Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 14, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | EVO Transportation & Energy Services, Inc. | |
Entity Central Index Key | 728,447 | |
Trading Symbol | EVOA | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock Shares Outstanding | 693,581 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 90,768 | $ 24,944 |
Accounts receivable | 369,271 | 15,214 |
Inventory | 1,212 | |
Prepaids | 41,269 | 11,576 |
Total current assets | 502,520 | 51,734 |
Non-current assets | ||
Property, equipment and land, net | 8,272,210 | 1,102,249 |
Assets available for sale | 394,575 | |
Construction in progress | 363,424 | 79,354 |
Goodwill and other intangibles | 1,482,837 | |
Deposits and other long-term assets | 244,968 | 39,646 |
Total non-current assets | 10,758,014 | 1,221,249 |
Total assets | 11,260,534 | 1,272,983 |
Current liabilities | ||
Accounts payable | 1,572,260 | 822,829 |
Accounts payable - related party | 410,336 | 261,060 |
Advances from stockholders | 107,758 | 37,500 |
Accrued interest - related party | 461,655 | 164,368 |
Accrued expenses | 177,855 | 127,596 |
Derivative liability | 21,669 | |
Current portion of subordinated senior notes payable to stockholders | 1,421,556 | 1,021,556 |
Promissory notes - related party | 4,038,315 | |
Current portion of long-term debt | 1,124,470 | 121,299 |
Total current liabilities | 9,335,874 | 2,556,208 |
Non-current liabilities | ||
Long term subordinated convertible notes payable to stockholders | 1,166,373 | 1,166,373 |
Promissory notes - stockholders, net unamortized discount of $3,063,653 (2017) and $0 (2016) | 6,853,712 | 405,103 |
Long term debt, less current portion | 1,073,690 | |
Derivative liability, less current portion | 13,753 | |
Deferred rent | 18,747 | 15,439 |
Deferred income tax liability | 71,294 | 71,294 |
Total non-current liabilities | 8,123,879 | 2,731,899 |
Total liabilities | 17,459,753 | 5,288,107 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Preferred stock, $.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding | ||
Common stock, $.0001 par value; 100,000,000 shares authorized; 420,804 (2017) and 317,207 (2016) shares issued and outstanding | 42 | 32 |
Additional paid-in capital | 1,299,981 | 899,304 |
Accumulated deficit | (7,499,242) | (4,914,460) |
Total stockholders' deficit | (6,199,219) | (4,015,124) |
Total liabilities and stockholders' deficit | $ 11,260,534 | $ 1,272,983 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Balance Sheets [Abstract] | ||
Convertible promissory notes - stockholders, net unamortized discount | $ 3,063,653 | $ 0 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 420,804 | 317,207 |
Common stock, shares outstanding | 420,804 | 317,207 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | ||||
CNG sales | $ 622,073 | $ 133,353 | $ 1,692,787 | $ 295,452 |
Volumetric excises tax credit | 60,263 | |||
Total revenue | 622,073 | 133,353 | 1,692,787 | 355,715 |
CNG cost of sales | 316,433 | 46,936 | 870,517 | 139,468 |
Gross profit | 305,640 | 86,417 | 822,270 | 216,247 |
Operating expenses | ||||
General and administrative | 356,666 | 598,977 | 1,317,993 | 1,157,528 |
Depreciation | 148,353 | 51,312 | 499,639 | 153,936 |
Loss on impaiment of fixed assets | 679,535 | 679,535 | ||
Total operating expenses | 1,184,554 | 650,289 | 2,497,167 | 1,311,464 |
Other expense | ||||
Interest expense | (244,721) | (96,246) | (879,595) | (264,444) |
Loss on acquisition of El Toro | (717,011) | |||
Realized and unrealized gain on derivative liability, net | (30,125) | 47,210 | ||
Warrant expense | 77,500 | 77,500 | ||
Other expense | 4,480 | |||
Total other expense | (352,346) | (91,766) | (909,885) | (981,455) |
Loss before income taxes | (1,231,260) | (655,638) | (2,584,782) | (2,076,672) |
Income tax expense | ||||
Deferred federal | ||||
Total provision for income taxes | ||||
Net loss | $ (1,231,260) | $ (655,638) | $ (2,584,782) | $ (2,076,672) |
Basic weighed average common shares outstanding | 420,804 | 142,787 | 420,804 | 142,787 |
Basic loss per common share | $ (2.93) | $ (4.59) | $ (6.14) | $ (14.54) |
Diluted weighed average common shares outstanding | 420,804 | 142,787 | 420,804 | 142,787 |
Diluted loss per common share | $ (2.5) | $ (4.59) | $ (4.93) | $ (14.54) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (2,584,782) | $ (2,076,672) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 499,639 | 153,936 |
Deferred rent | 3,308 | |
Gain on derivative liability | 23,677 | |
Realized loss on derivative liability | (70,887) | |
Common stock issued with debt | 13,187 | |
Loss on impaiment of fixed assets | 679,535 | |
Warrant expense | 77,500 | |
Loss on acquisition of El Toro | 717,011 | |
Accretion of debt discount | 231,094 | 13,905 |
Amortization of deferred financing costs | 4,782 | |
Changes in assets and liabilities | ||
Accounts receivable | (367,057) | |
Volumetric excise tax credit receivable | 13,000 | |
Inventory | (1,212) | |
Prepaids | 2,425 | (80,000) |
Other current assets | (5,127) | |
Other long-term assets | 34,020 | |
Deposits and other long-term assets | (6,571) | |
Accounts payable | 502,919 | 309,033 |
Accounts payable - related party | 149,276 | 49,406 |
Accrued interest related party | 297,287 | 195,581 |
Accrued expenses | 50,259 | 133,874 |
Deferred rent | (4,215) | |
Adjustments to reconcile net loss to net cash used in operating activities, total | 2,097,379 | 1,522,206 |
Net cash used in operating activities | (487,403) | (554,466) |
Cash flows from investing activities | ||
Purchase of equipment | (94,712) | |
Construction in progress | (144,827) | |
Cash from acquisition | (3,434) | |
Net cash used in investing activities | (144,827) | (98,146) |
Cash flows from financing activities | ||
Line-of-credit | (150,000) | |
Promissory note - related party | (11,685) | |
Proceeds from sale of common stock and issuance of warrants | 310,000 | |
Subordinated convertible senior notes payable to members | 400,000 | 850,000 |
Proceeds from note payable to member | 35,500 | |
Payments of principal on long-term debt | (70,519) | (75,520) |
Advances from related party | 70,258 | 21,986 |
Net cash provided by financing activities | 698,054 | 681,966 |
Net increase in cash | 65,824 | 29,354 |
Cash and cash equivalents - beginning of year | 24,944 | 358 |
Cash and cash equivalents - end of year | $ 90,768 | $ 29,712 |
Consolidated Statements of Cas6
Consolidated Statements of Cash Flows (Parenthetical) (Unaudited) | Sep. 30, 2017USD ($) |
Business Acquisition [Line Items] | |
Goodwill | $ 936,837 |
EVO [Member] | |
Business Acquisition [Line Items] | |
Prepaid | 32,118 |
Trademarks | 164,000 |
Customer list | 466,000 |
Goodwill | 936,837 |
Property, equipment and land | 8,552,441 |
Deposits and other long-term assets | 198,751 |
Derivative liability | (5,821) |
Derivative liability, less current portion | (76,811) |
Convertible promissory note - related party | (13,550,000) |
Debt discount | $ 3,282,485 |
Consolidated Statements of Cas7
Consolidated Statements of Cash Flows (Parenthetical 1) (Unaudited) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Jan. 01, 2016 | |
Supplemental cash flow information | |||
Cash paid for interest | $ 363,476 | $ 47,316 | |
Supplemental disclosure of non-cash activity [Abstract] | |||
Construction in progress purchases in accounts payable | $ 247,512 | 247,512 | |
Subordinated notes payable to stockholders | 99,235 | ||
Accounts payable - related party | 127,108 | ||
Conversion of long term notes | 85,599 | ||
Subordinated convertible senior notes payable to members | 21,556 | ||
Subordinated notes payable to member of related party | $ 64,043 | ||
El Toro [Member] | |||
Supplemental disclosure of non-cash activity [Abstract] | |||
Acquire existing percentage | 80.00% |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical 2) (Unaudited) | 1 Months Ended |
Jan. 01, 2016USD ($) | |
Assets and liabilities [Abstract] | |
Prepaid rent | $ 11,576 |
Property and equipment | 1,271,617 |
Deposits | 38,669 |
Total assets | 1,321,862 |
Checks written in excess of bank balance | 3,434 |
Accounts payable | 45,434 |
Accounts payable - related party | 55,249 |
Deferred rent | 24,147 |
Accrued expenses | 1,566 |
Accrued interest - related party | 122,582 |
Subordinated notes payable to members | 700,826 |
Long-term debt | 1,300,000 |
Net liabilities acquired | $ (931,376) |
Basis of Presentation and Secur
Basis of Presentation and Securities Exchange | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation and Securities Exchange [Abstract] | |
Basis of Presentation and Securities Exchange | Basis of Presentation and Securities Exchange These financial statements represent the consolidated financial statements of EVO Transportation & Energy Services, Inc., formerly Minn Shares Inc. (“EVO Inc.” or the “Company”), its wholly owned subsidiaries, Titan CNG LLC (“Titan”) and Environmental Alternative Fuels, LLC (“EAF”), Titan’s wholly-owned subsidiaries, Titan El Toro LLC (“El Toro”), Titan Diamond Bar LLC (“Diamond Bar”), and Titan Blaine, LLC (“Blaine”), and EAF’s wholly-owned subsidiary, EVO CNG, LLC (“EVO CNG”). On November 22, 2016, Titan and its members entered into an Agreement and Plan of Securities Exchange with EVO Inc. whereby EVO Inc. acquired all of the equity interests of Titan and Titan became a wholly-owned subsidiary of EVO Inc. (the “Titan Securities Exchange”). The Company issued 248,481 shares of common stock, par value $0.0001 per share (“Common Stock”), to acquire Titan, which resulted in the former Titan equity holders owning approximately 91.25% of the outstanding shares of the Company’s Common Stock after the consummation of the Titan Securities Exchange. At the closing of the Titan Securities Exchange, all of the issued and outstanding units of Titan immediately prior to the closing of the Titan Securities Exchange were converted into 248,481 shares of the Company’s Common Stock. The Company did not have any stock options or warrants to purchase shares of its capital stock outstanding at the time of the Titan Securities Exchange. Cash and cash equivalents $ 3,377 Accounts payable (54,036 ) Convertible promissory note - related party (405,103 ) Reverse acquisition $ (455,762 ) Because the former members of Titan owned approximately 91.25% of the combined company on completion of the Titan Securities Exchange, the transaction was accounted for as a recapitalization through a reverse acquisition, with no goodwill or other intangibles recorded. As such, the financial information reflects the historical financial information of Titan, Diamond Bar and Blaine and the remaining assets and liabilities of EVO Inc. brought over at historical cost. EVO Inc.’s results of operations, which were de minimis, are included in the Company’s consolidated financial statements from the date of acquisition, November 22, 2016. Costs of the transaction have been charged to operations. The capital structure of the Company has been retroactively adjusted to reflect that of EVO Inc. with all shares being adjusted based on the exchange ratio of equity interest in connection with the Titan Securities Exchange. As a result of the Titan Securities Exchange, EVO Inc. acquired the business of Titan and its subsidiaries Diamond Bar, Blaine and El Toro as of November 22, 2016, and will continue the existing business operations of Titan, Diamond Bar, Blaine and possibly El Toro as a publicly traded company under the name EVO Transportation & Energy Services, Inc. Effective August 31, 2017, the Company amended its certificate of incorporation to change its name from “Minn Shares Inc.” to “EVO Transportation & Energy Services, Inc.” by the filing an amendment to the certificate of incorporation of the Company (the “Charter Amendment”). In connection with the name change, the Company changed its ticker symbol on the OTC Pink Marketplace from “MSHS” to “EVOA.” The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for completed financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the consolidated financial statements of the Company as of September 30, 2017. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the operating results for the full year. It is recommended that these consolidated financial statements be read in conjunction with the consolidated financial statements and related disclosures for the year ended December 31, 2016 filed with the Securities and Exchange Commission on April 18, 2017. On February 1, 2017, EVO Inc., EAF, EVO CNG, and Danny R. Cuzick (“Danny Cuzick”), Damon R. Cuzick (“Damon Cuzick”), Theril H. Lund and Thomas J. Kiley (together with Danny Cuzick and Damon Cuzick, the “EAF Members”) consummated the transactions contemplated by that certain Agreement and Plan of Securities Exchange dated January 11, 2017 (the “EAF Exchange Agreement”). Pursuant to the EAF Exchange Agreement, EVO Inc. acquired all of the membership interests in EAF (the “EAF Interests”) from the EAF Members. EAF, together with EVO CNG, is a compressed natural gas fueling station company with six fueling stations in California, Texas, Arizona and Wisconsin. In determining the accounting acquirer in the transactions contemplated by the EAF Exchange Agreement, management considered the Financial Accounting Standards Board’s Accounting Standard Codification (“ASC”) 805—Business Combinations. Specifically, management considered the guidance in ASC 810-10, which generally provides that the acquirer in a business combination transaction is determined by identifying the existence of a controlling financial interest, which can typically be determined by the ownership of a majority voting interest. Because the EVO, Inc. stockholders continued to own all of the outstanding shares of Common Stock on completion of the transactions contemplated by the EAF Exchange Agreement, management determined that EVO Inc. was the accounting acquirer in the EAF transaction. However, because the Convertible Notes issued as consideration pursuant to the EAF Exchange Agreement could convert to a majority of the issued and outstanding Common Stock, management will continue to evaluate the accounting treatment for the EAF transaction. On April 6, 2017, the Company effected a 50-for-1 reverse stock split of its Common Stock pursuant to which each 50 shares of issued and outstanding Common Stock became one share of Common Stock (the “Reverse Split”). No fractional shares were issued as a result of the Reverse Split. All references to numbers of shares of Common Stock and per share amounts give retroactive effect to the Reverse Split for all periods presented. Going Concern The Company is an early stage company in the process of acquiring several businesses in the transportation and vehicle fuels industry. As of September 30, 2017 the Company acquired EAF, which was financed through approximately $13.6 million of debt, of which $3.8 million is contemplated to be repaid through a successful secondary offering before the December 31, 2017 due date. As of September 30, 2017, the Company has a working capital deficit of approximately $8.4 million which management anticipates rectifying with additional public or private offerings. Also, the Company is evaluating certain cash flow improvement measures. However, there can be no assurance that the Company will be successful in these efforts. The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern; however, the above conditions raise doubt about the Company’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Description of Business and Summary of Significant Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Note 1 - Description of Business and Summary of Significant Accounting Policies The Company is a holding company based in Peoria, Arizona that owns two operating subsidiaries, Titan and EAF, that compete in the compressed natural gas (“CNG”) service business. Titan is the management company that oversees operations of the El Toro, Diamond Bar, and Blaine CNG service stations. El Toro was formed during 2013 and began operations during 2015. El Toro, located in Lake Forest, California, is a comprehensive natural gas vehicle solutions provider that offers products and services to corporate and municipal fleet operators as well as individual consumers. As of June 30, 2017, El Toro ceased operations. Blaine and Diamond Bar were formed in 2015. In March 2016, Diamond Bar began operations of its CNG station under a lease agreement with the State of California South Coast Air Quality Management District (“SCAQMD”) in Diamond Bar, California. The Company is currently constructing a private CNG station for Walters Recycling & Refuse, Inc. (“Walters”) in Blaine, Minnesota, which the Company will operate under a seven year take-or-pay contract with Walters. The Company also intends to provide comprehensive natural gas vehicle solutions to corporate and municipal fleet operators as well. The Company was incorporated in the State of Delaware on October 22, 2010. Principles of Consolidation The accompanying consolidated financial statements include the accounts of EVO, Inc., its subsidiaries, Titan and EAF, Titan’s wholly owned subsidiaries, El Toro, Diamond Bar and Blaine, and EAF’s wholly owned subsidiary, EVO CNG. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to recognition and measurement of identifiable assets acquired and liabilities assumed in business combinations, accounts receivable, estimated useful lives and impairment on property, equipment and land, and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant. Accounts Receivable The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. No allowance for doubtful accounts was recorded for the nine months ended September 30, 2017. Concentrations of Credit Risk During the nine months ended September 30, 2017 and 2016, four and one customers accounted for 84% and 13%, respectively, of total revenues. At September 30, 2017, four customers accounted for 84% of total accounts receivable. Property, Equipment and Land Property and equipment are stated at cost. Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets, ranging from five to 40 years, and the shorter of the estimated economic life or related lease terms for leasehold improvements. Construction in process represents the accumulated costs of assets not yet placed in service and primarily relates to equipment purchases and architectural fees for a CNG station being constructed by Blaine. Based on management's assessment, we recorded a $679,535 fixed asset impairment charge related to closing of the El Toro station. A significant portion of the asstes were land improvements and could not be sold or conveyed to another property. Goodwill and Intangible Assets Goodwill represents the excess of fair value over the net assets of the business acquired. Goodwill is evaluated for impairment annually or when a triggering event indicates it is more likely than not that an impairment may be necessary. Definite-lived intangible assets are amortized over their estimated useful lives. In addition, amortized intangible assets are reviewed for impairment annually or when indicators of impairment exist. No impairment expense was recognized during the nine months ended September 30, 2017. Long-Lived Assets The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. During the nine months ended September 30, 2017, the Company determined that fixed assets and construction in progress were impaired, recording a loss of $679,535 due to impairment of assets related to the Company’s El Toro station ceasing operations. Assets Held for Sale The Company classifies assets as being held for sale when the following criteria are met: management has committed to a plan to sell the asset; the asset is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; the sale of the asset is highly probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Net Loss per Share of Common Stock Basic loss per share is computed by dividing net loss available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the period. Diluted loss per share reflects the potential dilution that would occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. Securities totaling 103,333 and 0 for the three and nine months ended September 30, 2017 and 2016, respectively, have been excluded from loss per share because their effect would have been anti-dilutive. Revenue Recognition The Company’s revenues primarily consist of CNG fuel sales. These revenues are recognized in accordance with GAAP, which requires that the following four criteria must be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists: (ii) delivery has occurred and title and the risks and rewards of ownership have been transferred to the customer or services have been rendered; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Applying these factors, the Company typically recognizes revenue from the sale of natural gas fuel at the time the fuel is dispensed. Income Taxes The Company recognizes deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The Company’s temporary differences result primarily from depreciation. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions will more likely than not be sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are not recorded as a tax benefit or expense in the current year. Interest and penalties, if applicable, are recorded in the period assessed as general and administrative expenses. However, no interest or penalties have been assessed for the nine months ended September 30, 2017 and 2016. Deferred income taxes are provided for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of the enactment. In evaluating the ultimate realization of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. Management establishes a valuation allowance if it is more likely than not that all or a portion of the deferred income tax assets will not be utilized. The ultimate realization of deferred income tax assets is dependent on the generation of future taxable income, which must occur prior to the expiration of the net operating loss carryforwards. Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350) (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of ASU 2017-04 will have a material impact on our consolidated financial statements. In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We do not expect the adoption of ASU 2016-13 will have a material impact on our consolidated financial statements. In March 2016, FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting. The amendments in ASU 2016-09 address multiple aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liability, and classification on the statements of cash flows. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. An entity that elects early adoption must adopt all the amendments in the same period, and any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. We do not expect the adoption of ASU 2016-09 will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption, but would not allow adoption any earlier than the original effective date of the standard. The Company is still assessing the impact of the amendments in this ASU; however, the disclosure will be significant to the Company. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. For a lessor, the accounting applied is also largely unchanged from previous guidance. The new rules will be effective for the Company in the first quarter of 2019. The Company is in the process of evaluating the impact the amendment will have on its consolidated financial position or results of operations. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions [Abstract] | |
Acquisitions | Note 2 - Acquisitions EAF On February 1, 2017, pursuant to the EAF Exchange Agreement, EVO, Inc. acquired all of the membership interests of EAF. EAF, together with EVO, is a compressed natural gas fueling station company with six fueling stations in California, Texas, Arizona and Wisconsin. In determining the accounting acquirer in the transactions contemplated by the EAF Exchange Agreement, management considered the Financial Accounting Standards Board’s Accounting Standard Codification (“ASC”) 805—Business Combinations. Specifically, management considered the guidance in ASC 810-10, which generally provides that the acquirer in a business combination transaction is determined by identifying the existence of a controlling financial interest, which can typically be determined by the ownership of a majority voting interest. Because the EVO Inc. stockholders continued to own all of the outstanding shares of Common Stock on completion of the transactions contemplated by the EAF Exchange Agreement, management determined that EVO, Inc. was the accounting acquirer in the EAF transaction. However, because the Convertible Notes issued as consideration pursuant to the EAF Exchange Agreement could convert to a majority of the issued and outstanding Common Stock, management will continue to evaluate the accounting treatment for the EAF transaction. The following unaudited table summarizes the preliminary fair value allocation of the assets acquired and liabilities assumed at the acquisition date, which were based on the best information available at the time the financial statements were issued and is subject to change. Prepaid $ 32,118 Trademarks 164,000 Customer lists 466,000 Goodwill 936,837 Property, equipment and land 8,552,441 Deposits and other long-term assets 198,751 Derivative liability (5,821 ) Derivative liability, less current portion (76,811 ) Convertible promissory note - related party (13,550,000 ) Debt discount 3,282,485 The following table summarizes the unaudited pro forma results of the Company giving effect to the acquisition as if it had occurred on January 1, 2016. The unaudited pro forma information is not necessarily indicative of the results of operations of the Company had this acquisition occurred at the beginning of the years presented, nor is it necessarily indicative of future results. For the Nine Months Ended September 30, 2017 2016 Revenue $ 1,904,385 $ 1,779,093 Net loss $ (2,373,189 ) $ (2,692,046 ) Basic weighted average common shares outstanding 420,804 142,787 Basic loss per common stock $ (5.63 ) $ (18.85 ) The Company is evaluating the allocation of intangible assets as required under ASC 805-10-50-2 because the accounting for this business combination was incomplete at the time the financial statements were issued. As consideration for the EAF Interests, EVO, Inc. issued a promissory note to an EAF Member in the principal amount of $3.8 million (the “Senior Promissory Note”) that bears interest at 7.5% per year, with a default interest rate of 12.5% per year, and has a maturity date of the earlier of (a) the date that is ten days after the initial closing of a private offering of capital stock of EVO, Inc. in an amount not less than $10 million (a “Private Offering”); (b) December 31, 2017 or a (c) declaration by the noteholder of an event of default under the Senior Promissory Note. Also as consideration for the EAF Interests, EVO, Inc. issued convertible promissory notes to the EAF Members in the aggregate principal amount of $9.5 million (the “Convertible Notes”). The Convertible Notes bear interest at 1.5% per year and have a maturity date of February 1, 2026. The Convertible Notes are convertible into 1,400,000 shares (the “Transaction Shares”) of the Company’s Common Stock, subject to adjustment for any stock splits, combinations or similar transactions, representing approximately 81.1% of the Company’s total outstanding shares of Common Stock on a post-transaction basis. Accordingly, the conversion of the Convertible Notes would result in a change in control of the Company. The number of Transaction Shares will be increased to equal 70% of the issued and outstanding Common Stock if the issuance of Common Stock pursuant to a private offering of Common Stock of up to $2 million and the conversion into Common Stock of the Company’s subordinated notes payable to members, Senior Bridge Notes, convertible promissory notes, and certain accounts payable would otherwise cause the Transaction Shares to represent less than 70% of the issued and outstanding Common Stock. Pursuant to the terms of the EAF Exchange Agreement, the EAF Members are entitled to demand registration rights and piggyback registration rights with respect to the Transaction Shares upon customary terms, limitations, exceptions and conditions. The Convertible Notes are secured by all of the assets of EAF and the EAF Interests, which the Company pledged to the EAF Members as security for the Convertible Notes. Each Convertible Note is convertible at the applicable holder’s option beginning on the first anniversary of the date of issuance of the Convertible Notes, including at any time within 90 days after the holder’s receipt of notice of consummation of (1) a reorganization, merger or similar transaction where EVO, Inc. is not the surviving or resulting entity or (2) the sale of all or substantially all of EVO, Inc. assets, subject to customary restrictions. Each holder’s conversion option is subject to a monthly limit of the number of shares of Common Stock equal to 10% of the thirty day average trading volume of shares of Common Stock during the prior calendar month. The Convertible Notes are also subject to mandatory conversion at the Company’s option beginning on the first anniversary of the date of issuance of the Convertible Notes if: (i) the closing price of the Common Stock is greater than (A) 150% of the price at which a share of Common Stock is sold in a Private Offering or (B) $10.00 if a Private Offering has not occurred by December 31, 2017 and (ii) the average daily trading volume of shares of Common Stock has equaled 100,000 or more for the 30 days prior to the applicable date. Upon a conversion of the Convertible Notes, accrued interest may also be converted at the greater of (i) the amount of interest to be converted divided by the exchange ratio of 0.1357, subject to adjustment for stock splits or combinations, or (ii) the amount of interest to be converted divided by the closing price of the Common Stock on the trading day preceding the conversion date. In connection with the closing of the EAF Exchange Agreement, on February 1, 2017, the Company issued promissory notes to the EAF Members in the aggregate principal amount of $250,000 that bear interest at 6% per annum with a default rate of 11% per annum and a maturity date of the earlier of (a) the closing of a Private Offering; (b) 180 days from the date of the notes and (c) declaration by a holder of an event of default under the holder’s note (the “Working Capital Notes”). The Company failed to pay the outstanding balance on these notes by July 31, 2017, and as a result these notes are in default. However, the Company is in negotiations with the noteholders of these notes to extend the maturity date of these notes. In connection with the closing of the EAF Exchange Agreement, on February 1, 2017, the Company guaranteed a note from an EAF member to EAF dated January 30, 2017 in the principal amount of $4 million (the “EAF Note”). The EAF Note is secured by all assets of EAF and is guaranteed by EAF. The EAF Note bears interest at 7.5% per annum with a default rate of 12.5% per annum and has a maturity date of the earlier of (a) February 1, 2020 and (b) declaration by the noteholder of an event of default under the EAF Note. |
Balance Sheet Disclosures
Balance Sheet Disclosures | 9 Months Ended |
Sep. 30, 2017 | |
Balance Sheet Disclosures [Abstract] | |
Balance Sheet Disclosures | Note 3 - Balance Sheet Disclosures Property and equipment are summarized as follows: September 30, 2017 December 31, (Unaudited) 2016 Buildings $ 4,054,806 $ 664,276 Equipment 3,521,738 401,462 Land 975,899 - Site development - 161,467 Leasehold improvements - 46,728 Computer equipment 40,528 42,109 8,592,971 1,316,042 Less Property and equipment - accumulated depreciation (320,761 ) (213,793 ) $ 8,272,210 $ 1,102,249 Depreciation expense for the nine months ended September 30, 2017 and 2016 was $415,639 and $153,936, respectively. Construction in process contains amounts paid or accrued for construction of the Blaine CNG station that has not been placed into service as of September 30, 2017. Intangible assets and goodwill consist of the following: September 30, 2017 December 31, (Unaudited) 2016 Trademarks $ 164,000 $ - Customer lists 466,000 - Goodwill 936,837 - $ 1,566,837 $ - Less intangible assets – accumulated amortization (84,000 ) - $ 1,482,837, $ - Amortization expense for the nine months ended September 30, 2017 and 2016 was $84,000 and $0, respectively. Amortization expense for the intangibles will be approximately $126,000 annually through 2022 and $21,000 in 2023. Accrued expenses consist of the following: September 30, 2017 December 31, (Unaudited) 2016 Professional fees $ 119,319 $ 82,386 Credit cards 25,508 32,061 FET taxes 23,187 0 Deferred rent 9,841 13,149 $ 177,855 $ 127,596 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 4 - Related Party Transactions Accounts Payable - Related Party The Company’s accounts payables - related party consist of guaranteed payments and expense reimbursement to members. Accounts payable - related party was $410,336 and $261,060 as of September 30, 2017 and December 31, 2016, respectively. Advances Related Party During the nine months ended September 30, 2017, an EAF member advanced $70,258 to the Company. During the year ended December 31, 2016, a Titan member advanced $2,000 to the Company. During the year ended December 31, 2016 an El Toro member advanced $35,500 to the Company. Accrued Interest - Related Party The Company’s accrued interest - related party are the accrued interest payments on stockholders’ subordinated convertible senior notes payable and convertible promissory notes payable to stockholders. Accrued interest - related party was $461,655 and $164,368 as of September 30, 2017 and December 31, 2016, respectively. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt [Absract] | |
Long-Term Debt | Note 5 - Long-Term Debt Long-term debt consists of: September 30, December 31, 2017 2016 (Unaudited) $1,300,000 SBA note payable issued December 31, 2014, with interest at 5.50% for the first five years, then adjusted to the SBA LIBOR base rate, plus 2.35% for the remaining five years. The note required interest only payments for the first twelve months and commencing during January 2016 calls for monthly principle and interest payments of $15,288. The note matures March 2024, is secured by substantially all of the Company’s business assets and is personally guaranteed by certain members. The note is a co-borrower arrangement between Titan and El Toro with the proceeds received by El Toro. The Company issued to members 35,491 units (equivalent to 31,203 common shares) in Titan as compensation for the guarantee. The Company was in violation of certain restrictive covenants as of September 30, 2017 and December 31, 2016. $ 1,124,470 $ 1,194,989 Six subordinated senior notes payable to stockholders (“Senior Bridge Loans”) with interest at 12%. In connection with the notes payable, the note holders were issued 25,541 Class A Membership Units (equivalent to 22,455 common shares). In the event of a default the Company is required to pay the holder a stated number of Class A Membership Units on the date of default and each 90 day interval thereafter until all amounts due have been paid in full. Effective July 2016, the maturity date of the Senior Bridge Notes was extended to September 30, 2016 and allowed for an interest rate increase from 12% to 16% effective March 14, 2016. The default interest rate was increased from 15% to 18%. As part of the first amendment, the note holders received 3,359 Class A Membership Units (equivalent to 2,953 common shares) in Titan. In September 2016, the Senior Bridge Notes were amended to extend the due date to April 30, 2017 and the Company paid a fee for the extension of 1% of the outstanding principal balance to the note holders. The Company subsequently extended the maturity date of the notes to October 31, 2017. The Company paid a fee of 1% of the outstanding principal balance on the notes on or around each of January 31, 2017, April 30, 2017, and July 31, 2017 to extend the maturity date of the notes. The notes are secured by a subordinate security interest on substantially all of the Company’s assets and are personally guaranteed by two members. The Senior Bridge Notes contemplate a future conversion into equity but do not contain specific conversion terms. The Senior Bridge Notes were not extended at the maturity. See Note 10 for further discussion. However, the Company is in negotiations with the noteholders to extend the maturity date of the notes. 1,421,556 1,021,556 Nine subordinated notes payable to stockholders with interest at 12%, with maturity at December 2020, secured by a subordinate security interest on substantially all assets of the Company. During October 2017, the notes and related interest were converted to into 272,777 shares of common stock at a price of $5 per share. 1,166,373 1,166,373 Three convertible promissory notes to stockholders with interest at 12%, with maturity on or after November 2019. At the next equity financing the holder at their discretion may elect to convert the principal and interest at a conversion price equal to the price per security issued in such offering. These notes are also subject to mandatory conversion in the event that the Senior Bridge Notes and subordinated notes discussed above convert to equity, and any mandatory conversion will be on the same terms as those received by the holders of the Senior Bridge Notes and subordinated notes. The promissory notes are unsecured. 417,365 405,103 A promissory note to a former EAF member with interest at 7.5%, with maturity during December 2017, ten days after the initial closing of a private offering of capital stock of the Company in an amount not less than $10 million or at discretion of the member. 3,788,315 - Four promissory notes to former EAF members with interest at 6%, with maturity upon the earlier of July 2017 or the date of closing a private offering of at least $2 million. These notes are currently in default. However, the Company is in negotiations with the noteholders to extend the maturity date of these notes. 250,000 - Four promissory notes to former EAF members with interest at 1.5%, with maturity during February 2026. The promissory notes are convertible into 1,400,000 shares. These convertible promissory notes are secured by substantially all of the assets of EAF. The Company imputed an interest rate of 5.1% on the promissory notes. The discount is accreted over the period from the date of issuance to the date the promissory notes are due using the effective interest rate method. See note 2 above for additional discussion regarding the conversion mechanics of these convertible notes. 9,500,000 - Debt discount* (3,063,653 ) - 14,604,426 3,788,021 Less current portion (6,584,341 ) (1,142,855 ) $ 8,020,085 $ 2,645, 166 * Of our total indebtedness of approximately $17,668,000 as of September 30, 2017, approximately $6,600,000 is classified as current debt. We are in violation of certain covenants related to the SBA loan. We received a waiver with respect to those covenant violations for the year ended December 31, 2016, but have not received a waiver for current violations of these covenants as of September 30, 2017 and through the date of filing of this Form 10-Q. On February 1, 2017, pursuant to the EAF Exchange Agreement, EVO Inc. acquired all of the membership interests of EAF. As consideration for the membership interests, EVO Inc. issued convertible promissory notes to the former members of EAF in the aggregate principal amount of $9.5 million (the “Convertible Notes”). The Convertible Notes bear interest at 1.5% per year and have a maturity date of February 1, 2026. The Convertible Notes are convertible into 1,400,000 shares (the “Transaction Shares”) of EVO Inc. common stock, subject to adjustment for stock splits, combinations or similar transactions, which represents approximately 81.1% of EVO Inc.’s total outstanding shares of common stock on a post-transaction basis. Accordingly, the conversion of the Convertible Notes would result in a change in control of the Company. The number of Transaction Shares will be increased to equal 70% of the issued and outstanding shares of EVO Inc. common stock if the issuance of common stock pursuant to a private offering of common stock of up to $2 million and the conversion into common stock of EVO Inc.’s subordinated notes payable to members, Senior Bridge Notes, convertible promissory notes, and certain accounts payable would otherwise cause the Transaction Shares to represent less than 70% of the issued and outstanding common stock. The Company engaged a third-party financial advisory firm to assist in the determination of the purchase price allocation under the guidance of ASC Topic 805. The advisory firm calculated, with assistance and collaboration of management, the value of the $9.5 million-dollar debt to be $4,563,389, generating a debt discount $4,936,611; with accretion at September 30, 2017 the remaining discount is $3,063,653. Maturities of long-term obligations are as follows: Year Ending December 31, Related Party Notes Other Notes Total At September 30, 2017 $ 5,459,871 $ 1,124,470 $ 6,584341 2018 - - - 2019 417,365 - 417,365 2020 1,166,373 - 1,166,373 2021 - - - Thereafter 9,500,000 - 9,500,000 $ 16,543,609 $ 1,124,470 $ 17,668,079 |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments [Abstract] | |
Derivative Instruments | Note 6 - Derivative Instruments The Company periodically enters into various commodity hedging instruments to mitigate a portion of the effect of natural gas price fluctuations, as summarized in the table below. Open derivative positions are accounted for on a fair value basis at the consolidated balance sheet date, and any unrealized gain or loss is included in other expense on the consolidated statement of operations. Gains and losses from settled transactions are also recorded in other expense on the consolidated statement of operations. The Company does not have any derivative contracts designated as cash flow hedges. The following table summarizes the fair value of the derivatives recorded in the consolidated balance sheets, by category. Fair Value at September 30, 2017 Current commodity derivative liability $ 21,669 Long-term commodity derivative liability 13,753 - Total derivative liability $ 35,422 - As of September 30, 2017, the Company was party to one open derivative positions outstanding summarized below: Type Term Volume Hedged (Dth) Index Fixed Price Swap March 2015 - February 2019 95,000 NYM-LDS $ 3.82 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 7 - Fair Value Measurements The following are the major categories of assets and liabilities measured at fair value on a recurring basis during the nine months ended September 30, 2017, using quoted prices in active markets for identical assets and liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). The following assets are measured at fair value on a recurring basis: Description Level 1 Level 2 Level 3 Total Liability Derivative liability $ - $ 35,422 $ - $ 35,422 The fair value of these derivative swap contracts is based on market prices posted on the New York Mercantile Exchange for natural gas. The Company determines the fair value of its derivative instruments under the income approach using a discounted cash flow model. The valuation model requires a variety of inputs, including contractual terms, projected natural gas prices, discount rates, and credit risk adjustments, as appropriate. The Company’s estimates of fair value of derivatives include consideration of the counterparty’s creditworthiness, the Company’s creditworthiness, and the time value of money. The consideration of these factors results in an estimated exit price for each derivative asset or liability under a marketplace participant’s view. All of the significant inputs are observable, either directly or indirectly; therefore, the Company’s derivative instruments are included within the Level 2 fair value hierarchy. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity [Abstract] | |
Stockholders' Equity | Note 8 - Stockholders’ Equity On April 6, 2017, the Company effected a 50-for-1 reverse stock split of its common stock pursuant to which each 50 shares of issued and outstanding common stock became one share of common stock (the “Reverse Split”). No fractional shares were issued as a result of the Reverse Split. All references to numbers of shares of common stock and per share amounts give retroactive effect to the Reverse Split for all periods presented. In connection with the completion of the Titan Securities Exchange, 104,179 outstanding Class A units were valued at predecessor cost, which resulted in no value to the units with the resulting liability assumed recorded at a loss in the statement of operations. During the nine months ended September 30, 2017, the Company issued 103,333 units for $3.00 per units, with each unit consisting of one share of common stock and one equity-classified warrant to purchase one share of common stock. The fair value of the warrants is estimated on the date of issuance using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including the expected term of the warrant, expected stock price volatility, and expected dividends. These estimates involve inherent uncertainties and the application of management judgment. Expected volatilities used in the valuation model are based on the average volatility of the Company’s stock. The risk-free rate for the expected term of the option is based on the United States Treasury yield curve in effect at the time of grant. As of September 30, 2017, the authorized share capital of the Company consisted of 100,000,000 shares of common stock with a par value of $0.0001 per share. There were 420,804 and 317,207 shares of common stock issued and outstanding as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2017, the authorized share capital of the Company consisted of 10,000,000 shares of preferred stock with a par value of $0.0001 per share. There were no shares of preferred stock issued and outstanding as of September 30, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 9 - Commitments and Contingencies Operating Leases The Company leases office space in Minnesota on a month to month basis with payments of $977 per month. Titan entered into an operating lease agreement which expires in February 2019, with an option to extend to February 2024. In November 2014 the lease was amended to add El Toro as a co-lessee. The monthly payments range from $10,000 to $11,604. The lease calls for rent increases over the term of the lease. The Company records rent expense on a straight line basis using average rent for the term of the lease. The excess of the expense over cash rent paid is shown as deferred rent. Rent expense for the six months ended September 30, 2017 and 2016 was approximately $95,000. Future minimum lease payments under these leases are approximately as follows: Years Ending December 31, Nine months ended September 30, 2017 Remainder of 2017 $ 35,000 2018 139,000 2019 23,000 $ 197,000 Litigation In the normal course of business, the Company is party to litigation from time to time. The Company maintains insurance to cover certain actions and believes that resolution of such litigation will not have a material adverse effect on the Company. Grant Agreement In 2013, Titan was the recipient of two grants in the amount of $300,000 and $150,000 from the California Energy Commission (“CEC”) and SCAQMD. The grant funds were used to complete the construction of a facility on El Toro Road as contemplated in the grant agreements. The grant proceeds are subject to repayment if the Company does not satisfy certain operational metrics contained in the grant agreements, and the Company is not in compliance with those metrics. In addition, the use of Titan on the project could be construed as requiring amendments to the grant agreements or consent from the CEC or SCAQMD, neither of which has been obtained by the Company. Walters Recycling and Refuse Station In June 2016 Blaine entered into a compressed natural gas fuel station agreement with Walters, an unrelated third party. Under the agreement Blaine will construct, at its sole expense, a CNG dispensing system (the “System”) on a portion of the property owned by Walters. The System must include certain required elements as defined in the contract and will only be used for the purpose of filling Walters’ vehicles and authorized Blaine vehicles and trailers. Titan was required to have the System fully operational by June 2017. Because the System was not fully operational by June 2017, Walters may terminate the agreement with 30 days written notice to Blaine. Walters has not terminated this agreement, and Blaine continues to discuss construction of the system with Walters. If the agreement is terminated, Blaine will be required to return the property to its pre-construction condition. Blaine shall retain ownership of all unattached movable components of the System. In addition, Blaine is responsible for all costs relating to installing the utilities required for the System as well as the costs for all ongoing system and property maintenance. The term of the agreement will be for a period of seven years and will commence on the date the System becomes fully operational and is first used by Walters, as defined in the agreement. Walters has the right to renew the agreement for four additional two year renewal periods. Beginning on the commencement date and through the contract term, Walters agrees to purchase 144,000 GGE, annually, of CNG, as defined, exclusively from Blaine. The rate charged to Walters includes an initial six month rate which is then adjusted as stated in the agreement. SCAQMD In December 2015, Diamond Bar entered into a transfer of ownership and lease arrangement with the SCAQMD. This property has an existing CNG station previously owned and operated by the SCAQMD. Thirty days after the date of the agreement, SCAQMD transferred to Diamond Bar, without charge, all of their rights and interests in the existing assets. The agreement also specifies that Diamond Bar lease the property for $1 and identifies certain commitments agreed to by the parties. Some of the more significant ones are as follows: * Within 180 days from the contract execution, Diamond Bar, using its best efforts, shall sell any surplus assets and provide SCAQMD with 90% of the net proceeds, as defined. To date Diamond Bar has not had any surplus assets to sell. * Diamond Bar is also required to comply with certain provisions in the agreement with regards to the operation and maintenance of the station. * Diamond Bar, at its expense and upon written consent from SCAQMD, can remodel, redecorate or otherwise make improvements and replacements of and to all or any part of the leased premises. * Diamond Bar is required to install specific station upgrades, as defined, and is responsible for the cost of these upgrades. All upgrades must be completed within eight months of the execution date. Any improvements made to the premises remain the property of Diamond Bar and can be removed by Diamond Bar. * The fueling rate charged to the SCAQMD will be based on actual utility costs, taxes and a fee not to exceed $0.50 per GGE. Currently the rate charged is substantially equal to the market rate charged to all other customers. * The contract ends December 31, 2020. SCAQMD can extend the contract for a period not to exceed five years starting January 1, 2021 at no additional cost. Either party may terminate the contract with sixty days’ notice. If the SCAQMD terminates without cause they will be required to either purchase the property necessary for the operation of the CNG station or reimburse Diamond Bar for the cost of removing the property. If Diamond Bar terminates the contract without cause, the SCAQMD shall have the option to either purchase the property necessary for the operation of the station or require Diamond Bar to remove the property at no cost to SCAQMD. Contingent Liability The Company is a guarantor on a $4,000,000 loan from a former EAF member and has pledged the Company’s assets. The note bears interest of 7.5% per annum and has a maturity date of the earlier of (a) February 1, 2020 and (b) declaration by the noteholder of an event of default under the loan. Long-Term Take-or-Pay Natural Gas Supply Contracts As of September 30, 2017, the Company had commitments to purchase CNG on a take-or-pay basis of approximately $545,000. It is anticipated these are normal purchases that will be necessary for sales, and no cash settlements will be made related to the purchase commitments. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 10 - Subsequent Events On October 1, 2017, the Company converted the eight Junior Bridge Notes and related interest totaling $1,363,858 into common stock at a price per share of $5.00 for a total of 272,777 shares. The terms of the Senior Bridge Notes required principal of approximately $1,222,000 and accrued interest of approximately $200,000 to be repaid on or before November 7, 2017, which is two business days after the fifth calendar day after October 31, 2017, the maturity date. The Company did not make these required payments, and this nonpayment by the Company constitutes an event of default under the Senior Bridge Notes. The Company and the Senior Bridge Note holders are negotiating extension terms for the Senior Bridge Notes, but there can be no assurance that the Company and the Senior Bridge Note holders will be able to agree on extension terms. |
Description of Business and S20
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Description of Business and Summary of Significant Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of EVO, Inc., its subsidiaries, Titan and EAF, Titan’s wholly owned subsidiaries, El Toro, Diamond Bar and Blaine, and EAF’s wholly owned subsidiary, EVO CNG. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to recognition and measurement of identifiable assets acquired and liabilities assumed in business combinations, accounts receivable, estimated useful lives and impairment on property, equipment and land, and contingencies. These estimates may be adjusted as more current information becomes available, and any adjustment could be significant. |
Accounts Receivable | Accounts Receivable The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company’s estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company’s estimate of the allowance for doubtful accounts will change and that losses ultimately incurred could differ materially from the amounts estimated in determining the allowance. No allowance for doubtful accounts was recorded for the nine months ended September 30, 2017. |
Concentrations of Credit Risk | Concentrations of Credit Risk During the nine months ended September 30, 2017 and 2016, four and one customers accounted for 84% and 13%, respectively, of total revenues. At September 30, 2017, four customers accounted for 84% of total accounts receivable. |
Property, Equipment and Land | Property, Equipment and Land Property and equipment are stated at cost. Depreciation is provided utilizing the straight-line method over the estimated useful lives for owned assets, ranging from five to 40 years, and the shorter of the estimated economic life or related lease terms for leasehold improvements. Construction in process represents the accumulated costs of assets not yet placed in service and primarily relates to equipment purchases and architectural fees for a CNG station being constructed by Blaine. Based on management's assessment, we recorded a $679,535 fixed asset impairment charge related to closing of the El Toro station. A significant portion of the asstes were land improvements and could not be sold or conveyed to another property. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess of fair value over the net assets of the business acquired. Goodwill is evaluated for impairment annually or when a triggering event indicates it is more likely than not that an impairment may be necessary. Definite-lived intangible assets are amortized over their estimated useful lives. In addition, amortized intangible assets are reviewed for impairment annually or when indicators of impairment exist. No impairment expense was recognized during the nine months ended September 30, 2017. |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of long-lived assets whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. Such circumstances could include, but are not limited to (1) a significant decrease in the market value of an asset, (2) a significant adverse change in the extent or manner in which an asset is used, or (3) an accumulation of costs significantly in excess of the amount originally expected for the acquisition of an asset. The Company measures the carrying amount of the asset against the estimated undiscounted future cash flows associated with it. Should the sum of the expected future net cash flows be less than the carrying value of the asset being evaluated, an impairment loss would be recognized. The impairment loss would be calculated as the amount by which the carrying value of the asset exceeds its fair value. The fair value is measured based on quoted market prices, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. These assumptions require significant judgment and actual results may differ from assumed and estimated amounts. During the nine months ended September 30, 2017, the Company determined that fixed assets and construction in progress were impaired, recording a loss of $679,535 due to impairment of assets related to the Company’s El Toro station ceasing operations. |
Assets Held for Sale | Assets Held for Sale The Company classifies assets as being held for sale when the following criteria are met: management has committed to a plan to sell the asset; the asset is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; the sale of the asset is highly probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year; the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. |
Net Loss per Share of Common Stock | Net Loss per Share of Common Stock Basic loss per share is computed by dividing net loss available to holders of the Company’s Common Stock by the weighted average number of shares of Common Stock outstanding for the period. Diluted loss per share reflects the potential dilution that would occur if securities or other contracts to issue Common Stock were exercised or converted into Common Stock. Securities totaling 103,333 and 0 for the three and nine months ended September 30, 2017 and 2016, respectively, have been excluded from loss per share because their effect would have been anti-dilutive. |
Revenue Recognition | Revenue Recognition The Company’s revenues primarily consist of CNG fuel sales. These revenues are recognized in accordance with GAAP, which requires that the following four criteria must be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists: (ii) delivery has occurred and title and the risks and rewards of ownership have been transferred to the customer or services have been rendered; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. Applying these factors, the Company typically recognizes revenue from the sale of natural gas fuel at the time the fuel is dispensed. |
Income Taxes | Income Taxes The Company recognizes deferred tax liabilities and assets based on the differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. The Company’s temporary differences result primarily from depreciation. The Company evaluates its tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions will more likely than not be sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are not recorded as a tax benefit or expense in the current year. Interest and penalties, if applicable, are recorded in the period assessed as general and administrative expenses. However, no interest or penalties have been assessed for the nine months ended September 30, 2017 and 2016. Deferred income taxes are provided for temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred taxes are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of the enactment. In evaluating the ultimate realization of deferred income tax assets, management considers whether it is more likely than not that the deferred income tax assets will be realized. Management establishes a valuation allowance if it is more likely than not that all or a portion of the deferred income tax assets will not be utilized. The ultimate realization of deferred income tax assets is dependent on the generation of future taxable income, which must occur prior to the expiration of the net operating loss carryforwards. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles - Goodwill and Other (Topic 350) (“ASU 2017-04”), Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the amendments eliminate Step 2 from the goodwill impairment test. The annual, or interim, goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. The guidance is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not expect the adoption of ASU 2017-04 will have a material impact on our consolidated financial statements. In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”), Measurement of Credit Losses on Financial Instruments. The standard significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren’t measured at fair value through net income. The standard will replace today’s “incurred loss” approach with an “expected loss” model for instruments measured at amortized cost. For available-for-sale debt securities, entities will be required to record allowances rather than reduce the carrying amount, as they do today under the other-than-temporary impairment model. It also simplifies the accounting model for purchased credit-impaired debt securities and loans. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods therein. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods therein. We do not expect the adoption of ASU 2016-13 will have a material impact on our consolidated financial statements. In March 2016, FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718) (“ASU 2016-09”), Improvements to Employee Share-Based Payment Accounting. The amendments in ASU 2016-09 address multiple aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liability, and classification on the statements of cash flows. This ASU is effective for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted in any interim or annual period. An entity that elects early adoption must adopt all the amendments in the same period, and any adjustments should be reflected as of the beginning of the fiscal year that includes the interim period. We do not expect the adoption of ASU 2016-09 will have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption, but would not allow adoption any earlier than the original effective date of the standard. The Company is still assessing the impact of the amendments in this ASU; however, the disclosure will be significant to the Company. In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASU 2016-02”), which will require lessees to recognize a right-of-use asset and a lease liability for all leases that are not short-term in nature. For a lessor, the accounting applied is also largely unchanged from previous guidance. The new rules will be effective for the Company in the first quarter of 2019. The Company is in the process of evaluating the impact the amendment will have on its consolidated financial position or results of operations. |
Basis of Presentation and Sec21
Basis of Presentation and Securities Exchange (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation and Securities Exchange [Abstract] | |
Schedule of noncash or part noncash acquisitions | Cash and cash equivalents $ 3,377 Accounts payable (54,036 ) Convertible promissory note - related party (405,103 ) Reverse acquisition $ (455,762 ) |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Acquisitions [Abstract] | |
Schedule of fair value allocation of assets acquired and liabilities assumed at the acquisition date | Prepaid $ 32,118 Trademarks 164,000 Customer lists 466,000 Goodwill 936,837 Property, equipment and land 8,552,441 Deposits and other long-term assets 198,751 Derivative liability (5,821 ) Derivative liability, less current portion (76,811 ) Convertible promissory note - related party (13,550,000 ) Debt discount 3,282,485 |
Schedule of pro forma information | For the Nine Months Ended September 30, 2017 2016 Revenue $ 1,904,385 $ 1,779,093 Net loss $ (2,373,189 ) $ (2,692,046 ) Basic weighted average common shares outstanding 420,804 142,787 Basic loss per common stock $ (5.63 ) $ (18.85 ) |
Balance Sheet Disclosures (Tabl
Balance Sheet Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Balance Sheet Disclosures [Abstract] | |
Schedule of property and equipment | September 30, 2017 December 31, (Unaudited) 2016 Buildings $ 4,054,806 $ 664,276 Equipment 3,521,738 401,462 Land 975,899 - Site development - 161,467 Leasehold improvements - 46,728 Computer equipment 40,528 42,109 8,592,971 1,316,042 Less Property and equipment - accumulated depreciation (320,761 ) (213,793 ) $ 8,272,210 $ 1,102,249 |
Schedule of Intangible assets and goodwill | September 30, 2017 December 31, (Unaudited) 2016 Trademarks $ 164,000 $ - Customer lists 466,000 - Goodwill 936,837 - $ 1,566,837 $ - Less intangible assets – accumulated amortization (84,000 ) - $ 1,482,837, $ - |
Schedule of accrued expenses | September 30, 2017 December 31, (Unaudited) 2016 Professional fees $ 119,319 $ 82,386 Credit cards 25,508 32,061 FET taxes 23,187 0 Deferred rent 9,841 13,149 $ 177,855 $ 127,596 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long-Term Debt [Absract] | |
Schedule of long-term debt | September 30, December 31, 2017 2016 (Unaudited) $1,300,000 SBA note payable issued December 31, 2014, with interest at 5.50% for the first five years, then adjusted to the SBA LIBOR base rate, plus 2.35% for the remaining five years. The note required interest only payments for the first twelve months and commencing during January 2016 calls for monthly principle and interest payments of $15,288. The note matures March 2024, is secured by substantially all of the Company’s business assets and is personally guaranteed by certain members. The note is a co-borrower arrangement between Titan and El Toro with the proceeds received by El Toro. The Company issued to members 35,491 units (equivalent to 31,203 common shares) in Titan as compensation for the guarantee. The Company was in violation of certain restrictive covenants as of September 30, 2017 and December 31, 2016. $ 1,124,470 $ 1,194,989 Six subordinated senior notes payable to stockholders (“Senior Bridge Loans”) with interest at 12%. In connection with the notes payable, the note holders were issued 25,541 Class A Membership Units (equivalent to 22,455 common shares). In the event of a default the Company is required to pay the holder a stated number of Class A Membership Units on the date of default and each 90 day interval thereafter until all amounts due have been paid in full. Effective July 2016, the maturity date of the Senior Bridge Notes was extended to September 30, 2016 and allowed for an interest rate increase from 12% to 16% effective March 14, 2016. The default interest rate was increased from 15% to 18%. As part of the first amendment, the note holders received 3,359 Class A Membership Units (equivalent to 2,953 common shares) in Titan. In September 2016, the Senior Bridge Notes were amended to extend the due date to April 30, 2017 and the Company paid a fee for the extension of 1% of the outstanding principal balance to the note holders. The Company subsequently extended the maturity date of the notes to October 31, 2017. The Company paid a fee of 1% of the outstanding principal balance on the notes on or around each of January 31, 2017, April 30, 2017, and July 31, 2017 to extend the maturity date of the notes. The notes are secured by a subordinate security interest on substantially all of the Company’s assets and are personally guaranteed by two members. The Senior Bridge Notes contemplate a future conversion into equity but do not contain specific conversion terms. The Senior Bridge Notes were not extended at the maturity. See Note 10 for further discussion. However, the Company is in negotiations with the noteholders to extend the maturity date of the notes. 1,421,556 1,021,556 Nine subordinated notes payable to stockholders with interest at 12%, with maturity at December 2020, secured by a subordinate security interest on substantially all assets of the Company. During October 2017, the notes and related interest were converted to into 272,777 shares of common stock at a price of $5 per share. 1,166,373 1,166,373 Three convertible promissory notes to stockholders with interest at 12%, with maturity on or after November 2019. At the next equity financing the holder at their discretion may elect to convert the principal and interest at a conversion price equal to the price per security issued in such offering. These notes are also subject to mandatory conversion in the event that the Senior Bridge Notes and subordinated notes discussed above convert to equity, and any mandatory conversion will be on the same terms as those received by the holders of the Senior Bridge Notes and subordinated notes. The promissory notes are unsecured. 417,365 405,103 A promissory note to a former EAF member with interest at 7.5%, with maturity during December 2017, ten days after the initial closing of a private offering of capital stock of the Company in an amount not less than $10 million or at discretion of the member. 3,788,315 - Four promissory notes to former EAF members with interest at 6%, with maturity upon the earlier of July 2017 or the date of closing a private offering of at least $2 million. These notes are currently in default. However, the Company is in negotiations with the noteholders to extend the maturity date of these notes. 250,000 - Four promissory notes to former EAF members with interest at 1.5%, with maturity during February 2026. The promissory notes are convertible into 1,400,000 shares. These convertible promissory notes are secured by substantially all of the assets of EAF. The Company imputed an interest rate of 5.1% on the promissory notes. The discount is accreted over the period from the date of issuance to the date the promissory notes are due using the effective interest rate method. See note 2 above for additional discussion regarding the conversion mechanics of these convertible notes. 9,500,000 - Debt discount* (3,063,653 ) - 14,604,426 3,788,021 Less current portion (6,584,341 ) (1,142,855 ) $ 8,020,085 $ 2,645, 166 * Of our total indebtedness of approximately $17,668,000 as of September 30, 2017, approximately $6,600,000 is classified as current debt. We are in violation of certain covenants related to the SBA loan. We received a waiver with respect to those covenant violations for the year ended December 31, 2016, but have not received a waiver for current violations of these covenants as of September 30, 2017 and through the date of filing of this Form 10-Q. On February 1, 2017, pursuant to the EAF Exchange Agreement, EVO Inc. acquired all of the membership interests of EAF. As consideration for the membership interests, EVO Inc. issued convertible promissory notes to the former members of EAF in the aggregate principal amount of $9.5 million (the “Convertible Notes”). The Convertible Notes bear interest at 1.5% per year and have a maturity date of February 1, 2026. The Convertible Notes are convertible into 1,400,000 shares (the “Transaction Shares”) of EVO Inc. common stock, subject to adjustment for stock splits, combinations or similar transactions, which represents approximately 81.1% of EVO Inc.’s total outstanding shares of common stock on a post-transaction basis. Accordingly, the conversion of the Convertible Notes would result in a change in control of the Company. The number of Transaction Shares will be increased to equal 70% of the issued and outstanding shares of EVO Inc. common stock if the issuance of common stock pursuant to a private offering of common stock of up to $2 million and the conversion into common stock of EVO Inc.’s subordinated notes payable to members, Senior Bridge Notes, convertible promissory notes, and certain accounts payable would otherwise cause the Transaction Shares to represent less than 70% of the issued and outstanding common stock. |
Schedule of annual maturities of long-term debt | Year Ending December 31, Related Party Notes Other Notes Total At September 30, 2017 $ 5,459,871 $ 1,124,470 $ 6,584341 2018 - - - 2019 417,365 - 417,365 2020 1,166,373 - 1,166,373 2021 - - - Thereafter 9,500,000 - 9,500,000 $ 16,543,609 $ 1,124,470 $ 17,668,079 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments [Abstract] | |
Summary of fair value derivatives recorded in the consolidated balance sheets | Fair Value at September 30, 2017 Current commodity derivative liability $ 21,669 Long-term commodity derivative liability 13,753 - Total derivative liability $ 35,422 - |
Summary of open derivative positions outstanding | Type Term Volume Hedged (Dth) Index Fixed Price Swap March 2015 - February 2019 95,000 NYM-LDS $ 3.82 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements [Abstract] | |
Schedule of financial liabilities fair value on a recurring basis | Description Level 1 Level 2 Level 3 Total Liability Derivative liability $ - $ 35,422 $ - $ 35,422 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum lease payments | Years Ending December 31, Nine months ended September 30, 2017 Remainder of 2017 $ 35,000 2018 139,000 2019 23,000 $ 197,000 |
Basis of Presentation and Sec28
Basis of Presentation and Securities Exchange (Details) - USD ($) | 1 Months Ended | 9 Months Ended |
Nov. 22, 2016 | Sep. 30, 2017 | |
Noncash or Part Noncash Acquisitions [Line Items] | ||
Cash and cash equivalents | $ 3,377 | |
Accounts payable | (54,036) | |
Convertible promissory note - related party | (405,103) | |
Reverse acquisition | $ (455,762) | |
Basis of Presentation and Securities Exchange Agreement [Member] | ||
Noncash or Part Noncash Acquisitions [Line Items] | ||
Cash and cash equivalents | $ 3,377 | |
Accounts payable | (54,036) | |
Convertible promissory note - related party | (405,103) | |
Reverse acquisition | $ (455,762) |
Basis of Presentation and Sec29
Basis of Presentation and Securities Exchange (Details Textual) - USD ($) $ / shares in Units, $ in Millions | Apr. 06, 2017 | Nov. 22, 2016 | Sep. 30, 2017 | Dec. 31, 2016 |
Basis of Presentation and Securities Exchange (Textual) | ||||
Common stock, par value | $ 0.0001 | $ 0.0001 | ||
Stockholders equity reverse stock split | The Company effected a 50-for-1 reverse stock split of its common stock pursuant to which each 50 shares of issued and outstanding common stock became one share of common stock (the "Reverse Split"). No fractional shares were issued as a result of the Reverse Split. | |||
Description of acquisition | The Company acquired EAF, which was financed through approximately $13.6 million of debt, of which $3.8 million is contemplated to be repaid through a successful secondary offering before the December 31, 2017 due date. | |||
Working capital deficit | $ 8.4 | |||
Securities Exchange Agreement [Member] | ||||
Basis of Presentation and Securities Exchange (Textual) | ||||
Common stock shares acquired | 248,481 | |||
Ownership percentage equity | 91.25% | |||
Common stock, par value | $ 0.0001 | |||
Common stock shares converted | 248,481 |
Description of Business and S30
Description of Business and Summary of Significant Accounting Policies (Details) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017shares | Sep. 30, 2017USD ($)Customers | Sep. 30, 2016Customersshares | |
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Loss recognised on impairment of assets | $ | $ 679,535 | ||
Securities totaling | shares | 103,333 | 0 | |
Property, Equipment and Land [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Loss recognised on impairment of assets | $ | $ 679,535 | ||
Minimum [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful life | 5 years | ||
Maximum [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Property and equipment estimated useful life | 40 years | ||
Revenues [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Percentage of concentrations of credit risk | 84.00% | 13.00% | |
Number of customers | Customers | 4 | 1 | |
Accounts receivable [Member] | |||
Description of Business and Summary of Significant Accounting Policies (Textual) | |||
Percentage of concentrations of credit risk | 84.00% | ||
Number of customers | Customers | 4 |
Acquisitions (Details)
Acquisitions (Details) - EAF [Member] | Feb. 01, 2017USD ($) |
Business Acquisition [Line Items] | |
Prepaid | $ 32,118 |
Trademarks | 164,000 |
Customer lists | 466,000 |
Goodwill | 936,837 |
Property, equipment and land | 8,552,441 |
Deposits and other long-term assets | 198,751 |
Derivative liability | (5,821) |
Derivative liability, less current portion | (76,811) |
Convertible promissory note - related party | (13,550,000) |
Debt discount | $ 3,282,485 |
Acquisitions (Details 1)
Acquisitions (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Unaudited pro forma information | ||
Revenue | $ 1,904,385 | $ 1,779,093 |
Net loss | $ (2,373,189) | $ (2,692,046) |
Basic weighted average common shares outstanding | 420,804 | 142,787 |
Basic loss per common stock | $ (5.63) | $ (18.85) |
Acquisitions (Details Textual)
Acquisitions (Details Textual) - USD ($) | Jan. 30, 2017 | Feb. 01, 2017 |
Acquisitions (Textual) | ||
Principal amount | $ 3,800,000 | |
Interest rate | 7.50% | |
Default interest rate | 12.50% | |
Debt instrument maturity, description | (a) the date that is ten days after the initial closing of a private offering of capital stock of EVO, Inc. in an amount not less than $10 million (a "Private Offering"); (b) December 31, 2017 or a (c) declaration by the noteholder of an event of default under the Senior Promissory Note. | |
Aggregate principal amount | $ 9,500,000 | |
Convertible notes bearing interest rate | 1.50% | |
Convertible notes, maturity date | Feb. 1, 2026 | |
Convertible shares | 1,400,000 | |
Debt conversion, description | Each holder's conversion option is subject to a monthly limit of the number of shares of Common Stock equal to 10% of the thirty day average trading volume of shares of Common Stock during the prior calendar month. The Convertible Notes are also subject to mandatory conversion at the Company's option beginning on the first anniversary of the date of issuance of the Convertible Notes if: (i) the closing price of the Common Stock is greater than (A) 150% of the price at which a share of Common Stock is sold in a Private Offering or (B) $10.00 if a Private Offering has not occurred by December 31, 2017 and (ii) the average daily trading volume of shares of Common Stock has equaled 100,000 or more for the 30 days prior to the applicable date. Upon a conversion of the Convertible Notes, accrued interest may also be converted at the greater of (i) the amount of interest to be converted divided by the exchange ratio of 0.1357, subject to adjustment for stock splits or combinations, or (ii) the amount of interest to be converted divided by the closing price of the Common Stock on the trading day preceding the conversion date. | |
Conversion ratio | 0.1357 | |
Debt instrument, description | The number of Transaction Shares will be increased to equal 70% of the issued and outstanding Common Stock if the issuance of Common Stock pursuant to a private offering of Common Stock of up to $2 million and the conversion of Minn Shares' and Titan's junior bridge notes, senior bridge notes, convertible promissory notes, and certain accounts payable into Common Stock would otherwise cause the Transaction Shares to represent less than 70% of the issued and outstanding Common Stock. | |
Percentage of outstanding common stock | 81.10% | |
Exchange Agreement [Member] | ||
Acquisitions (Textual) | ||
Principal amount | $ 4,000,000 | |
Interest rate | 7.50% | 6.00% |
Default interest rate | 12.50% | 11.00% |
Debt instrument maturity, description | (a) February 1, 2020 and (b) declaration by the noteholder of an event of default under the EAF Note. | (a) The closing of a Private Offering; (b) 180 days from the date of the notes and (c) declaration by a holder of an event of default under the holder's note (the "Working Capital Notes"). |
Aggregate principal amount | $ 250,000 |
Balance Sheet Disclosures (Deta
Balance Sheet Disclosures (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property and equipment | ||
Buildings | $ 4,054,806 | $ 664,276 |
Equipment | 3,521,738 | 401,462 |
Land | 975,899 | |
Site development | 161,467 | |
Leasehold improvements | 46,728 | |
Computer equipment | 40,528 | 42,109 |
Property and equipment, gross | 8,592,971 | 1,316,042 |
Less Property and equipment - accumulated depreciation | (320,761) | (213,793) |
Property and equipment | $ 8,272,210 | $ 1,102,249 |
Balance Sheet Disclosures (De35
Balance Sheet Disclosures (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 1,566,837 | |
Less intangible assets - accumulated amortization | (84,000) | |
Intangibles assets, net | 1,482,837 | |
Goodwill [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 936,837 | |
Trademarks [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | 164,000 | |
Customer Lists [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 466,000 |
Balance Sheet Disclosures (De36
Balance Sheet Disclosures (Details 2) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Accrued expenses | ||
Professional fees | $ 119,319 | $ 82,386 |
Credit cards | 25,508 | 32,061 |
FET taxes | 23,187 | 0 |
Deferred rent | 9,841 | 13,149 |
Accrued expenses | $ 177,855 | $ 127,596 |
Balance Sheet Disclosures (De37
Balance Sheet Disclosures (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Balance Sheet Disclosures (Textual) | ||||
Depreciation expense | $ 116,853 | $ 51,312 | $ 499,639 | $ 153,936 |
Amortization expense | $ 31,500 | $ 84,000 | ||
Amortization expense for intangibles, description | Amortization expense for the intangibles will be approximately $126,000 annually through 2022 and $21,000 in 2023 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Related Party Transactions (Textual) | ||
Accounts payable - related party | $ 410,336 | $ 261,060 |
Accrued interest - related party | 461,655 | 164,368 |
EAF [Member] | ||
Related Party Transactions (Textual) | ||
Advanced from related party | $ 70,258 | |
Titan [Member] | ||
Related Party Transactions (Textual) | ||
Advanced from related party | 2,000 | |
El Toro [Member] | ||
Related Party Transactions (Textual) | ||
Advanced from related party | $ 35,500 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | |
Extinguishment of Debt [Line Items] | |||
Long term debt gross | $ 1,073,690 | ||
Debt discount | [1] | 3,063,653 | 0 |
Less current portion | 1,124,470 | 121,299 | |
Long-term debt | 8,020,085 | 2,645,166 | |
Long-term debt [Member] | Three convertible promissory notes [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | 417,365 | 405,103 | |
Long-term debt [Member] | Promissory notes [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | 3,788,315 | ||
Long-term debt [Member] | Four promissory notes [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | 250,000 | ||
Long-term debt [Member] | Four promissory notes one [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | 9,500,000 | ||
Long-term debt [Member] | SBA note payable [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | 1,124,470 | 1,194,989 | |
Long-term debt [Member] | Six subordinated senior notes payable [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | 1,421,556 | 1,021,556 | |
Long-term debt [Member] | Nine subordinated notes payable [Member] | |||
Extinguishment of Debt [Line Items] | |||
Long term debt gross | $ 1,166,373 | $ 1,166,373 | |
[1] | Of our total indebtedness of approximately $17,668,000 as of September 30, 2017, approximately $6,600,000 is classified as current debt. We are in violation of certain covenants related to the SBA loan. We received a waiver with respect to those covenant violations for the year ended December 31, 2016, but have not received a waiver for current violations of these covenants as of September 30, 2017 and through the date of filing of this Form 10-Q. On February 1, 2017, pursuant to the EAF Exchange Agreement, EVO Inc. acquired all of the membership interests of EAF. As consideration for the membership interests, EVO Inc. issued convertible promissory notes to the former members of EAF in the aggregate principal amount of $9.5 million (the "Convertible Notes"). The Convertible Notes bear interest at 1.5% per year and have a maturity date of February 1, 2026. The Convertible Notes are convertible into 1,400,000 shares (the "Transaction Shares") of EVO Inc. common stock, subject to adjustment for stock splits, combinations or similar transactions, which represents approximately 81.1% of EVO Inc.'s total outstanding shares of common stock on a post-transaction basis. Accordingly, the conversion of the Convertible Notes would result in a change in control of the Company. The number of Transaction Shares will be increased to equal 70% of the issued and outstanding shares of EVO Inc. common stock if the issuance of common stock pursuant to a private offering of common stock of up to $2 million and the conversion into common stock of EVO Inc.'s subordinated notes payable to members, Senior Bridge Notes, convertible promissory notes, and certain accounts payable would otherwise cause the Transaction Shares to represent less than 70% of the issued and outstanding common stock. |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) | Sep. 30, 2017USD ($) |
Extinguishment of Debt [Line Items] | |
At September 30, 2017 | $ 6,584,341 |
2,018 | |
2,019 | 417,365 |
2,020 | 1,166,373 |
2,021 | |
Thereafter | 9,500,000 |
Long-term debt | 17,668,079 |
Related Party Notes [Member] | |
Extinguishment of Debt [Line Items] | |
At September 30, 2017 | 5,459,871 |
2,018 | |
2,019 | 417,365 |
2,020 | 1,166,373 |
2,021 | |
Thereafter | 9,500,000 |
Long-term debt | 16,543,609 |
Other Notes [Member] | |
Extinguishment of Debt [Line Items] | |
At September 30, 2017 | 1,124,470 |
2,018 | |
2,019 | |
2,020 | |
2,021 | |
Thereafter | |
Long-term debt | $ 1,124,470 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) | Nov. 07, 2017 | Oct. 01, 2017 | Oct. 31, 2017 | Feb. 01, 2017 | Jan. 31, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2014 |
Long-Term Debt (Textual) | ||||||||
Long term subordinated convertible notes payable to stockholders | $ 1,166,373 | $ 1,166,373 | ||||||
Note payable, description | Total indebtedness of approximately $17,668,000 as of September 30, 2017, approximately $6,600,000 is classified as current debt. | |||||||
Interest rate | 7.50% | |||||||
Note payable maturity, description | (a) the date that is ten days after the initial closing of a private offering of capital stock of EVO, Inc. in an amount not less than $10 million (a "Private Offering"); (b) December 31, 2017 or a (c) declaration by the noteholder of an event of default under the Senior Promissory Note. | |||||||
Interest rate on promissory notes | 12.50% | |||||||
Notes convert in to shares | 1,400,000 | |||||||
Principal amount | $ 3,800,000 | |||||||
Percentage of outstanding common stock | 70.00% | |||||||
Convertible debt | $ 9,500,000 | |||||||
Debt discount | 4,936,611 | |||||||
Accretion Discount | $ 3,063,653 | |||||||
Subsequent Event [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Maturity date | Oct. 31, 2017 | |||||||
Number of units equivalent to common shares | 272,777 | |||||||
Evo Inc [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Interest rate | 81.10% | |||||||
Interest rate on promissory notes | 70.00% | |||||||
Convertible note shares | 1,400,000 | |||||||
Conversion of common stock | $ 2,000,000 | |||||||
Three convertible promissory notes [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Maturity date | Nov. 30, 2019 | |||||||
Interest rate | 12.00% | |||||||
Promissory notes [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Long term subordinated convertible notes payable to stockholders | $ 10,000,000 | |||||||
Maturity date | Feb. 1, 2026 | Dec. 31, 2017 | ||||||
Interest rate | 7.50% | |||||||
Note payable maturity, description | Ten days after the initial closing of a private offering of capital stock of the Company in an amount not less than $10 million or at discretion of the member. | |||||||
Interest rate on promissory notes | 1.50% | |||||||
Principal amount | $ 9,500,000 | |||||||
Convertible debt | $ 4,563,389 | |||||||
Four promissory notes [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Maturity date | Jul. 31, 2017 | |||||||
Interest rate | 6.00% | |||||||
Conversion of common stock | $ 2,000,000 | |||||||
Four promissory notes one [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Maturity date | Feb. 28, 2026 | |||||||
Interest rate | 1.50% | |||||||
Interest rate on promissory notes | 5.10% | |||||||
Notes convert in to shares | 1,400,000 | |||||||
SBA note payable [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Long term subordinated convertible notes payable to stockholders | $ 1,300,000 | |||||||
Note payable, description | $1,300,000 SBA note payable issued December 31, 2014, with interest at 5.50% for the first five years, then adjusted to the SBA LIBOR base rate, plus 2.35% for the remaining five years. | |||||||
Maturity date | Mar. 31, 2024 | |||||||
Issued in units | 35,491 | |||||||
Number of units equivalent to common shares | 31,203 | |||||||
Principle and interest payments | $ 15,288 | |||||||
Six subordinated senior notes payable [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Note payable, description | The Company subsequently extended the maturity date of the notes to October 31, 2017. The Company paid a fee of 1% of the outstanding principal balance on the notes on or around each of January 31, 2017, April 30, 2017, and July 31, 2017 to extend the maturity date of the notes. The notes are secured by a subordinate security interest on substantially all of the Company's assets and are personally guaranteed by two members. | |||||||
Issued in units | 25,541 | |||||||
Number of units equivalent to common shares | 22,455 | |||||||
Interest rate | 12.00% | |||||||
Description of interest rate | Effective July 2016, the maturity date of the Senior Bridge Notes was extended to September 30, 2016 and allowed for an interest rate increase from 12% to 16% effective March 14, 2016. The default interest rate was increased from 15% to 18%. As part of the first amendment, the note holders received 3,359 Class A Membership Units (equivalent to 2,953 common shares) in Titan. In September 2016, the Senior Bridge Notes were amended to extend the due date to April 30, 2017 and the Company paid a fee for the extension of 1% of the outstanding principal balance to the note holders. | |||||||
Six subordinated senior notes payable [Member] | Class A Membership [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Issued in units | 3,359 | |||||||
Number of units equivalent to common shares | 2,953 | |||||||
Nine subordinated notes payable [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Maturity date | Dec. 31, 2020 | |||||||
Interest rate | 12.00% | |||||||
Nine subordinated notes payable [Member] | Subsequent Event [Member] | ||||||||
Long-Term Debt (Textual) | ||||||||
Notes convert in to shares | 272,777 | |||||||
Common stock, per share | $ 5 |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Current commodity derivative liability | $ 21,669 | |
Long-term commodity derivative liability | 13,753 | |
Total derivative liability | $ 35,422 |
Derivative Instruments (Detai43
Derivative Instruments (Details 1) | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Derivative Instruments [Abstract] | |
Derivative instruments, Type | Swap |
Derivative instruments, Term | March 2015 - February 2019 |
Derivative instruments, Volume hedged (Dth) | $ 95,000 |
Derivative instruments, Index | NYM-LDS |
Derivative instruments, Fixed Price ($/Dth) | 3.82% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) | Sep. 30, 2017USD ($) |
Liability | |
Derivative liability | $ 35,422 |
Level 1 [Member] | |
Liability | |
Derivative liability | |
Level 2 [Member] | |
Liability | |
Derivative liability | 35,422 |
Level 3 [Member] | |
Liability | |
Derivative liability |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | Apr. 06, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders Equity (Textual) | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |
Common stock, par value | $ 0.0001 | $ 0.0001 | |
Common stock, shares issued | 420,804 | 317,207 | |
Common stock, shares outstanding | 420,804 | 317,207 | |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |
Preferred stock, par value | $ 0.0001 | $ 0.0001 | |
Preferred stock, shares issued | |||
Preferred stock, shares outstanding | |||
Reverse stock split, description | The Company effected a 50-for-1 reverse stock split of its common stock pursuant to which each 50 shares of issued and outstanding common stock became one share of common stock (the "Reverse Split"). No fractional shares were issued as a result of the Reverse Split. | ||
Common stock shares issued | 103,333 | ||
Common stock, per share | $ 3 | ||
Predecessor cost | $ 104,179 |
Commitments and Contingencies46
Commitments and Contingencies (Details) | Sep. 30, 2017USD ($) |
Future minimum lease payments | |
Remainder of 2017 | $ 35,000 |
2,018 | 139,000 |
2,019 | 23,000 |
Total | $ 197,000 |
Commitments and Contingencies47
Commitments and Contingencies (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Jun. 30, 2016 | Nov. 30, 2014 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2015 | Feb. 01, 2017 | Dec. 31, 2016 | Dec. 31, 2013 | |
Commitments and Contingencies (Textual) | ||||||||
Rent expense | $ 95,000 | $ 95,000 | ||||||
CNG purchase | $ 545,000 | |||||||
Operating lease, description | Titan entered into an operating lease agreement which expires in February 2019, with an option to extend to February 2024. | |||||||
Percentage of note bears interest | 12.50% | |||||||
Contingent Liability [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
Maturity date | Feb. 1, 2020 | |||||||
Percentage of note bears interest | 7.50% | |||||||
Guarantor loan from related party | $ 4,000,000 | |||||||
Walters Recycling and Refuse Station [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
CNG purchase | $ 144,000 | |||||||
Minnesota [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
Monthly rental payments | $ 977 | |||||||
El Toro [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
Monthly rental payments range, description | The monthly payments range from $10,000 to $11,604. | |||||||
SCAQMD [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
Grant amount | $ 150,000 | |||||||
Amount of lease property | $ 1 | |||||||
Operating lease, description | Within 180 days from the contract execution, Diamond Bar, using its best efforts, shall sell any surplus assets and provide SCAQMD with 90% of the net proceeds, as defined. To date Diamond Bar has not had any surplus assets to sell. | |||||||
Lease contract term, description | The contract ends December 31, 2020. SCAQMD can extend the contract for a period not to exceed five years starting January 1, 2021 at no additional cost. Either party may terminate the contract with sixty days' notice. | |||||||
California Energy Commission [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
Grant amount | $ 300,000 | |||||||
Texas Commission [Member] | ||||||||
Commitments and Contingencies (Textual) | ||||||||
Grant amount | $ 400,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | Nov. 07, 2017 | Oct. 01, 2017 |
Subsequent Events (Textual) | ||
Principal amount | $ 1,222,000 | |
Accrued interest | $ 200,000 | |
Maturity date | Oct. 31, 2017 | |
Conversion of notes into shares, value | $ 1,363,858 | |
Conversion of notes into shares, shares | 272,777 | |
Share price | $ 5 |