 10, 2019. The note bears interest at 8% and is payable in one lump sum on April 10, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. The principal balance at September 30, 2019 is $102,500. The Company borrowed $400,000 from five lenders on May 20, 2019. The notes bear interest at 10% and are payable in one lump sum on May 20, 2020, at which time the entire amount of principal and accrued interest is due and payable. The notes are unsecured. The outstanding principal and interest amount is convertible by the holders into shares of the Company’s common stock at any time after the closing price of the Company’s common stock exceeds $0.75 for 10 consecutive trading days at a price equal to $0.50 per share. There was no value assigned to the beneficial conversion feature on the issuance date of the notes due to the Company’s common stock price being less than $0.75 per share. The principal balance at September 30, 2019 is $400,000. The Company borrowed $88,500 from a lender on July 8, 2019. The note bears interest at 8% and is payable in one lump sum on July 8, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the average of the lowest two trading prices of the Company’s common stock for the twenty trading days prior to the conversion date. The principal balance at September 30, 2019 is $88,500. The Company borrowed $103,000 from a lender on July 24, 2019. The note bears interest at 10% and is payable in one lump sum on July 24, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to the lesser of (1) $0.22 and (2) sixty-five percent of the lowest trading price of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company paid $15,315 for debt issuance costs. The principal balance at September 30, 2019 is $103,000. The Company borrowed $100,000 from two lenders on July 26, 2019. The notes bear interest at 10% and are payable in one lump sum on May 20, 2020, at which time the entire amount of principal and accrued interest is due and payable. The notes are unsecured. The outstanding principal and interest amount is convertible by the holders into shares of the Company’s common stock at any time after the closing price of the Company’s common stock exceeds $0.75 for 10 consecutive trading days at a price equal to $0.50 per share. There was no value assigned to the beneficial conversion feature on the issuance date of the notes due to the Company’s common stock price being less than $0.75 per share. The principal balance at September 30, 2019 is $100,000. The Company borrowed $175,000 from a lender on August 26, 2019. The note bears interest at 12% and is payable in one lump sum on February 26, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning 180 days after the issuance date and prior to the maturity date at a price per share equal to sixty-five percent of the second lowest trade price of the Company’s common stock for the twenty trading days prior to the conversion date. In addition, the Company granted the lender 625,000 shares of the Company’s common stock, paid $17,500 as a discount on the note, and paid $3,000 for debt issuance costs. The shares granted must be returned if the note is fully repaid and satisfied prior to 180 days after the issuance date. The Company recorded the value of the shares at $81,250, based on the Company’s share price on the date of the note agreement, as debt issuance costs. The principal balance at September 30, 2019 is $175,000. The Company borrowed $295,000 from a lender on September 4, 2019. The note does not bear interest and matures September 4, 2020, at which time the entire amount of principal is due and payable. The note is unsecured. The outstanding principal amount is convertible by the holder into shares of the Company’s common stock at any time after the closing price of the Company’s common stock exceeds $0.75 for 10 consecutive trading days at a price equal to $0.50 per share. There was no value assigned to the beneficial conversion feature on the issuance date of the notes due to the Company’s common stock price being less than $0.75 per share. The principal balance at September 30, 2019 is $295,000. The Company paid $45,000 as a discount for interest on the note. The Company borrowed $262,500 from a lender on September 10, 2019. The note bears interest at 10%, and is payable in one lump sum on September 10, 2020, at which time the entire amount of principal and accrued interest is due and payable. The note is unsecured. The outstanding principal and interest amount is convertible by the holder into shares of the Company’s common stock beginning on the sixth month anniversary of the note and prior to the maturity date at a price per share equal to sixty percent of the lowest trading price of the Company’s common stock for the fifteen trading days prior to the conversion date. The principal balance at September 30, 2019 is $262,500. |
7. Advances from Related Party
7. Advances from Related Party | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions [Abstract] | |
Advances from Related Party | 7. Advances From Related Parties The Company has received non-interest bearing advances without a specified maturity date from certain stockholders of the Company. The Company owed approximately $20,000 and $302,000, respectively, at September 30, 2019 and December 31, 2018 to the stockholders. |
8. Revenue Sharing Agreements
8. Revenue Sharing Agreements | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Revenue Sharing Agreements | 8. Revenue Sharing Agreements The Company borrowed $50,000 from a lender on November 29, 2018, whereby the proceeds are to be used to purchase a certain HydraSpin unit in exchange for the lender to receive five percent of the revenues net of costs generated from the HydraSpin unit. On March 3, 2019, the Company cancelled this original agreement and entered into a new agreement whereby the lender is to receive fifty percent of the revenues net of costs and has guaranteed that the lender would receive $150,000 in net revenues by March 3, 2021, or the Company would pay the lender the difference between the $150,000 and the purchase price of $50,000 on or before March 31, 2021. On August 19, 2019, the Company cancelled the March 3, 2019 agreement and entered into a new agreement to borrow an additional $230,000, whereby the proceeds will be used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by November 4, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before November 30, 2021. For the nine-month period ended September 30, 2019, the Company recorded $27,569 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $264,000 from a lender on December 13, 2018, whereby the proceeds are to be used to purchase certain HydraSpin units. On February 27, 2019, the Company cancelled this original agreement and entered into a new agreement to borrow an additional $66,000, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by March 3, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before March 31, 2021. For the nine-month period ended September 30, 2019, the Company recorded $42,625 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $660,000 from a lender on January 2, 2019, whereby the proceeds were used to purchase certain HydraSpin units in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin units. The Company has guaranteed that the lender would receive $990,000 in net revenues by January 2, 2021, or the Company would pay the lender the difference between the $990,000 and the purchase price of $660,000 on or before January 15, 2021. For the nine-month period ended September 30, 2019, the Company recorded $123,750 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $660,000 from a lender on January 16, 2019, whereby the proceeds were used to purchase certain HydraSpin units in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin units. The Company has guaranteed that the lender would receive $990,000 in net revenues by January 15, 2021, or the Company would pay the lender the difference between the $990,000 and the purchase price of $660,000 on or before January 17, 2021. For the nine-month period ended September 30, 2019, the Company recorded $116,875 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $330,000 from a lender on January 30, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive sixty percent of the revenues net of forty percent of costs generated from the HydraSpin unit until the lender receives revenue equal to 120% of the $330,000 investment, then the lender shall receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by January 30, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before February 6, 2021. For the nine-month period ended September 30, 2019, the Company recorded $55,000 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $330,000 from a lender on January 30, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive sixty percent of the revenues net of forty percent of costs generated from the HydraSpin unit until the lender receives revenue equal to 120% of the $330,000 investment, then the lender shall receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by January 30, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before February 6, 2021. For the nine-month period ended September 30, 2019, the Company recorded $55,000 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the unit, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $330,000 from a lender on April 1, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $495,000 in net revenues by April 8, 2021, or the Company would pay the lender the difference between the $495,000 and the purchase price of $330,000 on or before April 30, 2021. For the nine-month period ended September 30, 2019, the Company recorded $41,250 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. The Company borrowed $60,000 from a lender on June 25, 2019, whereby the proceeds were used to purchase a certain HydraSpin unit in exchange for the lender to receive fifty percent of the revenues net of costs generated from the HydraSpin unit. The Company has guaranteed that the lender would receive $90,000 in net revenues by June 25, 2021, or the Company would pay the lender the difference between the $90,000 and the purchase price of $60,000 on or before July 25, 2021. On August 15, 2019, the Company borrowed an additional $70,000 from the lender. During the quarter, the lender requested the agreement be terminated and $130,000 be returned to the lender. The Company intends to return the amount borrowed during the period ending December 31, 2019. For the nine-month period ended September 30, 2019, the Company recorded $208 of interest expense related to the value of the revenue sharing liability. The agreement remains in full force and effect until the earlier of (a) the Company is unable to satisfy its obligations under the terms of the agreement and action is brought by the lender to enforce same, (b) the expiration of the operating life of the units, as confirmed by the manufacturer (five years), or (c) the mutual written agreement of the parties. |
9. Equity Transactions
9. Equity Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Equity Transactions | 9. Equity Transactions From January 1, 2018 to March 31, 2018, the Company issued 1,656,000 shares to investors at $0.50 per share for cash, with total proceeds of $828,000, including subscription receivable of $50,000. In addition, the Company issued 610,000 shares to executives, employees working in research and development at the Company, and consultants. The value of these shares at $0.50 per share was $305,000. From April 1, 2018 to June 30, 2018, the Company issued 625,000 shares to investors at $0.50 per share for cash, with total proceeds of $312,500. In addition, the Company issued 770,000 shares to executives, employees working in research and development at the Company and consultants. The value of these shares at $0.50 per share was $385,000. The Company had 1,250,000 shares returned during June 2018 as a result of a lawsuit settlement. From July 1, 2018 to September 30, 2018, the Company issued 660,000 shares to investors at $0.50 per share for cash, with total proceeds of $330,000. In addition, the Company granted 705,000 shares to executives, employees working in research and development at the Company and consultants. The value of these shares at $0.50 per share was $352,500. Also see Note 5 regarding shares issued for debt issuance costs in September 2018. From January 1, 2019 to March 31, 2019, the Company issued 200,000 shares to a lender upon receipt of a conversion notice. The Company also issued 565,384 shares to lenders for debt issuance costs. See Note 5. From April 1, 2019 to June 30, 2019, the Company issued 1,289,051 shares to lenders upon receipt of conversion notices. See Note 5. In addition, the Company issued 825,000 shares to employees and consultants valued at the share price on the date the services were performed. From July 1, 2019 to September 30, 2019, the Company issued 4,183,152 shares to lenders upon receipt of conversion notices. The Company also issued 625,000 shares to a lender for debt issuance costs and 1,502,389 shares to a lender for settlement of a claim. See Note 5. In addition, the Company issued 400,000 shares to employees and consultants valued at the share price on the date the services were performed and issued 1,180,000 shares to investors for total cash proceeds of $294,900. |
10. Operating Leases _ Right of
10. Operating Leases – Right of Use Assets | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Operating Leases - Right of Use Assets | 10. Operating Leases – Right of Use Assets The Company has operating leases for office and warehouse space that expires in 2020 and 2023. Below is a summary of the Company’s right of use assets and liabilities as of September 30, 2019: Right-of-use assets $ 813,393 Lease liability obligations, current $ 277,310 Lease liability obligations, less current portion 550,308 Total lease liability obligations $ 827,618 Weighted-average remaining lease term 3.5 years Weighted-average discount rate 10 % During the nine months ended September 30, 2019, the Company recognized approximately $164,000 in operating lease costs and are included in selling, general and administrative expenses in our consolidated statement of operations. During the nine months ended September 30, 2019, operating cash flows from operating leases was $144,847. Approximate future minimum lease payments for the Company’s right of use assets over the remaining lease periods as of September 30, 2019, are as follows: Year ending December 31, 2019 $ 81,000 2020 312,000 2021 240,000 2022 246,000 2023 103,000 Total minimum payments $ 982,000 |
11. Income Taxes
11. Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. The Company’s tax provision is determined using an estimate of an annual effective tax rate adjusted for discrete items, if any, that are taken into account in the relevant period. The 2019 and 2018 annual effective tax rate was 0% for the U.S. federal and state statutory tax rates. The Company reviews tax uncertainties in light of changing facts and circumstances and adjusts them accordingly. As of September 30, 2019 and December 31, 2018, there were no tax contingencies recorded. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting, and the amounts recognized for income tax purposes. The Company has a net operating loss carry-forward for federal and state tax purposes of approximately $15,549,000 at September 30, 2019, that is potentially available to offset future taxable income. The TCJA (Tax Cut and Jobs Act) changes the rules on NOL carryforwards. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However, NOL carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income. For financial reporting purposes, no deferred tax asset was recognized at September 30, 2019 and December 31, 2018 because management estimates that it is more likely than not that substantially all of the net operating losses will expire unused. As a result, the amount of the deferred tax assets considered realizable was reduced 100% by a valuation allowance. The change in the valuation allowances were approximately $1,590,000 and $583,000 for the nine-months ended September 30, 2019 and 2018, respectively. |
12. Segment Information
12. Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Segment Information | 12. Segment Information The Company sells water purification products and operates oil recovery systems. The Company has identified such reportable segments based on management responsibility and the nature of the Company’s products, services, and costs. To date, the Company primarily sells its water purification products internationally and operates its oil recovery systems in the United States. The Company measures segment profit (loss) as income (loss) from operations. Segment assets are those assets controlled by each reportable segment. Below is the financial information related to the Company’s segments: For the three months ended For the nine months ended September 30, September 30, 2019 2018 2019 2018 Revenues Water purification products $ — $ (19,995 ) $ 308,744 $ 39,200 Oil recovery systems 20,092 — 25,649 — $ 20,092 $ (19,995 ) $ 334,393 $ 39,200 Loss from operations Water purification products $ 608,469 $ 732,123 $ 1,936,762 $ 2,130,811 Oil recovery systems 196,485 — 541,599 — General corporate 247,519 164,086 674,395 549,437 $ 1,052,473 $ 896,209 $ 3,152,756 $ 2,680,248 Capital expenditures Water purification products $ — $ — $ 92,158 $ — Oil recovery systems — — 1,558,625 — General corporate — — — — $ — $ — $ 1,650,783 $ — September 30, 2019 December 31, 2018 Total assets Water purification products $ 937,704 $ 612,498 Oil recovery systems 2,632,098 1,244,814 General corporate 1,010,515 63,956 $ 4,580,317 $ 1,921,268 General corporate expenses include corporate salaries, health insurance and social security taxes for officers and corporate employees, corporate insurance, legal and accounting fees, and other corporate costs such as transfer agent and travel costs. Management considers these to be non-allocable costs for segment purposes. |
13. Subsequent Events
13. Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events The Company has evaluated all material events or transactions that occurred after September 30, 2019 up to November 19, 2019, the date these financial statements were available to be issued. On November 12, 2019, the Company, through its HydraSpin subsidiary, signed an Exclusive Distributor Agreement (the “Agreement”) in which the other party to the agreement (the “Distributor”) agrees to become the exclusive distributor of HydraSpin products in certain Texas and New Mexico territories. HydraSpin shall provide the products to the Distributor at no cost but HydraSpin will receive certain net revenues from the sale of hydrocarbons produced by the products. HydraSpin’s share of net revenues will be 92% of Net Revenues, as defined for the first 10 installed products and 85% for the eleventh product installed and those products installed subsequently. In order for the Distributor to maintain the exclusivity granted in the agreement, it must deploy products in 25 new locations during each 12-month period following the effective date and all customer locations in the aggregate must generate an average of 7,500 barrels of water with at least 2% oil content in each per day. If the Agreement is extended beyond the initial term of five years, the number of customer locations to be secured to maintain exclusivity shall be increased to 50 per year. Stock Issuances During October 2019 and through November 19, 2019, the Company has converted $123,000 of its convertible debt into 4,927,841 shares of common stock. Settlement Agreements On November 15, 2019, the Company reached an amicable resolution of any and all obligations owed by it to Auctus Funds, LLC (“AF”) with respect to the Securities Purchase Agreement dated April 9, 2019 and the related Convertible Promissory Note dated April 9, 2019. The Company has agreed to pay AF $270,000 in three installments. The first payment of $50,000 was paid on November 15, 2019. The second payment of $100,000 will be paid to AF on November 22, 2019. The final payment of $120,000 will be paid to AF on November 29, 2019. On November 15, 2019, the Company reached an amicable resolution of any and all obligations owed by it to Crown Bridge Partners, LLC (“CBP”) with respect to that certain securities purchase agreement and outstanding convertible note with CBP. The Company made a payment of $120,000 to CBP on November 15, 2019, thereby fulfilling any and all obligations to CBP. |
1. Basis of Presentation (Polic
1. Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fair Value Measurements | Fair Value Measurements ASC Topic 820, “ Fair Value Measurement” “Financial Instruments.” Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred. The Company did not have any Level 1 or Level 2 assets and liabilities at September 30, 2019 and 2018. The Derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities during the nine months ended September 30, 2019: Derivative liability balance at December 31, 2018 $ — Additions to derivative liability for new debt 2,765,228 Reclass to equity upon conversion/cancellation (1,114,472 ) Change in fair value (646,557 ) Balance at September 30, 2019 $ 1,004,199 At September 30, 2019, the fair value of the derivative liabilities of convertible notes was estimated using the following weighted-average inputs: the price of the Company’s common stock of $0.16, a risk-free interest rate of 1.88%, and expected volatility of the Company’s common stock of 213.76%, and the various estimated reset exercise prices weighted by probability. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Effective January 1, 2019, we adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-02, Leases Targeted Improvements to ASC 842 Leases Additional information and disclosures required by this new standard are contained in Note 10. |
1. Basis of Presentation (Table
1. Basis of Presentation (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of activity of Level 3 | Derivative liability balance at December 31, 2018 $ — Additions to derivative liability for new debt 2,765,228 Reclass to equity upon conversion/cancellation (1,114,472 ) Change in fair value (646,557 ) Balance at September 30, 2019 $ 1,004,199 |
3. Revenues (Tables)
3. Revenues (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Revenues [Abstract] | |
Revenues | For the three months ended For the nine months ended September 30, September 30, 2019 2018 2019 2018 Revenues Water purification products $ — $ (19,995 ) $ 308,744 $ 39,200 Oil recovery systems 20,092 — 25,649 — $ 20,092 $ (19,995 ) $ 334,393 $ 39,200 |
10. Operating Leases _ Right _2
10. Operating Leases – Right of Use Assets as of June 30, 2019 (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Operating Leases - Right of Use Assets | Right-of-use assets $ 813,393 Lease liability obligations, current $ 277,310 Lease liability obligations, less current portion 550,308 Total lease liability obligations $ 827,618 Weighted-average remaining lease term 3.5 years Weighted-average discount rate 10 % |
10. Operating Leases _ Remainin
10. Operating Leases – Remaining Right of Use Assets as of June 30, 2019 (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Notes to Financial Statements | |
Operating Leases - Remaining Right of Use Assets | Year ending December 31, 2019 $ 81,000 2020 312,000 2021 240,000 2022 246,000 2023 103,000 Total minimum payments $ 982,000 |
12. Segment Information (Tables
12. Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Segment Information | For the three months ended For the nine months ended September 30, September 30, 2019 2018 2019 2018 Revenues Water purification products $ — $ (19,995 ) $ 308,744 $ 39,200 Oil recovery systems 20,092 — 25,649 — $ 20,092 $ (19,995 ) $ 334,393 $ 39,200 Loss from operations Water purification products $ 608,469 $ 732,123 $ 1,936,762 $ 2,130,811 Oil recovery systems 196,485 — 541,599 — General corporate 247,519 164,086 674,395 549,437 $ 1,052,473 $ 896,209 $ 3,152,756 $ 2,680,248 Capital expenditures Water purification products $ — $ — $ 92,158 $ — Oil recovery systems — — 1,558,625 — General corporate — — — — $ — $ — $ 1,650,783 $ — September 30, 2019 December 31, 2018 Total assets Water purification products $ 937,704 $ 612,498 Oil recovery systems 2,632,098 1,244,814 General corporate 1,010,515 63,956 $ 4,580,317 $ 1,921,268 |
1. Basis of Presentation (Detai
1. Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Derivative liability beginning balance | |
Additions to derivative liability for new debt | 2,765,228 |
Reclass to equity upon conversion/cancellation | (1,114,472) |
Change in fair value | (646,557) |
Derivative liability end balance | $ 1,004,199 |
1. Basis of Presentation (Det_2
1. Basis of Presentation (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Price of company common stock | .16 | |
Risk-free interest rate | 1.88% | |
Expected volatility of company common stock | 213.76% | |
Operating lease right-of-use assets | $ 813,393 | |
Lease liabilities | $ 827,618 |
2. Going Concern (Details Narra
2. Going Concern (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Going Concern | |||
Cash | $ 127,129 | $ 53,106 | |
Working capital | (4,617,000) | ||
Net Loss | $ (7,575,057) | $ (2,776,586) |
3. Revenues (Details)
3. Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues [Abstract] | ||||||||
Water purification products | $ 230,192 | $ (19,995) | $ (68,395) | $ 308,744 | $ 59,195 | $ 308,744 | $ 39,200 | |
Oil recovery machines | 20,092 | 5,557 | 5,557 | 25,649 | ||||
Total Revenues | $ 20,092 | $ 235,749 | $ (19,995) | $ (68,395) | $ 314,301 | $ 59,195 | $ 334,393 | $ 39,200 |
4. Distributorship Agreement (D
4. Distributorship Agreement (Details Narrative) - African Horizon Technologies Ltd [Member] | 9 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | |
Payment for distributorship agreement | $ 500,000 |
Shares issued, distributorship agreement | shares | 500,000 |
Share value | $ 250,000 |
Share price | $ / shares | $ 0.5 |
Value of agreement | $ 1,000,000 |
Date of agreement | Oct. 31, 2018 |
5. Notes Payable - Stockholde_2
5. Notes Payable - Stockholders (Details Narrative) - USD ($) | Sep. 30, 2019 | Mar. 25, 2019 |
Amount paid | $ 100,000 | |
Note 1 [Member] | ||
Amount borrowed from shareholder | $ 200,000 | |
Interest rate on note | 18.00% | |
Date of Maturity | Apr. 25, 2019 | |
Note 2 [Member] | ||
Amount borrowed from shareholder | $ 100,000 | |
Interest rate on note | 18.00% | |
Date of Maturity | Apr. 25, 2019 |
6. Convertible Notes Payable (D
6. Convertible Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 4 Months Ended | 5 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||||||||||||||||||||||
Sep. 30, 2019 | Sep. 30, 2018 | Jan. 03, 2019 | Apr. 05, 2019 | Mar. 26, 2019 | Apr. 12, 2019 | Mar. 25, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Sep. 10, 2019 | Sep. 04, 2019 | Aug. 26, 2019 | Jul. 26, 2019 | Jul. 24, 2019 | Jul. 08, 2019 | May 20, 2019 | Apr. 10, 2019 | Apr. 09, 2019 | Mar. 28, 2019 | Mar. 18, 2019 | Mar. 11, 2019 | Feb. 21, 2019 | Feb. 20, 2019 | Feb. 14, 2019 | Jan. 02, 2019 | Dec. 31, 2018 | Dec. 17, 2018 | Dec. 13, 2018 | Nov. 06, 2018 | Oct. 15, 2018 | Oct. 12, 2018 | Oct. 11, 2018 | Sep. 17, 2018 | Sep. 04, 2018 | Aug. 30, 2018 | |
Principle amount of convertible notes payable | $ 2,346,196 | $ 2,346,196 | $ 428,257 | ||||||||||||||||||||||||||||||||
Interest Expense | $ 3,760,191 | $ 89,272 | $ 4,885,981 | $ 96,608 | |||||||||||||||||||||||||||||||
Shares Issued, Shares | 46,682,976 | 46,682,976 | 36,013,000 | ||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 8,877,325 | $ 8,877,325 | $ 6,463,705 | ||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | (130,052) | (182,877) | |||||||||||||||||||||||||||||||||
September Convertible Notes[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 295,000 | 295,000 | $ 295,000 | $ 68,000 | |||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | $ 39,748 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Sep. 4, 2020 | Sep. 4, 2019 | |||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,500 | ||||||||||||||||||||||||||||||||||
Discount for Interest on Note | $ 45,000 | ||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ 14,351 | ||||||||||||||||||||||||||||||||||
Date paid off | Jan. 3, 2019 | ||||||||||||||||||||||||||||||||||
September Convertible Notes 3[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 200,000 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 0.00% | ||||||||||||||||||||||||||||||||||
Debt conversion per share | $ 0.75 | ||||||||||||||||||||||||||||||||||
Interest Expense | $ 58,000 | ||||||||||||||||||||||||||||||||||
Shares issued for interest | 332,500 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | $ 37,333 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Sep. 17, 2021 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 5,000 | ||||||||||||||||||||||||||||||||||
Discount for Interest on Note | $ 34,440 | ||||||||||||||||||||||||||||||||||
Shares Issued, Shares | 60,000 | ||||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 53,400 | ||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ (31,111) | ||||||||||||||||||||||||||||||||||
Principal paid | $ 142,000 | ||||||||||||||||||||||||||||||||||
Balance remaining on note | 0 | ||||||||||||||||||||||||||||||||||
August Convertible Notes 2 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 100,000 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Debt conversion per share | $ 0.5 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Mar. 4, 2019 | ||||||||||||||||||||||||||||||||||
Shares Issued, Shares | 200,000 | ||||||||||||||||||||||||||||||||||
October Convertible Notes 3[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 42,500 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 21,745 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | $ 24,160 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Oct. 15, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,500 | ||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ 17,841 | ||||||||||||||||||||||||||||||||||
Date paid off | Mar. 26, 2019 | ||||||||||||||||||||||||||||||||||
January Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 86,500 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | Jan. 2, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,500 | ||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ (32,592) | ||||||||||||||||||||||||||||||||||
Date paid off | Jul. 8, 2019 | ||||||||||||||||||||||||||||||||||
February Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 102,500 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | Feb. 14, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,500 | ||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ 38,143 | ||||||||||||||||||||||||||||||||||
Date paid off | Aug. 20, 2019 | ||||||||||||||||||||||||||||||||||
February Convertible Notes 2 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 100,000 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Debt conversion per share | $ 0.32 | $ 0.32 | |||||||||||||||||||||||||||||||||
Interest Expense | $ 45,000 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 164,490 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 13,071 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Feb. 20, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 5,000 | $ 5,000 | |||||||||||||||||||||||||||||||||
Shares Issued, Shares | 159,070 | 159,070 | |||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 15,748 | $ 15,748 | |||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | (45,629) | ||||||||||||||||||||||||||||||||||
Principal paid | (42,629) | ||||||||||||||||||||||||||||||||||
Financing costs | 64,490 | ||||||||||||||||||||||||||||||||||
February Convertible Notes 3 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 448,000 | $ 448,000 | $ 560,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 12.00% | ||||||||||||||||||||||||||||||||||
Debt conversion per share | $ 0.11 | $ 0.11 | |||||||||||||||||||||||||||||||||
Interest Expense | $ 8,400 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 560,000 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 155,000 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Aug. 21, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 4,000 | 4,000 | |||||||||||||||||||||||||||||||||
Discount for Interest on Note | $ 56,000 | $ 56,000 | |||||||||||||||||||||||||||||||||
Shares Issued, Shares | 450,000 | 450,000 | |||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 400,455 | $ 400,455 | |||||||||||||||||||||||||||||||||
Additional Embedded Beneficial Conversion Feature | 1,185,397 | ||||||||||||||||||||||||||||||||||
March Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 42,500 | 42,500 | $ 42,500 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 142 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 31,556 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 1,419 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Mar. 11, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | 2,500 | $ 2,500 | |||||||||||||||||||||||||||||||||
Date paid off | Sep. 9, 2019 | ||||||||||||||||||||||||||||||||||
March Convertible Notes 2 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 95,650 | $ 95,650 | $ 150,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 12.00% | ||||||||||||||||||||||||||||||||||
Debt conversion per share | $ 0.28 | $ 0.28 | |||||||||||||||||||||||||||||||||
Interest Expense | $ 750 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 433,000 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 9,256 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Sep. 19, 2019 | ||||||||||||||||||||||||||||||||||
Discount for Interest on Note | $ 15,000 | $ 15,000 | |||||||||||||||||||||||||||||||||
Shares Issued, Shares | 115,384 | 115,384 | 115,384 | ||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 91,153 | $ 91,153 | |||||||||||||||||||||||||||||||||
November Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 45,000 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 7,054 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | $ 24,231 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Nov. 6, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,500 | ||||||||||||||||||||||||||||||||||
Gain (Loss) on Extinguishment of Debt | $ (15,870) | ||||||||||||||||||||||||||||||||||
Date paid off | Apr. 5, 2019 | ||||||||||||||||||||||||||||||||||
October Convertible Notes 4[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 82,500 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | $ 38,940 | 10,589 | |||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | $ 4,653 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Apr. 11, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 13,500 | ||||||||||||||||||||||||||||||||||
Date paid off | Apr. 12, 2019 | ||||||||||||||||||||||||||||||||||
Additional interest expense | 38,940 | ||||||||||||||||||||||||||||||||||
December Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 100,000 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Debt conversion per share | $ .36 | ||||||||||||||||||||||||||||||||||
Interest Expense | 29,255 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 150,000 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 74,732 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Dec. 13, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 5,000 | ||||||||||||||||||||||||||||||||||
Shares Issued, Shares | 82,275 | ||||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 14,997 | ||||||||||||||||||||||||||||||||||
Principal paid | 65,745 | ||||||||||||||||||||||||||||||||||
Balance remaining on note | 20,000 | ||||||||||||||||||||||||||||||||||
Fair value derivative liability | $ 40,000 | ||||||||||||||||||||||||||||||||||
October Convertible Notes 5[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 51,500 | $ 51,500 | $ 77,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 12.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 6,625 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 149,000 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 59,042 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Oct. 12, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,000 | ||||||||||||||||||||||||||||||||||
Discount for Interest on Note | $ 1,500 | ||||||||||||||||||||||||||||||||||
Shares Issued, Shares | 632,000 | ||||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 76,089 | ||||||||||||||||||||||||||||||||||
Balance remaining on note | 53,911 | ||||||||||||||||||||||||||||||||||
Max amount able to be borrowed | 231,000 | ||||||||||||||||||||||||||||||||||
Additional borrowings | 51,500 | ||||||||||||||||||||||||||||||||||
Additional Embedded Beneficial Conversion Feature | 51,500 | ||||||||||||||||||||||||||||||||||
Fair value derivative liability | $ 115,000 | ||||||||||||||||||||||||||||||||||
December Convertible Notes 2 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 80,000 | ||||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 32,791 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 91,000 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Dec. 17, 2019 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 6,000 | ||||||||||||||||||||||||||||||||||
Shares Issued, Shares | 242,276 | ||||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 47,244 | ||||||||||||||||||||||||||||||||||
Balance remaining on note | 35,000 | ||||||||||||||||||||||||||||||||||
Fair value derivative liability | $ 91,000 | ||||||||||||||||||||||||||||||||||
April Convertible Notes[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 175,000 | 175,000 | $ 175,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 12.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 5,250 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 15,000 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 10,417 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Jan. 9, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 16,250 | ||||||||||||||||||||||||||||||||||
Balance remaining on note | 175,000 | ||||||||||||||||||||||||||||||||||
April Convertible Notes 2[Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 102,500 | 102,500 | $ 102,500 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 2,050 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature | 52,907 | ||||||||||||||||||||||||||||||||||
Embedded Beneficial Conversion Feature - Interest Expense | 13,852 | ||||||||||||||||||||||||||||||||||
Date of Maturity | Apr. 10, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 2,500 | ||||||||||||||||||||||||||||||||||
May Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 400,000 | 400,000 | $ 400,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Interest Expense | 4,183 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 20,000 | ||||||||||||||||||||||||||||||||||
Balance remaining on note | 400,000 | ||||||||||||||||||||||||||||||||||
Amortization debt issuance cost | 1,667 | ||||||||||||||||||||||||||||||||||
July Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 88,500 | 88,500 | $ 88,500 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 8.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | Jul. 8, 2020 | ||||||||||||||||||||||||||||||||||
July Convertible Notes 2 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 103,000 | 103,000 | $ 103,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | Jul. 24, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 15,315 | ||||||||||||||||||||||||||||||||||
July Convertible Notes 3 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 100,000 | 100,000 | $ 100,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | May 20, 2020 | ||||||||||||||||||||||||||||||||||
August Convertible Notes [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | 175,000 | 175,000 | $ 175,000 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 12.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | Feb. 26, 2020 | ||||||||||||||||||||||||||||||||||
Debt Issuance Cost | $ 3,000 | ||||||||||||||||||||||||||||||||||
Discount for Interest on Note | $ 17,500 | ||||||||||||||||||||||||||||||||||
Shares Issued, Shares | 625,000 | ||||||||||||||||||||||||||||||||||
Shares Issued, Value | $ 81,250 | ||||||||||||||||||||||||||||||||||
September Convertible Notes 2 [Member] | |||||||||||||||||||||||||||||||||||
Principle amount of convertible notes payable | $ 262,500 | $ 262,500 | $ 262,500 | ||||||||||||||||||||||||||||||||
Interest rate on Convertible Notes | 10.00% | ||||||||||||||||||||||||||||||||||
Date of Maturity | Sep. 10, 2020 |
7. Advances from Related Party
7. Advances from Related Party (Details Narrative) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Related Party Transactions [Abstract] | ||
Balance outstanding on related party advance | $ 20,000 | $ 302,000 |
8. Revenue Sharing Agreements (
8. Revenue Sharing Agreements (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Jun. 25, 2019 | Apr. 01, 2019 | Jan. 30, 2019 | Jan. 16, 2019 | Jan. 02, 2019 | Dec. 13, 2018 | Nov. 29, 2018 | |
Interest expense | $ 3,760,191 | $ 89,272 | $ 4,885,981 | $ 96,608 | |||||||
November HydraSpin Loan [Member] | |||||||||||
Amount borrowed | $ 50,000 | ||||||||||
% Revenue for lender in exchange | 5.00% | ||||||||||
Date of cancellation | Mar. 3, 2019 | ||||||||||
Payable to lender FV | $ 150,000 | ||||||||||
Interest expense | $ 27,569 | ||||||||||
Date of second cancellation | Aug. 19, 2019 | ||||||||||
New amount borrowed | 230,000 | ||||||||||
New payable to lender FV | $ 495,000 | ||||||||||
December HydraSpin Loan [Member] | |||||||||||
Amount borrowed | $ 264,000 | ||||||||||
% Revenue for lender in exchange | 50.00% | ||||||||||
Date of cancellation | Feb. 27, 2019 | ||||||||||
Additional amount borrowed | $ 66,000 | ||||||||||
Payable to lender FV | $ 495,000 | ||||||||||
Interest expense | $ 42,625 | ||||||||||
January HydraSpin Loan [Member] | |||||||||||
Amount borrowed | $ 660,000 | ||||||||||
% Revenue for lender in exchange | 50.00% | ||||||||||
Payable to lender FV | $ 990,000 | ||||||||||
Interest expense | 123,750 | ||||||||||
January HydraSpin Loan 2 [Member] | |||||||||||
Amount borrowed | $ 660,000 | ||||||||||
% Revenue for lender in exchange | 50.00% | ||||||||||
Payable to lender FV | $ 990,000 | ||||||||||
Interest expense | 116,875 | ||||||||||
January HydraSpin Loan 3 [Member] | |||||||||||
Amount borrowed | $ 330,000 | ||||||||||
% Revenue for lender in exchange | 40.00% | ||||||||||
Payable to lender FV | $ 495,000 | ||||||||||
Interest expense | 55,000 | ||||||||||
January HydraSpin Loan 4 [Member] | |||||||||||
Amount borrowed | $ 330,000 | ||||||||||
% Revenue for lender in exchange | 60.00% | ||||||||||
Payable to lender FV | $ 495,000 | ||||||||||
Interest expense | 55,000 | ||||||||||
April HydraSpin Loan [Member] | |||||||||||
Amount borrowed | $ 330,000 | ||||||||||
Payable to lender FV | $ 495,000 | ||||||||||
Interest expense | $ 41,250 | ||||||||||
June HydraSpin Loan [Member] | |||||||||||
Amount borrowed | $ 60,000 | ||||||||||
Date of cancellation | Aug. 15, 2019 | ||||||||||
Additional amount borrowed | 70,000 | ||||||||||
Payable to lender FV | $ 90,000 | ||||||||||
Interest expense | $ 208 |
9. Equity Transactions (Details
9. Equity Transactions (Details Narrative) - USD ($) | 3 Months Ended | |||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | |
Notes to Financial Statements | ||||||
Shares issued to executives and employees | 400,000 | 825,000 | 705,000 | 770,000 | 610,000 | |
Price per share | .5 | .5 | 0.5 | |||
Proceeds from executive stock issue | $ 352,500 | $ 385,000 | $ 305,000 | |||
Proceeds from stock issue | $ 294,900 | $ 330,000 | $ 312,500 | $ 828,000 | ||
Shares Issued for conversion | 4,183,152 | 1,289,051 | 200,000 | |||
Common Stock shares issued | 1,180,000 | 660,000 | 625,000 | 1,656,000 | ||
Subscription receivable | $ 50,000 | |||||
Shares issued for debt issuance cost | 625,000 | 565,384 | ||||
Shares issued for penalty interest | 1,502,389 | |||||
Shares returned - lawsuit settlement | 1,250,000 |
10. Operating Leases _ Right _3
10. Operating Leases – Right of Use Assets as of March 31, 2019 (Details) | Sep. 30, 2019USD ($) |
Notes to Financial Statements | |
Right-of-use assets | $ 813,393 |
Lease liability obligations, current | 299,310 |
Lease liability obligations, less current position | 550,308 |
Total lease liability obligations | $ 827,618 |
Weighted-average remaining lease term | 3 years 6 months |
Weighted-average discount rate | 10.00% |
10. Operating Leases _ Remain_2
10. Operating Leases – Remaining Right of Use Assets as of March 31, 2019 (Details) | Sep. 30, 2019USD ($) |
Notes to Financial Statements | |
2019 | $ 81,000 |
2020 | 312,000 |
2021 | 240,000 |
2022 | 246,000 |
2023 | 103,000 |
Total minimum payments | $ 982,000 |
10. Operating Leases _ Right _4
10. Operating Leases – Right of Use Assets (Details Narrative) | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Notes to Financial Statements | |
Operating lease costs | $ 164,000 |
Operating cash flows from operating leases | $ 144,847 |
11. Income Taxes (Details Narra
11. Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | ||
Annual effective tax rate | 0.00% | 0.00% |
Operating loss carry-forward | $ 15,549,000 | |
Change in valuation allowance | $ 1,590,000 | $ 583,000 |
12. Segment Information (Detail
12. Segment Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2019 | Jun. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Revenues | |||||||||
Water purification products | $ 230,192 | $ (19,995) | $ (68,395) | $ 308,744 | $ 59,195 | $ 308,744 | $ 39,200 | ||
Oil recovery machines | 20,092 | 5,557 | 5,557 | 25,649 | |||||
Total Revenues | 20,092 | 235,749 | (19,995) | (68,395) | 314,301 | 59,195 | 334,393 | 39,200 | |
Loss from operations | |||||||||
Water purification products | 608,469 | 605,739 | 732,123 | 680,403 | 1,328,923 | 1,398,688 | 1,936,762 | 2,130,811 | |
Oil recovery machines | 196,485 | 248,533 | 345,114 | 541,599 | |||||
General corporate | 247,519 | 227,599 | 164,086 | 289,284 | 426,874 | 385,351 | 674,395 | 549,437 | |
Total Loss from Operations | 1,052,473 | 1,131,871 | 896,209 | 969,687 | 2,100,281 | 1,784,039 | 3,152,756 | 2,680,248 | |
Capital expenditures | |||||||||
Water purification products | 92,158 | 92,158 | |||||||
Oil recovery machines | 930,000 | 1,558,625 | 1,558,625 | ||||||
General corporate | |||||||||
Total Capital Expenditures | $ 930,000 | $ 1,650,783 | 1,650,783 | ||||||
Total assets | |||||||||
Water purification products | 937,704 | 937,704 | $ 612,498 | ||||||
Oil recovery machines | 2,632,098 | 2,632,098 | 1,244,814 | ||||||
General corporate | 1,010,515 | 1,010,515 | 63,956 | ||||||
Total Assets | $ 4,580,317 | $ 4,580,317 | $ 1,921,268 |
13. Subsequent Events - Stock I
13. Subsequent Events - Stock Issuances (Details Narrative) | 2 Months Ended |
Nov. 19, 2019USD ($)shares | |
Subsequent Events [Abstract] | |
Shares issued for conversion | shares | 4,927,841 |
Debt converted | $ | $ 1,230 |
13. Subsequent Events - Settlem
13. Subsequent Events - Settlement Agreements (Details Narrative) | Nov. 15, 2019USD ($) |
Auctus Fund, LLC [Member] | |
Installments payable | $ 270,000 |
Crown Bridge Partners, LLC [Member] | |
Payment to fulfill debt | $ 120,000 |