Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 10, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | COATES INTERNATIONAL LTD \DE\ | |
Entity Central Index Key | 948,426 | |
Amendment Flag | false | |
Trading Symbol | COTE | |
Current Fiscal Year End Date | --12-31 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 188,934,066 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash | $ 8,100 | $ 6,807 |
Inventory | 102,164 | 103,610 |
Other current assets | 50,316 | 608 |
Total Current Assets | 160,580 | 111,025 |
Property, plant and equipment, net | 2,013,367 | 2,031,684 |
Deferred licensing costs, net | 31,740 | 33,882 |
Total Assets | 2,205,687 | 2,176,591 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 2,780,714 | 2,544,003 |
Deferred compensation payable | 1,797,382 | 1,621,322 |
Promissory notes to related parties | 1,475,639 | 1,472,409 |
Mortgage loan payable | 1,243,158 | 1,273,158 |
Derivative liability related to convertible promissory notes | 354,081 | 358,996 |
Convertible promissory notes, net of unamortized discount | 291,059 | 96,816 |
Unearned revenues | 150,595 | 150,595 |
Sublicense deposits | 19,200 | 60,725 |
Total Current Liabilities | 8,111,828 | 7,578,024 |
Non-current portion of sublicense deposits | 639,900 | 607,975 |
Total Liabilities | 8,751,728 | 8,185,999 |
Commitments and Contingencies | ||
Stockholders' Deficiency | ||
Preferred stock, $0.001 par value, 350,000 shares authorized: | ||
Series A Preferred Stock, 50,000 and 5,000 shares designated, 15,620 and 3,601 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 16 | 4 |
Series B Convertible Preferred Stock, 950,000 and 345,000 shares designated, 381,184 and 228,471 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 381 | 228 |
Common Stock, $0.0001 par value, 2,400,000,000 and 120,000 shares authorized, 72,979,521 and 36,943,242 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively | 7,298 | 3,694 |
Additional paid-in capital | 70,167,996 | 67,699,876 |
Accumulated deficit | (76,721,732) | (73,713,210) |
Total Stockholders' Deficiency | (6,546,041) | (6,009,408) |
Total Liabilities and Stockholders' Deficiency | $ 2,205,687 | $ 2,176,591 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 350,000 | 350,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, authorized shares | 2,400,000,000 | 120,000 |
Common stock, issued shares | 72,979,521 | 36,943,242 |
Common stock, outstanding shares | 72,979,521 | 36,943,242 |
Series A Preferred Stock | ||
Series A preferred stock, designated shares | 50,000 | 5,000 |
Series A Preferred stock, issued shares | 15,620 | 3,601 |
Series A Preferred stock, outstanding shares | 15,620 | 3,601 |
Series B Convertible Preferred Stock | ||
Series B convertible preferred stock, designated shares | 950,000 | 345,000 |
Series B Preferred stock, issued shares | 381,184 | 228,471 |
Series B Preferred stock, outstanding shares | 381,184 | 228,471 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statements of Operations [Abstract] | ||||
Sublicensing fee revenue | $ 4,800 | $ 4,800 | $ 9,600 | $ 9,600 |
Total Revenues | 4,800 | 4,800 | 9,600 | 9,600 |
Expenses: | ||||
Research and development costs | 93,756 | 58,211 | 95,245 | 196,598 |
Stock-based compensation expense | 1,294,049 | 3,020,230 | 1,883,433 | 3,211,556 |
Compensation and benefits | 44,499 | 94,180 | 180,836 | 225,927 |
General and administrative expenses | 163,767 | 24,270 | 286,481 | 143,109 |
Depreciation and amortization | 10,002 | 12,249 | 21,009 | 24,497 |
Total Operating Expenses | 1,606,073 | 3,209,140 | 2,467,004 | 3,801,687 |
Loss from Operations | (1,601,273) | (3,204,340) | (2,457,404) | (3,792,087) |
Other Expenses: | ||||
Decrease (Increase) in estimated fair value of embedded derivative liabilities | 142,623 | (112,110) | 4,915 | (163,387) |
Loss on conversion of convertible notes | (7,908) | (149,118) | (28,586) | (160,747) |
Interest expense, net | (201,844) | (506,868) | (527,447) | (703,383) |
Total other expenses | (67,129) | (768,096) | (551,118) | (1,027,517) |
Loss Before Income Taxes | (1,668,402) | (3,972,436) | (3,008,522) | (4,819,604) |
Provision for income taxes | ||||
Net Loss | $ (1,668,402) | $ (3,972,436) | $ (3,008,522) | $ (4,819,604) |
Basic net loss per share | $ (0.03) | $ (0.20) | $ (0.06) | $ (0.27) |
Basic weighted average shares outstanding | 60,013,287 | 19,829,113 | 51,371,716 | 17,678,911 |
Diluted net loss per share | $ (0.03) | $ (0.20) | $ (0.06) | $ (0.27) |
Diluted weighted average shares outstanding | 60,013,287 | 19,829,113 | 51,371,716 | 17,678,911 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Cash Flows [Abstract] | ||
Net Cash Used in Operating Activities | $ (267,637) | $ (551,041) |
Net Cash Used in Investing Activities | ||
Cash Flows Provided by Financing Activities: | ||
Issuance of convertible promissory notes | 295,700 | 628,700 |
Issuance of promissory notes to related parties | 60,730 | 43,340 |
Issuance of common stock under equity purchase agreements | 42,944 | |
Issuance of promissory note | 30,000 | |
Repayment of promissory notes and accrued interest to related parties | (57,500) | (122,000) |
Repayment of mortgage loan | (30,000) | (30,000) |
Repayment of promissory notes | (30,000) | |
Net Cash Provided by Financing Activities | 268,930 | 562,984 |
Net Increase (Decrease) in Cash | 1,293 | 11,943 |
Cash, beginning of period | 6,807 | 9,163 |
Cash, end of period | 8,100 | 21,106 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid during the year for interest | 52,007 | 109,840 |
Supplemental Disclosure of Non-cash Financing Activities: | ||
Conversion of convertible promissory notes | $ 163,662 | $ 449,614 |
The Company and Basis of Presen
The Company and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
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 to the patented Coates spherical rotary valve (“CSRV ® ® ® ® ® Management believes 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 financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2017 and the Company’s quarterly financial statements and the notes thereto included in its Quarterly Reports. 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 June 30, 2018, had a stockholders’ deficiency of ($6,546,000). In addition, a mortgage loan which had a principal balance of $1,243,000 at June 30, 2018, matured in July 2018. The lender is working with us on an extension of the mortgage loan and has not demanded repayment of the balance. As directed by the lender, we are continuing to make payments on the mortgage loan on the same terms that were in effect prior to the maturity date. If the lender does not ultimately agree to extend the term of the mortgage loan, we would be required to refinance the property with another mortgage lender, if possible. Failure to do so could adversely affect our financial position and results of operations. In addition, the recent trading price range of the Company’s common stock at a fraction of a penny, has introduced additional 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. Reverse Stock Split The Company effected a one-for-200 reverse stock split of all of its outstanding shares of common stock, Series A Preferred Stock, Series B Convertible Preferred Stock, common stock warrants and stock options as of the close of trading on December 1, 2017. All prior year balances of shares of capital stock, warrants and stock options outstanding and all presentations and disclosures of transactions in shares of capital stock, warrants and stock options have been restated on a pro forma basis as if the reverse stock split had occurred prior to January 1, 2017. Such restatements include calculations regarding the Company’s weighted average shares outstanding and loss per share. Inventory Inventory consists of raw materials. Inventory is stated at the lower of cost or net realizable value. Inventory is accounted for on the first-in, first-out method. Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These significant estimates include determining the fair value of convertible promissory notes containing embedded derivatives and variable conversion rates, determining a value for shares of Series A Preferred Stock and Series B Convertible Preferred Stock issued, assigning useful lives to the Company’s property, plant and equipment, determining an appropriate amount to reserve for obsolete and slow moving inventory, estimating a valuation allowance for deferred tax assets, assigning expected lives to, and estimating the rate of forfeitures of, stock options granted and selecting a trading price volatility factor for the Company’s common stock in order to estimate the fair value of the Company’s stock options on the date of grant or other appropriate measurement date. Actual results could differ from those estimates. |
Concentrations of Credit and Bu
Concentrations of Credit and Business Risk | 6 Months Ended |
Jun. 30, 2018 | |
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 one financial institution. Monies on deposit are fully insured by the Federal Deposit Insurance Corporation. The Company’s operations are devoted to the development, application, licensing and marketing of the CSRV ® ® |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
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 | 6 Months Ended |
Jun. 30, 2018 | |
Licensing Agreement and Deferred Licensing Costs [Abstract] | |
LICENSING AGREEMENT AND DEFERRED LICENSING COSTS | 4. LICENSING AGREEMENT AND DEFERRED LICENSING COSTS The Company holds a manufacturing, use, lease and sale license from George J. Coates and Gregory G. Coates for the CSRV ® ® ® ® ® 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 June 30, 2018 and December 31, 2017, deferred licensing costs, comprised of expenditures for patent costs incurred pursuant to the CSRV ® |
Agreement Assigned to Almont En
Agreement Assigned to Almont Energy, Inc. | 6 Months Ended |
Jun. 30, 2018 | |
Agreement Assigned to Almont Energy, Inc. [Abstract] | |
AGREEMENT ASSIGNED TO ALMONT ENERGY, INC. | 5. AGREEMENT ASSIGNED TO ALMONT ENERGY, INC. In 2010, Almont Energy Inc. (“Almont”), a privately held, independent third-party entity based in Alberta, Canada became the assignee of a sublicense which covers the use of the CSRV ® ® In prior years, the Company received a non-refundable $300,000 deposit on the Canadian License. As the Company continues to be desirous of commencing shipments of its CSRV ® ® Year Ending Amount 2018 10,000 2019 19,000 2020 19,000 2021 19,000 Thereafter 94,000 $ 161,000 At June 30, 2018 and December 31, 2017, the unamortized balance of this license deposit was $161,000 and $170,000, respectively. The current portion of $19,000 is included in sublicense deposits under current assets and the remainder of the balance is included in non-current sublicense deposits on the accompanying balance sheets at June 30, 2018 and December 31, 2017, respectively. For the three months ended June 30, 2018 and 2017, amortization of the license deposit which was recorded as sublicensing fee revenue amounted to $5,000 and $5,000, respectively. For the six months ended June 30, 2018 and 2017, amortization of the license deposit which was recorded as sublicensing fee revenue amounted to $10,000 and $10,000, respectively. |
Non-Exclusive Distribution Subl
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. | 6 Months Ended |
Jun. 30, 2018 | |
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 ® ® ® ® At this time, as the Company’s intellectual property rights only cover the territory of North America, it does not have any rights to enter into a manufacturing and sale license agreement with Coates Power. These rights are currently held by George J. Coates, Gregory G. Coates and The Coates Trust, a trust controlled by George J. Coates. Coates Power and Renown are controlled and managed by Mr. James Pang, the Company’s liaison agent in China. The Company received a $131,000 cash deposit with an order from Coates Power to produce two Gen Sets. This amount is included in Deposits in the accompanying balance sheets at June 30, 2018 and December 31, 2017. The Company intends to build and ship these two generators at such time that Coates Power is able to commence production in accordance with the manufacturing license agreement and there is sufficient working capital for this purpose. |
Other Current Assets
Other Current Assets | 6 Months Ended |
Jun. 30, 2018 | |
Other Current Assets [Abstract] | |
OTHER CURRENT ASSETS | 7. OTHER CURRENT ASSETS Other current assets at June 30, 2018 and December 31, 2017 amounted to $50,000 and $1,000, respectively. The balance at June 30, 2018 included $48,000 for inventory billed, but not received. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2018 | |
Inventory [Abstract] | |
INVENTORY | 8. INVENTORY Inventory consisted of the following: June 30, December 31, Raw materials $ 102,000 $ 104,000 |
Property, Plant and Equipment
Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY, PLANT AND EQUIPMENT | 9. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment at cost, less accumulated depreciation, consisted of the following: June 30, 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 57,000 3,028,000 3,028,000 Less: Accumulated depreciation (1,015,000 ) (996,000 ) Total $ 2,013,000 $ 2,032,000 Depreciation expense amounted to $9,000 and $11,000 for the three months ended June 30, 2018 and 2017, respectively. Depreciation expense amounted to $19,000 and $22,000 for the six months ended June 30, 2018 and 2017, respectively. |
Mortgage Loan Payable
Mortgage Loan Payable | 6 Months Ended |
Jun. 30, 2018 | |
Mortgage Loan Payable/Promissory Notes [Abstract] | |
MORTGAGE LOAN PAYABLE | 10. MORTGAGE LOAN PAYABLE The Company has a mortgage loan on the land and building that serves as its headquarters and research and development facility which bears interest at the rate of 7.5% per annum, which matured in July 2018. The lender is working with the Company on an extension of the mortgage loan and has not demanded repayment of the balance. As directed by the lender, the Company is continuing to make payments on the mortgage loan on the same terms that were in effect prior to the maturity date. If the lender does not ultimately agree to extend the term of the mortgage loan, the Company would be required to refinance the property with another mortgage lender, if possible. Failure to do so could adversely affect the Company’s financial position and results of operations. Interest expense for the three months ended June 30, 2018 and 2017 amounted to $24,000 and $25,000, respectively. Interest expense for the six months ended June 30, 2018 and 2017 amounted to $48,000 and $50,000, respectively. The loan requires monthly payments of interest, plus $5,000 which is being applied to the principal balance. The remaining principal balance at June 30, 2018 and December 31, 2017 was $1,243,000 and $1,273,000, respectively. The mortgage loan may be prepaid in whole, or, in part, at any time without penalty. The loan is collateralized by a security interest in all of the Company’s assets, the pledge of 25,000 shares of common stock of the Company owned by George J. Coates, which were deposited into escrow for the benefit of the lender and the personal guarantee of George J. Coates. The Company is not permitted to create or permit any secondary mortgage or similar liens on the property or improvements thereon without prior consent of the lender. |
Accounts Payable and Accrued Li
Accounts Payable and Accrued Liabilities | 6 Months Ended |
Jun. 30, 2018 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 11. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are as follows: June 30, December 31, Legal and professional fees $ 1,495,000 $ 1,427,000 Accrued interest expense 670,000 582,000 General and administrative expenses 501,000 420,000 Research and development costs 115,000 115,000 Total $ 2,781,000 $ 2,544,000 |
Promissory Notes to Related Par
Promissory Notes to Related Parties | 6 Months Ended |
Jun. 30, 2018 | |
Promissory Notes to Related Parties [Abstract] | |
PROMISSORY NOTES TO RELATED PARTIES | 12. PROMISSORY NOTES TO RELATED PARTIES Promissory Notes Issued to George J. Coates During the six months ended June 30, 2018 and 2017, the Company issued, in a series of transactions, promissory notes to George J. Coates and received cash proceeds of $47,000 and $19,000, respectively and repaid promissory notes to George J. Coates in the aggregate principal amount of $23,000 and $23,000, respectively. Interest expense for the three months ended June 30, 2018 and 2017 amounted to $15,000 and $12,000, respectively. Interest expense for the six months ended June 30, 2018 and 2017 amounted to $27,000 and $25,000, respectively. The promissory notes are payable on demand and provide for interest at the rate of 17% per annum, compounded monthly. At June 30, 2018, the outstanding principal balance was $45,000 and the balance of unpaid accrued interest was $346,000. 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. Interest is being imputed on this promissory note at the rate of 10% per annum. During the six months ended June 30, 2018 and 2017, the Company, partially repaid $15,000 and $20,000, respectively of this promissory note. Imputed interest expense for the three months ended June 30, 2018 and 2017, amounted to $35,000 and $36,000, respectively. Imputed interest expense for the six months ended June 30, 2018 and 2017, amounted to $70,000 and $71,000, respectively. At June 30, 2018, the outstanding principal balance was $1,403,000. Promissory Notes Issued to Bernadette Coates During the six months ended June 30, 2018 and 2017, the Company issued promissory notes to Bernadette Coates, spouse of George J. Coates and received cash proceeds of $14,000 and $24,000, respectively. The Company repaid promissory notes to Bernadette Coates in the principal amount of $15,000 and $31,000, respectively. The promissory notes are payable on demand and provide for interest at the rate of 17% per annum, compounded monthly. Interest expense for the three months ended June 30, 2018 and 2017, amounted to $5,000 and $4,000, respectively. Interest expense for the six months ended June 30, 2018 and 2017, amounted to $12,000 and $7,000, respectively. At June 30, 2018, the outstanding principal balance was $27,000. Promissory Note Issued to Employee The Company issued promissory notes to an employee in 2016, aggregating $5,000, which were payable on demand and provided for interest at the rate of 17% per annum, compounded monthly. In February 2018, these notes were repaid in full along with accrued interest thereon of $1,000. The aggregate amount of unpaid accrued interest on all promissory notes to related parties amounting to $452,000 is included in accounts payable and accrued liabilities in the accompanying balance sheet at June 30, 2018. |
Promissory Note
Promissory Note | 6 Months Ended |
Jun. 30, 2018 | |
Mortgage Loan Payable/Promissory Notes [Abstract] | |
PROMISSORY NOTE | 13. PROMISSORY NOTE In March 2017, the Company issued a $25,000 promissory note with a maturity date of May 13, 2017. Interest was payable upon maturity in the form of 50,000 shares of unregistered, restricted shares of the Company’s common stock. In addition, the Company agreed to extend warrants held by the lender to purchase 54,199 shares of common stock that were scheduled to expire in 2017 for an additional five years and modify the exercise price to $0.03 per share. On May 5, 2017, the Company prepaid the note in full and issued 43,443 shares of its common stock representing the prorated number of shares for interest on the note, as a result of the prepayment. Interest expense of $4,000 was recorded for issuance of these shares based on the closing trading price on the date of issuance. |
Convertible Promissory Notes an
Convertible Promissory Notes and Embedded Derivative Liability | 6 Months Ended |
Jun. 30, 2018 | |
Convertible Promissory Notes and Embedded Derivative Liability [Abstract] | |
CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE LIABILITY | 14. CONVERTIBLE PROMISSORY NOTES AND EMBEDDED DERIVATIVE LIABILITY From time to time, the Company issues convertible promissory notes, the proceeds of which are used for general working capital purposes. At June 30, 2018, there was $351,000 principal amount of convertible promissory notes outstanding. During the six months ended June 30, 2018 and 2017, $325,000 and $670,000 of convertible promissory notes were issued, respectively. Outstanding notes may be converted into unregistered shares of the Company’s common stock at a discount ranging from 30% to 39% of the defined trading price of the common stock on the date of conversion. The defined trading prices are based on the trading price of the stock during a defined period ranging from ten to twenty-five trading days immediately preceding the date of conversion. The conversion rate discount establishes a beneficial conversion feature (“BCF”) or unamortized discount, which is required to be valued and accreted to interest expense over the six-month period until the conversion of the notes into restricted shares of common stock is permitted. In addition, the conversion formula meets the conditions that require accounting for convertible notes as derivative liability instruments. The effective interest rate on the outstanding convertible notes at June 30, 2018 ranged from 85% to 147%. The unamortized discount on the outstanding convertible notes at June 30, 2018 and December 31, 2017 amounted to $60,000 and $141,000, respectively. 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, with a prepayment penalty ranging from 15% to 50% of the principal amount of the convertible note at any time prior to becoming eligible for conversion. One convertible promissory note with an aggregate outstanding balance of $53,000 is convertible in monthly installments in an amount determined by the noteholder, 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, which 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 quoted daily yield curve rates of treasury securities with comparable maturities 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: June 30, December 31, Level 1 Inputs $ - $ - Level 2 Inputs 354,000 359,000 Level 3 Inputs - - Total $ 354,000 $ 359,000 In a series of transactions, during the six months ended June 30, 2018, convertible promissory notes with an aggregate principal balance of $164,000, including accrued interest thereon were converted into 27,066,279 unregistered shares of common stock. The Company incurred a loss on these conversions amounting to $29,000 for the six months ended June 30, 2018. In a series of transactions, during the six months ended June 30, 2017, convertible promissory notes with an aggregate principal balance of $448,000, including accrued interest thereon were converted into 8,324,280 unregistered shares of common stock. The Company incurred a loss on these conversions amounting to $161,000 for the six months ended June 30, 2017. 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 | 6 Months Ended |
Jun. 30, 2018 | |
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 real-time quotes and market information for the Company at www.otcmarkets.com Reverse Stock Split At the close of trading in the Company’s common stock on December 1, 2017, a 1:200 reverse stock split of all of the Company’s shares of common stock, shares of preferred stock, common stock warrants and stock options became effective. Shareholders were paid cash-in-lieu of any fractional shares that would have resulted in connection with the reverse stock split. The reverse stock split was approved by the board of directors and George J. Coates, the majority stockholder by means of a written consent. For purposes of presenting the accompanying financial statements as of June 30, 2018 and December 31, 2017 and for the six months ended June 30, 2018, all balances, transactions and calculations were restated on a pro forma basis as if the reverse stock split occurred prior to the beginning of the year ended December 31, 2017. Certificate of Validation On April 2, 2018, the Company filed a certificate of validation with the state of Delaware which had retroactive effect to the close of trading in the Corporation’s common stock on December 1, 2017, in order to: (i) cure certain technical, procedural defects related to the 1:200 reverse stock split, which became effective at the close of trading on December 31, 2017, (ii) clarify that the reverse stock split effected a 1:200 reduction in the number of the Corporation’s authorized shares of common stock, from 12,000,000,000 to 60,000,000, with retroactive effect to the close of trading on December 1, 2017, (iii) clarify that the reverse stock split effected 1:200 reduction in the number of authorized shares of the Corporation’s preferred stock, from 100,000,000 to 500,000 with retroactive effect to the close of trading on December 1, 2017; and, (iv) concurrently therewith, further amend the Corporation’s Amended Certificate of Articles of Incorporation with the State of Delaware to increase the number of the Corporation’s authorized shares of common stock, par value $0.0001 from 60,000,000 to 120,000,000 and reduce the number of authorized shares of the Corporation’s preferred stock, par value $0.001 from 500,000 to 350,000. The above corporate action was authorized by the board of directors on February 28, 2018, and by means of obtaining the written consent of George J. Coates, the sole majority stockholder, was approved by the shareholders on March 1, 2018. Certificate of Conversion and Certificate of Designation On May 9, 2018, the Company filed a Certificate of Conversion and a Certificate of Designation which caused the following corporate actions to become effective: (i) The Corporation’s State of Domicile was converted from the State of Delaware to the State of Nevada. (ii) The number of authorized shares of capital stock of the Company was increased to: a. 2,400,000,000 shares of common stock, par value $0.0001 per share b. 100,000,000 shares of preferred stock, par value $0.001 per share (iii) The series and number of shares of preferred stock designated from the 100,000,000 shares of preferred stock authorized, was increased to: a. 1,000,000 shares of Series A Preferred Stock, $0.001 per share b. 10,000,000 shares of Series B Convertible Preferred Stock, $0.001 per share Section 3(a)10 Exempt Securities Transaction On March 19, 2018, the Company entered into a Settlement Agreement and Stipulation (the “Settlement Agreement”) with Livingston Asset Management LLC, a Florida limited liability company (“LAM”), pursuant to which the Company agreed to issue common stock to LAM in exchange for the settlement of $69,000 (the “Settlement Amount”) of past-due obligations and accounts payable of the Company. LAM purchased the obligations and accounts payable from certain vendors of the Company as described below. On April 2, 2018, the Circuit Court of Baltimore County, Maryland (the “Court”), entered an order (the “LAM Order”) approving, among other things, the fairness of the terms and conditions of an exchange in reliance upon an exemption from registration provided for in Section 3(a)(10) of the Securities Act of 1933, as amended (the “Securities Act”), in accordance with a stipulation of settlement, pursuant to the Settlement Agreement between the Company and LAM. Pursuant to the court order, LAM commenced an action against the Company to recover an aggregate of $69,000 of past-due obligations and accounts payable of the Company, which LAM had purchased from certain vendors of the Company pursuant to the terms of separate claim purchase agreements between LAM and each of such vendors (the “LAM Assigned Accounts”). The LAM Assigned Accounts relate to certain accounting services provided to the Company and a supplier invoice. The Settlement Agreement became effective and binding upon the Company and LAM upon execution of the Order by the Court on April 2, 2018. Pursuant to the terms of the Settlement Agreement approved by the LAM Order, on April 2, 2018, the Registrant agreed to issue shares to LAM (the “LAM Settlement Shares”) of the Registrant’s common stock at a 30% discount from the selling price of the settlement shares sold by LAM, as defined in the settlement agreement. The Settlement Agreement provides that the LAM Settlement Shares will be issued in one or more tranches, as necessary, sufficient to satisfy the settlement amount through the issuance of freely trading securities issued in reliance upon an exemption provided for in Section 3(a)(10) of the Securities Act. The parties reasonably estimate that the fair market value of the LAM Settlement Shares to be received by LAM is equal to approximately $99,000. Additional tranche requests shall be made as requested by LAM until the LAM Settlement Amount is paid in full. The Settlement Agreement provides that in no event shall the number of shares of common stock issued to LAM or its designee in connection with the Settlement Agreement, when aggregated with all other shares of common stock then beneficially owned by LAM and its affiliates (as calculated pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations thereunder), result in the beneficial ownership by LAM and its affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and the rules and regulations thereunder) at any time of more than 9.99% of the Common Stock. The Company is required to reserve a sufficient number of shares of its common stock to provide for issuances thereof, upon full satisfaction of the Settlement Amount. The following common stock transactions occurred during the six months ended June 30, 2018: ● In a series of transactions, convertible promissory notes with an aggregate principal balance of $164,000, including accrued interest thereon were converted into 27,066,279 unregistered shares of common stock. ● In a series of transactions, the Company issued 8,970,000 shares of its common stock to LAM to be sold in the open market in reliance upon an exemption provided for in Section 3(a)(10) of the Securities Act. Proceeds from the sales are to be used to satisfy past-due obligations of the Company previously assigned to LAM. During the six months ended June 30, 2018, Lam has paid $40,000 of the Settlement Amount of the Company’s past due obligations in accordance with the Settlement Agreement. The following common stock transactions occurred during the six months ended June 30, 2017: ● In a series of transactions, convertible promissory notes with an aggregate principal balance of $448,000, including accrued interest thereon were converted into 8,324,430 unregistered shares of common stock. ● Barry C. Kaye converted 6.86 shares of Series B Convertible Preferred Stock (“Series B”) into 6,860 unregistered, restricted shares of the Company’s common stock. ● The Company issued 43,443 shares of common stock in payment of interest on a $25,000 promissory note as more fully discussed in Note 13. 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”), 50,000 shares designated, 15,620 and 3,601 shares issued and outstanding as of June 30, 2018 and December 31, 2017, 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, which entitle him to 152,620,000 votes in addition to his voting rights from the shares of common stock and the shares of Series B he holds. The Company may issue additional shares of Series A Preferred Stock to Mr. Coates if deemed necessary to provide anti-dilution protection and maintain his ownership percentage of eligible votes. Issuances of shares of Series A to George J. Coates do not have any effect on the share of dividends or liquidation value of the holders of the Company’s common stock. However, the voting rights of the holders of the Company’s common stock are diluted with each issuance. During the six months ended June 30, 2018 and 2017, the Company issued 12,019 and 3,351 shares, respectively, of Series A Preferred Stock to George J. Coates representing anti-dilution shares to maintain Mr. Coates’ percentage of eligible votes at 85.7%. ● Series B Convertible Preferred Stock, par value $0.001 per share, 950,000 and 345,000 shares designated and 381,184 and 228,471 shares issued and outstanding at June 30, 2018 and December 31, 2017, 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 the 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 provides anti-dilution protection for certain of its key employees. For each new share of common stock issued by the Company to non-Coates family members in the future, additional shares of Series B will be issued to maintain their fixed ownership percentage of the Company. The fixed ownership percentage is adjusted for acquisitions and dispositions of common stock, not related to conversions of Series B Convertible Preferred Stock, by these key employees. At June 30, 2018, the fixed ownership percentages were as follows: 1. George J. Coates – 80.63% 2. Gregory G. Coates – 6.10% 3. Barry C. Kaye – 0.048% 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. The following presents by year, the number of shares of Series B held and the year that they become eligible for conversion into shares of common stock, as of June 30, 2018. Total 2018 2019 2020 George J. Coates 352,294 74,506 136,599 141,189 Gregory G. Coates 26,817 5,484 10,646 10,687 Barry C. Kaye 2,073 413 823 837 Total 381,184 80,403 148,068 152,713 For the six months ended June 30, 2018, 141,189, 10,687 and 837 shares of Series B were issued to George J. Coates, Gregory G. Coates and Barry C. Kaye, respectively, having an estimated fair value of $545,000, $41,000 and $3,000, respectively. These amounts were included in stock-based compensation expense in the accompanying statement of operations for the three months ended June 30, 2018. For the six months ended June 30, 2017, 45,381, 3,739 and 293 shares of Series B were issued to George J. Coates, Gregory G. Coates and Barry C. Kaye, respectively, having an estimated fair value of $2,925,000, $250,000 and $20,000, respectively. These amounts were included in stock-based compensation expense in the accompanying statement of operations for the six months ended June 30, 2017. During the six months ended June 30, 2017, Barry C. Kaye converted 6.86 shares of Series B into 6,868 unregistered, restricted shares of the Company’s common stock. In the event that all of the 381,184 shares of Series B outstanding at June 30, 2018 were converted, once the conversion restrictions lapse, an additional 381,184,000 new restricted shares of common stock would be issued. On a pro forma basis, based on the number of shares of common stock outstanding at June 30, 2018, this would dilute the ownership percentage of non-affiliated stockholders from 88.8% to 12.8%. 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. |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Loss Per Share [Abstract] | |
LOSS PER SHARE | 16. LOSS PER SHARE At June 30, 2018, there were stock warrants outstanding to purchase 733,393 shares of common stock at exercise prices ranging from $0.10 to $13.50 per share, vested stock options outstanding to acquire 62,351 shares of common stock at exercise prices ranging from $5.60 to $88.00 per share and $385,000 of convertible promissory notes outstanding, which on a pro forma basis assuming all such promissory notes were converted into shares of common stock using the contractual conversion price determined as of the close of trading on the last trading in June 2018, would have been convertible into 197,472,443 shares of common stock At June 30, 2017, there were stock warrants outstanding to purchase 751,725 shares of common stock at exercise prices ranging from $0.10 to $13.50 per share, vested stock options outstanding to acquire 62,351 shares of common stock at exercise prices ranging from $5.60 to $88.00 per share and $80,000 of convertible promissory notes outstanding, which on a pro forma basis assuming all such promissory notes were converted into shares of common stock using the contractual conversion price determined as of the close of trading on the last trading in June 2017, would have been convertible into 4,843,465 shares of common stock. For the three and six-month periods ended June 30, 2018 and 2017, 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 | 6 Months Ended |
Jun. 30, 2018 | |
Capital Stock/Stock Options [Abstract] | |
STOCK OPTIONS | 17. 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 250,000 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 250,000 shares of common stock covered by the 2014 Stock Plan. At June 30, 2018, none of the shares of common stock authorized under the 2014 Stock Plan had been granted as stock options or awards. 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 six months ended June 30, 2018 and 2017, no stock options were granted. There were no unvested stock options outstanding at June 30, 2018. During the six months ended June 30, 2018 and 2017, the Company did not incur any stock-based compensation expense related to employee stock options. At June 30, 2018, 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, 6/30/18 $5.60 – $88.00 62,500 8 62,500 $ 36.34 $ 33.84 No stock options were exercised, forfeited or expired during the six months ended June 30, 2018 and 2017. 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. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Taxes [Abstract] | |
INCOME TAXES | 18. 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 $458,000 and $1,418,000 for the three months ended June 30, 2018 and 2017, respectively. Deferred tax assets increased by $705,000 and $1,627,000 for the six months ended June 30, 2018 and 2017, 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 June 30, 2018 and December 31, 2017. 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 2014 through 2016, 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 six months ended June 30, 2018 and 2017, there were no penalties or interest related to the Company’s income tax returns. At June 30, 2018, the Company had available, $21,107,000 of net operating loss carryforwards which may be used to reduce future federal taxable income, expiring between 2018 and 2038 and $10,723,000 of net operating loss carryforwards which may be used to reduce future state taxable income, expiring between 2029 and 2038. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 19. RELATED PARTY TRANSACTIONS Licensing Agreement for CSRV ® The Company’s intellectual property rights for the CSRV ® Non-Exclusive distribution sublicense to Renown Power Development, Ltd. The Company has granted a non-exclusive distribution sublicense to Renown, as more fully discussed in Note 6. Renown is controlled by James Pang, the Company’s exclusive liaison agent in China. Issuances and Repayments of Promissory Notes to Related Parties Issuances and repayments of promissory notes to related parties during the six months ended June 30, 2018 and 2017, are discussed in detail in Note 13. Promissory notes issued to George J. Coates and Bernadette Coates are payable on demand and provide for interest at the rate of 17% per annum, compounded monthly. The promissory note issued to Gregory G. Coates is non-interest bearing, however, the Company imputes interest at a rate of 10% per annum, which has been charged to interest expense in the accompanying statements of operations. Stock Options Stock options previously granted to related parties, all of which are fully vested are more fully discussed in Note 17. Issuances and Conversions of Preferred Stock Shares of Series A Preferred Stock awarded to George J. Coates during the six months ended June 30, 2018 and 2017, are discussed in detail in Note 15. Shares of Series B Convertible Preferred Stock awarded to George J. Coates, Gregory G. Coates and Barry C. Kaye and shares converted during the six months ended June 30, 2018 and 2017, are discussed in detail in Note 15. Personal Guaranty and Stock Pledge In connection with the Company’s mortgage loan on the Company’s headquarters facility, 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. 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 is summarized as follows: For the six months ended 2018 2017 George J. Coates (a) (b) $ 8,000 $ 18,000 Gregory G. Coates (c) (d) 47,000 10,000 (a) For the six months ended June 30, 2018 and 2017, George J. Coates earned additional base compensation of $125,000 and $115,000, respectively, payment of which is being deferred until the Company has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $1,346,000 and $1,221,000, respectively. (b) During the six months ended June 30, 2018 and 2017, George J. Coates was awarded Series A Preferred Stock and Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. (c) For the six months ended June 30, 2018 and 2017, Gregory G. Coates earned additional base compensation of $38,000 and $38,000, respectively, payment of which is being deferred until the Company has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $180,000 and $143,000, respectively. (d) During the six months ended June 30, 2018 and 2017, Gregory G. Coates was awarded Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. The Company had been deferring base compensation for Bernadette Coates, who retired in 2016, until it has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $242,000. During the six months ended June 30, 2018 and 2017, Barry C. Kaye, Treasurer and Chief Financial Officer was paid compensation of $35,000 and $50,000, respectively. For the six months ended June 30, 2018 and 2017, Mr. Kaye earned compensation of $63,000 and $60,000, respectively, which was not paid and is being deferred until the Company has sufficient working capital to remit payment to him. During the six months ended June 30, 2018 and 2017, interest accrued on Mr. Kaye’s deferred compensation amounted to $37,000 and $27,000, respectively. At June 30, 2018, the total amount of Mr. Kaye’s unpaid, deferred compensation, including accrued interest thereon, was $483,000. This amount is included in accounts payable and accrued liabilities in the accompanying balance sheet at June 30, 2018. During the six months ended June 30, 2018 and 2017, Barry C. Kaye was awarded Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. At June 30, 2018 the Company owed deferred compensation to an employee in the amount of $30,000, payment of which is being deferred until the Company has sufficient working capital. This amount is included in deferred compensation in the accompanying balance sheet at June 30, 2018. |
Contractual Obligations and Com
Contractual Obligations and Commitments | 6 Months Ended |
Jun. 30, 2018 | |
Contractual Obligations and Commitments [Abstract] | |
CONTRACTUAL OBLIGATIONS AND COMMITMENTS | 20. CONTRACTUAL OBLIGATIONS AND COMMITMENTS The following table summarizes the Company’s contractual obligations and commitments at March 31, 2018: Total 2018 2019 Deferred compensation $ 1,797,000 $ 1,797,000 $ - Promissory notes to related parties 1,477,000 1,477,000 - Mortgage loan payable 1,243,000 1,243,000 - Convertible promissory notes 351,000 255,000 96,000 Total $ 4,868,000 $ 4,772,000 $ 96,000 |
Litigation and Contingencies
Litigation and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Litigation and Contingencies [Abstract] | |
LITIGATION AND CONTINGENCIES | 21. 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 | 6 Months Ended |
Jun. 30, 2018 | |
Recently Issued Accounting Standards [Abstract] | |
RECENTLY ISSUED ACCOUNTING STANDARDS | 22. 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. The Company intends to adopt this standard in its first quarter of 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. 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. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 23. SUBSEQUENT EVENTS Conversion of Convertible Promissory Notes During the period from July 1, 2018 to August 13, 2018, $97,000 principal amount of convertible promissory notes, including accrued interest, was converted into 115,304,620 unregistered, restricted shares of the Company’s common stock. Issuances and Repayments of Promissory Notes to Related Parties During the period from July 1, 2018 to August 13, 2018, the Company issued promissory notes to George J. Coates and received aggregate cash proceeds of $8,000. During the period from July 1, 2018 to August 13, 2018, the Company repaid $10,000 and $5,000 of promissory notes to George J. Coates and Gregory G. Coates, respectively. The promissory notes are payable on demand and provide for interest at the rate of 17% per annum, compounded monthly. Deferred Compensation During the period from July 1, 2018 to August 13, 2018, George J. Coates, Gregory G. Coates, Barry C. Kaye and one employee agreed to additional deferral of their compensation amounting to $30,000, $9,000, $13,000 and $4,000, respectively. During the period from July 1, 2018 to August 13, 2018, Barry C. Kaye was paid compensation of $3,000. Deposit On July 23, 2018, the Company entered into a non-binding letter of intent and received a $50,000 refundable deposit for the potential sale of a 3.6-acre undeveloped parcel of land that it is not currently using in its operations at its headquarters facility in New Jersey. |
The Company and Basis of Pres29
The Company and Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
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 to the patented Coates spherical rotary valve (“CSRV ® ® ® ® ® Management believes 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 financial statements and the notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2017 and the Company’s quarterly financial statements and the notes thereto included in its Quarterly Reports. 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 June 30, 2018, had a stockholders’ deficiency of ($6,270,000). In addition, a mortgage loan which had a principal balance of $1,243,000 at June 30, 2018, matured in July 2018. The lender is working with us on an extension of the mortgage loan and has not demanded repayment of the balance. As directed by the lender, we are continuing to make payments on the mortgage loan on the same terms that were in effect prior to the maturity date. If the lender does not ultimately agree to extend the term of the mortgage loan, we would be required to refinance the property with another mortgage lender, if possible. Failure to do so could adversely affect our financial position and results of operations. In addition, the recent trading price range of the Company’s common stock at a fraction of a penny, has introduced additional 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. |
Reverse Stock Split | Reverse Stock Split The Company effected a one-for-200 reverse stock split of all of its outstanding shares of common stock, Series A Preferred Stock, Series B Convertible Preferred Stock, common stock warrants and stock options as of the close of trading on December 1, 2017. All prior year balances of shares of capital stock, warrants and stock options outstanding and all presentations and disclosures of transactions in shares of capital stock, warrants and stock options have been restated on a pro forma basis as if the reverse stock split had occurred prior to January 1, 2017. Such restatements include calculations regarding the Company’s weighted average shares outstanding and loss per share. |
Inventory | Inventory Inventory consists of raw materials. Inventory is stated at the lower of cost or net realizable value. Inventory is accounted for on the first-in, first-out method. |
Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These significant estimates include determining the fair value of convertible promissory notes containing embedded derivatives and variable conversion rates, determining a value for shares of Series A Preferred Stock and Series B Convertible Preferred Stock issued, assigning useful lives to the Company’s property, plant and equipment, determining an appropriate amount to reserve for obsolete and slow moving inventory, estimating a valuation allowance for deferred tax assets, assigning expected lives to, and estimating the rate of forfeitures of, stock options granted and selecting a trading price volatility factor for the Company’s common stock in order to estimate the fair value of the Company’s stock options on the date of grant or other appropriate measurement date. Actual results could differ from those estimates. |
Agreement Assigned to Almont 30
Agreement Assigned to Almont Energy, Inc. (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Agreement Assigned to Almont Energy, Inc. [Abstract] | |
Summary of amortization | Year Ending Amount 2018 10,000 2019 19,000 2020 19,000 2021 19,000 Thereafter 94,000 $ 161,000 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory [Abstract] | |
Summary of inventory | June 30, December 31, Raw materials $ 102,000 $ 104,000 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Summary of property, plant and equipment | June 30, 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 57,000 3,028,000 3,028,000 Less: Accumulated depreciation (1,015,000 ) (996,000 ) Total $ 2,013,000 $ 2,032,000 |
Accounts Payable and Accrued 33
Accounts Payable and Accrued Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounts Payable and Accrued Liabilities [Abstract] | |
Summary of accounts payable and accrued liabilities | June 30, December 31, Legal and professional fees $ 1,495,000 $ 1,427,000 Accrued interest expense 670,000 582,000 General and administrative expenses 501,000 420,000 Research and development costs 115,000 115,000 Total $ 2,781,000 $ 2,544,000 |
Convertible Promissory Notes 34
Convertible Promissory Notes and Embedded Derivative Liability (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Convertible Promissory Notes and Embedded Derivative Liability [Abstract] | |
Schedule of fair value hierarchy of financial assets and liabilities measured at fair value | June 30, December 31, Level 1 Inputs $ - $ - Level 2 Inputs 354,000 359,000 Level 3 Inputs - - Total $ 354,000 $ 359,000 |
Capital Stock (Tables)
Capital Stock (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Capital Stock/Stock Options [Abstract] | |
Schedule of conversion into shares of common stock | Total 2018 2019 2020 George J. Coates 352,294 74,506 136,599 141,189 Gregory G. Coates 26,817 5,484 10,646 10,687 Barry C. Kaye 2,073 413 823 837 Total 381,184 80,403 148,068 152,713 |
Stock Options (Tables)
Stock Options (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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, 6/30/18 $5.60 – $88.00 62,500 8 62,500 $ 36.34 $ 33.84 |
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 ● 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. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Summary of approximate amount of base compensation and benefits | For the six months ended 2018 2017 George J. Coates (a) (b) $ 8,000 $ 18,000 Gregory G. Coates (c) (d) 47,000 10,000 (a) For the six months ended June 30, 2018 and 2017, George J. Coates earned additional base compensation of $125,000 and $115,000, respectively, payment of which is being deferred until the Company has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $1,346,000 and $1,221,000, respectively. (b) During the six months ended June 30, 2018 and 2017, George J. Coates was awarded Series A Preferred Stock and Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. (c) For the six months ended June 30, 2018 and 2017, Gregory G. Coates earned additional base compensation of $38,000 and $38,000, respectively, payment of which is being deferred until the Company has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $180,000 and $143,000, respectively. (d) During the six months ended June 30, 2018 and 2017, Gregory G. Coates was awarded Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. |
Contractual Obligations and C38
Contractual Obligations and Commitments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Contractual Obligations and Commitments [Abstract] | |
Summary of contractual obligations and commitments | Total 2018 2019 Deferred compensation $ 1,797,000 $ 1,797,000 $ - Promissory notes to related parties 1,477,000 1,477,000 - Mortgage loan payable 1,243,000 1,243,000 - Convertible promissory notes 351,000 255,000 96,000 Total $ 4,868,000 $ 4,772,000 $ 96,000 |
The Company and Basis of Pres39
The Company and Basis of Presentation (Details) - USD ($) | Dec. 01, 2017 | Jun. 30, 2018 | Dec. 31, 2017 |
The Company and Basis of Presentation (Textual) | |||
Stockholder's deficiency | $ (6,546,000) | $ (6,009,408) | |
Mortgage loan of principal balance | 1,243,000 | 1,273,000 | |
Negative working capital | $ (7,951,000) | $ (7,467,000) | |
Maturity date | Jul. 31, 2018 | ||
System technology developed over a period | 20 years | ||
Reverse stock split, description | A 1:200 reverse stock split of all of the Company's shares of common stock, shares of preferred stock, common stock warrants and stock options became effective. | The Company effected a one-for-200 reverse stock split of all of its outstanding shares of common stock, Series A Preferred Stock, Series B Convertible Preferred Stock, common stock warrants and stock options as of the close of trading on December 1, 2017. |
Licensing Agreement and Defer40
Licensing Agreement and Deferred Licensing Costs (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Licensing Agreement and Deferred Licensing Costs (Textual) | |||||
Accumulated amortization | $ 32,000 | $ 32,000 | $ 34,000 | ||
Amortization expense | $ 1,000 | $ 1,000 | $ 2,000 | $ 2,000 |
Agreement Assigned to Almont 41
Agreement Assigned to Almont Energy, Inc. (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Agreement Assigned to Almont Energy, Inc. [Abstract] | ||
2,018 | $ 10,000 | |
2,019 | 19,000 | |
2,020 | 19,000 | |
2,021 | 19,000 | |
Thereafter | 94,000 | |
Amortization amount | $ 161,000 | $ 170,000 |
Agreement Assigned to Almont 42
Agreement Assigned to Almont Energy, Inc. (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Agreement Assigned to Almont Energy, Inc. (Textual) | |||||
Unamortized balance of license deposit | $ 161,000 | $ 161,000 | $ 170,000 | ||
Sublicense deposits under current assets | 19,000 | 19,000 | $ 19,000 | ||
Sublicensing fee revenue | $ 5,000 | $ 5,000 | 10,000 | $ 10,000 | |
Canadian License [Member] | |||||
Agreement Assigned to Almont Energy, Inc. (Textual) | |||||
Amount of non-refundable license deposit | $ 300,000 |
Non-Exclusive Distribution Su43
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. (Details) - USD ($) | 1 Months Ended | |
Feb. 28, 2015 | Jun. 30, 2018 | |
Renown Power Development, Ltd. [Member] | ||
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. (Textual) | ||
Amount of non-refundable deposit received in prior years | $ 500,000 | |
Coates Power [Member] | ||
Non-Exclusive Distribution Sublicense with Renown Power Development, Ltd. (Textual) | ||
Deposit on order for two completed gen sets received in prior years | $ 131,000 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Other Current Assets (Textual) | ||
Other current assets | $ 50,316 | $ 608 |
Inventory billed, but not received | $ 48,000 |
Inventory (Details)
Inventory (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Summary of inventory | ||
Raw materials | $ 102,000 | $ 104,000 |
Property, Plant and Equipment46
Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Summary of Property, plant and equipment | ||
Property, plant and equipment, Gross | $ 3,028,000 | $ 3,028,000 |
Less: Accumulated depreciation | (1,015,000) | (996,000) |
Total | 2,013,000 | 2,032,000 |
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 | $ 57,000 |
Property, Plant and Equipment47
Property, Plant and Equipment (Details Textual) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment (Textual) | ||||
Depreciation expense | $ 9,000 | $ 11,000 | $ 19,000 | $ 22,000 |
Mortgage Loan Payable (Details)
Mortgage Loan Payable (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Mortgage Loan Payable (Textual) | |||||
Maturity date | Jul. 31, 2018 | ||||
Mortgage loan payable, interest rate | 7.50% | 7.50% | |||
Interest expense | $ 24,000 | $ 25,000 | $ 48,000 | $ 50,000 | |
Mortgage loan payment terms | Monthly payments of interest, plus $5,000 which is being applied to the principal balance. | ||||
Monthly payment of principal | $ 5,000 | ||||
Principal balance of mortgage loan due | $ 1,243,000 | $ 1,243,000 | $ 1,273,000 | ||
Shares of common stock owned by George J. Coates pledged as collateral | 25,000 | 25,000 |
Accounts Payable and Accrued 49
Accounts Payable and Accrued Liabilities (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Summary of accounts payable and accrued liabilities | ||
Legal and professional fees | $ 1,495,000 | $ 1,427,000 |
Accrued interest expense | 670,000 | 582,000 |
General and administrative expenses | 501,000 | 420,000 |
Research and development costs | 115,000 | 115,000 |
Total | $ 2,781,000 | $ 2,544,000 |
Promissory Notes to Related P50
Promissory Notes to Related Parties (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Feb. 28, 2018 | Dec. 31, 2016 | |
George J. Coates [Member] | ||||||
Promissory Notes to Related Parties (Textual) | ||||||
Cash proceeds from related party promissory notes | $ 47,000 | $ 19,000 | ||||
Repaid promissory notes principal amount | $ 23,000 | 23,000 | ||||
Promissory note, interest rate | 17.00% | 17.00% | ||||
Principal amount, outstanding | $ 45,000 | $ 45,000 | ||||
Promissory notes, interest expense | $ 15,000 | $ 12,000 | 27,000 | 25,000 | ||
Unpaid balance of accrued interest on promissory notes | 346,000 | |||||
Gregory G. Coates [Member] | ||||||
Promissory Notes to Related Parties (Textual) | ||||||
Repaid promissory notes principal amount | $ 15,000 | 20,000 | ||||
Promissory note, imputed interest rate | 10.00% | 10.00% | ||||
Promissory notes, interest expense | $ 35,000 | 36,000 | $ 70,000 | 71,000 | ||
Outstanding principal balance | $ 1,403,000 | 1,403,000 | ||||
Bernadette Coates [Member] | ||||||
Promissory Notes to Related Parties (Textual) | ||||||
Cash proceeds from related party promissory notes | 14,000 | 24,000 | ||||
Repaid promissory notes principal amount | $ 15,000 | 31,000 | ||||
Promissory note, interest rate | 17.00% | 17.00% | ||||
Promissory notes, interest expense | $ 5,000 | $ 4,000 | $ 12,000 | $ 7,000 | ||
Outstanding principal balance | $ 27,000 | 27,000 | ||||
Employee [Member] | ||||||
Promissory Notes to Related Parties (Textual) | ||||||
Promissory note, interest rate | 17.00% | |||||
Interest expense during the period | $ 1,000 | |||||
Aggregating promissory notes | $ 5,000 | |||||
Promissory Notes [Member] | ||||||
Promissory Notes to Related Parties (Textual) | ||||||
Unpaid balance of accrued interest on promissory notes | $ 452,000 |
Promissory Note (Details)
Promissory Note (Details) - USD ($) | May 05, 2017 | Mar. 31, 2017 |
Promissory Note (Textual) | ||
Promissory note, issued | $ 25,000 | |
Promissory note, maturity date | May 13, 2017 | |
Promissory note interest payable with unregistered shares of common stock | 50,000 | |
Number of warrants held by lender extended for five years with modified exercise price | 54,199 | |
Promissory note additional term | Five years | |
Original expiration date of warrants extended | 2,017 | |
Restricted shares of common stock issued in payment of interest | 43,443 | |
Interest expense on promissory notes | $ 4,000 | |
Extended warrants modified exercise price, per share | $ 0.03 |
Convertible Promissory Notes 52
Convertible Promissory Notes and Embedded Derivative Liability (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Financial assets and liabilities measured at fair value | ||
Total | $ 354,000 | $ 359,000 |
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 | 354,000 | 359,000 |
Level 3 Inputs [Member] | ||
Financial assets and liabilities measured at fair value | ||
Total |
Convertible Promissory Notes 53
Convertible Promissory Notes and Embedded Derivative Liability (Details Textual) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | |||
Principal balance of convertible note with post-conversion remeasurement provisions | $ 351,000 | ||
Convertible promissory notes [Member] | |||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | |||
Principal balance of convertible notes issued | $ 325,000 | $ 670,000 | |
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 39% of the defined trading price of the common stock on the date of conversion. The defined trading prices are based on the trading price of the stock during a defined period ranging from ten to twenty-five trading days immediately preceding the date of conversion. | ||
Unamortized discount | $ 60,000 | $ 141,000 | |
Convertible promissory notes with an aggregate principal balance | $ 164,000 | $ 448,000 | |
Convertible promissory notes, accrued interest converted | 27,066,279 | 8,324,280 | |
Loss on conversion of convertible notes | $ 29,000 | $ 161,000 | |
Prepayment option, description | 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, with a prepayment penalty ranging from 15% to 50% of the principal amount of the convertible note at any time prior to becoming eligible for conversion. | ||
Estimated volatility rate | 200.00% | ||
Convertible promissory notes [Member] | Maximum [Member] | |||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | |||
Conversion price discount from defined trading price | 39.00% | ||
Effective interest rate | 147.00% | ||
Convertible promissory notes [Member] | Minimum [Member] | |||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | |||
Conversion price discount from defined trading price | 30.00% | ||
Effective interest rate | 85.00% | ||
Convertible promissory note one [Member] | |||
Convertible Promissory Notes and Embedded Derivative Liability (Textual) | |||
Principal balance of convertible note with post-conversion remeasurement provisions | $ 53,000 | ||
Conversion price, description for convertible note payable | This convertible note also requires that the conversion price be re-measured 23 trading days after the conversion shares are originally delivered. |
Capital Stock (Details)
Capital Stock (Details) | 6 Months Ended |
Jun. 30, 2018shares | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 381,184 |
2018 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 80,403 |
2019 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 148,068 |
2020 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 152,713 |
George J. Coates [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 352,294 |
George J. Coates [Member] | 2018 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 74,506 |
George J. Coates [Member] | 2019 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 136,599 |
George J. Coates [Member] | 2020 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 141,189 |
Gregory G. Coates [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 26,817 |
Gregory G. Coates [Member] | 2018 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 5,484 |
Gregory G. Coates [Member] | 2019 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 10,646 |
Gregory G. Coates [Member] | 2020 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 10,687 |
Barry C. Kaye [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 2,073 |
Barry C. Kaye [Member] | 2018 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 413 |
Barry C. Kaye [Member] | 2019 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 823 |
Barry C. Kaye [Member] | 2020 [Member] | |
Number of shares of stock becoming eligible for conversion to shares of common stock by year [Line Items] | |
Total | 837 |
Capital Stock (Details Textual)
Capital Stock (Details Textual) - USD ($) | May 09, 2018 | Dec. 01, 2017 | Apr. 02, 2018 | Mar. 19, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Capital Stock (Textual) | |||||||
Common stock, authorized shares | 2,400,000,000 | 120,000 | |||||
Common stock, par value | $ 0.0001 | $ 0.0001 | |||||
Reverse stock split, description | A 1:200 reverse stock split of all of the Company's shares of common stock, shares of preferred stock, common stock warrants and stock options became effective. | The Company effected a one-for-200 reverse stock split of all of its outstanding shares of common stock, Series A Preferred Stock, Series B Convertible Preferred Stock, common stock warrants and stock options as of the close of trading on December 1, 2017. | |||||
Common stock, issued shares | 72,979,521 | 36,943,242 | |||||
Common stock, outstanding shares | 72,979,521 | 36,943,242 | |||||
Certificate of Validation, description | (i) cure certain technical, procedural defects related to the 1:200 reverse stock split, which became effective at the close of trading on December 31, 2017, (ii) clarify that the reverse stock split effected a 1:200 reduction in the number of the Corporation's authorized shares of common stock, from 12,000,000,000 to 60,000,000, with retroactive effect to the close of trading on December 1, 2017, (iii) clarify that the reverse stock split effected 1:200 reduction in the number of authorized shares of the Corporation's preferred stock, from 100,000,000 to 500,000 with retroactive effect to the close of trading on December 1, 2017; and, (iv) concurrently therewith, further amend the Corporation's Amended Certificate of Articles of Incorporation with the State of Delaware to increase the number of the Corporation's authorized shares of common stock, par value $0.0001 from 60,000,000 to 120,000,000 and reduce the number of authorized shares of the Corporation's preferred stock, par value $0.001 from 500,000 to 350,000. | ||||||
Certificate of conversion and designation, description | (i) The Corporation's State of Domicile was converted from the State of Delaware to the State of Nevada. (ii) The number of authorized shares of capital stock of the Company was increased to: a. 2,400,000,000 shares of common stock, par value $0.0001 per share b. 100,000,000 shares of preferred stock, par value $0.001 per share (iii) The series and number of shares of preferred stock designated from the 100,000,000 shares of preferred stock authorized, was increased to: a. 1,000,000 shares of Series A Preferred Stock, $0.001 per share b. 10,000,000 shares of Series B Convertible Preferred Stock, $0.001 per share. | ||||||
Estimated fair value of LAM settlement | $ 99,000 | $ 99,000 | |||||
Convertible promissory notes one [Member] | |||||||
Capital Stock (Textual) | |||||||
Unregistered, restricted shares of common shares issued upon conversion of convertible promissory notes | 8,324,430 | ||||||
Principal amount of convertible debt, including accrued interest converted into shares of common stock | $ 448,000 | ||||||
Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Preferred stock, authorized shares | 100,000,000 | ||||||
Preferred Stock Textual [Member] | |||||||
Capital Stock (Textual) | |||||||
Preferred stock, authorized shares | 100,000,000 | 500,000 | |||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Series A Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Series A preferred stock, designated shares | 50,000 | 5,000 | |||||
Series A convertible preferred stock, issued shares | 15,620 | 3,601 | |||||
Series A Convertible preferred stock, outstanding shares | 15,620 | 3,601 | |||||
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. | ||||||
Series B Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Preferred stock, par value | $ 0.001 | $ 0.001 | |||||
Series B convertible preferred stock, designated shares | 950,000 | 345,000 | |||||
Series B Convertible preferred stock, issued shares | 381,184 | 228,471 | |||||
Series B Convertible preferred stock, outstanding shares | 381,184 | 228,471 | |||||
Number shares of common stock into which each share of Series B Convertible Preferred Stock can be converted | 1,000 | ||||||
Description of preferred stock voting rights | Holders of the 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 | 88.80% | ||||||
Percentage of non - affiliate shareholder ownership after assumed conversion | 12.80% | ||||||
LAM Settlement Shares [Member] | |||||||
Capital Stock (Textual) | |||||||
Estimated fair value of LAM settlement | $ 99,000 | ||||||
Percentage of common stock of the company permitted to be held by LAM at any one time | 9.99% | ||||||
Shares of common stock issued to LAM | 8,970,000 | ||||||
Aggregate amount of past-due obligations settled during the period | $ 40,000 | ||||||
Series B Convertible Preferred Stock Textual [Member] | |||||||
Capital Stock (Textual) | |||||||
Pro forma information for series B convertible preferred stock, description | Once the conversion restrictions lapse, an additional 381,184,000 new restricted shares of common stock would be issued. On a pro forma basis, based on the number of shares of common stock outstanding at June 30, 2018, this would dilute the ownership percentage of non-affiliated stockholders from 88.8% to 12.8%. | ||||||
Shares of series B stock outstanding that could be converted to common stock once all restrictions lapse | 381,184 | ||||||
Convertible promissory note [Member] | |||||||
Capital Stock (Textual) | |||||||
Unregistered, restricted shares of common shares issued upon conversion of convertible promissory notes | 27,066,279 | 8,324,280 | |||||
Principal amount of convertible debt, including accrued interest converted into shares of common stock | $ 164,000 | $ 448,000 | |||||
Amount of promissory note converted into shares of common stock | $ 25,000 | ||||||
Shares issued upon conversion of promissory notes | 43,443 | ||||||
George J. Coates [Member] | |||||||
Capital Stock (Textual) | |||||||
Shares of series B stock outstanding that could be converted to common stock once all restrictions lapse | 352,294 | ||||||
George J. Coates [Member] | Series A Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Description of preferred stock voting rights | All outstanding shares of Series A are owned by George J. Coates, which entitle him to 152,620,000 votes in addition to his voting rights from the shares of common stock and the shares of Series B he holds. | ||||||
Number of shares of Series A Preferred Stock granted | 12,019 | 3,351 | |||||
Percentage of eligible votes | 85.70% | 85.70% | |||||
George J. Coates [Member] | Series B Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Series B stock, issued shares | 141,189 | 45,381 | |||||
Fixed ownership percentage | 80.63% | ||||||
Estimated fair value of Series B convertible preferred stock granted | $ 545,000 | $ 2,925,000 | |||||
Gregory G. Coates [Member] | |||||||
Capital Stock (Textual) | |||||||
Shares of series B stock outstanding that could be converted to common stock once all restrictions lapse | 26,817 | ||||||
Gregory G. Coates [Member] | Series B Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Series B stock, issued shares | 10,687 | 3,739 | |||||
Fixed ownership percentage | 6.10% | ||||||
Estimated fair value of Series B convertible preferred stock granted | $ 41,000 | $ 250,000 | |||||
Barry C. Kaye [Member] | |||||||
Capital Stock (Textual) | |||||||
Shares of common stock issued upon conversion of Series B shares | 6.86 | ||||||
Shares of common stock issued upon conversion of shares of Series B Convertible preferred stock | 6,868 | ||||||
Shares of series B stock outstanding that could be converted to common stock once all restrictions lapse | 2,073 | ||||||
Barry C. Kaye [Member] | Series B Preferred Stock [Member] | |||||||
Capital Stock (Textual) | |||||||
Series B stock, issued shares | 837 | 293 | |||||
Fixed ownership percentage | 0.048% | ||||||
Estimated fair value of Series B convertible preferred stock granted | $ 3,000 | $ 20,000 | |||||
Shares of common stock issued upon conversion of shares of Series B Convertible preferred stock | 6,860 |
Loss Per Share (Details)
Loss Per Share (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Loss Per Share (Textual) | ||
Warrants outstanding to purchase common stock | 733,393 | 751,725 |
Vested stock options outstanding | 62,351 | 62,351 |
Exercise prices, description | Stock warrants outstanding to purchase 733,393 shares of common stock at exercise prices ranging from $0.10 to $13.50 per share. | Stock warrants outstanding to purchase 751,725 shares of common stock at exercise prices ranging from $0.10 to $13.50 per share. |
Convertible promissory notes [Member] | ||
Loss Per Share (Textual) | ||
Convertible promissory notes outstanding, eligible for conversion | $ 385,000 | $ 80,000 |
Pro forma number of common shares issuable upon assumed conversion of promissory notes eligible for conversion | 197,472,443 | 4,843,465 |
Minimum [Member] | ||
Loss Per Share (Textual) | ||
Stock option exercise price | $ 5.60 | $ 5.60 |
Maximum [Member] | ||
Loss Per Share (Textual) | ||
Stock option exercise price | $ 88 | $ 88 |
Stock Options (Details)
Stock Options (Details) - Stock Option [Member] | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Stock options outstanding under stock option plan | |
Number Outstanding | shares | 62,500 |
Weighted Average Remaining Contractual Life | 8 years |
Number Exercisable | shares | 62,500 |
Weighted Average Exercise Price | $ 36.34 |
Weighted Average Fair Value Per Stock Option at Date of Grant | 33.84 |
Minimum [Member] | |
Stock options outstanding under stock option plan | |
Exercise Price Per Share | 5.60 |
Maximum [Member] | |
Stock options outstanding under stock option plan | |
Exercise Price Per Share | $ 88 |
Stock Options (Details 1)
Stock Options (Details 1) | 6 Months Ended | |
Jun. 30, 2018 | ||
Summary of assumptions used to determine weighted average fair value | ||
Historical stock price volatility, minimum | 139.00% | [1] |
Historical stock price volatility, maximum | 325.00% | [1] |
Risk-free interest rate, minimum | 0.21% | [2] |
Risk-free interest rate, maximum | 4.64% | [2] |
Expected life (in years) | 4 years | [3] |
Dividend yield | 0.00% | [4] |
[1] | 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. | |
[2] | 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. | |
[3] | 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. | |
[4] | No expected dividends. |
Stock Options (Details Textual)
Stock Options (Details Textual) | 6 Months Ended |
Jun. 30, 2018shares | |
Stock Options (Textual) | |
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 | 250,000 |
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 | 250,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Taxes (Textual) | ||||
Increased in deferred tax assets | $ 458,000 | $ 1,418,000 | $ 705,000 | $ 1,627,000 |
Open income tax years, Description | 2014 through 2016. | |||
Future federal taxable income [Member] | ||||
Income Taxes (Textual) | ||||
Operating loss carryforwards | 21,107,000 | $ 21,107,000 | ||
Operating loss carryforwards expiration date, description | Expiring between 2018 and 2038. | |||
Future state taxable income [Member] | ||||
Income Taxes (Textual) | ||||
Operating loss carryforwards | $ 10,723,000 | $ 10,723,000 | ||
Operating loss carryforwards expiration date, description | Expiring between 2029 and 2038. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
George J. Coates [Member] | |||
Summary of approximate amount of base compensation and benefits | |||
Base compensation and benefits paid | [1],[2] | $ 8,000 | $ 18,000 |
Gregory G. Coates [Member] | |||
Summary of approximate amount of base compensation and benefits | |||
Base compensation and benefits paid | [3],[4] | $ 47,000 | $ 10,000 |
[1] | During the six months ended June 30, 2018 and 2017, George J. Coates was awarded Series A Preferred Stock and Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. | ||
[2] | For the six months ended June 30, 2018 and 2017, George J. Coates earned additional base compensation of $125,000 and $115,000, respectively, payment of which is being deferred until the Company has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $1,346,000 and $1,221,000, respectively. | ||
[3] | During the six months ended June 30, 2018 and 2017, Gregory G. Coates was awarded Series B Converted Preferred Stock for anti-dilution. The details are presented in Note 15. | ||
[4] | For the six months ended June 30, 2018 and 2017, Gregory G. Coates earned additional base compensation of $38,000 and $38,000, respectively, payment of which is being deferred until the Company has sufficient working capital. The total amount of deferred compensation included in the accompanying balance sheets at June 30, 2018 and December 31, 2017, was $180,000 and $143,000, respectively. |
Related Party Transactions (D62
Related Party Transactions (Details Textual) - USD ($) | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
George J. Coates [Member] | |||
Related Party Transactions (Textual) | |||
Amount of compensation deferred during the year | $ 125,000 | $ 115,000 | |
Amount of deferred compensation | $ 1,346,000 | $ 1,221,000 | |
Promissory note, interest rate | 17.00% | ||
Gregory G. Coates [Member] | |||
Related Party Transactions (Textual) | |||
Balance of deferred compensation outstanding | $ 180,000 | 143,000 | |
Amount of compensation deferred during the year | $ 38,000 | 38,000 | |
Promissory note, imputed interest rate | 10.00% | ||
Bernadette Coates [Member] | |||
Related Party Transactions (Textual) | |||
Balance of deferred compensation outstanding | $ 242,000 | $ 242,000 | |
Promissory note, interest rate | 17.00% | ||
Barry C. Kaye [Member] | |||
Related Party Transactions (Textual) | |||
Amount of compensation paid | $ 35,000 | 50,000 | |
Compensation earned by Barry C. Kaye | 63,000 | 60,000 | |
Interest accrued on unpaid deferred compensation | 37,000 | $ 27,000 | |
Total amount of unpaid, deferred compensation and accrued interest | 483,000 | ||
Employee [Member] | |||
Related Party Transactions (Textual) | |||
Amount of deferred compensation | $ 30,000 |
Contractual Obligations and C63
Contractual Obligations and Commitments (Details) | Jun. 30, 2018USD ($) |
Summary of contractual obligations and commitments | |
Total | $ 4,868,000 |
2018 [Member] | |
Summary of contractual obligations and commitments | |
Total | 4,772,000 |
2019 [Member] | |
Summary of contractual obligations and commitments | |
Total | 96,000 |
Deferred compensation [Member] | |
Summary of contractual obligations and commitments | |
Total | 1,797,000 |
Deferred compensation [Member] | 2018 [Member] | |
Summary of contractual obligations and commitments | |
Total | 1,797,000 |
Deferred compensation [Member] | 2019 [Member] | |
Summary of contractual obligations and commitments | |
Total | |
Promissory notes to related parties [Member] | |
Summary of contractual obligations and commitments | |
Total | 1,477,000 |
Promissory notes to related parties [Member] | 2018 [Member] | |
Summary of contractual obligations and commitments | |
Total | 1,477,000 |
Promissory notes to related parties [Member] | 2019 [Member] | |
Summary of contractual obligations and commitments | |
Total | |
Mortgage loan payable [Member] | |
Summary of contractual obligations and commitments | |
Total | 1,243,000 |
Mortgage loan payable [Member] | 2018 [Member] | |
Summary of contractual obligations and commitments | |
Total | 1,243,000 |
Mortgage loan payable [Member] | 2019 [Member] | |
Summary of contractual obligations and commitments | |
Total | |
Convertible promissory notes [Member] | |
Summary of contractual obligations and commitments | |
Total | 351,000 |
Convertible promissory notes [Member] | 2018 [Member] | |
Summary of contractual obligations and commitments | |
Total | 255,000 |
Convertible promissory notes [Member] | 2019 [Member] | |
Summary of contractual obligations and commitments | |
Total | $ 96,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Events [Member] | 1 Months Ended | |
Aug. 13, 2018USD ($)shares | Jul. 23, 2018USD ($)a | |
Subsequent Event [Line Items] | ||
Refundable deposit for sale of land | $ 50,000 | |
Area of land | a | 3.6 | |
George J. Coates [Member] | Deferred compensation [Member] | ||
Subsequent Event [Line Items] | ||
Additional deferred compensation | $ 30,000 | |
Gregory G. Coates [Member] | Deferred compensation [Member] | ||
Subsequent Event [Line Items] | ||
Additional deferred compensation | 9,000 | |
Barry C. Kaye [Member] | Deferred compensation [Member] | ||
Subsequent Event [Line Items] | ||
Additional deferred compensation | 13,000 | |
Payments of deferred compensation | 3,000 | |
One employee [Member] | Deferred compensation [Member] | ||
Subsequent Event [Line Items] | ||
Additional deferred compensation | 4,000 | |
Convertible Promissory Note [Member] | ||
Subsequent Event [Line Items] | ||
Total amount of convertible notes converted to common stock | $ 97,000 | |
Unregistered, restricted shares of common stock issued upon conversion | shares | 115,304,620 | |
Promissory Note to Related Party [Member] | George J. Coates [Member] | ||
Subsequent Event [Line Items] | ||
Aggregate cash proceeds | $ 8,000 | |
Repayment of promissory note | 10,000 | |
Promissory Note to Related Party [Member] | Gregory G. Coates [Member] | ||
Subsequent Event [Line Items] | ||
Repayment of promissory note | $ 5,000 |