Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Mar. 13, 2015 | Jun. 30, 2014 | |
Document and Entity Information: | |||
Entity Registrant Name | POWERVERDE, INC. | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Entity Central Index Key | 933972 | ||
Current Fiscal Year End Date | -19 | ||
Entity Common Stock, Shares Outstanding | 31,750,106 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $4,775,875 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ||
Cash and cash equivalents | $4,736 | $48,306 |
Accounts receivable | 189,220 | 49,844 |
Employee advances | 12,292 | 19,292 |
Prepaid expenses | 14,238 | 18,366 |
Total Current Assets | 220,486 | 135,808 |
Property and Equipment | ||
Property and equipment, net of accumulated depreciation of $55,258 and $38,616, respectively | 52,383 | 55,434 |
Other Assets | ||
Intellectual property, net of accumulated amortization of $604,487 and $384,673, respectively | 54,953 | 274,767 |
Total Assets | 327,822 | 466,009 |
Current Liabilities | ||
Accounts payable and accrued expenses | 100,006 | 43,575 |
Payable to related parties | 41,900 | 163,965 |
Notes payable to related parties | 314,140 | |
Total Current Liabilities | 141,906 | 521,680 |
Long-Term Liabilities | ||
Notes payable to related parties | 374,235 | |
Total Long-Term Liabilities | 374,235 | |
Total Liabilities | 516,141 | 521,680 |
Common stock: | ||
Preferred stock: 50,000,000 preferred shares authorized, 0 preferred shares issued and outstanding at December 31, 2014 and 2013. | ||
Common stock: 200,000,000 common shares authorized, par value $0.0001 per share, 31,750,106 common shares issued and outstanding at December 31, 2014 and 27,600,106 common shares issued and outstanding at December 31, 2013 | 3,981 | 3,567 |
Additional paid-in capital | 11,531,516 | 11,098,665 |
Treasury stock, 8,550,000 shares at cost | -491,139 | -491,139 |
Deficit accumulated in the development stage | -11,232,677 | -10,666,764 |
Total Stockholders' Equity (Deficiency) | -188,319 | -55,671 |
Total Liabilities and Stockholders' Equity (Deficiency) | $327,822 | $466,009 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Assets [Abstract] | ||
Property and equipment, net of accumulated depreciation | $55,258 | $38,616 |
Intellectual Property, net of accumulated amortization | $604,487 | $384,673 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock, no par value | $0.00 | $0.00 |
Common Stock, shares authorized | 200,000,000 | 200,000,000 |
Common Stock, shares issued | 31,750,106 | 27,600,106 |
Common Stock, shares outstanding | 31,750,106 | 27,600,106 |
Treasury stock | 8,550,000 | 8,550,000 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | 94 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Revenues [Abstract] | |||
Revenue, Net | $428,747 | $359,362 | $1,266,558 |
Cost of Goods Sold | 136,925 | ||
Gross Profit | 428,747 | 359,362 | 1,129,633 |
Operating Expenses | |||
Research and development | 364,095 | 459,651 | 4,152,640 |
General and administrative | 501,706 | 844,259 | 4,996,395 |
Goodwill impairment | 2,637,760 | ||
Total Operating Expenses | 865,801 | 1,303,910 | 11,786,795 |
Loss from Operations | -437,054 | -944,548 | -10,657,162 |
Other Income (Expenses) | |||
Interest income | 2,401 | ||
Interest expense | -128,859 | -147,161 | -633,927 |
Other income (expenses) | 36,750 | 56,011 | |
Total Other Income (Expenses) | -128,859 | -110,411 | -575,515 |
Loss before Income Taxes | -565,913 | -1,054,959 | -11,232,677 |
Provision for Income Taxes | |||
Net Loss | ($565,913) | ($1,054,959) | ($11,232,677) |
Net Loss per Share - Basic and Diluted | ($0.02) | ($0.04) | |
Weighted Average Common Shares Outstanding - Basic and Diluted | 30,613,257 | 26,865,503 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (USD $) | Common Stock | Additional Paid in Capital | Treasury Stock | Deficit Accumulated during the Development Stage | Total |
Balance at Mar. 09, 2007 | |||||
Balance, Shares at Mar. 09, 2007 | |||||
Common Stock issued for cash, net of stock issuance costs | 20,350 | 659,252 | 679,602 | ||
Common Stock issued for cash, net of stock issuance costs, shares | 20,350,000 | ||||
Net Loss | |||||
Balance at Dec. 31, 2007 | 20,350 | 659,252 | -274,402 | 405,200 | |
Balance, Shares at Dec. 31, 2007 | 20,350,000 | ||||
Sale of common stock | 50,000 | ||||
Sale of common stock, shares | 50 | 24,950 | 25,000 | ||
Stockholder Equity of Vyrex Corporation at merger | 102 | -479,771 | -479,669 | ||
Stockholder Equity of Vyrex Corporation at merger, shares | 1,019,144 | ||||
Recapitalization of PowerVerde stockholders' equity | -20,400 | 20,400 | |||
Recapitalization of PowerVerde stockholders' equity, shares | -20,400,000 | ||||
Shares issued related to forgiveness of debt and issued for services | 28 | 249,972 | 250,000 | ||
Shares issued related to forgiveness of debt and issued for services, shares | 275,000 | ||||
Shares issued in exchange for PowerVerde shares | 2,459 | -2,459 | |||
Shares issued in exchange for PowerVerde shares, shares | 24,588,734 | ||||
Warrants issued with debt | 299,984 | 299,984 | |||
Net Loss | -829,556 | -829,556 | |||
Balance at Dec. 31, 2008 | 2,589 | 772,328 | -1,103,958 | -329,041 | |
Balance, Shares at Dec. 31, 2008 | 25,882,878 | ||||
Sale of common stock | 126 | 864,874 | 865,000 | ||
Sale of common stock, shares | 1,266,667 | ||||
Common stock issued on conversion of debt | 38 | 189,223 | 189,261 | ||
Common stock issued on conversion of debt, shares | 378,521 | ||||
Common stock issued for services | 8 | 56,242 | 56,242 | ||
Common stock issued for services, shares | 75,000 | ||||
Net Loss | -890,980 | -890,980 | |||
Balance at Dec. 31, 2009 | 2,761 | 1,882,667 | -1,994,938 | -109,510 | |
Balance, Shares at Dec. 31, 2009 | 27,603,066 | ||||
Sale of common stock | 43 | 296,958 | 297,001 | ||
Sale of common stock, shares | 439,999 | ||||
Net Loss | -308,352 | -308,352 | |||
Balance at Dec. 31, 2010 | 2,804 | 2,179,625 | -2,303,290 | -120,861 | |
Balance, Shares at Dec. 31, 2010 | 28,043,065 | ||||
Sale of common stock | 200 | 1,349,800 | 1,350,000 | ||
Sale of common stock, shares | 2,000,000 | ||||
Stock-based compensation | 466,907 | 466,907 | |||
Warrants issued for services | 612,150 | 612,150 | |||
Warrants exercised | 8 | 122,242 | 122,250 | ||
Warrants exercised, shares | 81,500 | ||||
Treasury stock | -170,758 | -170,758 | |||
Treasury stock, shares | -4,500,000 | ||||
Net Loss | -2,553,465 | -2,553,465 | |||
Balance at Dec. 31, 2011 | 3,012 | 4,730,724 | -170,758 | -4,856,755 | -293,777 |
Balance, Shares at Dec. 31, 2011 | 25,624,565 | ||||
Sale of common stock | 176 | 1,258,052 | 1,258,228 | ||
Sale of common stock, shares | 1,752,000 | ||||
Stock-based compensation | 658,381 | 658,381 | |||
Treasury stock | -320,381 | -320,381 | |||
Treasury stock, shares | -3,550,000 | ||||
Issuance of warrants for settlement with Newton | 262,700 | 262,700 | |||
Issuance of common stock at $1.37 per share for Cornerstone acquisition | 226 | 3,095,974 | 3,096,200 | ||
Issuance of common stock at $1.37 per share for Cornerstone acquisition, shares | 2,260,000 | ||||
Issuance of warrants for Cornerstone acquisition | 201,000 | 201,000 | |||
Cancellation of shares issued for services to Del Mar Consulting, shares | -75,000 | ||||
Warrants issued in connection with notes payable to related party | 71,500 | 71,500 | |||
Net Loss | -4,755,050 | -4,755,050 | |||
Balance at Dec. 31, 2012 | 3,414 | 10,278,331 | -491,139 | -9,611,805 | 178,801 |
Balance, Shares at Dec. 31, 2012 | 26,011,565 | ||||
Sale of common stock | 121 | 299,879 | 300,000 | ||
Sale of common stock, shares | 1,200,000 | ||||
Common stock issued on conversion of debt | |||||
Common stock issued on conversion of debt, shares | 44,791 | ||||
Common stock issued for services | 32 | 124,718 | 124,750 | ||
Common stock issued for services, shares | 325,000 | ||||
Stock-based compensation | 121,237 | 121,237 | |||
Warrants issued for services | 210,000 | 210,000 | |||
Warrants issued in connection with notes payable to related party | 16,500 | 16,500 | |||
Warrants issued in connection with derivative liability | 48,000 | 48,000 | |||
Cashless exercise of options | |||||
Cashless exercise of options, shares | 18,750 | ||||
Modification of warrants in connection with Notes payable to related party | |||||
Net Loss | -1,054,959 | -1,054,959 | |||
Balance at Dec. 31, 2013 | 3,567 | 11,098,665 | -491,139 | -10,666,764 | -55,671 |
Balance, Shares at Dec. 31, 2013 | 27,600,106 | ||||
Sale of common stock | 414 | 407,086 | 407,500 | ||
Sale of common stock, shares | 4,150,000 | ||||
Modification of warrants in connection with Notes payable to related party | 25,765 | 25,765 | |||
Net Loss | -565,913 | -565,913 | |||
Balance at Dec. 31, 2014 | $3,981 | $11,531,516 | ($491,139) | ($11,232,677) | ($188,319) |
Balance, Shares at Dec. 31, 2014 | 31,750,106 |
CONSOLIDATED_STATEMENTS_OF_CHA1
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY) (Parenthetical) (USD $) | 10 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2007 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2009 | Dec. 31, 2013 | Dec. 31, 2008 | |
Stockholders' Deficiency | ||||||||
Sale of common stock price per share | $0.10 | $0.75 | $0.75 | $0.75 | $0.25 | $0.50 | ||
Stock issuance costs | $45,398 | $7,500 | $139,803 | $150,000 | $85,000 | $85,000 | ||
Transaction One | ||||||||
Stockholders' Deficiency | ||||||||
Sale of common stock price per share | $1 | |||||||
Number of shares sale | 906,000 | |||||||
Transaction Two | ||||||||
Stockholders' Deficiency | ||||||||
Sale of common stock price per share | $0.72 | |||||||
Number of shares sale | 450,000 | |||||||
Transaction Three | ||||||||
Stockholders' Deficiency | ||||||||
Sale of common stock price per share | $0.43 | |||||||
Number of shares sale | 396,000 | |||||||
Cornerstone Acquisition | ||||||||
Stockholders' Deficiency | ||||||||
Sale of common stock price per share | $1.37 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | 94 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Cash Flows from Operating Activities | |||
Net loss | ($565,913) | ($1,054,959) | ($11,232,677) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and amortization | 236,455 | 231,658 | 659,744 |
Amortization of discount | 85,860 | 87,773 | 526,846 |
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 | -36,750 | -40,000 | |
Changes in operating assets and liabilities | |||
Accounts receivable and prepaid expenses | -135,248 | 94,118 | -203,458 |
Employee advances | 7,000 | -19,292 | -12,292 |
Accounts payable and accrued expenses | 56,431 | -65,993 | -130,526 |
Payable to related parties | -22,065 | -6,799 | 130,747 |
Cash Used in Operating Activities | -337,480 | -314,257 | -5,151,489 |
Cash Flows From Investing Activities | |||
Purchase of property and equipment | -13,590 | -57,720 | -107,640 |
Cash acquired in business acquisition | 872 | ||
Cash Used in Investing Activities | -13,590 | -57,720 | -106,768 |
Cash Flows from Financing Activities | |||
Proceeds from issuance of common stock | 415,000 | 300,000 | 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 | 375,000 | 5,262,993 |
Net (Decrease) Increase in Cash and Cash Equivalents | -43,570 | 3,023 | 4,736 |
Cash and cash equivalents at Beginning of Period | 48,306 | 45,283 | |
Cash and cash equivalents at End of Period | 4,736 | 48,306 | 4,736 |
Supplemental Disclosure of Cashflow Information | |||
Cash Paid for Interest | 43,000 | 20,705 | 63,705 |
Cash Paid for Income Taxes | 24,221 | ||
Supplemental Schedule of Non-Cash Financing | |||
Common stock issued for convertible debt | 189,261 | ||
Common stock issued for services | 124,750 | ||
Common stock issued for acquisition of Cornerstone Conservation Group, LLC | 3,096,200 | ||
Warrants issued in connection with acquisition of Cornerstone Conservation Group, LLC | 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 | 176,000 | 176,000 | |
Debt discount in connection with the modified warrants | 25,765 | 25,765 | |
Warrants issued in connection with derivative liability | 48,000 | 48,000 | |
Common stock issued in connection with debt forgiveness and services rendered | $250,000 |
CONSOLIDATED_STATEMENTS_OF_CAS1
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2013 | Dec. 31, 2014 | |
Net Cash Provided by (Used in) Operating Activities [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 |
Nature_of_Business
Nature of Business | 12 Months Ended |
Dec. 31, 2014 | |
Nature of Business | |
Nature of Business | Note 1 – Nature of Business |
PowerVerde, Inc. (the “Company”) is a “C” Corporation organized under the Laws of Delaware with operations in Scottsdale, Arizona. The Company’s two founders, now its largest shareholders, have conceived and developed the use of a power systems patent. The Company is in the development stage and it is presently undertaking research and development on a power generating system. | |
On February 11, 2008, Vyrex Corporation (“Vyrex” or the “Company”); PowerVerde, Inc. (“PowerVerde”) and Vyrex Acquisition Corporation (“VAC”), a wholly-owned subsidiary of Vyrex, all Delaware corporations, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on February 12, 2008, VAC merged with and into PowerVerde, with PowerVerde remaining as the surviving corporation and a wholly-owned subsidiary of Vyrex (the “Merger”). As consideration for the Merger, as of the closing of the Merger, each issued and outstanding share of common stock of PowerVerde was converted into the right to receive 1.2053301 shares of the common stock of Vyrex and each share of VAC was converted into one share of PowerVerde common stock. As a result of the Merger, the former shareholders of PowerVerde held 24,588,734 shares, or 95%, of the common stock of Vyrex. Pursuant to the Merger Agreement, PowerVerde paid $233,000 in accounts payable and other liabilities owed by Vyrex. The total purchase price of the transaction of $401,894 includes $60,000 of transaction costs related to the Merger. | |
In addition, immediately prior to execution of the Merger Agreement, Vyrex paid a $200,000 promissory note through the issuance of 250,000 shares of common stock and issued an additional 25,000 shares of common stock as payment for certain consulting and administrative services. | |
At a stockholder meeting held on August 6, 2008, the Company’s stockholders approved (i) the change of the Company’s name to “PowerVerde, Inc.” and (ii) the Amended and Restated Certificate of Incorporation filed as an exhibit to the Company’s report on Form 10-Q for the quarter ended June 30, 2008. Immediately prior to the filing of the Certificate changing the Company’s name, the name of the Company’s operating subsidiary was changed from “PowerVerde, Inc.” to “PowerVerde Systems, Inc.” |
Going_Concern
Going Concern | 12 Months Ended |
Dec. 31, 2014 | |
Going Concern: | |
Going Concern | Note 2 – Going Concern |
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has had recurring operating losses and negative cashflows from operations. 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 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
The Company plans to finance its operations for the next 12 months through Biotech IP licensing fee revenues and private sales of equity and debt securities to accredited investors. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3 – Summary of Significant Accounting Policies |
Principles of Consolidation | |
The 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 has 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 December 31, 2014 and 2013, 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. | |
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 reasonable 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. | |
Intellectual Property | |
The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment. | |
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 were recognized in the years ended December 31, 2014 and 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 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. | |
Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements. Our evaluation was performed for the tax years ended December 31, 2011, 2012, 2013 and 2014, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2014. | |
We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the consolidated financial statements as general and administrative expense. | |
Research and Development Costs | |
The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $364,095 and $459,651 for the years ended December 31, 2014 and 2013, respectively. | |
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, if any, 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 antidilutive. Excluded from weighted average common shares outstanding on a diluted basis were warrants exercisable for 5,586,000 shares and options for 2,750,000 shares for December 31, 2014 and warrants exercisable for 7,586,000 shares and options for 2,750,000 shares for December 31, 2013. | |
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 from 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 option 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. | |
The Company reports its derivative liabilities at fair value on the accompanying consolidated balance sheet as of December 31, 2013. There were no derivative liabilities at December 31, 2014 and 2013. | |
Use of Estimates | |
The preparation of the consolidated 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 consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2014 | |
Recent Accounting Prouncements | |
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 or 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. | |
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. | |
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. This change should be applied retrospectively for annual reporting periods beginning after December 15, 2014, and interim periods therein. 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 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. |
Acquisition
Acquisition | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Acquisition | |||||
Acquisition | Note 5 – Acquisition | ||||
On March 30, 2012, the Company purchased 100% of the membership interests of Cornerstone Conservation Group LLC (“Cornerstone”) pursuant to a Membership Interest Purchase Agreement (the “Agreement”). Cornerstone’s main asset is its proprietary Combined Cooling, Heating and Power (“CCHP”) technology, which utilizes waste heat from commercial and residential heating, ventilation air conditioning and refrigeration (“HVACR”) systems. | |||||
Cornerstone also has substantial experience and technology relating to geothermal or ground source heat pumps. The Company also moved its operations to a 5,000 square foot facility owned by one of the sellers in Scottsdale, Arizona. The Company has been using the facility rent free on a short term basis but expects to negotiate a lease on fair market terms. | |||||
In consideration for the 100% membership interests in Cornerstone, the Company issued 2,260,000 shares of the Company’s common stock (valued at $1.37 per share, the closing price on March 30, 2012) to the selling members of Cornerstone and issued to the sellers fully vested three–year warrants to purchase an aggregate of 300,000 shares of the Company’s common stock as follows: | |||||
(i) | 100,000 shares at an exercise price of $2.00 per share, exercisable beginning January 1, 2012, through December 31, 2016; | ||||
(ii) | 100,000 shares at an exercise price of $3.00 per share, exercisable beginning July 1, 2012, through June 30, 2017; and | ||||
(iii) | 100,000 shares at an exercise price of $4.00 per share, exercisable beginning January 1, 2013, through December 31, 2017. | ||||
The estimated fair value of the total warrants issued in connection with the acquisition of Cornerstone was $201,000 which was calculated using the Black-Scholes option valuation method with the following assumptions: a risk free interest rate of 1.04 percent, an estimated volatility of 79.1 percent and no dividend yield. The total present value of all consideration expected to be paid as part of this agreement was $3,297,200. | |||||
The following summarizes the fair values of the assets acquired: | |||||
Intangible asset – Intellectual Property | $ | 659,440 | |||
Goodwill | 2,637,760 | ||||
Total assets acquired | 3,297,200 | ||||
Aggregate purchase price | $ | 3,297,200 | |||
The assets acquired were recorded based on estimates of their fair values determined by management, based on information then available and on assumptions as to future operations. | |||||
Due to the departure of a key employee and as part of the Company’s annual impairment analysis, the goodwill associated with this acquisition was determined to be impaired at December 31, 2012 and accordingly, it was written off in that period. | |||||
For each of the periods ending December 31, 2014 and 2013, amortization expense was $219,813 and accumulated amortization of the intangible asset-intellectual property was $604,487 and $384,673. | |||||
Future amortization of the intangible asset – intellectual property was as follows as of December 31, 2014: | |||||
Year ending December 31: | |||||
2015 | $ | 54,953 | |||
Total | 54,953 | ||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Property, Plant, and Equipment: | |||||||||||
Property and Equipment | Note 6 – Property and Equipment | ||||||||||
A summary of property and equipment at December 31, 2014 and December 31, 2013 is as follows: | |||||||||||
2014 | 2013 | Estimated Useful | |||||||||
Lives | |||||||||||
(in years) | |||||||||||
Equipment | $ | 96,737 | $ | 83,146 | 5 | ||||||
Computer equipment (hardware) | 6,975 | 6,975 | 5-Mar | ||||||||
Software | 3,929 | 3,929 | 3 | ||||||||
107,641 | 94,050 | ||||||||||
Less: Accumulated depreciation | (55,258 | ) | (38,616 | ) | |||||||
$ | 52,383 | $ | 55,434 | ||||||||
The amounts charged to operations for depreciation expense for the year ended December 31, 2014 and 2013 were $16,641 and $11,845 respectively. Depreciation expense from inception through December 31, 2014 was $55,258. |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Equity: | |||||||||||||
Stockholders' Equity | Note 7– 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 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 warrant pricing model to determine the fair value of each warrant. As of December 31, 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 $3.00 per share with a five-year term for settlement of certain disputed amounts. These share-based payments have been accounted for in accordance with ASC 815-40 using the Black-Scholes warrant pricing model to determine the fair value of each warrant. As of December 31, 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 December 31, 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 December 31, 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 December 31, 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 December 31, 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 $.41 per share in association with the Secured Promissory Note (See Note 10). These warrants expire December 31, 2015. As of December 31, 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 10). These warrants expire December 31, 2015. As of December 31, 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 December 31, 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 10). These warrants expire December 31, 2016. As of December 31, 2014, all of these warrants were outstanding. | |||||||||||||
During the fourth quarter of 2014, the Company revised the terms of the original warrants issued December 31, 2012, extending the maturity date from December 31, 2015 to December 31, 2017 and the exercise price was reduced from $0.41 per share to $0.39 per share. The Company also revised the terms of the additional warrants issued December 1, 2013, to extend the maturity date to December 31, 2018 and the exercise price was reduced from $.21 per share to $0.17 per share. | |||||||||||||
A summary of warrants issued, exercised and expired during the year ending December 31, 2014 is as follows: | |||||||||||||
Shares | Weighted Average | Aggregate | |||||||||||
Exercise Price | Intrinsic | ||||||||||||
Value | |||||||||||||
Balance at December 31, 2013 | 7,586,000 | $ | 0.92 | $ | 45,000 | ||||||||
Issued | — | — | — | ||||||||||
Expired | (2,000,000 | ) | (.75 | ) | — | ||||||||
Balance at December 31, 2014 | 5,586,000 | $ | 0.99 | $ | 45,000 | ||||||||
The weighted average grant date fair value of warrants issued during the year ended December 31, 2014 amounted to $0.06 per warrant. The fair value of each warrant granted for equity and debt raises was determined using the Black-Scholes warrant pricing model and the following assumptions: | |||||||||||||
31-Dec-14 | |||||||||||||
Risk free interest rate | 1.10 % to 1.38 | % | |||||||||||
Expected term | 3-4 years | ||||||||||||
Annualized volatility | 90 | % | |||||||||||
Expected dividends | — | ||||||||||||
The expected term of warrants granted is based on historical experience with past warrant holders, and represents the period of time that warrants granted are expected to be outstanding. | |||||||||||||
The warrant shares referred to above are unregistered shares of the Company’s stock and are restricted from trading as defined under Rule 144 of the United States Securities Act of 1933. | |||||||||||||
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. The expense for the period of $124,750 is included in the general and administrative expenses on the consolidated statement of operations. | |||||||||||||
Private Placement of Common Stock | |||||||||||||
In February 2012, the Company raised $500,000 exclusively from accredited European investors (including $275,000 from a Newton affiliate) pursuant to a private placement of 500,000 shares of common stock at a price of $1.00 per share. There were no warrants issued pursuant to this round; however, simultaneously Newton affiliates received three-year warrants to purchase 500,000 shares at $1.00 per share in connections with the settlement of certain claims by and between the Company and Newton. | |||||||||||||
In the second quarter of 2012, the Company raised gross proceeds of $335,000 through the private placement of 335,000 unregistered shares of common stock to accredited investors at $1.00 per share. Each investor received a three-year warrant to purchase shares of common stock at $3.00 per share for a number of shares equal to the number of shares purchased by the investor in this offering. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent. | |||||||||||||
In the third quarter of 2012, the Company raised gross proceeds of $71,000 through the private placement of 71,000 unregistered shares of common stock to accredited investors at $1.00 per share. Each investor received a three-year warrant to purchase shares of common stock at $3.00 per share for a number of shares equal to the number of shares purchased by the investor in this offering. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent. | |||||||||||||
In the fourth quarter of 2012, the Company raised gross proceeds of $492,030 through the private placement of 396,000 unregistered shares of common stock to accredited investors at $.43 per share and 450,000 shares at $.715 per share. Each investor who purchased the common stock at $.715 per share received a three-year warrant to purchase additional shares of common stock at $1.00 per share for a number of shares equal to one-half of the number of shares purchased by the investor in this offering. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent. | |||||||||||||
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. The Company paid a 10% commission on the gross proceeds of this offering to its placement agent. | |||||||||||||
In the third quarter of 2014, the Company raised gross proceeds of $100,000 through private placement of 1,000,000 unregistered shares of common stock to accredited investors at $.10 per share. | |||||||||||||
Treasury Shares | |||||||||||||
On April 7, 2011, 4,500,000 shares of the Company’s stock were surrendered to Treasury in exchange for a $200,000 interest-free note payable due in April 2013. The note payable is reported as note payable to related party on the accompanying consolidated balance sheets. In accordance with GAAP, the Company has discounted this obligation at an imputed rate of 8%. The balance was settled on October 16, 2012 with the surrender of 3,000,000 shares of the Company’s stock to Treasury in exchange for $530,000 as discussed below. | |||||||||||||
In April 2012, the Company purchased 100,000 shares of common stock from an affiliate at a price of $.25 per share. Of the $25,000 purchase price, $14,000 was paid in 2011 and the balance in April 2012. The shares have been held as treasury stock from the date of closing. | |||||||||||||
In May 2012, the Company purchased 450,000 shares of its common stock from an affiliate at a price of $0.20 per share. Of the $90,000 purchase price, $10,000 was paid at closing and the balance is payable $10,000 per month through January 2013. The payable has a balance of $5,000 and $33,000 at December 31, 2013 and 2012, respectively, and is included in “Payable to related parties” in the accompanying condensed consolidated balance sheets. The shares have been held as treasury stock from the date of closing. | |||||||||||||
On October 16, 2012, 3,000,000 shares of the Company’s stock were surrendered to Treasury in exchange for $530,000, $100,000 of which was 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 fourth quarter of 2013 and the first quarter of 2014. The payable had a balance of $100,000, including accrued interest, as of December 31, 2013 and was included in the “Payable to related parties” in the accompanying consolidated balance sheets. The $100,000 debt was paid in full in the first quarter of 2014. |
Stock_Options
Stock Options | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stock Options | |||||||||||||||||
Stock Options | Note 8 – Stock Options | ||||||||||||||||
Stock option activity for the year ended December 31, 2014, is summarized as follows: | |||||||||||||||||
Shares | Weighted Average | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic | ||||||||||||||
Exercise Price | Value | ||||||||||||||||
Options outstanding at December 31, 2013 | 2,750,000 | $ | 0.78 | 9 | $ | — | |||||||||||
Granted | — | — | — | — | |||||||||||||
Expired/forfeited | — | — | — | — | |||||||||||||
Options outstanding at December 31, 2014 | 2,750,000 | $ | 0.78 | 9 | $ | — | |||||||||||
Total stock-based compensation for the years ended December 31, 2014 and 2013 was $0 and $121,237 respectively. | |||||||||||||||||
There is no unrecognized stock compensation expense at December 31, 2014. |
Notes_Payable_to_Related_Parti
Notes Payable to Related Parties | 12 Months Ended |
Dec. 31, 2014 | |
Notes Payable to Related Parties | |
Notes Payable to Related Parties | 9. 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 December 31, 2013, $400,000 was raised, of which $325,000 was raised in 2012 and $75,000 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 and a commitment to issue additional warrants on December 1, 2013. On December 1, 2013, the Company issued additional three year warrants for 400,000 shares to the investors at an exercise price equal to $.21 per share (the average price of the common stock during the 10 trading days prior to December 1, 2013). See revisions to warrants discussed below. | |
The promissory notes bear interest at the rate of 10% per annum based on a 365-day year. Accrued interest was 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. | |
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 commitment to issue warrants on December 1, 2013 was classified as derivative liabilities until issuance on December 1, 2013. On December 1, 2013 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 was $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. | |
In the fourth quarter 2014, the Note Holders agreed to extend the maturity date of the Note principal balance to December 31, 2016. In connection with the Note extension, the Company revised the terms of the original warrants issued December 31, 2012, extending the expiration date from December 31, 2015 to December 31, 2017 and the exercise price was reduced from $0.41 per share to $0.39 per share. The Company also revised the terms of the additional warrants to extend the expiration date to December 31, 2018 and the exercise price was reduced from $.21 per share to $0.17 per share. The relative fair value of the common stock warrants recorded as additional paid in capital was $25,765. This discount is being amortized to interest expense over the extended term of the Secured Promissory Note to related parties using the effective interest method. The fair value of the modified common stock warrants was determined using the Black-Scholes pricing model. | |
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. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2014 | |
Commitment and Contingencies: | |
Commitments and Contingencies | 10. 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 acquired, for a period of 10 years, the exclusive manufacturing and distribution rights for 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 technical problems with the Company’s Systems, the Company deferred commencement of the minimum sales requirement until the problems were resolved. Newton terminated the License Agreement in August 2014. | |
On October 25, 2012, the Company entered into a consulting agreement with Hank Leibowitz, the principal of Waste Heat Solutions, LLC. Pursuant to this consulting agreement, which is terminable by either party on 30 days’ notice, the Company paid Waste Heat Solutions, $5,000 per month through February 2013 and has paid $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 statement of operations during 2012. The fair value of the option vesting six months from the contract date was approximately $182,000 of which approximately $61,000 was recorded as research and development expense in the consolidated statement of operations during 2012. Approximately $91,000 was recorded during the first quarter of 2013 and the remaining $30,000 was recognized in the second quarter of 2013. All amounts were recorded in research and development expense in the accompanying 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. The installments due in July and August are included in the Payable to Related Parties on the condensed consolidated financial statements. As of the date of this filing, all of the settlement payments have been made, and this case is concluded. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Income Taxes: | |||||||||||||||||||||
Income Tax Disclosure | Note 11 – Income Taxes | ||||||||||||||||||||
Deferred income taxes are provided based on the provisions of ASC Topic 740, “Accounting for Income Taxes”, to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. | |||||||||||||||||||||
The Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2014, 2013, 2012 and 2011. | |||||||||||||||||||||
The Company classifies interest and penalties arising from underpayment of income taxes in the consolidated statements of operations as general and administrative expenses. As of December 31, 2014, the Company had no accrued interest or penalties related to uncertain tax provisions. | |||||||||||||||||||||
Significant components of the Company’s net deferred income taxes are as follows: | |||||||||||||||||||||
For the Years ended | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Deferred tax assets: | |||||||||||||||||||||
Net operating loss carryforwards | $ | 2,307,440 | $ | 2,092,216 | |||||||||||||||||
Start-up cost | 350,834 | 381,070 | |||||||||||||||||||
Goodwill | 805,100 | 871,272 | |||||||||||||||||||
Amortization of Intellectual Property | (6,893 | ) | (6,893 | ) | |||||||||||||||||
Stock based compensation | 621,858 | 542,836 | |||||||||||||||||||
Other | 131 | 1,653 | |||||||||||||||||||
Deferred tax assets | 4,078,470 | 3,882,154 | |||||||||||||||||||
Less valuation allowance | (4,078,470 | ) | (3,882,154 | ) | |||||||||||||||||
Net deferred tax assets after valuation allowance | $ | — | $ | — | |||||||||||||||||
A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate (benefit) follows: | |||||||||||||||||||||
Rate Reconciliation | For the Years ended | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Federal income tax at statutory rate | $ | (192,410 | ) | $ | (358,686 | ) | |||||||||||||||
State Tax, net of Federal rate | (20,543 | ) | (58,023 | ) | |||||||||||||||||
Permanent Differences | 237 | (13,829 | ) | ||||||||||||||||||
Forfeiture of fully vested stock compensation | — | 255,438 | |||||||||||||||||||
Rate Change from 39.5% to 37.63% | — | 88,950 | |||||||||||||||||||
Other | 16,400 | 21,891 | |||||||||||||||||||
Change in Valuation Allowance | 196,316 | 64,259 | |||||||||||||||||||
$ | — | $ | — | ||||||||||||||||||
In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more than likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making the assessment. After consideration of the evidence, both positive and negative, management has determined that a $4,078,470 valuation allowance at December 31, 2014 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation allowance for the current year is $196,315, as opposed to $64,259 on December 31, 2013. At December 31, 2014, the Company has available net operating loss carry forwards for federal income tax purposes of $5,841,620 expiring at various times from 2027 through 2032. | |||||||||||||||||||||
Valuation and Qualifying Accounts | |||||||||||||||||||||
Description | Balance at | Charged to | Write-offs | Other | Balance at | ||||||||||||||||
Beginning | Cost and | Charges | End of | ||||||||||||||||||
of Period | Expenses | Period | |||||||||||||||||||
Deferred tax asset valuation allowance | |||||||||||||||||||||
Year ended December 31, 2014 | $ | 3,882,154 | $ | 196,316 | $ | — | $ | — | $ | 4,078,470 | |||||||||||
Year ended December 31, 2013 | $ | 3,817,895 | $ | 64,259 | $ | — | $ | — | $ | 3,882,154 | |||||||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions | |
Related Party Transactions | Note 12- Related Party Transactions |
See Note 7 for discussion of transactions with the Company’s Co-Founders, George Konrad and Fred Barker. |
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events: | |
Subsequent Events | Note 13 – Subsequent Events |
There have been no material events since December 31, 2014. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation |
The 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 has 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 Receivables | Accounts Receivable |
Accounts receivable consist of balances due from sales and royalties. The Company monitors accounts receivable and provides allowances when considered necessary. At December 31, 2014 and 2013, 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. | |
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 reasonable 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. | |
Intellectual Property | Intellectual Property |
The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment. | |
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 were recognized in the years ended December 31, 2014 and 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 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. | |
Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our consolidated financial statements. Our evaluation was performed for the tax years ended December 31, 2011, 2012, 2013 and 2014, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2014. | |
We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the consolidated financial statements as general and administrative expense. | |
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. Such expenditures amounted to $364,095 and $459,651 for the years ended December 31, 2014 and 2013, respectively. | |
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, if any, 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 antidilutive. Excluded from weighted average common shares outstanding on a diluted basis were warrants exercisable for 5,586,000 shares and options for 2,750,000 shares for December 31, 2014 and warrants exercisable for 7,586,000 shares and options for 2,750,000 shares for December 31, 2013. | |
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 from 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 option 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. | |
The Company reports its derivative liabilities at fair value on the accompanying consolidated balance sheet as of December 31, 2013. There were no derivative liabilities at December 31, 2014 and 2013. | |
Use of Estimates | Use of Estimates |
The preparation of the consolidated 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 consolidated financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Summarizes_the_fair_values_of_
Summarizes the fair values of the assets acquired (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Summarizes the fair values of the assets acquired | |||||
Summarizes the fair values of the assets acquired | The following summarizes the fair values of the assets acquired: | ||||
Intangible asset – Intellectual Property | $ | 659,440 | |||
Goodwill | 2,637,760 | ||||
Total assets acquired | 3,297,200 | ||||
Aggregate purchase price | $ | 3,297,200 | |||
Future_amortization_of_the_int
Future amortization of the intangible asset intellectual property was as follows (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Future amortization of the intangible asset intellectual property was as follows | |||||
Future amortization of the intangible asset intellectual property was as follows | Future amortization of the intangible asset – intellectual property was as follows as of December 31, 2014: | ||||
Year ending December 31: | |||||
2015 | $ | 54,953 | |||
Total | 54,953 | ||||
Schedule_of_Property_and_Equip
Schedule of Property and Equipment (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Schedule of Plant, Property and equipment (Tables): | |||||||||||
Property and Equipment | A summary of property and equipment at December 31, 2014 and December 31, 2013 is as follows: | ||||||||||
2014 | 2013 | Estimated Useful | |||||||||
Lives | |||||||||||
(in years) | |||||||||||
Equipment | $ | 96,737 | $ | 83,146 | 5 | ||||||
Computer equipment (hardware) | 6,975 | 6,975 | 5-Mar | ||||||||
Software | 3,929 | 3,929 | 3 | ||||||||
107,641 | 94,050 | ||||||||||
Less: Accumulated depreciation | (55,258 | ) | (38,616 | ) | |||||||
$ | 52,383 | $ | 55,434 | ||||||||
Summary_of_warrants_Tables
Summary of warrants (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Summary of warrants: | |||||||||||||
Summary of warrants | A summary of warrants issued, exercised and expired during the year ending December 31, 2014 is as follows: | ||||||||||||
Shares | Weighted Average | Aggregate | |||||||||||
Exercise Price | Intrinsic | ||||||||||||
Value | |||||||||||||
Balance at December 31, 2013 | 7,586,000 | $ | 0.92 | $ | 45,000 | ||||||||
Issued | — | — | — | ||||||||||
Expired | (2,000,000 | ) | (.75 | ) | — | ||||||||
Balance at December 31, 2014 | 5,586,000 | $ | 0.99 | $ | 45,000 | ||||||||
Weighted_average_assumptions_T
Weighted average assumptions (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Weighted average assumptions: | |||||
Weighted average assumptions | The fair value of each warrant granted for equity and debt raises was determined using the Black-Scholes warrant pricing model and the following assumptions: | ||||
31-Dec-14 | |||||
Risk free interest rate | 1.10 % to 1.38 | % | |||
Expected term | 3-4 years | ||||
Annualized volatility | 90 | % | |||
Expected dividends | — | ||||
Stock_option_activity_Tables
Stock option activity (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stock option activity: | |||||||||||||||||
Stock option activity | Stock option activity for the year ended December 31, 2014, is summarized as follows: | ||||||||||||||||
Shares | Weighted Average | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic | ||||||||||||||
Exercise Price | Value | ||||||||||||||||
Options outstanding at December 31, 2013 | 2,750,000 | $ | 0.78 | 9 | $ | — | |||||||||||
Granted | — | — | — | — | |||||||||||||
Expired/forfeited | — | — | — | — | |||||||||||||
Options outstanding at December 31, 2014 | 2,750,000 | $ | 0.78 | 9 | $ | — | |||||||||||
Schedule_of_Income_Taxes_and_d
Schedule of Income Taxes and deferred tax assets (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Schedule Of Income Taxes And Deferred Tax Assets Tables | |||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s net deferred income taxes are as follows: | ||||||||||||||||||||
For the Years ended | |||||||||||||||||||||
December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Deferred tax assets: | |||||||||||||||||||||
Net operating loss carryforwards | $ | 2,307,440 | $ | 2,092,216 | |||||||||||||||||
Start-up cost | 350,834 | 381,070 | |||||||||||||||||||
Goodwill | 805,100 | 871,272 | |||||||||||||||||||
Amortization of Intellectual Property | (6,893 | ) | (6,893 | ) | |||||||||||||||||
Stock based compensation | 621,858 | 542,836 | |||||||||||||||||||
Other | 131 | 1,653 | |||||||||||||||||||
Deferred tax assets | 4,078,470 | 3,882,154 | |||||||||||||||||||
Less valuation allowance | (4,078,470 | ) | (3,882,154 | ) | |||||||||||||||||
Net deferred tax assets after valuation allowance | $ | — | $ | — | |||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate (benefit) follows: | ||||||||||||||||||||
Rate Reconciliation | For the Years ended | ||||||||||||||||||||
December 31, | |||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||
Federal income tax at statutory rate | $ | (192,410 | ) | $ | (358,686 | ) | |||||||||||||||
State Tax, net of Federal rate | (20,543 | ) | (58,023 | ) | |||||||||||||||||
Permanent Differences | 237 | (13,829 | ) | ||||||||||||||||||
Forfeiture of fully vested stock compensation | — | 255,438 | |||||||||||||||||||
Rate Change from 39.5% to 37.63% | — | 88,950 | |||||||||||||||||||
Other | 16,400 | 21,891 | |||||||||||||||||||
Change in Valuation Allowance | 196,316 | 64,259 | |||||||||||||||||||
$ | — | $ | — | ||||||||||||||||||
Summary of Valuation Allowance | Valuation and Qualifying Accounts | ||||||||||||||||||||
Description | Balance at | Charged to | Write-offs | Other | Balance at | ||||||||||||||||
Beginning | Cost and | Charges | End of | ||||||||||||||||||
of Period | Expenses | Period | |||||||||||||||||||
Deferred tax asset valuation allowance | |||||||||||||||||||||
Year ended December 31, 2014 | $ | 3,882,154 | $ | 196,316 | $ | — | $ | — | $ | 4,078,470 | |||||||||||
Year ended December 31, 2013 | $ | 3,817,895 | $ | 64,259 | $ | — | $ | — | $ | 3,882,154 | |||||||||||
Nature_of_Business_Details
Nature of Business (Details) (USD $) | Feb. 11, 2008 |
Nature of Business and organization | |
Each issued and outstanding share of common stock of PowerVerde was converted into the right to receive shares of the common stock of Vyrex | 1.2053301 |
Number of shares held by the former shareholders of PowerVerde as a result of the Merger | 24,588,734 |
Percentage of shares held by the former shareholders of PowerVerde as a result of the Merger | 95.00% |
Pursuant to the Merger Agreement, PowerVerde paid in accounts payable and other liabilities owed by Vyrex | $233,000 |
The total purchase price of the transaction | 401,894 |
Transaction costs related to the Merger included in the total purchase price | 60,000 |
Vyrex paid a promissory note prior to execution of the Merger Agreement | $200,000 |
Shares of common stock issued for payment of promissory note | 250,000 |
Additional shares of common stock issued as payment for certain consulting and administrative services | 25,000 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details) (USD $) | 12 Months Ended | 94 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Antidilutive Securities Excluded and Imapirment charges | |||
Research and development cost | $364,095 | $459,651 | $4,152,640 |
Number of warrants excluded from weighted average common shares outstanding on a diluted basis. | 5,586,000 | 7,586,000 | |
Number of options excluded from weighted average common shares outstanding on a diluted basis. | 2,750,000 | 2,750,000 |
Acquisition_Fair_values_of_ass
Acquisition - Fair values of assets (Details) (USD $) | Dec. 31, 2014 |
Acquisition - Cornerstone Acquisition - Purchase Price Allocation | |
Intangible asset - Intellectual Property | $659,440 |
Goodwill | 2,637,760 |
Total assets acquired | 3,297,200 |
Aggregate purchase price | $3,297,200 |
Acquisition_Future_amortizatio
Acquisition - Future amortization of intangible asset-intellectual property (Details) (USD $) | Dec. 31, 2014 |
Future Amortization Assets | |
2015 | $54,953 |
Total | $54,953 |
Acquisition_Details_Narrative
Acquisition (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Acquisition Narrative | ||
Percentage of membership interests purchased | 100.00% | |
Area of land owned by sellers in Scottsdale Arizona | 5,000 | |
Stock issued during period, shares, acquisitions | 2,260,000 | |
Share price (in Dollars per share) | $1.37 | |
Exercise period of warrants (in years) | 3 | |
Warrants issued' | 300,000 | |
Amortization expenses | $219,813 | $219,813 |
Accumulated amortization of intangible asset-intellectual property | $604,487 | $384,673 |
Acquisition_Parentheticals_Det
Acquisition Parentheticals (Details) (USD $) | Apr. 30, 2012 |
Acquisition Parentheticals | |
Warrants For Cornerstone Acquisition Exercisable January 1, 2012 - December 31, 2016 | 100,000 |
Exercise price of these warrants | $2 |
Warrants for Cornerstone Acquisition Exercisable July 1, 2012 through June 30, 2017 | 100,000 |
Exercise price of these warrants, | $3 |
Warrants For Cornerstone Acquisition Exercisable January 1, 2013 through December 31, 2017 | 100,000 |
Exercise price of warrants issued in transaction (in Dollars per share) | $4 |
Warrants For Cornerstone Acquisition | 300,000 |
Issuance of warrants in business acquisition, Value (in Dollars) | $201,000 |
Risk free interest rate | 1.04% |
Expected volatility rate | 79.10% |
Equity issued in business combination, fair value (in Dollars) | 3,297,200 |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
A summary of property and equipment at : | ||
Equipment. | $96,737 | $83,146 |
Computer equipment (hardware). | 6,975 | 6,975 |
Software. | 3,929 | 3,929 |
Total Property and equipments | 107,641 | 94,050 |
Less: Accumulated depreciation. | -55,258 | -38,616 |
Net Property and equipments. | $52,383 | $55,434 |
Property_and_Equipment_Details1
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | 94 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Summary of depreciation expenses | |||
Depreciation expense for the year ended | $16,641 | $11,845 | $55,258 |
Stockholders_Equitywarrants_is
Stockholders' Equity-warrants issued, exercised and expired (Details) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Summary of warrants issued, exercised and expired during the year | |
Balance at December 31, 2013 | 7,586,000 |
Shares Issued | 0 |
Shares Expired | -2,000,000 |
Balance at December 31, 2014 | 5,586,000 |
Weighted Average Exercise Price Balance at December 31, 2013 | $0.92 |
Weighted Average Exercise Price Issued | $0 |
Weighted Average Exercise Price Expired | ($0.75) |
Weighted Average Exercise Price Balance at December 31, 2014 | $0.99 |
Aggregate Intrinsic Value Balance at December 31, 2013 | $45,000 |
Aggregate Intrinsic Value Issued | $0 |
Aggregate Intrinsic Value Expired | $0 |
Aggregate Intrinsic Value Balance at December 31, 2014 | $45,000 |
Stockholders_EquityFair_value_
Stockholders' Equity-Fair value of each warrant granted for equity and debt raises (Details) | 12 Months Ended |
Dec. 31, 2014 | |
Stockholders Equity-fair Value Of Each Warrant Granted For Equity And Debt Raises Details | |
Risk free interest rate minimum | 1.10% |
Risk free interest rate maximum | 1.38% |
Expected term minimum in years | 3 |
Expected term maximum in years | 4 |
Annualized volatility | 90.00% |
Expected dividends | 0.00% |
Stockholders_Equity_Issue_of_W
Stockholders' Equity (Issue of Warrants to purchase shares of the Company's common stock) (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 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, 2014 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Dec. 31, 2014 | |
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 | $3 | $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 | |||||||||||
Extending maturity date | Extending the maturity date from December 31, 2015 to December 31, 2017 | |||||||||||
Reduced exercise price | Exercise price was reduced from $0.41 per share to $0.39 per share | |||||||||||
Revised the terms of the additional warrants | Revised the terms of the additional warrants issued December 1, 2013, to extend the maturity date to December 31, 2018 | |||||||||||
Reduced exercise price the additional warrants | Exercise price was reduced from $.21 per share to $0.17 per share | |||||||||||
Weighted average grant date fair value of warrants issued | $0.06 | |||||||||||
Maximum [Member] | ||||||||||||
Exercise price per share in association with stock subscription agreements | 4 | |||||||||||
Minimum [Member] | ||||||||||||
Exercise price per share in association with stock subscription agreements | 2 |
Stockholders_Equity_Common_Sto
Stockholders' Equity (Common Stock Issued for Services) (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2013 | Dec. 31, 2013 | |
Common Stock Issued for Services | ||
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 | $124,750 |
Stockholders_Equity_Private_Pl
Stockholders' Equity (Private Placement of Common Stock) (Details) (USD $) | 1 Months Ended | 3 Months Ended | ||||||||
Feb. 28, 2012 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | |
Private Placement of Common Stock | ||||||||||
Company raised exclusively from accredited European investors pursuant to a private placement | $500,000 | |||||||||
Shares of common stock issued to European investors pursuant to a private placement | 500,000 | |||||||||
Price per share of common stock issued to European investors pursuant to a private placement | $1 | |||||||||
Fund raised from a Newton affiliate | 275,000 | |||||||||
Newton affiliates received three-year warrants to purchase shares in connections with the settlement of certain claims by and between the Company and Newton | 500,000 | |||||||||
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 | $492,030 | $71,000 | $335,000 | |
Issue of unregistered shares of common stock to accredited investors | 1,000,000 | 750,000 | 2,400,000 | 100,000 | 600,000 | 500,000 | 71,000 | 335,000 | ||
Price per share of common stock issuedto accredited investors | $0.10 | $0.10 | $0.10 | $0.25 | $0.25 | $0.25 | $1 | $1 | ||
Each investor received a three-year warrant to purchase shares of common stock at a price per share | $1 | $3 | $3 | |||||||
Issue of unregistered shares of common stock to accredited investors at $ 0.43 per share | 396,000 | |||||||||
Issue of unregistered shares of common stock to accredited investors .715 per share | 450,000 | |||||||||
Percentage of commission on the gross proceeds of offering paid to its placement agent. | 10.00% | 10.00% | 10.00% | 10.00% |
Stockholders_Equity_Treasury_S
Stockholders' Equity (Treasury Shares transactions) (Details) (USD $) | 3 Months Ended | ||||||
Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 16, 2012 | 31-May-12 | Apr. 30, 2012 | Apr. 07, 2011 | |
Treasury Shares transactions | |||||||
Shares of the Company's stock were surrendered to Treasury in exchange for a interest-free note payable | 4,500,000 | ||||||
Amount reported as note payable to related party | $200,000 | ||||||
Imputed rate of interest on note payable | 8.00% | ||||||
The balance of the note payable was settled with the surrender of an additional shares of the Company's stock | 3,000,000 | ||||||
Value of note exchanged in Treasury | 530,000 | ||||||
Company purchased shares of common stock from an affiliate | 450,000 | 100,000 | |||||
Purchase price of shares of common stock purchased from an affiliate | $90,000 | $25,000 | |||||
Purchase price per share of common stock purchased from an affiliate | $0.20 | $0.25 | |||||
Amount payable as equal monthly installments | 100,000 | 10,000 | |||||
Balance of payable included in the "Payable to related parties" | 5,000 | 33,000 | 100,000 | 10,000 | 14,000 | ||
Debt fully Paid | $100,000 |
Stock_Options_Detail_Stock_Opt
Stock Options (Detail) - Stock Option Activity, Current Period (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Shares | ||
Balance at December 31, 2013 | 7,586,000 | |
Granted | 0 | |
Expired/forfeited | -2,000,000 | |
Balance at December 31, 2014 | 5,586,000 | |
Options | ||
Shares | ||
Balance at December 31, 2013 | 2,750,000 | |
Granted | 0 | |
Expired/forfeited | 0 | |
Balance at December 31, 2014 | 2,750,000 | 2,750,000 |
Weighted Average Exercise Price | ||
Balance at December 31, 2013 | $0.78 | |
Granted | $0 | |
Expired/forfeited | $0 | |
Balance at September 30, 2014 | $0.78 | $0.78 |
Weighted Average Remaining Contractual Life (Years) | ||
Options outstanding | 9 years | 9 years |
Aggregate Intrinsic Value | ||
Options outstanding | $0 | $0 |
Stock_Options_Details
Stock Options (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Share-based Compensation | $0 | $121,137 |
Unrecognized stock-based compensation | $0 |
Notes_Payable_to_Related_Parti1
Notes Payable to Related Parties (Details) (USD $) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 5-May-14 | |
Notes Payable to Related Parties parentheticals | |||||||
Proceeds from notes payable to related parties | $75,000 | $400,000 | |||||
Proceeds from notes payable to related parties in 2012 | 325,000 | ||||||
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% | ||||||
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 | $0.41 | |||||
Fair value of the common stock warrants recorded as additional paid in capital till date | 16,500 | 88,000 | |||||
Fair value of the common stock warrants recorded as derivative liability till date | 16,500 | 88,000 | |||||
Fair value of common stock warrants issued (in dollars per share) | $0.21 | ||||||
Promissory Note with Edward Gomez, a company shareholder | 30,000 | ||||||
Promissory note bears interest at | 10.00% | ||||||
Extending maturity date | Extending the maturity date from December 31, 2015 to December 31, 2017 | ||||||
Reduced exercise price | Exercise price was reduced from $0.41 per share to $0.39 per share | ||||||
Revised the terms of the additional warrants | Revised the terms of the additional warrants issued December 1, 2013, to extend the maturity date to December 31, 2018 | ||||||
Reduced exercise price the additional warrants | Exercise price was reduced from $.21 per share to $0.17 per share | ||||||
Promissory note maturity date | 31-Dec-16 | 19-May-15 | 19-May-14 | ||||
Accrued interest | $3,000 |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 1 Months Ended | |||
Oct. 31, 2012 | 31-May-14 | Nov. 30, 2012 | Oct. 25, 2012 | |
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 | |||
Fair value of the options fully vested recorded as general and administrative expenses | 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 | 61,000 | |||
Amount recorded during the first quarter of 2013 | 91,000 | |||
Amount recorded in the second quarter of 2013 | 30,000 | |||
Chief Technical Officer [Member] | ||||
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 |
Components_of_the_net_deferred
Components of the net deferred income tax asset (liability) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred income tax asset: | ||
Net operating loss carry forwards | $2,307,440 | $2,092,216 |
Start-up cost | 350,834 | 381,070 |
Goodwill | 805,100 | 871,272 |
Amortization of Intellectual Property | -6,893 | -6,893 |
Stock based compensation | 621,858 | 542,836 |
Other | 131 | 1,653 |
Deferred tax assets | 4,078,470 | 3,882,154 |
Less Valuation Allowance | -4,078,470 | -3,882,154 |
Net deferred tax assets after valuation allowance | $0 | $0 |
Income_Taxes_Rate_Reconciliati
Income Taxes (Rate Reconciliation) (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Rate Reconciliation | ||
Federal income tax at statutory rate | ($192,410) | ($358,686) |
State Tax, net of Federal rate | -20,543 | -58,023 |
Permanent Differences | 237 | -13,829 |
Forfeiture of fully vested stock compensation | 0 | 255,438 |
Rate Change from 39.5% to 37.63% | 0 | 88,950 |
Other changes | 16,400 | 21,891 |
Change in Valuation Allowance | 196,316 | 64,259 |
Income Tax rate (benefit) | $0 | $0 |
Income_taxes_Valuation_and_Qua
Income taxes (Valuation and Qualifying Accounts) (Details) (Deferred tax asset valuation allowance, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Deferred tax asset valuation allowance | ||
Balance at Beginning of Period | $3,882,154 | $3,817,895 |
Charged to Cost and Expenses | 196,316 | 64,259 |
Write-offs | ||
Other Charges | ||
Balance at End of Period | $4,078,470 | $3,882,154 |