Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2020 | Jul. 13, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 | |
Current Fiscal Year End Date | --12-31 | |
Entity Registrant Name | Water Now, Inc. | |
Entity Central Index Key | 0001713909 | |
Entity Incorporation, State or Country Code | TX | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Elected Not To Use the Extended Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 73,746,368 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Current Assets | ||
Cash | $ 405 | $ 66,042 |
Accounts receivable | 118,250 | 118,250 |
Inventory | 515,722 | 517,849 |
Prepaid expenses | 4,333 | 21,264 |
Total Currents Assets | 638,710 | 723,405 |
Property and equipment - net | 2,205,709 | 2,137,272 |
Operating lease right-of-use assets | 753,432 | |
Distributorship agreement, net | 716,667 | 766,667 |
Security deposit | 23,481 | 34,330 |
Total Assets | 4,217,497 | 4,415,106 |
Current Liabilities | ||
Accounts payable | 1,315,513 | 1,285,214 |
Accrued expenses | 552,116 | 532,512 |
Distributorship accrued expense | 250,000 | 250,000 |
Derivative liability | 1,201,258 | 508,323 |
Advances from related parties | 224,743 | 4,407 |
Current portion of operating lease liabilities | 178,116 | 247,070 |
Current portion of convertible notes payable, net of debt discounts | 1,833,352 | 2,143,369 |
Current portion of notes payable | 553,567 | 504,000 |
Current portion of revenue sharing liabilities | 3,057,708 | |
Total Current Liabilities | 9,166,373 | 5,474,895 |
Long-term notes payable | 114,292 | |
Operating lease liabilities | 473,932 | 520,137 |
Long-term revenue sharing liabilities | 2,249,478 | 5,042,455 |
Total Liabilities | 12,004,075 | 11,037,487 |
Commitments and Contingencies | ||
Stockholders' Deficit | ||
Preferred stock – no par value, 10,000,000 shares authorized, zero issued and outstanding at March 31, 2020 and December 31, 2019 | ||
Common stock - no par value, 90,000,000 shares authorized, 73,942,560 and 55,663,191 shares issued and 73,746,368 and 55,466,999 shares outstanding as of March 31, 2020 and December 31, 2019, respectively | 9,475,224 | 9,071,943 |
Additional paid-in capital | 3,436,245 | 2,813,464 |
Subscription receivable | (50,000) | (50,000) |
Treasury stock, at cost (100,000 shares held as of March 31, 2020 and December 31, 2019) | (10,000) | (10,000) |
Accumulated deficit | (20,638,047) | (18,447,788) |
Total Stockholders' Deficit | (7,786,578) | (6,622,381) |
Total Liabilities and Stockholders' Deficit | $ 4,217,497 | $ 4,415,106 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
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 | 73,942,560 | 55,663,191 |
Common Stock, shares outstanding | 73,746,368 | 55,466,999 |
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 |
Treasury Stock, shares held | 100,000 | 100,000 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Revenues, net | $ 2,995 | $ 78,552 |
Cost of goods sold | 2,127 | 68,880 |
Gross Profit | 868 | 9,672 |
Operating expenses | ||
Salaries and wages | 316,067 | 322,628 |
Professional fees | 69,976 | 293,644 |
Selling, general and administrative | 240,029 | 365,881 |
(Gain) Loss on sale of assets | 19,988 | (4,070) |
Total operating expenses | 646,060 | 978,083 |
Loss from operations | (645,192) | (968,411) |
Other income (expense) | ||
Interest expense | (265,000) | (605,595) |
Gain (Loss) on derivative liability | (550,726) | |
Other income | 895 | |
Loss on extinguishment of debt | (21,563) | |
Total other expense | (1,545,067) | (627,158) |
Loss before provision for income taxes | (2,190,259) | (1,595,569) |
Provision for income taxes | ||
Net Loss | $ (2,190,259) | $ (1,595,569) |
Loss per share | ||
basic and fully diluted | $ (0.04) | $ (0.04) |
Weighted-average number of shares of common stock | ||
basic and fully diluted | 58,753,418 | 35,962,919 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Additional Paid-In Capital | Subscription Receivable [Member] | Treasury Stock | Retained Earnings / Accumulated Deficit | Total |
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 | $ (50,000) | $ (7,979,177) | $ (878,041) | |
Common stock issued for conversion of debt, Shares | 200,000 | |||||
Common stock issued for conversion of debt, Value | $ 100,000 | 100,000 | ||||
Share issued for debt issuance costs, Shares | 465,384 | |||||
Share issued for debt issuance costs, Value | $ 491,608 | 491,608 | ||||
Beneficial conversion feature | 874,204 | 874,204 | ||||
Net loss | (1,595,569) | (1,595,569) | ||||
Ending Balance Common Stock, Shares at Mar. 31, 2019 | 36,482,192 | |||||
Ending Balance Common Stock, Value at Mar. 31, 2019 | $ 7,055,313 | 1,561,635 | (50,000) | (9,574,746) | (1,007,798) | |
Beginning Balance Common Stock, Shares at Dec. 31, 2019 | 55,466,999 | |||||
Beginning Balance Common Stock, Value at Dec. 31, 2019 | $ 9,071,943 | 2,813,464 | (50,000) | (10,000) | (18,447,788) | (6,622,381) |
Common stock issuances for services and compensation, Shares | 385,000 | |||||
Common stock issuances for services and compensation, Value | $ 24,600 | 24,600 | ||||
Common stock issued for conversion of debt, Shares | 16,894,369 | |||||
Common stock issued for conversion of debt, Value | $ 378,681 | 378,681 | ||||
Reduction of derivative liability from conversion/redemption | 622,781 | 622,781 | ||||
Common stock issued as collateral for loan, Shares | 1,000,000 | |||||
Common stock issued as collateral for loan, Value | ||||||
Net loss | (2,190,259) | (2,190,259) | ||||
Ending Balance Common Stock, Shares at Mar. 31, 2020 | 73,746,368 | |||||
Ending Balance Common Stock, Value at Mar. 31, 2020 | $ 9,475,224 | $ 3,436,245 | $ (50,000) | $ (10,000) | $ (20,638,047) | $ (7,786,578) |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (2,190,259) | $ (1,595,569) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Common stock issued as payment for services and employees’ compensation | 24,600 | |
Depreciation and amortization | 74,436 | 63,403 |
Lease expense | 5,343 | |
Amortization of discounts | 124,769 | 363,296 |
Derivative expense at issuance | 514,990 | |
Amortization of interest for revenue sharing agreements | 264,731 | 117,000 |
Interest converted to common shares | 32,395 | |
Loss (Gain) on sale of assets | 19,988 | (4,070) |
Change in fair value of derivative liability | 550,726 | |
Loss on extinguishment of debt | 21,563 | |
Changes in operating working capital items: | ||
Accounts receivable | (69,671) | |
Other receivables | (6,000) | |
Inventory | 2,127 | (8,548) |
Prepaid expenses | 16,931 | (49,522) |
Security deposit | 10,849 | (23,481) |
Accounts payable | 30,299 | (243,797) |
Accrued expenses | 19,604 | (277,986) |
Net cash used in operating activities | (498,471) | (1,713,382) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (30,000) | (720,783) |
Proceeds from sale of assets | 59,500 | 30,000 |
Payment for distributorship agreement | (400,000) | |
Net cash provided by (used in) investing activities | 29,500 | (1,090,783) |
Cash flows from financing activities: | ||
Cash advances from related parties | 322,036 | 10,000 |
Cash repayments from related parties | (101,700) | (270,000) |
Borrowings on notes payable | 25,000 | 300,000 |
Payments on notes payable | (3,502) | |
Borrowings on convertible notes payable | 241,500 | 1,041,500 |
Payments on convertible notes payable | (80,000) | (310,500) |
Borrowings on revenue sharing liabilities | 2,046,000 | |
Net cash provided by financing activities | 403,334 | 2,817,000 |
Net increase (decrease) in cash | (65,637) | 12,835 |
Cash at beginning of period | 66,042 | 53,106 |
Cash at end of period | 405 | 65,941 |
Supplemental Disclosure of Interest and Income Taxes Paid: | ||
Interest paid during the period | 22,209 | 99,632 |
Income taxes paid during the period | ||
Non-cash disclosures: | ||
Conversion of convertible notes payable into common shares | 346,286 | 100,000 |
Purchase of property and equipment through issuance of notes payable | 142,361 | |
Reclass of derivative upon settlement | 622,781 | |
Issuance of common stock for debt issuance costs | 491,608 | |
Beneficial debt conversion feature | $ 959,467 |
1. Basis of Presentation
1. Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation 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 or 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, 2019. 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. 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 March 31, 2020 and 2019. The derivative liabilities are Level 3 fair value measurements. The following is a summary of activity of Level 3 liabilities during the three months ended March 31, 2020: Derivative liability balance at December 31, 2019 $ 508,323 Additions to derivative liability for new debt 764,990 Reclass to equity upon conversion/cancellation (622,781 ) Change in fair value (550,726 ) Balance at March 31, 2020 $ 1,201,258 At March 31, 2020, 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 $0.02, a risk-free interest rate of 0.15%, and expected volatility of the Company s common stock of 242.48%, and the various estimated reset exercise prices weighted by probability. |
2. Going Concern
2. Going Concern | 3 Months Ended |
Mar. 31, 2020 | |
Going Concern | |
Going Concern | 2. Going Concern At March 31, 2020, the Company had approximately $405 in cash and had net working capital deficit of approximately $8,528,000. The Company, which generated a net loss of approximately $2,190,000 and $1,596,000 for the three months ended March 31, 2020 and 2019, 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 | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 2019 Revenues Water purification products $ 2,995 $ 78,552 Oil recovery machines — — $ 2,995 $ 78,552 |
4. Distributorship Agreement
4. Distributorship Agreement | 3 Months Ended |
Mar. 31, 2020 | |
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 will be AHT’s exclusive distributor of the Hydraspin Hydro Cyclone technology in the United States of America. The Company paid AHT $500,000 in cash and issued 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 earlier. 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 March 31, 2020, the 500,000 shares remaining to be issued are recorded as distributorship accrued expense in the amount of $250,000 and are required to be issued prior to October 31, 2020. Amortization expense amounted to $50,000 and $50,000 for the three months ended March 31, 2020 and 2019, respectively. |
5. Notes Payable - Stockholders
5. Notes Payable - Stockholders | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable-Stockholders | 5. Notes Payable During 2020 the Company entered into an additional short-term loan with a lender. Total principal borrowed during 2020 was $25,000. No repayments were made during the three months ended March 31, 2020. The remaining $529,000 of principal was repaid or extended as of July 13, 2020. The notes are generally unsecured. |
6. Convertible Notes Payable
6. Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
Convertible Notes Payable | 6. Convertible Notes Payable The Company borrowed $50,000 from a lender on January 14, 2020. The note bears interest at 18% and is payable in one lump sum on June 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 at any time prior to the maturity date at the conversion price of $0.50 per share. The principal balance at March 31, 2020 is $50,000. The Company borrowed $37,500 from a lender on February 5, 2020. The note is an extension of the existing Amended and Restated Secured Convertible Promissory Note dated June 18, 2018. The total principal due under the note is $100,000. The note bears interest at 18% and is payable in one lump sum on May 5, 2020. In the event 50% or more of the principal balance is paid prior to May 5, 2020 and the note is not in default, then the maturity date is extended to August 5, 2020. The required payment was not made by May 5, 2020 and the note is currently in default and outstanding. 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 a price per share equal to fifty percent of the average closing price of the Company’s common stock for the ten trading days prior to the conversion date. The principal balance at March 31, 2020 is $100,000. The Company borrowed $175,000 from a lender on March 4, 2020. The note bears interest at 12% and is payable in one lump sum on September 4, 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 paid $17,500 as a discount on the note and paid $3,500 for debt issuance costs. The principal balance at March 31, 2020 is $175,000. During the quarter ended March 31, 2020, the Company issued 1,000,000 shares to a lender as collateral held in escrow, to be cancelled upon payment of the debt. |
7. Advances from Related Party
7. Advances from Related Party | 3 Months Ended |
Mar. 31, 2020 | |
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 two stockholders of the Company. The Company owed approximately $225,000 and $4,000 at March 31, 2020 and December 31, 2019, respectively, to the stockholders. |
8. Revenue Sharing Agreements
8. Revenue Sharing Agreements | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
Revenue Sharing Agreements | 8. Revenue Sharing Agreements No additional revenue sharing agreements were entered into during the three months ended March 31, 2020. The Company recorded an additional $265,000 in interest expense during the three months ended March 31, 2020 related to the existing revenue sharing agreements. No payments have been made on existing revenue sharing agreements. As of July 13, 2020, the Company is obligated to purchase seven HydraSpin units with an aggregate cost of approximately $2 million awaiting shipment from Africa to the Company and there is approximately $1 million included in accounts payable for unpaid amounts on other units. No payment has been made on these units. |
9. Equity Transactions
9. Equity Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
Equity Transactions | 9. Equity Transactions 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 465,384 shares to lenders for debt issuance costs. From January 1, 2020 to March 31, 2020, the Company issued 16,894,369 shares to lenders upon receipt of conversion notices for total principal, interest and fees of $378,681. The Company also issued 385,000 shares to employees and consultants valued at $24,600 and issued 1,000,000 shares as collateral held in escrow, to be cancelled upon payment of the debt. |
10. Operating Leases _ Right of
10. Operating Leases – Right of Use Assets | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
Operating Leases - Right of Use Assets | 10. Operating Leases – Right of Use Assets The Company has an operating lease for office and warehouse space that expires in 2023. Below is a summary of the Company’s right of use assets and liabilities as of March 31, 2020: Right-of-use assets $ 632,930 Lease liability obligations, current $ 178,116 Lease liability obligations, less current portion 473,932 Total lease liability obligations $ 652,048 Weighted-average remaining lease term 3.2 years Weighted-average discount rate 10 % During the three months ended March 31, 2020, the Company recognized approximately $40,000 in operating lease costs and are included in selling, general and administrative expenses in our consolidated statement of operations. During the three months ended March 31, 2020, operating cash flows from operating leases was $57,000. Approximate future minimum lease payments for the Company’s right of use assets over the remaining lease periods as of March 31, 2020, are as follows: Year ending December 31, 2020 $ 176,000 2021 240,000 2022 246,000 2023 103,000 Total minimum payments $ 765,000 |
11. Income Taxes
11. Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
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 2020 and 2019 annual effective tax rate is estimated to be 0% for the U.S. federal and state statutory tax rates because the Company is in a net operating loss position. The Company reviews tax uncertainties in light of changing facts and circumstances and adjust them accordingly. As of March 31, 2020 and December 31, 2019, 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 had a net operating loss carry-forward for federal and state tax purposes of approximately $14,243,000 at March 31, 2020, 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 March 31, 2020 and December 31, 2019 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 allowance was approximately $236,000 and $334,000 for the three-months ended March 31, 2020 and 2019, respectively. |
12. Segment Information
12. Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
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 March 31, 2020 2019 Revenues Water purification products $ 2,995 $ 78,552 Oil recovery machines — — $ 2,995 $ 78,552 Loss from operations Water purification products $ 201,304 $ 722,554 Oil recovery machines 268,909 96,581 General corporate 174,979 149,276 $ 645,192 $ 968,411 Capital expenditures Water purification products $ — $ 92,158 Oil recovery machines 30,000 628,625 General corporate — — $ 30,000 $ 720,783 March 31, 2020 December 31, 2019 Total assets Water purification products $ 666,823 $ 749,536 Oil recovery machines 2,691,613 2,576,758 General corporate 859,061 1,088,812 $ 4,217,497 $ 4,415,106 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 | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 13. Subsequent Events On April 20, 2020, the Company obtained a Paycheck Protection Program (PPP) loan from a commercial bank in the amount of $290,400. The loan is unsecured, bears interest at 1.0% interest and is payable beginning November 20, 2020 in 18 equal installments. Interest accrues during the deferment period. The loan is subject to potential forgiveness in part or total, depending on the amount of certain costs incurred by the Company over an 8-week period after the loan’s disbursement date, including payroll costs, payment of interest on a covered obligation, rent and utilities. |
1. Basis of Presentation (Table
1. Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of activity of Level 3 | Derivative liability balance at December 31, 2019 $ 508,323 Additions to derivative liability for new debt 764,990 Reclass to equity upon conversion/cancellation (622,781 ) Change in fair value (550,726 ) Balance at March 31, 2020 $ 1,201,258 |
3. Revenues (Tables)
3. Revenues (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenues [Abstract] | |
Revenues | For the Three Months Ended March 31, 2020 2019 Revenues Water purification products $ 2,995 $ 78,552 Oil recovery machines — — $ 2,995 $ 78,552 |
10. Operating Leases _ Right _2
10. Operating Leases – Right of Use Assets as of June 30, 2019 (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
Operating Leases - Right of Use Assets | Right-of-use assets $ 632,930 Lease liability obligations, current $ 178,116 Lease liability obligations, less current portion 473,932 Total lease liability obligations $ 652,048 Weighted-average remaining lease term 3.2 years Weighted-average discount rate 10 % |
10. Operating Leases _ Remainin
10. Operating Leases – Remaining Right of Use Assets as of June 30, 2019 (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Notes to Financial Statements | |
Operating Leases - Remaining Right of Use Assets | Year ending December 31, 2020 $ 176,000 2021 240,000 2022 246,000 2023 103,000 Total minimum payments $ 765,000 |
12. Segment Information (Tables
12. Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Segment Information | For the Three Months Ended March 31, 2020 2019 Revenues Water purification products $ 2,995 $ 78,552 Oil recovery machines — — $ 2,995 $ 78,552 Loss from operations Water purification products $ 201,304 $ 722,554 Oil recovery machines 268,909 96,581 General corporate 174,979 149,276 $ 645,192 $ 968,411 Capital expenditures Water purification products $ — $ 92,158 Oil recovery machines 30,000 628,625 General corporate — — $ 30,000 $ 720,783 March 31, 2020 December 31, 2019 Total assets Water purification products $ 666,823 $ 749,536 Oil recovery machines 2,691,613 2,576,758 General corporate 859,061 1,088,812 $ 4,217,497 $ 4,415,106 |
1. Basis of Presentation (Detai
1. Basis of Presentation (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Derivative liability beginning balance | $ 508,323 |
Additions to derivative liability for new debt | 764,990 |
Reclass to equity upon conversion/cancellation | (622,781) |
Change in fair value | (550,726) |
Derivative liability end balance | $ 1,201,258 |
1. Basis of Presentation (Det_2
1. Basis of Presentation (Details Narrative) | Mar. 31, 2020 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Price of company common stock | .02 |
Risk-free interest rate | 15.00% |
Expected volatility of company common stock | 24248.00% |
2. Going Concern (Details Narra
2. Going Concern (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Going Concern | |||
Cash | $ 405 | $ 66,042 | |
Working capital | (8,528,000) | ||
Net Loss | $ (2,190,259) | $ (1,595,569) |
3. Revenues (Details)
3. Revenues (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues [Abstract] | ||
Water purification products | $ 2,995 | $ 78,552 |
Oil recovery machines | ||
Total Revenues | $ 2,995 | $ 78,552 |
4. Distributorship Agreement (D
4. Distributorship Agreement (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Accounting Policies [Abstract] | ||
Payment for distributorship agreement | $ 500,000 | |
Shares issued, distributorship agreement | 500,000 | |
Share value | $ 250,000 | |
Share price | $ 0.5 | |
Value of agreement | $ 1,000,000 | |
Date of agreement | Oct. 31, 2018 | |
Amortization Expense | $ 50,000 | $ 50,000 |
Distributorship accrued expenses | 500,000 |
5. Notes Payable - Stockholde_2
5. Notes Payable - Stockholders (Details Narrative) - Note 1 [Member] | Mar. 31, 2020USD ($) |
Amount borrowed from shareholder | $ 25,000 |
Amount of principal repaid or extended | $ 529,000 |
6. Convertible Notes Payable (D
6. Convertible Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | |||||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 04, 2020 | Feb. 05, 2020 | Jan. 14, 2020 | Dec. 31, 2019 | |
Principle amount of convertible notes payable | $ 1,833,352 | $ 2,143,369 | ||||
Interest Expense | 265,000 | $ 605,595 | ||||
Embedded Beneficial Conversion Feature | 959,467 | |||||
Shares Issued, Shares | 73,942,560 | 55,663,191 | ||||
Shares Issued, Value | $ 9,475,224 | $ 9,071,943 | ||||
Gain (Loss) on Extinguishment of Debt | $ (21,563) | |||||
Shares issued held in escrow | 1,000,000 | |||||
January Convertible Note [Member] | ||||||
Principle amount of convertible notes payable | $ 50,000 | |||||
Interest rate on Convertible Notes | 18.00% | |||||
Date of Maturity | Jun. 14, 2020 | |||||
Balance remaining on note | $ 50,000 | |||||
February Convertible Note [Member] | ||||||
Principle amount of convertible notes payable | $ 37,500 | |||||
Embedded Beneficial Conversion Feature | 52,000 | |||||
Balance remaining on note | 100,000 | |||||
March Convertible Note [Member] | ||||||
Principle amount of convertible notes payable | $ 175,000 | |||||
Interest rate on Convertible Notes | 12.00% | |||||
Date of Maturity | Sep. 4, 2020 | |||||
Debt Issuance Cost | $ 3,500 | |||||
Discount for Interest on Note | $ 17,500 | |||||
Balance remaining on note | $ 175,000 |
Advances from Related Party (De
Advances from Related Party (Details Narrative) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Related Party Transactions [Abstract] | ||
Balance outstanding on related party advance | $ 225,000 | $ 4,000 |
8. Revenue Sharing Agreements (
8. Revenue Sharing Agreements (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Jul. 13, 2020 | |
Notes to Financial Statements | |||
Interest expense | $ 265,000 | $ 605,595 | |
Accounts payable | $ 1,000,000 |
9. Equity Transactions (Details
9. Equity Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Notes to Financial Statements | ||
Shares issued to employees and consultants, Shares | 385,000 | |
Shares issued to employees and consultants, Value | $ 24,600 | |
Shares Issued for conversion, Shares | 16,894,369 | 200,000 |
Shares issued for conversion, Value | $ 378,681 | |
Common Stock shares issued | 1,000,000 | |
Shares issued for debt issuance cost | 465,384 |
10. Operating Leases _ Right _3
10. Operating Leases – Right of Use Assets as of March 31, 2019 (Details) | Mar. 31, 2020USD ($) |
Notes to Financial Statements | |
Right-of-use assets | $ 632,930 |
Lease liability obligations, current | 178,116 |
Lease liability obligations, less current position | 473,932 |
Total lease liability obligations | $ 652,048 |
Weighted-average remaining lease term | 3 years 73 days |
Weighted-average discount rate | 1000.00% |
10. Operating Leases _ Remain_2
10. Operating Leases – Remaining Right of Use Assets as of March 31, 2019 (Details) | Mar. 31, 2020USD ($) |
Notes to Financial Statements | |
2020 | $ 176,000 |
2021 | 240,000 |
2022 | 246,000 |
2023 | 103,000 |
Total minimum payments | $ 765,000 |
10. Operating Leases _ Right _4
10. Operating Leases – Right of Use Assets (Details Narrative) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Notes to Financial Statements | |
Operating lease costs | $ 40,000 |
Operating cash flows from operating leases | $ 57,000 |
11. Income Taxes (Details Narra
11. Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Annual effective tax rate | 0.00% | 0.00% |
Operating loss carry-forward | $ 14,243,000 | |
Change in valuation allowance | $ 236,000 | $ 334,000 |
12. Segment Information (Detail
12. Segment Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Revenues | |||
Water purification products | $ 2,995 | $ 78,552 | |
Oil recovery machines | |||
Total Revenues | 2,995 | 78,552 | |
Loss from operations | |||
Water purification products | 201,304 | 722,554 | |
Oil recovery machines | 268,909 | 96,581 | |
General corporate | 174,979 | 149,276 | |
Total Loss from Operations | 645,192 | 968,411 | |
Capital expenditures | |||
Water purification products | 92,158 | ||
Oil recovery machines | 30,000 | 628,625 | |
General corporate | |||
Total Capital Expenditures | 30,000 | $ 720,783 | |
Total assets | |||
Water purification products | 666,823 | $ 749,536 | |
Oil recovery machines | 2,691,613 | 2,576,758 | |
General corporate | 859,061 | 1,088,812 | |
Total Assets | $ 4,217,497 | $ 4,415,106 |
13. Subsequent Events - Stock I
13. Subsequent Events - Stock Issuances (Details Narrative) - Paycheck Protection Program Loan [Member] | Apr. 20, 2020USD ($) |
Loan amount | $ 290,400 |
Interest rate | 1.00% |