Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 07, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'POWERVERDE, INC. | ' |
Entity Central Index Key | '0000933972 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 31,750,106 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash and cash equivalents | $58,749 | $48,306 |
Accounts receivable | 73,398 | 49,844 |
Employee advances | 18,292 | 19,292 |
Prepaid expenses | 37,228 | 18,366 |
Total Current Assets | 187,667 | 135,808 |
Property and Equipment | ' | ' |
Property and equipment, net of accumulated depreciation of $49,792 and $38,616, respectively | 57,849 | 55,434 |
Other Assets | ' | ' |
Intellectual Property, net of accumulated amortization of $549,533 and $384,673 | 109,906 | 274,767 |
Total Assets | 355,422 | 466,009 |
Current Liabilities | ' | ' |
Accounts payable and accrued expenses | 140,230 | 43,575 |
Payable to related parties | 43,400 | 163,965 |
Notes payable to related parties | 378,361 | 314,140 |
Total Liabilities | 561,991 | 521,680 |
Stockholders' Deficiency | ' | ' |
Common stock: 100,000,000 common shares authorized, par value $0.0001 per share, 31,750,106 common shares issued and outstanding at September 30,2014 and 27,600,106 common shares issued and outstanding at December 31, 2013 | 3,981 | 3,567 |
Additional paid-in capital | 11,505,751 | 11,098,665 |
Treasury stock, 8,550,000 shares at cost on September 30, 2014 and December 31, 2013 | -491,139 | -491,139 |
Deficit accumulated in the development stage | -11,225,162 | -10,666,764 |
Total Stockholders' Deficiency | -206,569 | -55,671 |
Total Liabilities and Stockholders' Deficiency | $355,422 | $466,009 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Condensed Consolidated Balance Sheets Parenthetical | ' | ' |
Accumulated depreciation of property and equipment (in Dollars) | $49,792 | $38,616 |
Accumulated amortization of intellectual property (in Dollars) | $549,533 | $384,673 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value (in Dollars per share) | $0.00 | $0.00 |
Common stock, shares issued | 31,750,106 | 27,600,106 |
Common stock, shares outstanding | 31,750,106 | 27,600,106 |
Treasury stock, shares | 8,550,000 | 8,550,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | 91 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | |
Income Statement [Abstract] | ' | ' | ' | ' | ' |
Revenue, Net | $73,398 | $128,614 | $239,527 | $309,517 | $1,077,338 |
Cost of Goods Sold | ' | ' | ' | ' | 136,925 |
Gross Profit | 73,398 | 128,614 | 239,527 | 309,517 | 940,413 |
Operating Expenses | ' | ' | ' | ' | ' |
Research and development | 45,778 | 67,502 | 308,374 | 381,064 | 4,096,919 |
General and administrative | 137,848 | 107,413 | 393,170 | 749,917 | 4,887,859 |
Goodwill impairment | ' | ' | ' | ' | 2,637,760 |
Total Operating Expenses | 183,626 | 174,915 | 701,544 | 1,130,981 | 11,622,538 |
Loss from Operations | -110,228 | -46,301 | -462,017 | -821,464 | -10,682,125 |
Other Income (Expenses) | ' | ' | ' | ' | ' |
Interest income | ' | ' | ' | ' | 2,401 |
Interest expense | -32,825 | -33,671 | -96,381 | -75,431 | -601,449 |
Other income (expenses) | ' | -40,000 | ' | 4,750 | 56,011 |
Total Other Income (Expense) | -32,825 | -73,671 | -96,381 | -70,681 | -543,037 |
Loss before Income Taxes | -143,053 | -119,972 | -558,398 | -892,145 | -11,225,162 |
Provision for Income Taxes | ' | ' | ' | ' | ' |
Net Loss | ($143,053) | ($119,972) | ($558,398) | ($892,145) | ($11,225,162) |
Net Loss per Share - Basic and Diluted | ' | ' | ($0.01) | ($0.03) | ' |
Weighted Average Common Shares Outstanding - Basic and Diluted | 31,674,454 | 27,425,524 | 30,417,102 | 26,626,735 | ' |
Consolidated_Statement_of_Chan
Consolidated Statement of Changes in Stockholders' Deficiency (USD $) | 9 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | |
Common Stock [Member] | Additional Paid-In Capital [Member] | Treasury Stock [Member] | Treasury Stock [Member] | Deficit Accumulated during the Development Stage [Member] | ||
Balance | ($55,671) | $3,567 | $11,098,665 | ($491,139) | ($491,139) | ($10,666,764) |
Balance, Shares | ' | 27,600,106 | ' | ' | ' | ' |
Sale of common stock | 407,500 | 414 | 407,086 | ' | ' | ' |
Sale of common stock, shares | ' | 4,150,000 | ' | ' | ' | ' |
Net loss for the nine months ended September 30, 2014 | -558,398 | ' | ' | ' | ' | -558,398 |
Balance | ($206,569) | $3,981 | $11,505,751 | ($491,139) | ($491,139) | ($11,225,162) |
Balances, Shares | ' | 31,750,106 | ' | ' | ' | ' |
Consolidated_Statement_of_Chan1
Consolidated Statement of Changes in Stockholders' Deficiency (Parenthetical) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Stockholders' Deficiency | ' |
Sale of common stock price per share | $0.10 |
Stock issuance costs | $7,500 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | 91 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | |
Cash Flows from Operating Activities | ' | ' | ' |
Net loss | ($558,398) | ($892,145) | ($11,225,162) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Depreciation and amortization | 176,037 | 170,632 | 599,326 |
Amortization of debt discount | 64,221 | 31,882 | 505,207 |
Stock based compensation | ' | 121,237 | 1,302,767 |
Common stock issued for services | ' | 124,750 | 124,750 |
Goodwill impairment | ' | ' | 2,637,760 |
Warrants issued for services | ' | 210,000 | 822,150 |
Warrants issued for settlement | ' | ' | 262,700 |
Gain on re-measurement of derivative liability | ' | -4,750 | -40,000 |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable and prepaid expenses | -42,416 | 4,521 | -110,626 |
Employee advances | 1,000 | -19,292 | -18,292 |
Accounts payable and accrued expenses | 96,655 | 9,973 | -90,302 |
Payable to related parties | -20,565 | -17,797 | 132,247 |
Cash Used in Operating Activities | -283,466 | -260,989 | -5,097,475 |
Cash Flows From Investing Activities | ' | ' | ' |
Purchase of property and equipment | -13,591 | -57,719 | -107,641 |
Cash acquired in business acquisition | ' | ' | 872 |
Cash Used in Investing Activities | -13,591 | -57,719 | -106,769 |
Cash Flows from Financing Activities | ' | ' | ' |
Proceeds from issuance of common stock | 415,000 | 275,000 | 5,765,281 |
Proceeds from notes payable to related parties | ' | 75,000 | 700,000 |
Payment of line of credit | ' | ' | -50,000 |
Payment of note payable to related parties | -100,000 | ' | -371,206 |
Purchase of treasury stock | ' | ' | -320,381 |
Payment of stock issuance costs | -7,500 | ' | -460,701 |
Cash Provided by Financing Activities | 307,500 | 350,000 | 5,262,993 |
Net Increase in Cash and Cash Equivalents | 10,443 | 31,292 | 58,749 |
Cash and Cash Equivalents at Beginning of Period | 48,306 | 45,283 | ' |
Cash and Cash Equivalents at End of Period | 58,749 | 76,575 | 58,749 |
Supplemental Disclosure of Cash Flow Information | ' | ' | ' |
Cash paid during the period for interest | 19,836 | 20,705 | 60,705 |
Cash paid during the period for income taxes | ' | ' | 24,221 |
Supplemental Schedule of Non-Cash Financing Activities | ' | ' | ' |
Common stock issued for convertible debt | ' | ' | 189,261 |
Common stock issued for services | ' | 124,750 | 124,750 |
Common stock issued for acquisition of Cornerstone Conservation Group, LLC | ' | ' | 3,096,200 |
Warrants issued for services | ' | 210,000 | 201,000 |
Purchase of treasury stock with long-term related party payable | ' | ' | 242,758 |
Warrants issued in connection with debt | ' | ' | 299,984 |
Issuance of warrants as part of notes payable to related party of which $88,000 ($16,500 in Q1 2013) was classified as additional paid in capital and $88,000 ($16,500 in Q1 2013) was classified as a derivative liability | ' | 33,000 | 176,000 |
Warrants issued in connection with derivative liability | ' | ' | 48,000 |
Common stock issued in connection with debt forgiveness and services rendered | ' | ' | $250,000 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended |
Mar. 31, 2013 | Sep. 30, 2014 | |
Statement of Cash Flows [Abstract] | ' | ' |
Fair value of the common stock warrants recorded as additional paid in capital | $16,500 | $88,000 |
Fair value of the common stock warrants recorded as derivative liability | $16,500 | $88,000 |
Note_1_Condensed_Consolidated_
Note 1 - Condensed Consolidated Financial Statements | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Condensed Consolidated Financial Statements | ' |
Note 1 – Condensed Consolidated Financial Statements | |
Since 2008, the Company has focused on the development, testing and commercialization of our electric power systems, in particular, their applicability to thermal and natural gas pipeline operations. From 1991 until 2005, the Company devoted substantially all of its efforts and resources to research and development related to its unsuccessful Biotech Business. Since 2011, the Company has generated material Biotech IP licensing fees. The accompanying unaudited condensed consolidated financial statements prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Annual Report of PowerVerde, Inc. (“PowerVerde,” “we,” “us,” “our,” or the “Company”) as of and for the year ended December 31, 2013. The results of operations for the three and six months ended September 30, 2014, are not necessarily indicative of the results to be expected for the full year or for future periods. The condensed consolidated financial statements include the accounts of PowerVerde, Inc., formerly known as Vyrex Corporation (the “Company"), and PowerVerde Systems, Inc., formerly known as PowerVerde, Inc., its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation. |
Note_2_Going_Concern
Note 2 - Going Concern | 9 Months Ended |
Sep. 30, 2014 | |
Going Concern Note [Abstract] | ' |
Going Concern | ' |
Note 2 – Going Concern | |
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has had recurring operating losses and negative cash flows from operations since its inception. Those losses and negative operating cash flows have been funded through the sale of common stock and proceeds from related party advances/notes. Management expects to continue to require additional funding to support its operations. There can be no assurance that the Company will be successful in securing additional funding at commercially reasonable terms, if at all. Those factors, as well as uncertainty in securing additional funds for continued operations, create an uncertainty about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Note_3_Summary_of_Significant_
Note 3 - Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
Note 3 – Summary of Significant Accounting Policies | |
Principles of Consolidation | |
The condensed consolidated financial statements include the accounts of PowerVerde, Inc. and its wholly-owned subsidiary, PowerVerde Systems, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. | |
Development Stage Company | |
The Company is a development stage company as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915, “Development Stage Entities”. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. All losses accumulated since inception have been considered as part of the Company’s development stage activities. | |
Cash Equivalents | |
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. | |
Accounts Receivable | |
Accounts receivable consist of balances due from sales and royalties. The Company monitors accounts receivable and provides allowances when considered necessary. At September 30, 2014, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided. | |
Employee Advances | |
The employee advances represent the payroll taxes due on the issuance of common stock as compensation prior to 2014. | |
Revenue Recognition | |
Sales revenues and associated cost of sales are recognized when title of the goods sold pass to the buyer, when shipped and when accounts receivable are determined to be reasonably collectable. Certain sales agreements also require installation and training by PowerVerde once goods are received and accepted by the customer. The Company does not consider these agreements multiple elements arrangements as defined by ASC 605-25 “Revenue Recognition”, as the Company does not offer installation or training as services separate from the sale of its products at this time. Therefore, a “best estimate of selling price” or individual pricing in accordance with ASC 605-25 is undeterminable. The Company defers all revenues and costs of sales until the agreement is 100% complete. | |
Licensing and royalty revenue from royalty agreements is recognized in accordance with the terms of the specific agreement. | |
Revenues recognized under these agreements amount to 100% of total revenues of the three and nine months ended September 30, 2014 and 2013. | |
Property and Equipment | |
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred. | |
Impairment of Long-Lived Assets | |
Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. No impairment losses have been recognized during the nine months ended September 30, 2014 or 2013. | |
Stock-based Compensation | |
The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. | |
Common Stock Purchase Warrants | |
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract (if an event occurs and if that event is outside the control of the Company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). | |
Accounting for Uncertainty in Income Taxes | |
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. | |
Research and Development Costs | |
The Company’s research and development costs are expensed in the period in which they are incurred. | |
Earnings (Loss) Per Share | |
Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 5,586,000 shares and options for 2,750,000 shares were excluded from weighted average common shares outstanding on a diluted basis. | |
Financial instruments | |
The Company carries cash and cash equivalents, accounts receivable, accounts payable and accrued expenses at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature. The Company also carries notes payable to related parties at historical cost less discounts for warrants issued as loan financing costs. | |
Fair value of financial assets and liabilities | |
The Company measures the fair value of financial assets and liabilities in accordance with GAAP which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. | |
GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. GAAP describes three levels of inputs that may be used to measure fair value: | |
Level 1 – quoted prices in active markets for identical assets or liabilities | |
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable | |
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) | |
The Company generally does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain other financial instruments and contracts, such as debt financing arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value. | |
The Company uses the Black-Scholes valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to measure the fair value of these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective inputs that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the Company’s trading market price and the trading market price of various peer companies, which have historically had high volatility. Since derivative financial instruments are initially and subsequently carried at fair value, the Company’s income will reflect the volatility in these estimate and assumption changes. There were no derivative financial instruments as of and for the nine month period ended September 30, 2014. | |
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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Note_4_Recent_Accounting_Prono
Note 4 - Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
Recent Accounting Pronouncements | ' |
Note 4 – Recent Accounting Pronouncements | |
In July 2013, the FASB issued guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carry forward exists. This guidance requires the unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset. When a deferred tax asset is not available, or the asset is not intended to be used for this purpose, an entity should present the unrecognized tax benefit in the financial statements as a liability. The guidance became effective for us at the beginning of our second quarter of fiscal 2014. The adoption of this guidance did not have a material impact on our consolidated financial statements. | |
In January 2013, the FASB issued guidance clarifying the scope of disclosure requirements for offsetting assets and liabilities. The amended guidance limits the scope of balance sheet offsetting disclosures to derivatives, repurchase agreements, and securities lending transactions to the extent that they are offset in the financial statements of subject to an enforceable master netting arrangement of similar agreement. The guidance became effective for us at the beginning of our first quarter of fiscal 2014. The adoption of this guidance did not have a material impact on our consolidated financial statements. | |
On June 10, 2014, the FASB issued Accounting Standards Update No. 2014-10 (ASU 2014-10), which eliminates development stage reporting requirements under ASC 915, as well as amends provisions of existing variable interest entity guidance under ASC 810. Additionally, the ASU indicates that the lack of commencement of principal operations represents a risk and uncertainty and, accordingly, is subject to the disclosure requirements of ASC 275. As a result of the changes, existing development stage entity presentation and disclosure requirements are eliminated. For public business entities, the amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015, and interim periods therein. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued. Upon adoption, entities will no longer present or disclose any information required by Topic 915. We are currently evaluating the impact of our pending adoption of ASU 2014-10 on our consolidated financial statements. | |
In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017. | |
In August 2014, the FASB issued Accounting Standard Update ASU2014-15 Disclosure of Uncertainties about an entity’s Ability to Continue as a Going Concern. This ASU amends ASC205-40. ASC205-40 provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related note disclosures. With the amendments made by ASU 2014-15, financial statement disclosures will be required when there is substantial doubt about an entity’s ability to continue as a going concern or when substantial doubt is alleviated as a result of considerations of management’s plans. The new standard provides management with principles for evaluating whether there is substantial doubt by: providing a definition of substantial doubt, requiring an evaluation every reporting period (including interim periods), providing principles for considering the mitigating effect of management’s plans, requiring certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, requiring an express statement and other disclosures when substantial doubt is not alleviated, and requiring an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements. |
Note_5_Intellectual_Property
Note 5 - Intellectual Property | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Business Combinations [Abstract] | ' | ||||
Intellectual Property | ' | ||||
Note 5 – Intellectual Property | |||||
Intellectual property consists of technology acquired from the purchase of 100% of the membership interests of Cornerstone Conservation Group LLC (“Cornerstone”). | |||||
For the nine months ended September 30, 2014 and 2013, amortization expense was $164,860 and accumulated amortization of the intangible asset- intellectual property was $549,533 at September 30, 2014. | |||||
Future amortization of the intangible asset – intellectual property was as follows as of September 30, 2014: | |||||
Year ending December 31: | |||||
2014 (after September 30, 2014) | $ | 54,953 | |||
2015 | 54,953 | ||||
Total | $ | 109,906 |
Note_6_Stockholders_Equity
Note 6 - Stockholders' Equity | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
Stockholders' Equity | ' | ||||||||||||
Note 6 – Stockholders’ Equity | |||||||||||||
Warrants | |||||||||||||
The Company issued warrants on June 3, 2011 to various persons, including affiliates of the Company, for services provided to the Company. These warrants covered the purchase of 1,855,000 unregistered shares of the Company’s common stock at an exercise price of $1.05 per share with a five-year term. These share-based payments have been accounted for in accordance with ASC 815-40 using the Black Scholes pricing model to determine the fair value of each warrant. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
On February 3, 2012, The Company issued warrants to purchase 500,000 unregistered shares of the Company’s common stock at an exercise price of $1.00 per share with a five-year term for settlement of certain disputed amounts (See Note 10). These share-based payments have been accounted for in accordance with ASC 815-40 using the Black-Scholes pricing model to determine the fair value of each warrant. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
In connection with the acquisition of Cornerstone (See Note 5), on March 30, 2012, the Company issued warrants to purchase 300,000 unregistered shares of common stock at exercise prices ranging from $2.00 to $4.00 per share. These warrants expire at various dates through December 2017. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
During the second quarter of 2012, the Company issued warrants to purchase 335,000 unregistered shares of the Company’s common stock at an exercise price of $3.00 per share in association with stock subscription agreements. These warrants expire on various dates through 2015. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
During the third quarter of 2012, the Company issued warrants to purchase 71,000 unregistered shares of the Company’s common stock at an exercise price of $3.00 per share in association with stock subscription agreements. These warrants expire July 30, 2015. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
During the fourth quarter of 2012, the Company issued warrants to purchase 225,000 unregistered shares of the Company’s common stock at an exercise price of $1.00 per share in association with stock subscription agreements. These warrants expire October 31, 2015. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
In December 2012, the Company issued warrants to purchase 325,000 unregistered shares of the Company’s common stock at an exercise price of $0.41 per share in association with the Secured Promissory Note (See Note 8). These warrants expire December 31, 2015. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
During January 2013, the Company issued three-year warrants to purchase 75,000 unregistered shares of the Company’s common stock at an exercise price of $0.41 per share in association with the Secured Promissory Note (See Note 8). These warrants expire December 31, 2015. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
During March 2013, the Company issued its Chief Executive Officer and Chief Financial Officer five –year warrants to purchase common stock at an exercise price of $0.30 per share (market price on date of grant) in the amounts of 1,000,000 and 500,000 shares, respectively. The Company recognized $210,000 in compensation expense. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
On December 1, 2013, the Company issued additional three-year warrants to purchase 400,000 unregistered shares of the Company’s common stock at an exercise price equal to $0.21 per share (the average closing price of the common stock during the 10 trading days prior to December 1, 2013). This was in association with the Secured Promissory Note (See Note 8). These warrants expire December 31, 2016. As of September 30, 2014, all of these warrants were outstanding. | |||||||||||||
Expenses related to warrants issued in conjunction with settlement of certain disputes are included in the condensed statement of operations. | |||||||||||||
A summary of warrants issued, exercised and expired during the nine months ended September 30, 2014 is as follows: | |||||||||||||
Shares | Weighted Average Exercise Price | ||||||||||||
Aggregate Intrinsic Value | |||||||||||||
Balance at December 31, 2013 | 7,586,000 | $ | 0.92 | $ | 45,000 | ||||||||
Issued | — | — | — | ||||||||||
Expired | (2,000,000 | ) | (.75 | ) | — | ||||||||
Balance at September 30, 2014 | 5,586,000 | $ | 0.99 | $ | 45,000 | ||||||||
Common Stock Issued for Services | |||||||||||||
In the first quarter of 2013, the Company issued 125,000 common shares to a third party for six months consulting services and 200,000 common shares were issued to an employee as part of his compensation package. Expenses of $113,292 and $11,458, were recognized in the first and second quarter of 2013, respectively, and are included in the general and administrative expenses on the condensed consolidated statement of operations for the nine months ended September 30, 2013. | |||||||||||||
Private Placement of Common Stock | |||||||||||||
In the second quarter of 2013, the Company raised gross proceeds of $125,000 through private placement of 500,000 unregistered shares of common stock to accredited investors at $.25 per share. | |||||||||||||
In the third quarter of 2013, the Company raised gross proceeds of $150,000 through private placement of 600,000 unregistered shares of common stock to accredited investors at $.25 per share. | |||||||||||||
In the fourth quarter of 2013, the Company raised gross proceeds of $25,000 through private placement of 100,000 unregistered shares of common stock to accredited investors at $.25 per share. | |||||||||||||
In the first quarter of 2014, the Company raised gross proceeds of $240,000 through private placement of 2,400,000 unregistered shares of common stock to accredited investors at $.10 per share. | |||||||||||||
In the second quarter of 2014, the Company raised gross proceeds of $75,000 through private placement of 750,000 unregistered shares of common stock to accredited investors at $.10 per share. | |||||||||||||
In the third quarter of 2014, the Company raised gross proceeds of $100,000 through private placement of 1,000,000 unregistered shared of common stock to accredited investors at $.10 per share. | |||||||||||||
Treasury Shares | |||||||||||||
In May 2012, the Company purchased 450,000 shares of its common stock from its Co-Founder and Director Fred Barker at a price of $0.20 per share. Of the $90,000 purchase price, $10,000 was paid at closing and the balance was payable $10,000 per month through January 2013. As of September 30, 2014, the Company has paid the debt in full and has no further obligations. | |||||||||||||
On October 16, 2012, 3,000,000 shares of the Company’s stock were surrendered to Treasury by Company Co-Founder and former President and Director George Konrad, in exchange for $530,000, $100,000 of which is due in six equal monthly installments, beginning on November 16, 2012. The Company only made one of the required payments during 2013 and the payment schedule was renegotiated in the first quarter of 2014. The payable had a balance of $100,000, including accrued interest, as of December 31, 2013 and is included in the “Payable to related parties” in the accompanying consolidated condensed balance sheets. The $100,000 debt was paid in the first quarter of 2014. |
Note_7_Stock_Options
Note 7 - Stock Options | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||
Stock Options | ' | ||||||||||||
Note 7 – Stock Options | |||||||||||||
Stock option activity for the nine months ended September 30, 2014, is summarized as follows: | |||||||||||||
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||
Options outstanding at December 31, 2013 | 2,750,000 | $ | 0.78 | 7 | |||||||||
Granted | — | — | — | ||||||||||
Expired/forfeited | — | — | — | ||||||||||
Options outstanding at September 30, 2014 | 2,750,000 | $ | 0.78 | 6 | |||||||||
Total stock option compensation for the nine months ended September 30, 2014 and 2013 was $0 and $121,237, respectively. There is no unrecognized stock compensation expense at September 30, 2014. |
Note_8_Notes_Payable_to_Relate
Note 8 - Notes Payable to Related Parties | 9 Months Ended |
Sep. 30, 2014 | |
Notes Payable [Abstract] | ' |
Notes Payable to Related Parties | ' |
Note 8 - Notes Payable to Related Parties | |
In the fourth quarter of 2012, in an effort to raise capital, the Company entered into various Secured Promissory Note agreements with accredited investors, who are also existing stockholders of the Company. As of June 30, 2013, $400,000 was raised, of which $75,000 was raised in the first quarter 2013. Upon closing, the Company issued to the investors three-year warrants for the purchase of 400,000 shares (in the aggregate) of the Company’s common stock at a price of $.41 per share. On December 1, 2013, the Company issued additional three-year warrants for 400,000 shares to the investors at an exercise price of $.21 per share pursuant to the agreements with the investors, (the average price of the common stock during the 10 trading days prior to December 1, 2013). | |
The promissory notes bear interest at the rate of 10% per annum based on a 365-day year. Accrued interest will be paid semi-annually on June 30, 2013, December 31, 2013, June 30, 2014, and December 31, 2014. The entire principal balance of the Note, together with all unpaid interest accrued thereon, shall be due and payable on December 31, 2014. In the event the Company defaults on interest and/or principal payments, the Company will use all accounts receivable obtained now or hereafter existing, pursuant to the License Agreement from VDF FutureCeuticals Inc. (the “Licensee”), as collateral. Accrued interest of $10,082 through September 30, 2014 is included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets. | |
The Company analyzed the terms of the warrants based on the provisions of ASC 480, “Distinguishing Liabilities from Equity,” and determined that the warrants issued in conjunction with the closing of the notes payable qualified for equity accounting. The warrants that the Company had been committed to issue had been classified as derivative liabilities until issuance at December 1, 2013. At this point, the Company determined that the warrants qualified as equity accounting and as such the Company reclassified the fair value of the derivative liability to equity at December 1, 2013. | |
Under guidance in ASC 470, the Company allocated the $400,000 in proceeds proportionately between the Secured Promissory Note and the common stock warrants issued to the note holders based on their relative fair values. The relative fair value of the common stock warrants of $176,000, of which $88,000 ($16,500 in Q1 2013) was recorded as additional paid in capital and $88,000 ($16,500 in Q1 2013) was recorded as a derivative liability. The Secured Promissory Note was recorded at the principal amount of $400,000 less a discount of $176,000. This discount is being amortized to interest expense over the term of the Secured Promissory Note to related parties using the effective interest method. The fair value of the common stock warrants issued in conjunction with the Secured Promissory Notes was determined using the Black-Scholes pricing model. The Company determined the fair value of its common stock warrants to be $0.22 per warrant issued with an exercise price of $0.41 per warrant. Unamortized debt discount amounts to $21,639 and $85,860 as of September 30, 2014 and December 31, 2013, respectively. | |
On May 19, 2013, the Company entered into a Promissory Note with Edward Gomez, a Company shareholder, for $30,000. The promissory note bears interest at the rate of 10% per annum based on a 365-day year. The entire principal balance, along with the accrued interest was due on May 19, 2014. | |
On May 5, 2014, the Company entered into a Note Extension Agreement with Mr. Gomez to extend the maturity date of the principal balance to May 19, 2015 and paid the accrued interest of $3,000 through May 19, 2014. |
Note_9_Commitments_and_Conting
Note 9 - Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Commitments and Contingencies | ' |
Note 9 - Commitments and Contingencies | |
On September 29, 2011, the Company entered into a license agreement (the “License Agreement”) with Newton Investments BV. Pursuant to the License Agreement, Newton would, for a period of 10 years, hold the exclusive manufacturing and distribution rights for the Company’s systems (the “Systems”) in the 27 countries which are currently members of the European Union, subject to Newton’s achieving minimum sales of at least 100 Systems per year beginning in the second year of the License Agreement, payment of a royalty equal to 20% of the gross sales price of each System sold, and other terms and conditions set forth in the License Agreement. Due to ongoing technical problems with the Company’s Systems, the Company deferred commencement of the minimum sales requirement until the problems were resolved. On July 30, 2014, Newton terminated the License Agreement. | |
On October 25, 2012, the Company entered into a consulting agreement with Hank Leibowitz, the principal of Waste Heat Solutions, LLC, an expert with 40 years’ experience in the field of advanced energy systems. Pursuant to this consulting agreement, which is terminable by either party on 30 days’ notice, the Company pays Waste Heat Solutions, $5,000 per month through February 2013 and $7,500 per month thereafter. In connection with this consulting agreement, the Company issued to Waste Heat Solutions (i) a fully vested 10-year option to purchase 500,000 shares of common stock at $.56 per share and (ii) a 10-year option, vesting six months from the contract date, i.e., on April 25, 2013, to purchase an additional 500,000 shares at $.56 per share. The fair value of the fully vested option was approximately $182,000 and was recorded as general and administrative expenses in the consolidated statements of operations during 2012. The fair value of the option vesting six months from the contract date was approximately $182,000 of which approximately $91,000 was recorded as research and development expense in the condensed consolidated statements of operations for the first quarter 2013. The remaining $30,300 was recognized in the second quarter of 2013 and is included in research and development expense in the accompanying condensed consolidated statements of operations. | |
This consulting agreement contains standard confidentiality provisions, as well as standard non-competition and non-soliciting provisions which survive for two years following termination of the consultancy. | |
On November 2, 2012, Keith Johnson, the Company’s former Chief Technical Officer, filed suit against the Company’s operating subsidiary PowerVerde Systems, Inc., in Maricopa County, Arizona, Superior Court. The suit included claims for breach of his employment agreement, for back pay and related claims. Mr. Johnson, whose salary was $12,500 per month, sought back pay of $37,500, reimbursement of expenses totaling approximately $5,012 and other unspecified damages. The Company believes that Mr. Johnson voluntarily terminated his employment in accordance with the agreement and that he has been paid in full. In an abundance of caution, the Company also gave Mr. Johnson 30 days’ notice of termination without cause pursuant to the employment agreement, with this notice to be effective only if the Court determines that his employment was not previously terminated by him. Mr. Johnson ceased working for the Company in early September 2012. Based on the foregoing, the Company believed that it had substantial defenses to Mr. Johnson’s claims, which were denied in the Company’s answer. | |
In May 2014, the case was settled pursuant to the Company’s agreement to pay Mr. Johnson $30,088, with $5,088 due upon execution of the settlement agreement plus an additional $25,000 payable in installments of $12,500 each in July and August 2014. As of the date of this filing, all of the settlement payments have been made, and this case is concluded. |
Note_10_Related_Party_Transact
Note 10 - Related Party Transactions | 9 Months Ended |
Sep. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Note 10 - Related Party Transactions | |
See Note 6 for discussion of transactions with the Company’s Co-Founders, George Konrad and, Note 8 for discussion of a transaction with the Company’s CEO Richard Davis. |
Note_3_Summary_of_Significant_1
Note 3 - Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Principles of Consolidation | ' |
Principles of Consolidation | |
The condensed consolidated financial statements include the accounts of PowerVerde, Inc. and its wholly-owned subsidiary, PowerVerde Systems, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. | |
Development Stage Company | ' |
Development Stage Company | |
The Company is a development stage company as defined in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915, “Development Stage Entities”. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. All losses accumulated since inception have been considered as part of the Company’s development stage activities. | |
Cash Equivalents | ' |
Cash Equivalents | |
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. | |
Accounts Receivable | ' |
Accounts Receivable | |
Accounts receivable consist of balances due from sales and royalties. The Company monitors accounts receivable and provides allowances when considered necessary. At September 30, 2014, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided. | |
Employee Advances | ' |
Employee Advances | |
The employee advances represent the payroll taxes due on the issuance of common stock as compensation prior to 2014. | |
Revenue Recognition | ' |
Revenue Recognition | |
Sales revenues and associated cost of sales are recognized when title of the goods sold pass to the buyer, when shipped and when accounts receivable are determined to be reasonably collectable. Certain sales agreements also require installation and training by PowerVerde once goods are received and accepted by the customer. The Company does not consider these agreements multiple elements arrangements as defined by ASC 605-25 “Revenue Recognition”, as the Company does not offer installation or training as services separate from the sale of its products at this time. Therefore, a “best estimate of selling price” or individual pricing in accordance with ASC 605-25 is undeterminable. The Company defers all revenues and costs of sales until the agreement is 100% complete. | |
Licensing and royalty revenue from royalty agreements is recognized in accordance with the terms of the specific agreement. | |
Revenues recognized under these agreements amount to 100% of total revenues of the three and nine months ended September 30, 2014 and 2013. | |
Property and Equipment | ' |
Property and Equipment | |
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred. | |
Impairment of Long-Lived Assets | ' |
Impairment of Long-Lived Assets | |
Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. No impairment losses have been recognized during the nine months ended September 30, 2014 or 2013. | |
Stock-based compensation | ' |
Stock-based Compensation | |
The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option or warrant award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. | |
Common Stock Purchase Warrants | ' |
Common Stock Purchase Warrants | |
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company), or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). | |
Accounting for Uncertainty in Income Taxes | ' |
Accounting for Uncertainty in Income Taxes | |
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. | |
Research and Development Costs | ' |
Research and Development Costs | |
The Company’s research and development costs are expensed in the period in which they are incurred. | |
Earnings (Loss) Per Share | ' |
Earnings (Loss) Per Share | |
Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Basic earnings (loss) per share is computed by dividing net income (loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net income by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 5,586,000 shares and options for 2,750,000 shares were excluded from weighted average common shares outstanding on a diluted basis. | |
Financial instruments | ' |
Financial instruments | |
The Company carries cash and cash equivalents, accounts receivable, accounts payable and accrued expenses at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature. The Company also carries notes payable to related parties at historical cost less discounts for warrants issued as loan financing costs. | |
Fair value of financial assets and liabilities | ' |
Fair value of financial assets and liabilities | |
The Company measures the fair value of financial assets and liabilities in accordance with GAAP which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. | |
GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. GAAP also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. GAAP describes three levels of inputs that may be used to measure fair value: | |
Level 1 – quoted prices in active markets for identical assets or liabilities | |
Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable | |
Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions) | |
The Company generally does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has entered into certain other financial instruments and contracts, such as debt financing arrangements and freestanding warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. These instruments are required to be carried as derivative liabilities, at fair value. | |
The Company uses the Black-Scholes valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to measure the fair value of these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective inputs that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the Company’s trading market price and the trading market price of various peer companies, which have historically had high volatility. Since derivative financial instruments are initially and subsequently carried at fair value, the Company’s income will reflect the volatility in these estimate and assumption changes. There were no derivative financial instruments as of and for the nine month period ended September 30, 2014. | |
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 reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Note_5_Intellectual_Property_T
Note 5 - Intellectual Property (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Note 5 - Intellectual Property Tables | ' | ||||
Intellectual Property | ' | ||||
Future amortization of the intangible asset – intellectual property was as follows as of September 30, 2014: | |||||
Year ending December 31: | |||||
2014 (after September 30, 2014) | $ | 54,953 | |||
2015 | 54,953 | ||||
Total | $ | 109,906 |
Note_6_Stockholders_Equity_Tab
Note 6 - Stockholders' Equity (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
Schedule of summary of warrants issued, exercised and expired | ' | ||||||||||||
A summary of warrants issued, exercised and expired during the nine months ended September 30, 2014 is as follows: | |||||||||||||
Shares | Weighted Average Exercise Price | ||||||||||||
Aggregate Intrinsic Value | |||||||||||||
Balance at December 31, 2013 | 7,586,000 | $ | 0.92 | $ | 45,000 | ||||||||
Issued | — | — | — | ||||||||||
Expired | (2,000,000 | ) | (.75 | ) | — | ||||||||
Balance at September 30, 2014 | 5,586,000 | $ | 0.99 | $ | 45,000 |
Note_7_Stock_Options_Tables
Note 7 - Stock Options (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||
Schedule of stock option activity | ' | ||||||||||||
Stock option activity for the nine months ended September 30, 2014, is summarized as follows: | |||||||||||||
Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||
Options outstanding at December 31, 2013 | 2,750,000 | $ | 0.78 | 7 | |||||||||
Granted | — | — | — | ||||||||||
Expired/forfeited | — | — | — | ||||||||||
Options outstanding at September 30, 2014 | 2,750,000 | $ | 0.78 | 6 |
Note_3_Summary_of_Significant_2
Note 3 - Summary of Significant Accounting Policies (Details 1) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Revenue percentage | 100.00% | 100.00% | 100.00% | 100.00% |
Warrant [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Number of warrants and options excluded from weighted average common shares outstanding | ' | ' | 5,586,000 | ' |
Stock Options [Member] | ' | ' | ' | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ' | ' | ' | ' |
Number of warrants and options excluded from weighted average common shares outstanding | ' | ' | 2,750,000 | ' |
Note_5_Intellectual_Property_D
Note 5 - Intellectual Property (Detail) - (Table 1) Future amortization of the intangible asset (USD $) | Sep. 30, 2014 |
Year ending December 31: | ' |
2014 (after September 30, 2014) | $54,953 |
2015 | 54,953 |
Total | $109,906 |
Note_5_Intellectual_Property_D1
Note 5 - Intellectual Property (Detail) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Amortization expense | $164,860 | $164,860 | ' |
Accumulated amortization of the intangible asset- intellectual property | $549,533 | ' | $384,673 |
Cornerstone | ' | ' | ' |
Percentage of membership interests purchased | 100.00% | ' | ' |
Note_6_Stockholders_Equity_Det
Note 6- Stockholders' Equity (Detail) - (Table 1) Warrant Activity, Current Period (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Note 6- Stockholders Equity Detail - Table 1 Warrant Activity Current Period | ' |
Balance at December 31, 2013 | 7,586,000 |
Balance at December 31, 2013 | $0.92 |
Balance at December 31, 2013 | $45,000 |
Issued | ' |
Expired | -2,000,000 |
Expired | ($0.75) |
Expired | ' |
Balance at September 30, 2014 | 5,586,000 |
Balance at September 30, 2014 | $0.99 |
Balance at September 30, 2014 | $45,000 |
Note_6_Stockholders_Equity_Iss
Note 6 - Stockholders' Equity (Issue of Warrants to purchase shares of the Company's common stock) (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||||||||
Dec. 31, 2013 | Mar. 31, 2013 | Jan. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2012 | Feb. 29, 2012 | Jun. 30, 2011 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | |
Company issued warrants to purchase unregistered shares of the Company's common stock | 400,000 | ' | 75,000 | 325,000 | 300,000 | 500,000 | 1,855,000 | 225,000 | 71,000 | 335,000 |
Exercise price per share in association with stock subscription agreements | $0.21 | ' | $0.41 | $0.41 | ' | $1 | $1.05 | $1 | $3 | $3 |
Warrants term | ' | ' | ' | ' | ' | '5 years | '5 years | ' | ' | ' |
Warrants expiration date | 31-Dec-16 | ' | 31-Dec-15 | 31-Dec-15 | 31-Dec-17 | ' | ' | 31-Oct-15 | 30-Jul-15 | 31-Dec-15 |
Company issued its Chief Executive Officer five year warrants to purchase common stock | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Company issued its Chief Financial Officer five year warrants to purchase common stock | ' | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Company recognized an amount in compensation expense | ' | $210,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price per share in association with stock issued to Chief Executive Officer and Chief Financial Officer | ' | $0.30 | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price per share in association with stock subscription agreements | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' |
Maximum [Member] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price per share in association with stock subscription agreements | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' |
Note_6_Stockholders_Equity_Com
Note 6 - Stockholders' Equity (Common Stock Issued for Services) (Details) (USD $) | 3 Months Ended | |
Jun. 30, 2013 | Mar. 31, 2013 | |
Note 6 - Stockholders Equity Common Stock Issued For Services Details | ' | ' |
Company issued common shares to a third party for six months consulting services | ' | 125,000 |
Common shares issued to an employee as part of his compensation package | ' | 200,000 |
The expense for the period included in the general and administrative expenses | $11,458 | $113,292 |
Note_6_Stockholders_Equity_Pri
Note 6 - Stockholders' Equity (Private Placement of Common Stock) (Details) (USD $) | 3 Months Ended | |||||
Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | |
Note 6 - Stockholders Equity Private Placement Of Common Stock Details | ' | ' | ' | ' | ' | ' |
Company raised gross proceeds through the private placement of unregistered shares of common stock to accredited investors | $100,000 | $75,000 | $240,000 | $25,000 | $150,000 | $125,000 |
Issue of unregistered shares of common stock to accredited investors | 1,000,000 | 750,000 | 2,400,000 | 100,000 | 600,000 | 500,000 |
Price per share of common stock issued to accredited investors | $0.10 | $0.10 | $0.10 | $0.25 | $0.25 | $0.25 |
Note_6_Stockholders_Equity_Tre
Note 6 - Stockholders' Equity (Treasury Shares transactions) (Details) (USD $) | 3 Months Ended | |||
Mar. 31, 2014 | Dec. 31, 2013 | Oct. 16, 2012 | 31-May-12 | |
Note 6 - Stockholders Equity Treasury Shares Transactions Details | ' | ' | ' | ' |
Company purchased shares of common stock from Fred Barker | ' | ' | ' | 450,000 |
Purchase price of shares of common stock purchased from Fred Barker | ' | ' | ' | $90,000 |
Purchase price per share of common stock purchased from Fred Barker | ' | ' | ' | $0.20 |
Amount payable as equal monthly installments | ' | ' | 100,000 | 10,000 |
The balance of the note payable was settled with the surrender of an additional shares of the Company's stock by George Konrad | ' | ' | 3,000,000 | ' |
Value of note exchanged in Treasury | ' | ' | 530,000 | ' |
Balance of payable included in the "Payable to related parties" | ' | 100,000 | ' | ' |
Repayment of debt | $100,000 | ' | ' | ' |
Note_7_Stock_Options_Detail_Ta
Note 7 - Stock Options (Detail) - (Table 1) Stock Option Activity, Current Period (USD $) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Shares | ' | ' |
Options outstanding at December 31, 2013 | 2,750,000 | ' |
Granted | ' | ' |
Expired/forfeited | ' | ' |
Options outstanding at September 30, 2014 | 2,750,000 | 2,750,000 |
Weighted Average Exercise Price | ' | ' |
Balance at December 31, 2013 | $0.78 | ' |
Granted | ' | ' |
Expired/forfeited | ' | ' |
Balance at September 30, 2014 | $0.78 | $0.78 |
Weighted Average Remaining Contractual Life (Years) | ' | ' |
Options outstanding | '6 years | '7 years |
Note_7_Stock_Options_Detail
Note 7 - Stock Options (Detail) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' |
Share-based Compensation | $0 | $121,237 |
Note_8_Notes_Payable_to_Relate1
Note 8 - Notes Payable to Related Parties (Detail) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | 19-May-14 | |
Note 8 - Notes Payable To Related Parties Detail | ' | ' | ' | ' | ' | ' |
Proceeds from notes payable to related parties | ' | ' | $75,000 | ' | ' | ' |
Additional warrants issuable for purchase of common stock. | 400,000 | 400,000 | ' | ' | ' | ' |
Number of trading days used for calculation of exercise price of additional warrant. | '10 days | ' | ' | ' | ' | ' |
Interest rate of promissory note | 10.00% | ' | ' | ' | ' | ' |
Fair value of the common stock warrants recorded as additional paid in capital | ' | ' | 16,500 | ' | ' | ' |
Fair value of the common stock warrants recorded as derivative liability | ' | ' | 16,500 | ' | ' | ' |
Principal amount of secured promissory note | 400,000 | ' | ' | ' | ' | ' |
Discount on issue of secured promissory note | ' | ' | ' | 176,000 | ' | ' |
Fair value of common stock per share (in dollars per share) | ' | ' | ' | ' | $0.41 | ' |
Fair value of the common stock warrants recorded as additional paid in capital till date | ' | ' | ' | 88,000 | ' | ' |
Fair value of the common stock warrants recorded as derivative liability till date | ' | ' | ' | 88,000 | ' | ' |
Fair value of common stock warrants issued (in dollars per share) | $0.21 | ' | ' | $0.21 | $0.22 | ' |
Accrued interest | ' | ' | ' | ' | 10,082 | 3,000 |
Unamortized debt discount | $85,860 | ' | ' | $85,860 | $21,639 | ' |
Note_8_Notes_Payable_to_Relate2
Note 8 - Notes Payable to Related Parties (Detail 1) (USD $) | 1 Months Ended | ||||
31-May-14 | 31-May-13 | Sep. 30, 2014 | 19-May-14 | 19-May-13 | |
Note 8 - Notes Payable To Related Parties Detail 1 | ' | ' | ' | ' | ' |
Promissory Note with Edward Gomez | ' | ' | ' | ' | $30,000 |
Promissory note bears interest rate | ' | ' | ' | ' | 10.00% |
Promissory note maturity date | 19-May-15 | 19-May-14 | ' | ' | ' |
Accrued interest | ' | ' | $10,082 | $3,000 | ' |
Note_9_Commitments_and_Conting1
Note 9 - Commitments and Contingencies (Detail) (USD $) | 1 Months Ended | 1 Months Ended | ||
Oct. 31, 2012 | Oct. 25, 2012 | 31-May-14 | Nov. 30, 2012 | |
Chief Technical Officer [Member] | Chief Technical Officer [Member] | |||
Agreement terminable by either party notice period of days | '30 days | ' | ' | ' |
Company pays waste heat solutions per month through Feb. 2013 | ' | $5,000 | ' | ' |
Company pays waste heat solutions per month thereafter Feb. 2013 | ' | 7,500 | ' | ' |
Fully vested 10-year option issued to purchase shares of common stock at $.56 per share | ' | 500,000 | ' | ' |
Right to Purchase of additional shares for options vesting six months from the date of contract | ' | 500,000 | ' | ' |
Fair value of the options fully vested recorded as Research and development cost | ' | 182,000 | ' | ' |
Price per share of the 10 year options | ' | $0.56 | ' | ' |
Fair value of option vesting was recorded during the fourth quarter of 2012 | ' | 182,000 | ' | ' |
Amount recorded during the first quarter of 2013 | ' | 91,000 | ' | ' |
Amount recorded in the second quarter of 2013 | ' | 30,300 | ' | ' |
Officers salary | ' | ' | ' | 12,500 |
Sought back pay to officers | ' | ' | ' | 37,500 |
Expenses reimbursement | ' | ' | ' | 5,012 |
Settlement, Amount | ' | ' | 30,088 | ' |
Due amount on settlement | ' | ' | 5,088 | ' |
Additional amount payble on settlement | ' | ' | 25,000 | ' |
Monthly Installment | ' | ' | $12,500 | ' |