Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 10, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | COATES INTERNATIONAL LTD \DE\ | |
Entity Central Index Key | 948,426 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 1,378,132,809 |
Balance Sheets
Balance Sheets - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash | $ 42,560 | $ 29,207 |
Inventory, net | 225,913 | 218,018 |
Deferred offering costs and other assets | 4,164 | 9,117 |
Total Current Assets | 272,637 | 256,342 |
Property, plant and equipment, net | 2,108,805 | 2,108,990 |
Deferred licensing costs, net | 41,378 | 42,449 |
Total Assets | 2,422,820 | 2,407,781 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 2,072,738 | 2,022,568 |
Promissory notes to related parties | 1,445,882 | 1,455,882 |
Deferred compensation payable | 1,001,454 | 922,144 |
Derivative liability related to convertible promissory notes | 511,849 | 632,927 |
Convertible promissory notes, net of unamortized discount | 305,759 | 408,110 |
Current portion of license deposits | 150,595 | 150,595 |
Unearned revenue | 60,725 | 60,725 |
Mortgage loan payable | $ 60,000 | 60,000 |
Current portion of finance lease obligation, net of unamortized discount | 19,349 | |
Total Current Liabilities | $ 5,609,002 | 5,732,300 |
Non-current portion of mortgage loan payable | 1,313,158 | 1,328,159 |
Non-current portion of license deposits | 641,575 | 646,375 |
Total Liabilities | $ 7,563,735 | $ 7,706,834 |
Commitments and Contingencies | ||
Stockholders' Deficiency | ||
Preferred stock, $0.001 par value, 100,000,000 shares authorized: | ||
Series A Preferred Stock, 1,000,000 shares designated, 50,000 shares issued and outstanding at March 31, 2016 and December 31, 2015 | $ 50 | $ 50 |
Series B Convertible Preferred Stock, 25,000,000 and 5,000,000 shares designated, 4,849,511 and 3,492,749 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 4,871 | 3,493 |
Common Stock, $0.0001 par value, 2,000,000,000 shares authorized, 1,334,331,531 and 1,036,791,116 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 133,395 | 103,679 |
Additional paid-in capital | 53,849,434 | 51,564,723 |
Accumulated deficit | (59,128,665) | (56,970,998) |
Total Stockholders' Deficiency | (5,140,915) | (5,299,053) |
Total Liabilities and Stockholders' Deficiency | $ 2,422,820 | $ 2,407,781 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares | 2,000,000,000 | 2,000,000,000 |
Common stock, issued shares | 1,334,331,531 | 1,036,791,116 |
Common stock, outstanding shares | 1,334,331,531 | 1,036,791,116 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Series A preferred stock, designated shares | 1,000,000 | 1,000,000 |
Series A Preferred stock, issued shares | 50,000 | 50,000 |
Series A Preferred stock, outstanding shares | 50,000 | 50,000 |
Series B Convertible Preferred Stock [Member] | ||
Series B convertible preferred stock, designated shares | 25,000,000 | 5,000,000 |
Series B Preferred stock, issued shares | 4,849,511 | 3,492,749 |
Series B Preferred stock, outstanding shares | 4,849,511 | 3,492,749 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statements of Operations [Abstract] | ||
Sublicensing fee revenue | $ 4,800 | $ 4,800 |
Total Revenues | 4,800 | 4,800 |
Expenses: | ||
Research and development costs | 91,561 | 93,911 |
Compensation and benefits | 1,831,817 | 2,228,235 |
General and administrative expenses | 77,078 | 148,206 |
Depreciation and amortization | 12,749 | 15,963 |
Total Operating Expenses | 2,013,205 | 2,486,315 |
Loss from Operations | (2,008,405) | (2,481,515) |
Other Income (Expense): | ||
Decrease in estimated fair value of embedded derivative liabilities | 121,078 | 44,032 |
Loss on conversion of convertible notes | (26,380) | (104,504) |
Interest expense, net | (243,960) | (272,782) |
Total other income (expense) | (149,262) | (333,254) |
Loss Before Income Taxes | $ (2,157,667) | $ (2,814,769) |
Provision for income taxes | ||
Net Loss | $ (2,157,667) | $ (2,814,769) |
Basic net loss per share | $ 0 | $ (0.01) |
Basic weighted average shares outstanding | 1,144,882,150 | 504,806,827 |
Diluted net loss per share | $ 0 | $ (0.01) |
Diluted weighted average shares outstanding | 1,144,882,150 | 504,806,827 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Cash Flows [Abstract] | ||
Net Cash Used in Operating Activities | $ (151,530) | $ (134,651) |
Cash Used in Investing Activities: | ||
Acquisition of property, plant and equipment | (11,492) | (22,358) |
Total Cash Used in Investing Activities | (11,492) | (22,358) |
Cash Flows Provided (Used in) by Financing Activities: | ||
Issuance of common stock under equity line of credit | 100,000 | |
Issuance of convertible promissory notes | 85,000 | $ 50,000 |
Issuance of common stock and warrants | $ 25,000 | |
Issuance of promissory notes to related parties | $ 40,000 | |
Repayment of mortgage loan | $ (15,000) | (15,000) |
Repayment of promissory notes to related parties | (10,000) | (67,000) |
Finance lease obligation payments | $ (8,625) | (15,520) |
Repayment of convertible promissory notes | (26,375) | |
Net Cash Provided by (Used in) Financing Activities | $ 176,375 | (33,895) |
Net Increase (Decrease) in Cash | 13,353 | (190,904) |
Cash, beginning of period | 29,207 | 263,526 |
Cash, end of period | 42,560 | 72,622 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid during the period for interest | 26,925 | 25,813 |
Supplemental Disclosure of Non-cash Financing Activities: | ||
Conversion of convertible promissory notes | $ 978,209 | $ 402,818 |
The Company and Basis of Presen
The Company and Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
The Company and Basis of Presentation [Abstract] | |
THE COMPANY AND BASIS OF PRESENTATION | 1. THE COMPANY AND BASIS OF PRESENTATION Nature of Organization Coates International, Ltd. (the “Company” or “CIL”) has acquired the exclusive licensing rights for the Coates spherical rotary valve (“CSRV ® ® ® ® ® Management believes that the CSRV ® ● Improved fuel efficiency ● Lower levels of harmful emissions ● Adaptability to numerous types of engine fuels ● Longer engine life ● Longer intervals between engine servicing The CSRV ® ® ® ® ® ® ® Basis of Presentation The accompanying condensed financial statements include the accounts of the Company. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the condensed financial statements have been reclassified to conform to the current period’s presentation. These condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”). Since the Company’s inception, the Company has been responsible for the development costs of the CSRV ® ® ® As shown in the accompanying financial statements, the Company has incurred recurring losses from operations and, as of March 31, 2016, had a stockholders’ deficiency of ($5,141,000). In addition, the current economic environment, which is characterized by tight credit markets, investor uncertainty about how to safely invest their funds and low investor confidence, has introduced additional risk and difficulty to the Company’s challenge to secure needed additional working capital. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management has instituted a cost control program intended to restrict variable costs to only those expenses that are necessary to complete its activities related to entering the production phase of operations, develop additional commercially feasible applications of the CSRV ® The Company continues to actively seek out new sources of working capital; however, there can be no assurance that it will be successful in these efforts. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Use of Estimates |
Concentrations of Credit and Bu
Concentrations of Credit and Business Risk | 3 Months Ended |
Mar. 31, 2016 | |
Concentrations of Credit and Business Risk [Abstract] | |
CONCENTRATIONS OF CREDIT AND BUSINESS RISK | 2. CONCENTRATIONS OF CREDIT AND BUSINESS RISK The Company maintains cash balances with two financial institutions. Monies on deposit with one of the institutions is currently fully insured by the Federal Deposit Insurance Corporation. Monies on deposit at the other financial institution amounting to $3,000 are invested in a fund that invests in securities with maturities of 60 days or less. The Company’s operations are devoted to the development, application and marketing of the CSRV ® ® |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value of Financial Instruments [Abstract] | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 3. FAIR VALUE OF FINANCIAL INSTRUMENTS Cash, Other Assets, Accounts Payable and Accrued Liabilities and Other Liabilities With the exception of convertible promissory notes, the carrying amount of these items approximates their fair value because of the short term maturity of these instruments. The convertible promissory notes are reported at their estimated fair value, determined as described in more detail in Note 14. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. |
Licensing Agreement and Deferre
Licensing Agreement and Deferred Licensing Costs | 3 Months Ended |
Mar. 31, 2016 | |
Licensing Agreement and Deferred Licensing Costs [Abstract] | |
LICENSING AGREEMENT AND DEFERRED LICENSING COSTS | 4. LICENSING AGREEMENT AND DEFERRED LICENSING COSTS ® ® ® ® ® Under the License Agreement, George J. Coates and Gregory G. Coates agreed that they will not grant any Western Hemisphere licenses to any other party with respect to the CSRV ® At March 31, 2016 and December 31, 2015, deferred licensing costs, comprised of expenditures for patent costs incurred pursuant to the CSRV ® |
Agreements Assigned to Almont E
Agreements Assigned to Almont Energy, Inc. | 3 Months Ended |
Mar. 31, 2016 | |
Agreements Assigned to Almont Energy, Inc. [Abstract] | |
AGREEMENTS ASSIGNED TO ALMONT ENERGY, INC. | 5. AGREEMENTS ASSIGNED TO ALMONT ENERGY, INC. ® Almont is also the assignee of an escrow agreement (the “Escrow Agreement”) that provides conditional rights to a second sublicense agreement from the Company for the territory of the United States (the “US License”). The US License has been deposited into an escrow account and the grant of the license will not become effective until the conditions for release from escrow are satisfied. The US License provides for a license fee of $50 million. The Escrow Agreement requires that Almont, as the assignee, make a payment (“Release Payment”) to the Company equal to the then remaining unpaid balance of the Canadian License licensing fee, the R&D Agreement fee and the down payment of $1,000,000 required under the US License. It is not likely that Almont will be able to make additional payments of the Release Payment until the Company can raise sufficient new working capital to commence production and ship Gen Sets to Almont. At |
Non-Exclusive Distribution Subl
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. | 3 Months Ended |
Mar. 31, 2016 | |
Non-Exclusive Distribution Sublicense With Renown Power Development, Ltd. [Abstract] | |
NON-EXCLUSIVE DISTRIBUTION SUBLICENSE WITH RENOWN POWER DEVELOPMENT, LTD. | 6. NON-EXCLUSIVE DISTRIBUTION SUBLICENSE WITH RENOWN POWER DEVELOPMENT, LTD. In February 2015, the Company granted a non-exclusive distribution sublicense to Renown Power Development, Ltd., a China-based sales and distribution company (“Renown”) covering the territory defined as the Western Hemisphere. Under this sublicense, Renown will be permitted to sell, lease and distribute CSRV ® As collateral for payment of the sublicensing fee, Coates Power, Ltd. an independent China-based manufacturing company that will produce CSRV ® Coates Power has agreed to initially source its production parts and components from the Company. In February 2015, the Company received an order from Coates Power for approximately $131,000 of production parts and components, at cost, in connection with its plans to manufacture two initial Gen Sets. In June, 2015, by mutual consent of the parties, it was agreed that the Company would assemble two completed Gen Sets for shipment to Coates Power in China in lieu of shipping the parts and components. This amount is included in Deposits in the accompanying balance sheet at March 31, 2016. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2016 | |
Inventory [Abstract] | |
INVENTORY | 7. INVENTORY Inventory consisted of the following: March 31, 2016 December 31, 2015 Raw materials $ 538,000 $ 554,000 Work-in-process 75,000 51,000 Less: Reserve for obsolescence (387,000 ) (387,000 ) Total $ 226,000 $ 218,000 |
License Deposits
License Deposits | 3 Months Ended |
Mar. 31, 2016 | |
License Deposits [Abstract] | |
LICENSE DEPOSITS | 8. LICENSE DEPOSITS ® Sublicensing fee revenue for the three months ended March 31, 2016 and 2015 amounted to $5,000 and $5,000, respectively. |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 9. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at cost, less accumulated depreciation, consist of the following: March 31, 2016 December 31, Land $ 1,235,000 $ 1,235,000 Building 964,000 964,000 Building improvements 83,000 83,000 Machinery and equipment 689,000 689,000 Furniture and fixtures 57,000 46,000 3,028,000 3,017,000 Less: Accumulated depreciation (919,000 ) (908,000 ) Total $ 2,109,000 $ 2,109,000 Depreciation expense amounted to $12,000 and $15,000 for the three months ended March 31, 2016 and 2015, respectively. |
Mortgage Loan Payable
Mortgage Loan Payable | 3 Months Ended |
Mar. 31, 2016 | |
Mortgage Loan Payable [Abstract] | |
MORTGAGE LOAN PAYABLE | 10. MORTGAGE LOAN PAYABLE |
Finance Lease Obligation
Finance Lease Obligation | 3 Months Ended |
Mar. 31, 2016 | |
Finance Lease Obligation [Abstract] | |
FINANCE LEASE OBLIGATION | 11. FINANCE LEASE OBLIGATION In accordance with GAAP, this sale/leaseback was required to be accounted for as a financing lease. Under this accounting method, the equipment and accumulated depreciation remained on the Company’s books and records as if the Company still owned the equipment. For the three months ended March 31, 2016 and 2015, interest expense on this lease amounted to $2,000 and $10,000, respectively. These amounts are included in interest expense in the accompanying statements of operations. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are as follows: March 31, 2016 December 31, 2015 Legal and professional fees $ 1,342,000 $ 1,368,000 Accrued interest expense 372,000 376,000 General and administrative expenses 244,000 163,000 Research and development costs 115,000 115,000 Total $ 2,073,000 $ 2,022,000 |
Promissory Notes to Related Par
Promissory Notes to Related Parties | 3 Months Ended |
Mar. 31, 2016 | |
Promissory Notes to Related Parties [Abstract] | |
PROMISSORY NOTES TO RELATED PARTIES | 13. PROMISSORY NOTES TO RELATED PARTIES Promissory Notes Issued to George J. Coates During the three months ended Promissory Note Issued to Gregory G. Coates The Company has a non-interest bearing promissory note due to Gregory G. Coates which is payable on demand. As required by GAAP, interest at the rate of 10% per annum amounting to $36,000 has been imputed on this promissory note for the three months ended March 31, 2016. At March 31, 2016, the outstanding principal balance was $1,438,000. Promissory Notes Issued to Bernadette Coates During the three months ended For the three months ended March 31, 2016 and 2015, aggregate interest expense on all promissory notes to related parties amounted to $52,000 and $57,000, respectively. Unpaid accrued interest on these promissory notes amounting to $367,000 is included in accounts payable and accrued liabilities in the accompanying balance sheet at March 31, 2016. |
Convertible Promissory Notes an
Convertible Promissory Notes and Embedded Derivative Liability | 3 Months Ended |
Mar. 31, 2016 | |
Convertible Promissory Notes and Embedded Derivative Liability [Abstract] | |
CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE LIABILITY | 14. CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE LIABILITY The convertible notes generally become convertible, in whole, or in part, beginning on the six month anniversary of the issuance date and may be prepaid at the option of the Company, generally with a prepayment penalty of from 25% to 50% of the principal amount of the convertible note at any time prior to becoming eligible for conversion. One convertible promissory note with a balance of $199,000 is convertible in monthly installments in an amount determined by the noteholder of up to $53,000, plus accrued interest. The Company may elect, at its option to repay each monthly installment in whole, or in part, in cash, without penalty. The amount of each installment not paid in cash is converted into shares of the Company’s common stock. This convertible note also requires that the conversion price be re-measured 23 trading days after the conversion shares are originally delivered. If the re-measured conversion price is lower, then the Company is required to issue additional conversion shares to the noteholder. In accordance with GAAP, the estimated fair value of the embedded derivative liability related to the convertible notes is required to be remeasured at each balance sheet date. The fair value measurement accounting standard establishes a valuation hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used, when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on independent market data sources. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available. The valuation hierarchy is composed of three categories. The three levels of the fair value hierarchy are as follows: ● Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. ● Level 2 – Inputs include quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. ● Level 3 – Inputs to the fair value measurement are unobservable inputs or valuation techniques. The estimated fair value of the embedded derivative liabilities related to promissory notes outstanding was measured as the aggregate estimated fair value, based on Level 2 inputs, which included the average of the quoted daily yield curve rates on six-month and one-year treasury securities and, because the actual volatility rate on the Company’s common stock is not available, a conservative estimated volatility rate of 200%. The embedded derivative liability arises because, based on historical trading patterns of the Company’s stock, the formula for determining the Conversion Rate is expected to result in a different Conversion Rate than the closing price of the stock on the actual date of conversion (hereinafter referred to as the “Variable Conversion Rate Differential”). The estimated fair values of the derivative liabilities have been calculated based on a Black-Scholes option pricing model. The following table presents the Company's fair value hierarchy of financial assets and liabilities measured at fair value at: March 31, 2016 December 31, 2015 Level 1 Inputs $ - $ - Level 2 Inputs 512,000 633,000 Level 3 Inputs - - Total $ 512,000 $ 633,000 In a series of transactions, during the three months ended March 31, 2016, convertible promissory notes with an aggregate principal balance of $295,000, including accrued interest thereon were converted into 234,920,926 unregistered shares of common stock. The Company incurred a loss on these conversions amounting to $26,000 for during the three months ended March 31, 2016. In a series of transactions, during the three months ended March 31, 2015, convertible promissory notes with an aggregate principal balance of $426,000, including accrued interest thereon were converted into 142,831,226 unregistered shares of common stock. The Company incurred a loss on these conversions amounting to $105,000 for during the three months ended March 31, 2015. In February 2015, the Company also repaid $27,000 of a convertible promissory note, including accrued interest thereon without penalty. At March 31, 2016, the Company had reserved 457,000,000 shares of its unissued common stock for conversion of convertible promissory notes. The Company made the private placement of these securities in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the “Act”), Rule 506 of Regulation D, and the rules and regulations promulgated thereunder, and/or upon any other exemption from the registration requirements of the Act, as applicable. |
Capital Stock
Capital Stock | 3 Months Ended |
Mar. 31, 2016 | |
Capital Stock/Stock Options [Abstract] | |
CAPITAL STOCK | 15. CAPITAL STOCK Common Stock The Company’s common stock is traded on OTC Pink Sheets. Investors can find stock quotes and market information for the Company at www.otcmarkets.com market system under the ticker symbol COTE. Effective May 29, 2015, the Company amended its Certificate of Incorporation to increase the number of authorized shares of common stock, par value, $0.0001 per share (the “Common Stock”) to 2,000,000,000. The Company intends to increase the number of authorized shares of common stock in the future on a timely basis, at any point that it is anticipated that issuances of common stock from sales of common stock or conversions of convertible instruments into common stock will warrant such an increase. The following common stock transactions occurred during the three months ended March 31, 2016: ● In a series of transactions during the three months ended March 31, 2016, convertible promissory notes with an aggregate principal balance of $295,000, including accrued interest thereon were converted into 234,920,926 unregistered shares of common stock. ● In a series of transactions during the three months ended March 31, 2016, the Company issued 37,234,002 registered shares of its common stock to Southridge Partners II LP (“Southridge”) under the 2015 EP Agreement, as discussed in Note 20, in consideration for $100,000. The proceeds were used for general working capital. The Company is required to deliver shares of its common stock to Southridge with each Put Notice based on the dollar amount of the Put Notice and the trading price of the common stock. At March 31, 2016, there were 15,996,454 shares of common stock previously delivered and held by Southridge which had not been sold. These shares may be held by Southridge until sold under future Put Notices or until the Company requests that they be returned. ● In March 2016, the Company made a private sale, pursuant to a stock purchase agreement of 25,000,000 unregistered shares of its common stock and 25,000,000 common stock warrants to purchase one unregistered share of its common stock at an exercise price of $0.001 per share in consideration for $25,000. The following common stock transactions occurred during the three months ended March 31, 2015: ● In a series of transactions during the three months ended March 31, 2015, convertible promissory notes with an aggregate principal balance of $426,000, including accrued interest thereon were converted into 142,831,226 unregistered shares of common stock. At March 31, 2016, on a pro forma basis, the approximate number of shares of common stock that would be issued if all of the Company’s outstanding convertible instruments and stock options had been converted or exercised was 458,859,000. Preferred Stock and anti-dilution rights The Company is authorized to issue 100,000,000 shares of preferred stock, par value, $0.001 per share (the “Preferred Stock”). The Company may issue any class of the Preferred Stock in any series. The board is authorized to establish and designate series, and to fix the number of shares included in each such series and the relative rights, preferences and limitations as between series, provided that, if the stated dividends and amounts payable on liquidation are not paid in full, the shares of all series of the same class shall share ratably in the payment of dividends including accumulations, if any, in accordance with the sums which would be payable on such shares if all dividends were declared and paid in full, and in any distribution of assets other than by way of dividends in accordance with the sums which would be payable on such distribution if all sums payable were discharged in full. Shares of each such series when issued, shall be designated to distinguish the shares of each series from shares of all other series. There are two series of Preferred Stock that have been designated to date from the total 100,000,000 authorized shares of Preferred Stock. These are as follows: ● Series A Preferred Stock, par value $0.001 per share (“Series A”), 1,000,000 shares designated, 50,000 and 50,000 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively. Shares of Series A entitle the holder to 10,000 votes per share on all matters brought before the shareholders for a vote. These shares are not entitled to receive dividends or share in distributions of capital and have no liquidation preference. All outstanding shares of Series A are owned by George J. Coates. ● Series B Convertible Preferred Stock, par value $0.001 per share, 25,000,000 and 5,000,000 shares designated, 4,849,511 and 3,492,749 shares issued and outstanding as of March 31, 2016 and December 31, 2015, respectively. Shares of Series B do not earn any dividends and may be converted at the option of the holder at any time beginning on the second annual anniversary date after the date of issuance into 1,000 unregistered shares of the Company’s common stock. Holders of Series B are entitled to one thousand votes per share held, on all matters brought before the shareholders for a vote. In the event that either (i) the Company enters into an underwriting agreement for a secondary public offering of securities, or (ii) a change in control of the Company is consummated representing 50% more of the then outstanding shares of Company’s common stock, plus the number of shares of common stock into which any convertible preferred stock is convertible, regardless of whether or not such shares are otherwise eligible for conversion, then the Series B may be immediately converted at the option of the holder into restricted shares of the Company’s common stock. The Company has anti-dilution provisions in place for key executives which are triggered upon the issuance of new shares of its common stock to individuals that are not direct Coates family members or entities that are not controlled by direct Coates family members. These anti-dilution provisions do not apply to new shares of common stock issued in connection with exercises of employee stock options, a secondary public offering of the Company’s securities or a merger or acquisition. These provisions are as follows: ● For each such new share of common stock issued, shares of Series B will be issued to Mr. Coates equal to that number of shares of Series B required to maintain his ownership percentage of shares of common stock outstanding on a pro forma basis, at 78%. The ownership percentage of 78% represents the percentage of outstanding common stock that Mr. Coates originally held at December 31, 2002. ● For each such new share of common stock issued, shares of Series B will be issued to Gregory G. Coates in order to maintain his ownership percentage of common stock at 5.31% of the pro forma number of shares of common stock outstanding, assuming all shares of Series B were converted to common stock. This was his percentage ownership of common stock at December 31, 2002. ● For each such new share of common stock issued, shares of Series B will be issued to Barry C. Kaye in order to maintain his ownership percentage of common stock at a calculated percentage of the pro forma number of shares of common stock outstanding, assuming all shares of Series B were converted to common stock. This calculated percentage, which was 0.04157% at March 31, 2016, is equal to the weighted average percentage ownership of common stock he purchased, based on the number of shares of common stock outstanding on each date he acquired. This percentage is subject to adjustment if he acquires or disposes of shares of the Company’s common stock in the future. The number of shares of Series B outstanding at March 31, 2016, consisted of 4,514,341, 311,023 and 24,147 shares held by George J. Coates, Gregory G. Coates and Barry C. Kaye, respectively. None of the outstanding shares of Series B may be converted prior to July 2, 2016. For the three months ended March 31, 2016, 1,263,978, 86,048 and 6,736 shares of Series B were issued to George J. Coates, Gregory G. Coates and Barry C. Kaye, respectively, having an estimated fair value of $1,641,000, $112,000 and $9,000, respectively. These amounts were included in stock-based compensation expense in the accompanying statement of operations for three months ended March 31, 2016. For the three months ended March 31, 2015, 640,657, 43,614 and 3,414 shares of Series B were issued to George J. Coates, Gregory G. Coates and Barry C. Kaye, respectively, having an estimated fair value of $1,993,000 $136,000 and $11,000, respectively. These amounts were included in stock-based compensation expense in the accompanying statement of operations for the three months ended March 31, 2015. In the event that all of the 4,849,511 shares of Series B outstanding were converted, once the conversion restrictions lapse, an additional 4,849,511,000 new unregistered shares of common stock would be issued. On a pro forma basis, based on the number of shares of common stock outstanding at March 31, 2016, this would dilute the ownership percentage of non-affiliated stockholders from 78.0% to 16.2%. To the extent that additional shares of Series B are issued under the anti-dilution plan, the non-affiliated stockholders’ percentage ownership of the Company would be further diluted. |
Deposits
Deposits | 3 Months Ended |
Mar. 31, 2016 | |
Deposits [Abstract] | |
DEPOSITS | 16. DEPOSITS Deposits at March 31, 2016, consisted of the following: ● A deposit received with an order for two CSRV ® ● A $19,000 non-refundable deposit from Almont in connection with its order for a natural gas fueled electric power CSRV ® |
Sublicensing Fee Revenue
Sublicensing Fee Revenue | 3 Months Ended |
Mar. 31, 2016 | |
Sublicensing Fee Revenue [Abstract] | |
SUBLICENSING FEE REVENUE | 17. SUBLICENSING FEE REVENUE Sublicensing fee revenue for the three months ended March 31, 2016 and 2015 amounted to $5,000 and $5,000, respectively. The Company is recognizing the license deposit of $300,000 on the Canadian License as revenue on a straight-line basis over the approximate remaining life until 2027 of the last CSRV ® |
Loss Per Share
Loss Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Loss Per Share [Abstract] | |
LOSS PER SHARE | 18. LOSS PER SHARE At March 31, 2016, there were stock warrants outstanding to purchase 60,344,911 shares of common stock at exercise prices ranging from $0.001 to $0.12 per share and vested stock options outstanding to acquire 12,470,000 shares of common stock at exercise prices ranging from $0.028 to $0.44 per share and $252,000 of convertible promissory notes eligible for conversion, which on a pro forma basis, assuming they would have been converted on March 31, 2016, would have been convertible into 244,775,045 shares of common stock. At March 31, 2015, there were stock warrants outstanding to purchase 35,344,911 shares of common stock at exercise prices ranging from $0.02 to $0.35 per share and vested stock options outstanding to acquire 12,500,000 shares of common stock at exercise prices ranging from $0.028 to $1.00 per share and $146,000 of convertible promissory notes eligible for conversion, which on a pro forma basis, assuming they would have been converted on March 31, 2015, would have been convertible into 77,840,437 shares of common stock. For the three months ended March 31, 2016 and 2015, none of the potentially issuable shares of common stock were assumed to be converted because the Company incurred a net loss in those periods and the effect of including them in the calculation of earnings per share would have been anti-dilutive. |
Stock Options
Stock Options | 3 Months Ended |
Mar. 31, 2016 | |
Capital Stock/Stock Options [Abstract] | |
STOCK OPTIONS | 19. STOCK OPTIONS The Company’s 2006 Stock Option and Incentive Plan (the “Stock Plan”) was adopted by the Company’s board in October 2006. In September 2007, the Stock Plan, by consent of George J. Coates, majority shareholder, was adopted by our shareholders. The Stock Plan provides for the grant of stock-based awards to employees, officers and directors of, and consultants or advisors to, the Company and its subsidiaries, if any. Under the Stock Plan, the Company may grant options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (“ISO’s”), options not intended to qualify as incentive stock options (“non-statutory options”), restricted stock and other stock-based awards. ISO’s may be granted only to employees of the Company. All of the shares of common stock authorized under the Stock Plan have been granted and no further grants may be awarded thereunder. The Company established a 2014 Stock Option and Incentive Plan (the “2014 Stock Plan”) which was adopted by the Company’s board on May 30, 2014. On March 2, 2015, the 2014 Stock Plan, by consent of George J. Coates, majority shareholder, was adopted by our shareholders. The 2014 Stock Plan provides for the grant of stock-based awards to employees, officers and directors of, and consultants or advisors to, the Company and its subsidiaries, if any. Under the 2014 Stock Plan, the Company may grant ISO’s, non-statutory options, restricted stock and other stock-based awards. ISO’s may be granted only to employees of the Company. A total of 50,000,000 shares of common stock may be issued upon the exercise of options or other awards granted under the 2014 Stock Plan. The maximum number of shares with respect to which awards may be granted during any one year to any employee under the 2014 Stock Plan shall not exceed 25% of the 50,000,000 shares of common stock covered by the 2014 Stock Plan. At March 31, 2016, none of the shares of common stock authorized under the 2014 Stock Plan had been granted as stock options or awarded. The Stock Plan and the 2014 Stock Plan (the “Stock Plans”) are administered by the board and the Compensation Committee. Subject to the provisions of the Stock Plans, the board and the Compensation Committee each has the authority to select the persons to whom awards are granted and determine the terms of each award, including the number of shares of common stock subject to the award. Payment of the exercise price of an award may be made in cash, in a “cashless exercise” through a broker, or if the applicable stock option agreement permits, shares of common stock, or by any other method approved by the board or Compensation Committee. Unless otherwise permitted by the Company, awards are not assignable or transferable except by will or the laws of descent and distribution. Upon the consummation of an acquisition of the business of the Company, by merger or otherwise, the board shall, as to outstanding awards (on the same basis or on different bases as the board shall specify), make appropriate provision for the continuation of such awards by the Company or the assumption of such awards by the surviving or acquiring entity and by substituting on an equitable basis for the shares then subject to such awards either (a) the consideration payable with respect to the outstanding shares of common stock in connection with the acquisition, (b) shares of stock of the surviving or acquiring corporation, or (c) such other securities or other consideration as the board deems appropriate, the fair market value of which (as determined by the board in its sole discretion) shall not materially differ from the fair market value of the shares of common stock subject to such awards immediately preceding the acquisition. In addition to, or in lieu of the foregoing, with respect to outstanding stock options, the board may, on the same basis or on different bases as the board shall specify, upon written notice to the affected optionees, provide that one or more options then outstanding must be exercised, in whole or in part, within a specified number of days of the date of such notice, at the end of which period such options shall terminate, or provide that one or more options then outstanding, in whole or in part, shall be terminated in exchange for a cash payment equal to the excess of the fair market value (as determined by the board in its sole discretion) for the shares subject to such stock options over the exercise price thereof. Unless otherwise determined by the board (on the same basis or on different bases as the board shall specify), any repurchase rights or other rights of the Company that relate to a stock option or other award shall continue to apply to consideration, including cash, that has been substituted, assumed or amended for a stock option or other award pursuant to these provisions. The Company may hold in escrow all or any portion of any such consideration in order to effectuate any continuing restrictions. The board may at any time provide that any stock options shall become immediately exercisable in full or in part, that any restricted stock awards shall be free of some or all restrictions, or that any other stock-based awards may become exercisable in full or in part or free of some or all restrictions or conditions, or otherwise realizable in full or in part, as the case may be. The board or Compensation Committee may, in its sole discretion, amend, modify or terminate any award granted or made under the Stock Plan, so long as such amendment, modification or termination would not materially and adversely affect the participant. During the three months ended March 31, 2016 and 2015, no stock options were granted. There were no unvested stock options outstanding at March 31, 2016. During the three months ended March 31, 2016 and 2015, the Company recorded non-cash stock-based compensation expense related to employee stock options amounting to $-0- and $5,000, respectively. At March 31, 2016, all stock-based compensation expense related to outstanding stock options had been fully recognized. Details of the stock options outstanding under the Company’s Stock Option Plans are as follows: Exercise Price Per Share Number Outstanding Weighted Average Remaining Contractual Life Number Exercisable Weighted Average Exercise Price Weighted Average Fair Value Per Stock Option at Date of Grant Balance, 3/31/16 $ 0.028 – $0.44 12,470,000 11 12,470,000 $ 0.184 $ 0.169 No stock options were exercised, forfeited or expired during the three months ended March 31, 2016 and 2015. The weighted average fair value of the Company's stock options was estimated using the Black-Scholes option pricing model which requires highly subjective assumptions including the expected stock price volatility. These assumptions were as follows: ● Historical stock price volatility 139% - 325 % ● Risk-free interest rate 0.21%-4.64 % ● Expected life (in years) 4 ● Dividend yield 0.00 The valuation assumptions were determined as follows: ● Historical stock price volatility: The Company utilized the volatility in the trading of its common stock computed for the 12 months of trading immediately preceding the date of grant. ● Risk-free interest rate: The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of the grant for a period that is commensurate with the assumed expected option life. ● Expected life: The expected life of the options represents the period of time options are expected to be outstanding. The Company has very limited historical data on which to base this estimate. Accordingly, the Company estimated the expected life based on its assumption that the executives will be subject to frequent blackout periods during the time that the stock options will be exercisable and based on the Company’s expectation that it will complete its research and development phase and commence its initial production phase. The vesting period of these options was also considered in the determination of the expected life of each stock option grant. ● No expected dividends. |
Equity Purchase and Registratio
Equity Purchase and Registration Rights Agreements | 3 Months Ended |
Mar. 31, 2016 | |
Equity Purchase and Registration Rights Agreements [Abstract] | |
EQUITY PURCHASE AND REGISTRATION RIGHTS AGREEMENTS | 20. EQUITY PURCHASE AND REGISTRATION RIGHTS AGREEMENTS Southridge Partners II LP In July 2015, the Company entered into a 3-year equity purchase agreement (the “2015 EP Agreement”) with Southridge Partners II LP, a Delaware limited partnership (“Southridge”). Pursuant to the terms of the 2015 EP Agreement, Southridge committed to purchase up to 205,000,000 shares of the Company’s common stock, in exchange for consideration not to exceed Twenty Million ($20,000,000) Dollars. The terms of the 2015 EP Agreement provides that the purchase price for the shares of common stock shall be equal to 94% of the lowest closing price of the common stock during the ten trading days that comprise the defined pricing period. The Company is entitled to exercise a Put to Southridge by delivering a Put Notice, which requires Southridge to remit the dollar amount stated in the Put Notice at the end of the pricing period, provided, however, that for each day during the pricing period, if any, that the daily closing price of the Company’s common stock is (i) 25% or more below the Floor Price, as defined, or (ii) if the daily volume weighted average trading price of the stock was below the Floor Price, if any, stipulated in the Put Notice issued by the Company, then the dollar amount of the Put shall be reduced by 10% for each such day. The Company may stipulate a Floor Price below which, no shares of common stock may be sold by Southridge, however, the Floor price shall not be lower than the lowest daily volume weighted average price of the common stock during the ten trading days preceding the date of the Put Notice. The Company also entered into a registration rights agreement (the “Registration Rights Agreement”) with Southridge. Pursuant to the terms of the Registration Rights Agreement, on July 30, 2015, the Company filed a registration statement with the SEC covering 205,000,000 shares of common stock underlying the 2015 EP Agreement which was declared effective August 5, 2015. During the three months ended March 31, 2016, the Company sold 37,234,042 registered shares of common stock to Southridge and received proceeds of $100,000 under the 2015 EP Agreement. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | 21. INCOME TAXES Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets increased by $833,000 and $1,035,000 for the three months ended March 31, 2016 and 2015, respectively. These amounts were fully offset by a corresponding increase in the tax valuation allowance resulting in no net change in deferred tax assets, respectively, during these periods. No liability for unrecognized tax benefits was required to be reported at March 31, 2016 and December 31, 2015. Based on the Company's evaluation, it has concluded that there are no significant uncertain tax positions requiring recognition in the Company's financial statements. The Company's evaluation was performed for tax years ended 2012 through 2014, the only periods subject to examination. The Company believes that its income tax positions and deductions will be sustained on audit and does not anticipate that adjustments, if any, will result in a material change to its financial position. For the three months ended March 31, 2016 and 2015, there were no penalties or interest related to the Company’s income tax returns. At March 31, 2016, the Company had available, $19,581,000 of net operating loss carryforwards which may be used to reduce future federal taxable income, expiring between 2018 and 2036 and $9,419,000 of net operating loss carryforwards which may be used to reduce future state taxable income, expiring between 2015 and 2036. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 22. RELATED PARTY TRANSACTIONS Issuances and Repayments of Promissory Notes to Related Parties Issuances and repayments of promissory notes to related parties during the three months ended March 31, 2016 and 2015, are discussed in detail in Note 13. Issuances of Preferred Stock Shares of Series B Convertible Preferred Stock awarded to George J. Coates, Gregory G. Coates and Barry C. Kaye during the three months ended March 31, 2016 and 2015 are discussed in detail in Note 15. Personal Guaranty and Stock Pledge In connection with the Company’s mortgage loan, George J. Coates has pledged certain of his shares of common stock of the Company to the extent required by the lender and provided a personal guaranty as additional collateral for a mortgage loan on the Company’s headquarters facility. Compensation and Benefits Paid The approximate amount of compensation and benefits, all of which were approved by the board, paid to George J. Coates, Gregory G. Coates and Bernadette Coates, exclusive of stock-based compensation for unregistered, restricted shares of Preferred Stock awarded to George J. Coates and Gregory G. Coates and non-cash, stock-based compensation for employee stock options granted to Gregory G. Coates is summarized as follows: For the three months ended March 31, 2016 2015 George J. Coates (a) (b) $ 3,000 $ 2,000 Gregory G. Coates (c) 40,000 47,000 Bernadette Coates (d) 1,000 1,000 (a) For the three months ended March 31, 2016 and 2015, George J. Coates earned additional base compensation of $63,000 and $63,000, respectively, payment of which is being deferred until the Company has sufficient working capital. These amounts are included in deferred compensation in the accompanying balance sheets at March 31, 2016 and 2015. (b) During the three months ended March 31, 2016 and 2015, George J. Coates was awarded 1,263,978 and 640,657 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $1,641,000 and $1,993,000, respectively, for anti-dilution. (c) During the three months ended March 31, 2016 and 2015, Gregory G. Coates was awarded 86,048 and 43,614 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $112,000 and $136,000, respectively, for anti-dilution. (d) For the three months ended March 31, 2016 and 2015, Bernadette Coates earned additional base compensation of $17,000 and $17,000, respectively, payment of which is being deferred until the Company has sufficient working capital. These amounts are included in deferred compensation in the accompanying balance sheets at March 31, 2016 and 2015. During the three months ended March 31, 2016 and 2015, Barry C. Kaye, Treasurer and Chief Financial Officer was paid compensation of $-0- and $18,000, respectively. For the three months ended March 31, 2016 and 2015, Mr. Kaye earned compensation of $23,000 and $34,000, respectively, which was not paid and is being deferred until the Company has sufficient working capital to remit payment to him. At March 31, 2016, the total amount of Mr. Kaye’s unpaid, deferred compensation was $129,000. This amount is included in accounts payable and accrued liabilities in the accompanying balance sheet at March 31, 2016. During the three months ended March 31, 2016 and 2015, Barry C. Kaye was awarded 6,736 and 3,414 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $9,000 and $11,000, respectively, for anti-dilution. |
Contractual Obligations and Com
Contractual Obligations and Commitments | 3 Months Ended |
Mar. 31, 2016 | |
Contractual Obligations and Commitments / Litigation and Contingencies [Abstract] | |
CONTRACTUAL OBLIGATIONS AND COMMITMENTS | 23. CONTRACTUAL OBLIGATIONS AND COMMITMENTS Total 2016 2017 2018 Promissory notes to related parties $ 1,446,000 $ 1,446,000 $ - $ - Mortgage loan payable 1,373,000 60,000 60,000 1,253,000 Deferred compensation 1,001,000 1,001,000 - - Convertible promissory notes 383,000 151,000 232,000 - Total $ 4,203,000 $ 2,658,000 $ 292,000 $ 1,253,000 |
Litigation and Contingencies
Litigation and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Contractual Obligations and Commitments / Litigation and Contingencies [Abstract] | |
LITIGATION AND CONTINGENCIES | 24. LITIGATION AND CONTINGENCIES The Company is not a party to any litigation that is material to its business. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2016 | |
Recently Issued Accounting Standards [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 25. RECENTLY ISSUED ACCOUNTING STANDARDS Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606) – Deferral of the Effective Date, which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date. Accordingly, the Company may adopt the standard in either its first quarter of 2018 or 2019. In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing (“ASU 2016-10”), which amends the guidance in ASU 2014-09 related to identifying performance obligations and accounting for licenses of intellectual property. The Company will adopt ASU 2016-10 with ASU 2014-09. The Company is currently evaluating the impact of adopting the new revenue recognition standard, as amended, but does not expect it to have a material impact on its financial statements. Stock Compensation In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification in the statement of cash flows. ASU 2016-09 will be effective for the Company beginning in its first quarter of 2018. The Company is currently evaluating the impact of adopting the new stock compensation standard, but does not expect it to have a material impact on its financial statements. Financial Instruments In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10) (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Company beginning in its first quarter of 2019. The Company does not believe the adoption of the new financial instruments standard will have a material impact on its financial statements. Inventory Measurement In July 2015, the FASB issued ASU No. 2015-11, “Inventory – Simplifying the Measurement of Inventory (Topic 330)”. This update requires that inventory value be measured at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Currently, generally accepted accounting principles require that inventory be valued at the lower of cost or market price to replace the inventory. This update is to become effective for annual and interim financial statements for fiscal years ending after December 15, 2016. Earlier application is permitted. This update is required to be applied prospectively. The Company is currently evaluating the impact of this update; however, at this time it does not expect it will have a material impact on its financial statements. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 26. SUBSEQUENT EVENTS Common Stock Sold Under Equity Purchase Agreement Under the 2015 EP Agreement, Southridge purchased 15,197,568 shares of common stock from the Company in consideration for $20,000. In May 2016, the Company delivered 20,000,000 shares of its common stock as required under the Equity Purchase Agreement. At May 11, 2016, Southridge was holding 20,798,886 of common stock that had not been sold under the 2015 EP Agreement, which may be retained by Southridge and applied to a future Put Notice or returned promptly to the Company, upon request. Private Sale of Shares of Common Stock and Common Stock Warrants In April 2016, the Company issued 10,000,000 unregistered, restricted shares of common stock and 10,000,000 common stock warrants to purchase one share of restricted common stock at a price per share of $0.001 to a private investor in consideration for $10,000. This transaction was a private sale of unregistered, restricted securities. Transactions Related to Conversion of Convertible Promissory Notes ● During April and May 2016, a total of $15,000 principal amount of convertible promissory notes was converted into 16,211,253 unregistered, restricted shares of the Company’s common stock. ● In April 2016, the Company issued 17,590,025 unregistered, restricted shares of its common stock to the holder of a promissory note. These shares were required to be issued in connection with the remeasurement of the conversion price in the event that the trading price of the Company’s common stock falls over a defined trading period subsequent to the original date on conversion, which occurred in March 2016. The value of these shares will be recorded as a loss on conversion in the Company’s statement of operation for the three months ended June 30, 2016. Issuance of Anti-dilution shares In May 2016, the Company issued 454,300, 30,933 and 2,422 shares of Series B Convertible Preferred Stock to George J. Coates, Gregory G. Coates and Barry C. Kaye, respectively, representing anti-dilution shares related to newly issued shares of common stock. The estimated fair value of these shares was $327,000, $22,000 and $2,000, respectively. Issuances of Promissory Notes to Related Parties In April and May 2016, the Company issued promissory notes to George J. Coates and received cash proceeds of $28,000. The promissory notes are payable on demand and provide for interest at the rate of 17% per annum, compounded monthly. Deferred Compensation As of May 10, 2016, George J. Coates, Barry C. Kaye and Bernadette Coates agreed to additional deferral of their compensation amounting to $27,000, $17,000 and $7,000, respectively, bringing their total aggregate deferred compensation to $820,000, $146,000 and $215,000, respectively. |
The Company and Basis of Pres32
The Company and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
The Company and Basis of Presentation [Abstract] | |
Nature of Organization | Nature of Organization Coates International, Ltd. (the “Company” or “CIL”) has acquired the exclusive licensing rights for the Coates spherical rotary valve (“CSRV ® ® ® ® ® Management believes that the CSRV ® ● Improved fuel efficiency ● Lower levels of harmful emissions ● Adaptability to numerous types of engine fuels ● Longer engine life ● Longer intervals between engine servicing The CSRV ® ® ® ® ® ® ® |
Basis of Presentation | Basis of Presentation The accompanying condensed financial statements include the accounts of the Company. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain prior period amounts in the condensed financial statements have been reclassified to conform to the current period’s presentation. These condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual consolidated financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”). Since the Company’s inception, the Company has been responsible for the development costs of the CSRV ® ® ® As shown in the accompanying financial statements, the Company has incurred recurring losses from operations and, as of March 31, 2016, had a stockholders’ deficiency of ($5,141,000). In addition, the current economic environment, which is characterized by tight credit markets, investor uncertainty about how to safely invest their funds and low investor confidence, has introduced additional risk and difficulty to the Company’s challenge to secure needed additional working capital. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management has instituted a cost control program intended to restrict variable costs to only those expenses that are necessary to complete its activities related to entering the production phase of operations, develop additional commercially feasible applications of the CSRV ® The Company continues to actively seek out new sources of working capital; however, there can be no assurance that it will be successful in these efforts. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Use of Estimates | Use of Estimates |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventory [Abstract] | |
Summary of inventory | March 31, 2016 December 31, 2015 Raw materials $ 538,000 $ 554,000 Work-in-process 75,000 51,000 Less: Reserve for obsolescence (387,000 ) (387,000 ) Total $ 226,000 $ 218,000 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Summary of property, plant and equipment | March 31, 2016 December 31, Land $ 1,235,000 $ 1,235,000 Building 964,000 964,000 Building improvements 83,000 83,000 Machinery and equipment 689,000 689,000 Furniture and fixtures 57,000 46,000 3,028,000 3,017,000 Less: Accumulated depreciation (919,000 ) (908,000 ) Total $ 2,109,000 $ 2,109,000 |
Accounts Payable and Accrued 35
Accounts Payable and Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Summary of accounts payable and accrued liabilities | March 31, 2016 December 31, 2015 Legal and professional fees $ 1,342,000 $ 1,368,000 Accrued interest expense 372,000 376,000 General and administrative expenses 244,000 163,000 Research and development costs 115,000 115,000 Total $ 2,073,000 $ 2,022,000 |
Convertible Promissory Notes 36
Convertible Promissory Notes and Embedded Derivative Liability (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Convertible Promissory Notes and Embedded Derivative Liability [Abstract] | |
Schedule fair value hierarchy of financial assets and liabilities measured at fair value | March 31, 2016 December 31, 2015 Level 1 Inputs $ - $ - Level 2 Inputs 512,000 633,000 Level 3 Inputs - - Total $ 512,000 $ 633,000 |
Stock Options (Tables)
Stock Options (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Capital Stock/Stock Options [Abstract] | |
Summary of stock options outstanding under the company's stock option plans | Exercise Price Per Share Number Outstanding Weighted Average Remaining Contractual Life Number Exercisable Weighted Average Exercise Price Weighted Average Fair Value Per Stock Option at Date of Grant Balance, 3/31/16 $ 0.028 – $0.44 12,470,000 11 12,470,000 $ 0.184 $ 0.169 |
Summary of assumptions used to determine weighted average fair value | ● Historical stock price volatility 139% - 325 % ● Risk-free interest rate 0.21%-4.64 % ● Expected life (in years) 4 ● Dividend yield 0.00 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
Summary of approximate amount of base compensation and benefits | For the three months ended March 31, 2016 2015 George J. Coates (a) (b) $ 3,000 $ 2,000 Gregory G. Coates (c) 40,000 47,000 Bernadette Coates (d) 1,000 1,000 (a) For the three months ended March 31, 2016 and 2015, George J. Coates earned additional base compensation of $63,000 and $63,000, respectively, payment of which is being deferred until the Company has sufficient working capital. These amounts are included in deferred compensation in the accompanying balance sheets at March 31, 2016 and 2015. (b) During the three months ended March 31, 2016 and 2015, George J. Coates was awarded 1,263,978 and 640,657 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $1,641,000 and $1,993,000, respectively, for anti-dilution. (c) During the three months ended March 31, 2016 and 2015, Gregory G. Coates was awarded 86,048 and 43,614 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $112,000 and $136,000, respectively, for anti-dilution. (d) For the three months ended March 31, 2016 and 2015, Bernadette Coates earned additional base compensation of $17,000 and $17,000, respectively, payment of which is being deferred until the Company has sufficient working capital. These amounts are included in deferred compensation in the accompanying balance sheets at March 31, 2016 and 2015. |
Contractual Obligations and C39
Contractual Obligations and Commitments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Contractual Obligations and Commitments / Litigation and Contingencies [Abstract] | |
Summary of contractual obligations and commitments | Total 2016 2017 2018 Promissory notes to related parties $ 1,446,000 $ 1,446,000 $ - $ - Mortgage loan payable 1,373,000 60,000 60,000 1,253,000 Deferred compensation 1,001,000 1,001,000 - - Convertible promissory notes 383,000 151,000 232,000 - Total $ 4,203,000 $ 2,658,000 $ 292,000 $ 1,253,000 |
The Company and Basis of Pres40
The Company and Basis of Presentation (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
The Company and Basis of Presentation (Textual) | ||
Stockholder's deficiency | $ (5,140,915) | $ (5,299,053) |
Negative working capital | $ (5,336,000) | $ (5,476,000) |
Concentrations of Credit and 41
Concentrations of Credit and Business Risk (Details) | Mar. 31, 2016USD ($) |
Concentrations of Credit and Business Risk [Abstract] | |
Deposits in other financial institutions | $ 3,000 |
Licensing Agreement and Defer42
Licensing Agreement and Deferred Licensing Costs (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Licensing Agreement and Deferred Licensing Costs (Textual) | |||
Deferred licensing costs | $ 41,000 | $ 42,000 | |
Amortization expense | $ 1,000 | $ 1,000 |
Agreements Assigned to Almont43
Agreements Assigned to Almont Energy, Inc. (Details) | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Canadian License [Member] | |
Agreements Assigned to Almont Energy, Inc. (Textual) | |
License fee amount | $ 5,000,000 |
Additional fee under R&D Agreement | 5,000,000 |
US License [Member] | |
Agreements Assigned to Almont Energy, Inc. (Textual) | |
License fee amount | 50,000,000 |
Down payment receivable under Escrow Agreement | 1,000,000 |
Remaining balance of release payment | $ 5,847,000 |
Non-Exclusive Distribution Su44
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. (Details) | 1 Months Ended |
Feb. 28, 2015USD ($) | |
Renown Power Development, Ltd [Member] | |
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. (Textual) | |
Licensing fee | $ 100,000,000 |
Non-refundable deposit | $ 500,000 |
Sublicense fee payment terms | In addition, after Renown receives aggregate cash flow of US$10,000,000, it is required to pay the Company 25% of all funds it receives from any and all sources until the entire US$100 million licensing fee is paid in full. |
Amount of monies required to be received before sublicence fee payments commence | $ 10,000,000 |
Aggregate amount of capital raises to trigger full payment of balance of licensing fee | $ 300,000,000 |
Coates Power [Member] | |
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. (Textual) | |
Ownership interest | 25.00% |
Escrow account description | These shares of stock will be released from escrow and revert back to Coates Power and Renown only after the US$100 million sublicensing fee is paid in full. |
Deposit on order for two completed Gen Sets | $ 131,000 |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of inventory | ||
Raw materials | $ 538,000 | $ 554,000 |
Work-in-process | 75,000 | 51,000 |
Less: Reserve for obsolescence | (387,000) | (387,000) |
Total | $ 226,000 | $ 218,000 |
License Deposits (Details)
License Deposits (Details) - License Deposits [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
License Deposits (Textual) | ||
Term of sublicense deposit | Straight-line basis over the remaining period until expiration of the last remaining CSRV® patent in force in 2027. | |
Sublicensing fee revenue | $ 5,000 | $ 5,000 |
License deposit from Renown | 498,000 | |
License deposit from Almont | 300,000 | |
Aggregate of all revenue recognized related to license deposit from Almont since received | $ 96,000 |
Property, Plant and Equipment47
Property, Plant and Equipment (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | $ 3,028,000 | $ 3,017,000 |
Less: Accumulated depreciation | (919,000) | (908,000) |
Total | 2,109,000 | 2,109,000 |
Land [Member] | ||
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | 1,235,000 | 1,235,000 |
Building [Member] | ||
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | 964,000 | 964,000 |
Building improvements [Member] | ||
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | 83,000 | 83,000 |
Machinery and equipment [Member] | ||
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | 689,000 | 689,000 |
Furniture and fixtures [Member] | ||
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | $ 57,000 | $ 46,000 |
Property, Plant and Equipment48
Property, Plant and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property, Plant and Equipment (Textual) | ||
Depreciation expense | $ 12,000 | $ 15,000 |
Mortgage Loan Payable (Details)
Mortgage Loan Payable (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Mortgage Loan Payable (Textual) | |||
Maturity Date | Jul. 1, 2018 | ||
Mortgage loan payable, interest rate | 7.50% | ||
Interest expense | $ 26,000 | $ 18,000 | |
Mortgage loan payment terms | Monthly payments of interest, plus $5,000 which is being applied to the principal balance. | ||
Periodic payment of principal | $ 5,000 | ||
Principal balance of mortgage loan due | $ 1,373,000 | $ 1,388,000 | |
Number of shares pledged as collateral | Five million |
Finance Lease Obligation (Detai
Finance Lease Obligation (Details) - Finance Lease Obligations [Member] - USD ($) | 1 Months Ended | 3 Months Ended | |
Aug. 31, 2013 | Mar. 31, 2016 | Mar. 31, 2015 | |
Finance Lease Obligation (Textual) | |||
Effective Interest rate on lease | 36.60% | ||
Financial lease, interest expense | $ 2,000 | $ 10,000 | |
Paradigm Commercial Capital Group Corp [Member] | |||
Finance Lease Obligation (Textual) | |||
Cash proceeds for research and development and manufacturing equipment | $ 133,000 |
Accounts Payable and Accrued 51
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of accounts payable and accrued liabilities | ||
Legal and professional fees | $ 1,342,000 | $ 1,368,000 |
Accrued interest expense | 372,000 | 376,000 |
General and administrative expenses | 244,000 | 163,000 |
Research and development costs | 115,000 | 115,000 |
Total | $ 2,073,000 | $ 2,022,000 |
Promissory Notes to Related P52
Promissory Notes to Related Parties (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
George J. Coates [Member] | ||
Promissory Notes to Related Parties (Textual) | ||
Cash proceeds from related party promissory notes | $ 40,000 | |
Repaid promissory notes principal amount | $ 10,000 | 58,000 |
Promissory note interest rate | 17.00% | |
Balance of unpaid accrued interest | $ 298,000 | |
Bernadette Coates [Member] | ||
Promissory Notes to Related Parties (Textual) | ||
Repaid promissory notes principal amount | $ 0 | 9,000 |
Promissory note interest rate | 17.00% | |
Outstanding balance, including accrued interest | $ 69,000 | |
Promissory notes interest expense | 52,000 | $ 57,000 |
Promissory notes unpaid accrued interest | $ 367,000 | |
Gregory G. Coates [Member] | ||
Promissory Notes to Related Parties (Textual) | ||
Imputed interest rate on promissory note | 10.00% | |
Amount of imputed interest | $ 36,000 | |
Outstanding principal balance | $ 1,438,000 |
Convertible Promissory Notes 53
Convertible Promissory Notes and Embedded Derivative Liability (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Financial assets and liabilities measured at fair value | ||
Total | $ 512,000 | $ 633,000 |
Level 1 Inputs [Member] | ||
Financial assets and liabilities measured at fair value | ||
Total | ||
Level 2 Inputs [Member] | ||
Financial assets and liabilities measured at fair value | ||
Total | $ 512,000 | $ 633,000 |
Level 3 Inputs [Member] | ||
Financial assets and liabilities measured at fair value | ||
Total |
Convertible Promissory Notes 54
Convertible Promissory Notes and Embedded Derivative Liability (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Feb. 28, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | ||||
Volatility rate | 200.00% | |||
Convertible Promissory Note [Member] | ||||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | ||||
Principal amount | $ 383,000 | |||
Principal amount of convertible notes issued | $ 91,000 | $ 53,000 | ||
Conversion price, description for convertible note payable | Outstanding notes may be converted into unregistered shares of the Company's common stock at a discount ranging from 30% to 40% of the defined trading price of the common stock on the date of conversion. | |||
Unamortized discount | $ 64,000 | $ 150,000 | ||
Principal amount of debt, including accrued interest converted into shares of common stock | 295,000 | 426,000 | ||
Loss on conversion of convertible notes | $ 26,000 | $ 105,000 | ||
Amount of convertible promissory notes repaid in cash | $ 27,000 | |||
Common shares issued upon conversion of convertible notes | 234,920,926 | 142,831,226 | ||
Prepayment option, description | The convertible notes generally become convertible, in whole, or in part, beginning on the six month anniversary of the issuance date and may be prepaid at the option of the Company, generally with a prepayment penalty of from 25% to 50% of the principal amount of the convertible note at any time prior to becoming eligible for conversion. | |||
Common stock reserved for conversion of convertible notes | 457,000,000 | |||
Convertible Promissory Note [Member] | Maximum [Member] | ||||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | ||||
Effective interest rate | 183.00% | 183.00% | ||
Conversion price discount from defined trading price | 40.00% | |||
Convertible Promissory Note [Member] | Minimum [Member] | ||||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | ||||
Effective interest rate | 65.00% | 65.00% | ||
Conversion price discount from defined trading price | 30.00% | |||
Convertible promissory note one [Member] | ||||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | ||||
Principal amount payable in monthly installments | $ 199,000 | |||
Conversion price, description for convertible note payable in monthly installments | This convertible note also requires that the conversion price be re-measured 23 trading days after the conversion shares are originally delivered. If the re-measured conversion price is lower, then the Company is required to issue additional conversion shares to the noteholder. | |||
Maximum monthly amount that can be converted for convertible note payable in monthly installments | $ 53,000 |
Capital Stock (Details)
Capital Stock (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2002 | |
Capital Stock (Textual) | ||||
Common stock, authorized shares | 2,000,000,000 | 2,000,000,000 | ||
Common stock , par value | $ 0.0001 | $ 0.0001 | ||
Unregistered shares of common stock issued | 25,000,000 | |||
Unregistered shares of common stock issued, value | $ 25,000 | |||
Warrants sold to purchase one share of common stock | 25,000,000 | |||
Pro forma number of shares of common stock potentially issuable upon assumed conversion of covertible instruments | 458,859,000 | |||
Common stock warrant exercise price | $ 0.001 | |||
Preferred stock, authorized shares | 100,000,000 | 100,000,000 | ||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Series A Preferred Stock [Member] | ||||
Capital Stock (Textual) | ||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Series A preferred stock, designated shares | 1,000,000 | 1,000,000 | ||
Series A convertible preferred stock, issued shares | 50,000 | 50,000 | ||
Series A Convertible Preferred stock, outstanding shares | 50,000 | 50,000 | ||
Description of preferred stock voting rights | Shares of Series A entitle the holder to 10,000 votes per share on all matters brought before the shareholders for a vote. | Shares of Series A entitle the holder to 10,000 votes per share on all matters brought before the shareholders for a vote. | ||
Series B Convertible Preferred Stock [Member] | ||||
Capital Stock (Textual) | ||||
Total number of shares of common stock underlying the outstanding shares of Series B Convertible Preferred Stock, if converted | 4,849,511,000 | |||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Series B convertible preferred stock, designated shares | 5,000,000 | 25,000,000 | ||
Series B Convertible Preferred stock, issued shares | 4,849,511 | 3,492,749 | ||
Series B Convertible Preferred stock, outstanding shares | 4,849,511 | 3,492,749 | ||
Description of preferred stock voting rights | Holders of Series B are entitled to one thousand votes per share held, on all matters brought before the shareholders for a vote. | Holders of Series B are entitled to one thousand votes per share held, on all matters brought before the shareholders for a vote. | ||
Percentage of non - affiliate shareholder ownership before assumed conversion | 78.00% | |||
Percentage of non - affiliate shareholder ownership after assumed conversion | 16.20% | |||
Convertible promissory note [Member] | ||||
Capital Stock (Textual) | ||||
Common shares issued upon conversion of convertible promissory notes | 234,920,926 | 142,831,226 | ||
Principal amount of debt, including accrued interest converted into shares of common stock | $ 295,000 | $ 426,000 | ||
George J. Coates [Member] | Series B Convertible Preferred Stock [Member] | ||||
Capital Stock (Textual) | ||||
Series B convertible preferred stock, issued shares | 1,263,978 | 640,657 | ||
Series B Convertible Preferred stock, outstanding shares | 4,514,341 | |||
Ownership percentage | 78.00% | |||
Estimated fair value of Series B convertible preferred stock granted | $ 1,641,000 | $ 1,993,000 | ||
Gregory G. Coates [Member] | Series B Convertible Preferred Stock [Member] | ||||
Capital Stock (Textual) | ||||
Series B convertible preferred stock, issued shares | 86,048 | 43,614 | ||
Series B Convertible Preferred stock, outstanding shares | 311,023 | |||
Ownership percentage | 5.31% | |||
Estimated fair value of Series B convertible preferred stock granted | $ 112,000 | $ 136,000 | ||
Barry C. Kaye [Member] | ||||
Capital Stock (Textual) | ||||
Ownership percentage | 0.04157% | |||
Barry C. Kaye [Member] | Series B Convertible Preferred Stock [Member] | ||||
Capital Stock (Textual) | ||||
Series B convertible preferred stock, issued shares | 6,736 | 3,414 | ||
Series B Convertible Preferred stock, outstanding shares | 24,147 | |||
Estimated fair value of Series B convertible preferred stock granted | $ 9,000 | $ 11,000 | ||
Southridge Partners II LP [Member] | ||||
Capital Stock (Textual) | ||||
Registered shares of common stock issued, but not sold | 15,996,454 | |||
Registered shares of common stock sold, shares | 37,234,002 | |||
Registered shares of common stock sold, value | $ 100,000 |
Deposits (Details)
Deposits (Details) | Mar. 31, 2016USD ($) |
Deposits (Textual) | |
Deposit recieved for sale | $ 132,000 |
Non-refundable deposit | $ 19,000 |
Sublicensing Fee Revenue (Detai
Sublicensing Fee Revenue (Details) - Sublicensing Fee Revenue [Member] - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Sublicensing Fee Revenue [Line Items] | ||
Sublicensing fee revenue | $ 5,000 | $ 5,000 |
License deposits | $ 300,000 | |
Amortization method, description | Straight-line basis over the approximate remaining life until 2027 |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Loss Per Share (Textual) | ||
Warrants outstanding to purchase common stock | 60,344,911 | 35,344,911 |
Vested stock options outstanding | 12,470,000 | 12,500,000 |
Convertible promissory notes [Member] | ||
Loss Per Share (Textual) | ||
Convertible promissory notes outstanding | $ 252,000 | $ 146,000 |
Pro Forma Number of common shares issued upon conversion of promissory notes | 244,775,045 | 77,840,437 |
Maximum [Member] | ||
Loss Per Share (Textual) | ||
Warrant exercise price | $ 0.12 | $ 0.35 |
Stock option exercise price | 0.44 | 1 |
Minimum [Member] | ||
Loss Per Share (Textual) | ||
Warrant exercise price | 0.001 | 0.02 |
Stock option exercise price | $ 0.028 | $ 0.028 |
Stock Options (Details)
Stock Options (Details) - Stock Option [Member] | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Stock options outstanding under stock option plan | |
Number Outstanding | shares | 12,470,000 |
Weighted Average Remaining Contractual Life | 11 years |
Number Exercisable | shares | 12,470,000 |
Weighted Average Exercise Price | $ 0.184 |
Weighted Average Fair Value Per Stock Option at Date of Grant | 0.169 |
Maximum [Member] | |
Stock options outstanding under stock option plan | |
Exercise Price Per Share | 0.44 |
Minimum [Member] | |
Stock options outstanding under stock option plan | |
Exercise Price Per Share | $ 0.028 |
Stock Options (Details 1)
Stock Options (Details 1) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of assumptions used to determine weighted average fair value | |
Historical stock price volatility, minimum | 139.00% |
Historical stock price volatility, maximum | 325.00% |
Risk-free interest rate, minimum | 0.21% |
Risk-free interest rate, maximum | 4.64% |
Expected life (in years) | 4 years |
Dividend yield | 0.00% |
Stock Options (Details Textual)
Stock Options (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Options (Textual) | ||
Non-cash stock-based compensation expense related to employee stock options | $ 0 | $ 5,000 |
Historical stock price volatility description | The Company utilized the volatility in the trading of its common stock computed for the 12 months of trading immediately preceding the date of grant | |
2014 Stock Option and Incentive Plan [Member] | ||
Stock Options (Textual) | ||
Common stock available for stock options or awards under the Stock Plan | 50,000,000 | |
Maximum percentage of shares issuable in one year to one employee | 25.00% | |
Maximum number of shares of common stock authorized for issue under plan | 50,000,000 |
Equity Purchase and Registrat62
Equity Purchase and Registration Rights Agreements (Details) - USD ($) | 1 Months Ended | 3 Months Ended |
Jul. 30, 2015 | Mar. 31, 2016 | |
Equity Purchase and Registration Rights Agreements (Textual) | ||
Issuance of common stock under equity line of credit | $ 100,000 | |
Southridge Partners II LP [Member] | 2015 Equity Purchase Agreements [Member] | ||
Equity Purchase and Registration Rights Agreements (Textual) | ||
Number of shares of common stock sold | 37,234,042 | |
Daily conditions for reducing put option amount by 10% description | The purchase price for the shares of common stock shall be equal to 94% of the lowest closing price of the common stock during the ten trading days that comprise the defined pricing period. The Company is entitled to exercise a Put to Southridge by delivering a Put Notice, which requires Southridge to remit the dollar amount stated in the Put Notice at the end of the pricing period, provided, however, that for each day during the pricing period, if any, that the daily closing price of the Company's common stock is (i) 25% or more below the Floor Price, as defined, or (ii) if the daily volume weighted average trading price of the stock was below the Floor Price, if any, stipulated in the Put Notice issued by the Company, then the dollar amount of the Put shall be reduced by 10% for each such day. | |
Southridge Partners II LP [Member] | Equity Purchase Agreement [Member] | ||
Equity Purchase and Registration Rights Agreements (Textual) | ||
Purchase agreement term | 3 years | |
2015 equity purchase agreement description | Pursuant to the terms of the 2015 EP Agreement, Southridge committed to purchase up to 205,000,000 shares of the Company's common stock, in exchange for consideration not to exceed Twenty Million ($20,000,000) Dollars | |
Number of shares of common stock registered | 205,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Income Taxes (Textual) | |||
Increase in deferred tax assets | $ 833,000 | $ 1,035,000 | |
Unrecognized tax benefits liability | |||
Open income tax years, Description | 2012 through 2014. | ||
Penalties or interest related to income tax returns | |||
Federal [Member] | |||
Income Taxes (Textual) | |||
Operating loss carryforwards | $ 19,581,000 | ||
Operating loss carryforwards expiration date description | Expiring between 2018 and 2036. | ||
New Jersey [Member] | |||
Income Taxes (Textual) | |||
Operating loss carryforwards | $ 9,419,000 | ||
Operating loss carryforwards expiration date description | Expiring between 2015 and 2036. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Summary of approximate amount of base compensation and benefits | |||
Base compensation and benefits | $ 1,831,817 | $ 2,228,235 | |
George J. Coates [Member] | |||
Summary of approximate amount of base compensation and benefits | |||
Base compensation and benefits | [1],[2] | 3,000 | 2,000 |
Gregory G. Coates [Member] | |||
Summary of approximate amount of base compensation and benefits | |||
Base compensation and benefits | [3] | 40,000 | 47,000 |
Bernadette Coates [Member] | |||
Summary of approximate amount of base compensation and benefits | |||
Base compensation and benefits | [4] | $ 1,000 | $ 1,000 |
[1] | During the three months ended March 31, 2016 and 2015, George J. Coates was awarded 1,263,978 and 640,657 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $1,641,000 and $1,993,000, respectively, for anti-dilution. | ||
[2] | For the three months ended March 31, 2016 and 2015, George J. Coates earned additional base compensation of $63,000 and $63,000, respectively, payment of which is being deferred until the Company has sufficient working capital. These amounts are included in deferred compensation in the accompanying balance sheets at March 31, 2016 and 2015. | ||
[3] | During the three months ended March 31, 2016 and 2015, Gregory G. Coates was awarded 86,048 and 43,614 shares of Series B Convertible Preferred Stock, respectively, with an estimated fair value of $112,000 and $136,000, respectively, for anti-dilution. | ||
[4] | For the three months ended March 31, 2016 and 2015, Bernadette Coates earned additional base compensation of $17,000 and $17,000, respectively, payment of which is being deferred until the Company has sufficient working capital. These amounts are included in deferred compensation in the accompanying balance sheets at March 31, 2016 and 2015. |
Related Party Transactions (D65
Related Party Transactions (Details Textual) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
George J. Coates [Member] | ||
Related Party Transactions (Textual) | ||
Amount of compensation deferred | $ 63,000 | $ 63,000 |
George J. Coates [Member] | Series B Convertible Preferred Stock [Member] | ||
Related Party Transactions (Textual) | ||
Issuance of anti-dilution shares of Series B convertible preferred stock to related parties, shares | 1,263,978 | 640,657 |
Estimated fair value of Series B convertible preferred stock | $ 1,641,000 | $ 1,993,000 |
Gregory G. Coates [Member] | Series B Convertible Preferred Stock [Member] | ||
Related Party Transactions (Textual) | ||
Series B convertible preferred stock, issued shares | 86,048 | 43,614 |
Estimated fair value of Series B convertible preferred stock | $ 112,000 | $ 136,000 |
Bernadette Coates [Member] | ||
Related Party Transactions (Textual) | ||
Amount of compensation deferred | 17,000 | 17,000 |
Barry C. Kaye [Member] | ||
Related Party Transactions (Textual) | ||
Amount of compensation paid | $ 0 | $ 18,000 |
Issuance of anti-dilution shares of Series B convertible preferred stock to related parties, shares | 6,736 | 3,414 |
Value of anti-dilution shares of series B convertible preferred stock issued to related parties | $ 9,000 | $ 11,000 |
Compensation earned by Barry C. Kaye, but not paid | 23,000 | $ 34,000 |
Total amount of unpaid, deferred compensation | $ 129,000 |
Contractual Obligations and C66
Contractual Obligations and Commitments (Details) | Mar. 31, 2016USD ($) |
Summary of Company's contractual obligations | |
2,016 | $ 2,658,000 |
2,017 | 292,000 |
2,018 | 1,253,000 |
Total | 4,203,000 |
Promissory notes to related parties [Member] | |
Summary of Company's contractual obligations | |
2,016 | $ 1,446,000 |
2,017 | |
2,018 | |
Total | $ 1,446,000 |
Mortgage loan payable [Member] | |
Summary of Company's contractual obligations | |
2,016 | 60,000 |
2,017 | 60,000 |
2,018 | 1,253,000 |
Total | 1,373,000 |
Deferred compensation [Member] | |
Summary of Company's contractual obligations | |
2,016 | $ 1,001,000 |
2,017 | |
2,018 | |
Total | $ 1,001,000 |
Convertible promissory notes [Member] | |
Summary of Company's contractual obligations | |
2,016 | 151,000 |
2,017 | $ 232,000 |
2,018 | |
Total | $ 383,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | May. 11, 2016 | May. 10, 2016 | May. 11, 2016 | Apr. 30, 2016 |
George J. Coates [Member] | ||||
Subsequent Event [Line Items] | ||||
Total aggregate deferred compensation | $ 820,000 | |||
Additional deferred compensation | 27,000 | |||
Barry C. Kaye [Member] | ||||
Subsequent Event [Line Items] | ||||
Total aggregate deferred compensation | 146,000 | |||
Additional deferred compensation | 17,000 | |||
Bernadette Coates [Member] | ||||
Subsequent Event [Line Items] | ||||
Total aggregate deferred compensation | 215,000 | |||
Additional deferred compensation | $ 7,000 | |||
2015 Equity Purchase Agreement [Member] | Southridge Partners II LP [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of common shares purchased | 15,197,568 | |||
Purchase of common stock, value | $ 20,000 | |||
Number of shares delivered to Southridge | 20,000,000 | |||
Unsold shares | 20,798,886 | |||
Convertible Promissory Notes One [Member] | ||||
Subsequent Event [Line Items] | ||||
Unregistered shares of common stock issued | 16,211,253 | |||
Total amount of convertible notes converted to common stock | $ 15,000 | |||
Unregistered, restricted shares of common stock issued | 17,590,025 | |||
Promissory Note [Member] | George J. Coates [Member] | ||||
Subsequent Event [Line Items] | ||||
Interest rate | 17.00% | |||
Total amount of convertible notes issued | $ 28,000 | |||
Common Stock Warrants [Member] | Private Placement [Member] | ||||
Subsequent Event [Line Items] | ||||
Unregistered shares of common stock issued | 10,000,000 | |||
Common stock warrants issued | 10,000,000 | |||
Price per share of common stock sold | $ 0.001 | |||
Sale of stock and warrants consideration received | $ 10,000 | |||
Series B Convertible Preferred Stock [Member] | George J. Coates [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares of Series B Preferred Stock issued | 454,300 | |||
Fair value of Series B Preferred Stock issued | $ 327,000 | |||
Series B Convertible Preferred Stock [Member] | Gregory G. Coates [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares of Series B Preferred Stock issued | 30,933 | |||
Fair value of Series B Preferred Stock issued | $ 22,000 | |||
Series B Convertible Preferred Stock [Member] | Barry C. Kaye [Member] | ||||
Subsequent Event [Line Items] | ||||
Shares of Series B Preferred Stock issued | 2,422 | |||
Fair value of Series B Preferred Stock issued | $ 2,000 |