0001683168-17-003096.txt : 20171120 0001683168-17-003096.hdr.sgml : 20171120 20171120082537 ACCESSION NUMBER: 0001683168-17-003096 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 44 CONFORMED PERIOD OF REPORT: 20170930 FILED AS OF DATE: 20171120 DATE AS OF CHANGE: 20171120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIASPACE Inc. CENTRAL INDEX KEY: 0001270200 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MAILING, REPRODUCTION, COMMERCIAL ART & PHOTOGRAPHY [7330] IRS NUMBER: 760742386 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-110680 FILM NUMBER: 171212669 BUSINESS ADDRESS: STREET 1: 382 N. LEMON AVE #364 CITY: WALNUT STATE: CA ZIP: 91789 BUSINESS PHONE: 626-768-3364 MAIL ADDRESS: STREET 1: 382 N. LEMON AVE #364 CITY: WALNUT STATE: CA ZIP: 91789 FORMER COMPANY: FORMER CONFORMED NAME: Viaspace Inc. DATE OF NAME CHANGE: 20050705 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL WIDE PUBLICATION LTD DATE OF NAME CHANGE: 20031113 10-Q 1 viaspace_10q-093017.htm FORM 10-Q

 

 Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

  

x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the quarterly period ended September 30, 2017

 

or

 

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the transition period from  __________ to ___________

 

Commission File Number 333-110680

 

VIASPACE INC.

(Exact name of small business issuer as specified in its charter)

   

Nevada 76-0742386
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   

344 Pine Street, Santa Cruz, CA, 95062

(Address of principal executive offices)

 

 

382 N. Lemon Ave., Suite 364, Walnut, CA 91789

(Former Address

 

(626) 768-3360

(Issuer’s telephone number)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x  NO o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x  NO o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

 

  Large accelerated filer  o Accelerated filer  o
  Non-accelerated filer  o Smaller reporting company  x
  Emerging growth company  o  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o  NO x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 3,402,514,447 shares of $0.0001 par value common stock issued and outstanding as of November 20, 2017.

 

 

 

 
 

 

VIASPACE INC.

 

INDEX

FISCAL QUARTER ENDED SEPTEMBER 30, 2017

 

    Page
Part I. Financial Information  
     
Item 1. Financial Statements 3
  Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016 3
  Statements of Operations For the Three and Six months Ended September 30, 2017 and 2016 (Unaudited) 4
  Statements of Cash Flows For the Six months Ended September 30, 2017 and 2016 (Unaudited) 5
  Notes to Financial Statements September 30, 2017 (Unaudited) 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
     
Part II. Other Information  
     
Item 1. Legal Proceedings 19
Item 1A. Risk Factors 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Mine Safety Disclosures 21
Item 5. Other Information 21
Item 6. Exhibits 22
     
Signatures 23

 

 

 

 

 

 2 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

VIASPACE INC.

BALANCE SHEETS

 

  

September 30,
2017

(Unaudited)

  

December 31,
2016

(Audited)

 
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents  $11,000   $19,000 
Prepaid expenses   38,000    14,000 
TOTAL CURRENT ASSETS   49,000    33,000 
           
OTHER ASSETS:          
Investment in Almaden Energy Group   6,000    14,000 
Other assets   2,000    2,000 
TOTAL OTHER ASSETS   8,000    16,000 
           
TOTAL ASSETS  $57,000   $49,000 
           
LIABILITIES AND SHAREHOLDERS’ DEFICIT          
CURRENT LIABILITIES:          
Accounts payable  $93,000   $68,000 
Accrued expenses   22,000    29,000 
Unearned revenue   20,000    20,000 
Related party payables   749,000    640,000 
TOTAL CURRENT LIABILITIES   884,000    757,000 
           
COMMITMENTS AND CONTINGENCIES (Note 9)          
           
SHAREHOLDERS’ DEFICIT:          
Preferred stock, $0.0001 par value in 2017 and 2016, 10,000,000 shares authorized, one share of Series A preferred stock issued and outstanding in 2017 and 2016        
Common stock, $0.0001 par value in 2017 and 2016, 3,900,000,000 shares authorized, 3,400,594,447 shares issued and 3,300,594,447 shares outstanding as of September 30, 2017, and 2,919,472,132 shares issued and 2,819,472,132 shares outstanding as of December 31, 2016   330,000    282,000 
Additional paid in capital   53,086,000    52,458,000 
Accumulated deficit   (54,243,000)   (53,448,000)
Total shareholders’ deficit   (827,000)   (708,000)
           
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT  $57,000   $49,000 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 3 

 

 

VIASPACE INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2017   2016   2017   2016 
REVENUES  $33,000   $36,000   $101,000   $92,000 
COST OF REVENUES   2,000        16,000    18,000 
GROSS PROFIT (LOSS)   31,000    36,000    85,000    74,000 
                     
OPERATING EXPENSES                    
Operations   8,000    9,000    29,000    27,000 
Selling, general and administrative   267,000    226,000    703,000    817,000 
Total operating expenses   275,000    235,000    732,000    844,000 
LOSS FROM OPERATIONS   (244,000)   (199,000)   (647,000)   (770,000)
                     
OTHER INCOME (EXPENSE)                    
Interest expense   (48,000)   (82,000)   (141,000)   (243,000)
Other expense   (2,000)   (4,000)   (8,000)   (22,000)
Other income               16,000 
Total other income (expense)   (50,000)   (86,000)   (149,000)   (249,000)
                     
LOSS BEFORE INCOME TAXES   (294,000)   (285,000)   (796,000)   (1,019,000)
INCOME TAXES                
                     
NET LOSS  $(294,000)  $(285,000)  $(796,000)  $(1,019,000)
                     
LOSS PER SHARE OF COMMON STOCK – Basic and diluted  $0.00   $0.00   $0.00   $0.00 
                     
WEIGHTED AVERAGE SHARES OUTSTANDING – Basic and diluted   3,237,284,099    2,509,093,098    3,051,228,069    2,310,258,331 

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 4 

 

 

VIASPACE INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine Months Ended 
   September 30, 
   2017   2016 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(796,000)  $(1,019,000)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock option and stock compensation   317,000    288,000 
Stock issued for consulting expense   52,000    109,000 
Amortization of discounts on notes payable   139,000    241,000 
Loss on minority investment in Almaden Energy Group   8,000    21,000 
(Increase) decrease in operating assets:          
Accounts receivable       41,000 
Prepaid expenses   1,000    66,000 
Increase (decrease) in operating liabilities:          
Accounts payable   25,000    19,000 
Accrued expenses and other   (7,000)   (45,000)
Related party   109,000    7,000 
Unearned revenue       (11,000)
Net cash used in operating activities   (152,000)   (283,000)
           
CASH FLOWS FROM INVESTING ACTIVITIES        
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from convertible notes payable- related party   139,000    241,000 
Stock issued for investment by related parties       44,000 
Stock issued for investment by non-related parties   5,000    5,000 
Net cash provided by financing activities   144,000    290,000 
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (8,000)   7,000 
CASH AND CASH EQUIVALENTS, Beginning of period   19,000    10,000 
CASH AND CASH EQUIVALENTS, End of period  $11,000   $17,000 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid during the period for:          
Interest  $   $ 
Income taxes  $   $ 

  

Supplemental Disclosure of Non-Cash Activities for 2016:

  The Company issued 100,000,000 shares of the Company’s common stock for future funding source.  
  The Company recorded a discount on the loans from Dr. Schewe of $241,000 as a result of a beneficial conversion feature. During 2016, Dr. Schewe converted loans of $241,000 to equity.

 

 

Supplemental Disclosure of Non-Cash Activities for 2017:

 

  The Company issued 100,000,000 shares of the Company’s common stock for future funding source but was not recorded to prepaid expenses since the shares were not cleared at September 30, 2017. 
  The Company cleared 50,000,000 shares of the Company’s common stock for future services valued at $75,000.
  The Company recorded a discount on loans from Dr. Schewe, Dr. Kukkonen and Haris Basit of $139,000 as a result of a beneficial conversion feature. During 2017, Dr. Schewe, Dr. Kukkonen and Haris Basit converted loans of $139,000 to equity.

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 5 

 

 

VIASPACE INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Description of Business – VIASPACE Inc. (“we”, “us”, “VIASPACE”, or the “Company”) was founded in July 1998. Its business involves renewable energy and is based on biomass, in particular our license to a dedicated energy crop with the trademark “Giant King® Grass” (“GKG”). Through a license for GKG we obtained from Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA China") which is owned by VIASPACE Green Energy Inc. (“VGE”), we are able to commercialize GKG throughout the world, except for the People’s Republic of China (“China”) and the Republic of China (“Taiwan”).

 

GKG can be burned in 100% biomass power plants to generate electricity; made into pellets that can be burned together with coal to reduce carbon emissions from existing power plants; generate bio methane through anaerobic digestion, and can be used as a feedstock for low carbon liquid biofuels for transportation, biochemicals and bio plastics. Cellulosic ethanol, bio butanol and other liquid cellulosic biofuels, do not use corn or other food sources as feedstock. GKG can also be used as animal feed. GKG and other plants absorb and store carbon dioxide from the atmosphere as they grow. When they are burned, they release the carbon dioxide back into the atmosphere, but it is the same carbon dioxide that was removed from the atmosphere, and so this process is carbon neutral. Small amounts of fossil fuel are used by the farm equipment, transportation of GKG and fertilizer, so that the overall process of growing and burning GKG probably has some net carbon dioxide emissions, but much lower emissions than burning coal or other fossil fuels directly to create the same amount of energy. GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals.

 

Going Concern – The Company has incurred significant losses from operations, resulting in an accumulated deficit of $54,243,000. The Company expects such losses to continue. However, on November 30, 2016, the Company entered in a Loan Agreement with Vice Chairman Haris Basit whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on February 23, 2017, the Company entered in a Loan Agreement with CEO Kevin Schewe whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on July 25, 2017, the Company entered in a Loan Agreement with CTO Carl Kukkonen whereby he agreed to fund the Company $25,000 over a two-year period. The Company expects loans from Mr. Basit, Dr. Schewe and Dr. Kukkonen and revenue generated from future contracts using the license it has for Giant King Grass to fund operations for the foreseeable future. However, no assurance can be given that Mr. Basit, Dr. Schewe or Dr. Kukkonen will continue to fund the Company or that sales contracts will be obtained in the future, or if they are obtained, that they will be profitable. Accordingly, there continues to be substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any other adjustments that might result from the outcome of these uncertainties.

 

Basis of Presentation – The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company's annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.

 

Results of operations for the interim periods are not indicative of annual results.

 

Recent Accounting StandardsIn May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. In April 2016, May 2016 and December 2016, the FASB issued additional guidance, addressed implementation issues and provided technical corrections. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained earnings (deficit). The guidance is effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements.

 

 

 

 6 

 

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

   

NOTE 2 – PREPAID EXPENSES

 

The Company has entered into agreements with certain of its consultants and vendors whereby the Company issued unregistered shares of common stock in exchange for services to be provided to the Company. The Company has engaged a third-party provider to pay certain expenses of the Company on behalf of the Company. As compensation for the payment of these expenses on behalf of the Company, the Company pays the provider in shares of common stock equivalent to the expense paid plus a fee equal to 15% of the expense paid. During 2017, the third-party provider cleared 50,000,000 shares of the Company’s common stock for future services valued at $75,000. As of September 30, 2017 and December 31, 2016, included in prepaid expenses for this third-party provider is $38,000 and $13,000, respectively, for shares of stock issued to the provider in excess of amounts paid on the Company’s behalf.

  

Other prepaid expenses (non-stock related) were $0 and $1,000 at September 30, 2017 and December 31, 2016, respectively.

 

Note 3 – Investment in Almaden Energy Group

 

The investment in Almaden Energy Group, LLC (“AEG”) represents an 18.75% interest in that company’s outstanding membership interest units which became effective April 15, 2015. The Company originally accounted for this investment by the cost method because the membership interest units of AEG are unlisted and the criteria for using the equity method of accounting are not satisfied as the Company is not able to exercise significant influence over AEG. However, upon the Company hiring the CEO of AEG as its CEO in July 2015, the Company changed the method of its investment in AEG to the equity method. Dividends are recognized in income when declared and totaled $0 for 2017 and 2016. The carrying value of the investment is $6,000 and $14,000 as of September 30, 2017 and December 31, 2016, respectively. We recorded other expense of approximately $8,000 in the Company’s Statements of Operation during the nine months ended September 30, 2017, related to a loss on investment in AEG. See Note 8 for additional related party transactions with AEG.

  

NOTE 4 – STOCK OPTIONS AND ISSUED STOCK

 

The fair value of each stock option granted is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model has assumptions for risk free interest rates, dividends, stock volatility and expected life of an option grant. The risk free interest rate is based upon market yields for United States Treasury debt securities at a maturity near the term remaining on the option. Dividend rates are based on the Company’s dividend history. The stock volatility factor is based on the historical volatility of the Company’s stock price. The expected life of an option grant is based on management’s estimate as no options have been exercised in the Plan to date. The Company calculated a forfeiture rate for employees and directors based on historical information. A forfeiture rate of 0% is used for options granted to consultants. The fair value of each option grant to employees, directors and consultants is calculated by the Black-Scholes method and is recognized as compensation expense on a straight-line basis over the vesting period of each stock option award. The risk-free interest rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

 

    2017  
Dividends     0%  
Volatility factor     140.17%-140.25%  
Expected life     8.53 years  
Annual forfeiture rate     0%  
         

  

 

 

 7 

 

 

The following is a summary of the Company’s stock option activity for the nine months ended at September 30, 2017:

 

   Number of
Shares
   Weighted-
Average
Exercise
Price Per
Share
   Weighted-
Average
Remaining
Contractual
Term In Years
   Aggregate
Intrinsic
Value
 
Outstanding at December 31, 2016   380,730,000   $0.0028           
Granted   68,750,000    0.0016           
Exercised                  
Cancelled and forfeited                  
Outstanding at September 30, 2017   449,480,000   $0.0026    8.53   $ 
Exercisable at September 30, 2017   418,855,000   $0.0027    8.48   $ 

 

Stock options totaling 68,750,000 were granted during the nine months ended September 30, 2017. The Plan recorded $317,000 of compensation expense for employees and director stock options in 2017. At September 30, 2017, there was $49,000 of unrecognized compensation costs related to non-vested share-based compensation arrangements under the Plan that is expected to be recognized over a weighted average period of approximately nine months. There were no options exercised during the nine months ended September 30, 2017.

   

NOTE 5 – CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

 

Loan Agreement with Haris Basit

 

Effective November 30, 2016, the Company entered into a Loan Agreement with Director Haris Basit whereby Mr. Basit agreed to loan up to $100,000 to the Company over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Mr. Basit’s request, into a fixed number of shares of the Company’s common stock based on the closing price of the Company’s common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Mr. Basit will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.

  

During the nine months ended September 30, 2017, Mr. Basit made loans of $47,500 to the Company. The Company recorded a discount on the loans of $47,500 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During 2017, Mr. Basit converted loans totaling $47,500 into 140,958,681 common shares of the Company. At the time of the conversions, the company recorded the discount as additional interest expense. There are $0 loans outstanding at September 30, 2017. As of September 30, 2017, the Company had remaining availability under the note of $27,500.

 

Loan Agreement with Kevin Schewe

 

Effective February 23, 2017, the Company entered into a Loan Agreement with CEO Kevin Schewe whereby Dr. Schewe agreed to loan up to $100,000 to the Company over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Dr. Schewe’s request, into a fixed number of shares of the Company’s common stock based on the closing price of the Company’s common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Dr. Schewe will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.

  

During the nine months ended September 30, 2017, Dr. Schewe made loans of $80,000 to the Company. The Company recorded a discount on the loans of $80,000 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During 2017, Dr. Schewe converted loans totaling $80,000 into 242,278,404 common shares of the Company. At the time of the conversions, the company recorded the discount as additional interest expense. There are $0 loans outstanding at September 30, 2017. As of September 30, 2017, the Company had remaining availability under the note of $20,000.

 

 

 

 8 

 

 

Loan Agreement with Carl Kukkonen

 

Effective July 25, 2017, the Company entered into a Loan Agreement with CTO Carl Kukkonen whereby Dr. Kukkonen agreed to loan up to $25,000 to the Company over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Dr. Kukkonen’s request, into a fixed number of shares of the Company’s common stock based on the closing price of the Company’s common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Dr. Kukkonen will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.

  

During the nine months ended September 30, 2017, Dr. Kukkonen made loans of $11,500 to the Company. The Company recorded a discount on the loans of $11,500 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During 2017, Dr. Kukkonen converted loans totaling $11,500 into 41,218,638 common shares of the Company. At the time of the conversions, the company recorded the discount as additional interest expense. There are $0 loans outstanding at September 30, 2017. As of September 30, 2017, the Company had remaining availability under the note of $13,500.

   

NOTE 6 – STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

At September 30, 2017 and December 31, 2016, the number of authorized shares of the Company’s preferred stock was 10,000,000. The par value of the preferred stock is $0.0001.

 

At September 30, 2017 and December 31, 2016, there is one share of Series A Preferred Stock outstanding.

  

Common Stock

 

As of January 1, 2017, the number of authorized shares of the Company’s common stock was 3,900,000,000. The par value of the common stock is $0.0001.

 

During 2017, the Company issued 50,000,000 unregistered restricted shares of common stock respectively to a funding source so that the funding source can pay for future expenses on behalf of the Company. The shares are issued to the funding source to cover the amount of future expenses plus a fee of 15% of such future expenses. At the time of the future payment of the expenses incurred by the Company, the common stock and additional paid in capital are credited for the amount of the future payment plus 15%. During the period ending September 30, 2017, there is no accounting impact from this transaction because the shares remain in the Company's possession.

 

On January 9, 2017, the Company entered into Subscription Agreement with a non-related party to purchase 5,586,592 shares of common stock at a purchase price of $0.000895 per share for $5,000. The purchase price per share was equal to 50% of the average closing price of the Company's common stock for the 20 trading days immediately preceding the date of the investment. The Company issued such common stock on the date of such Subscription Agreement.

  

During 2017, the Company issued 1,080,000 shares of common stock to a consultant of the Company. The shares were issued at fair market value of approximately $1,920 on the date of the issuance.

 

During 2017, the Company issued 242,278,404 shares of common stock to CEO Kevin Schewe as he converted loans into shares of common stock as allowed under an agreement he has with the Company as discussed in Note 5. During 2017, the Company issued 140,958,681 shares of common stock to Director Haris Basit as he converted loans into shares of common stock as allowed under an agreement he has with the Company as discussed in Note 5. During 2017, the Company issued 41,218,638 shares of common stock to CTO Carl Kukkonen as he converted loans into shares of common stock as allowed under an agreement he has with the Company as discussed in Note 5.

 

As of September 30, 2017, there were 3,300,594,447 shares of common stock outstanding.

 

 

 

 9 

 

 

NOTE 7 – NET LOSS PER SHARE

 

The Company computes net loss per share in accordance with FASB ASC Topic 260. Under its provisions, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted earnings would customarily include, if dilutive, potential shares of common stock issuable upon the exercise of stock options and warrants. The dilutive effect of outstanding stock options and warrants is reflected in earnings per share in accordance with FASB ASC Topic 260 by application of the treasury stock method. For the periods presented, the computation of diluted loss per share equaled basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.

 

The following table sets forth common stock equivalents (potential common stock) at September 30, 2017 and 2016 that are not included in the loss per share calculation since their effect would be anti-dilutive for the periods indicated:

  

   2017   2016 
Stock Options   418,855,000    239,480,000 

  

The following table sets forth the computation of basic and diluted net loss per share for 2017 and 2016, respectively:

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2017   2016   2017   2016 
Basic and diluted net loss per share:                    
                     
Numerator:                    
Net loss attributable to common stock  $(294,000)  $(285,000)  $(796,000)  $(1,019,000)
                     
Denominator:                    
Weighted average shares of common stock outstanding   3,237,284,099    2,509,093,098    3,051,228,069    2,310,258,331 
                     
Net loss per share of common stock, basic and diluted  $0.00   $0.00   $0.00   $0.00 

   

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Included in the Company’s balance sheets at September 30, 2017 and December 31, 2016 are Related Party Payables of $749,000 and $640,000, respectively. The Company has a payable of $689,000 and $640,000, at September 30, 2017 and December 31, 2016 owed to Dr. Carl Kukkonen, CTO. Of the amount owed to Dr. Kukkonen, there is a cash component totaling $185,000 and a common stock component totaling $504,000. Dr. Kukkonen deferred a portion of his 2009, 2010 and 2011 stock awards and is entitled to the following unregistered shares of Company common stock at September 30, 2017: 11,195,707 shares for deferred 2009 compensation; 8,467,939 shares for deferred 2010 compensation; and 24,730,678 shares for deferred 2011 compensation. The Company also owes Director Haris Basit $60,000 at September 30, 2017, representing salary earned but not paid. Mr. Basit has also been granted 56,250,000 options at September 30, 2017

 

The Company has a loan agreement with CEO Dr. Kevin Schewe, Director Haris Basit and CTO Carl Kukkonen which is described in Note 5.

    

On April 13, 2015, the Company entered into a Giant King Grass supply contract with Almaden Energy Group, LLC. (“AEG”). AEG is developing an animal feed project in the United States for the domestic and global market. The Company granted AEG a license to grow Giant King Grass only for animal feed, nursery and research purposes anywhere within the 48 contiguous United States. AEG is permitted to sell Giant King Grass anywhere in the world with the exception of the State of Hawaii. The CEO of AEG is also the former CEO and current member of the Board of Directors of the Company. For the nine months ended September 30, 2017 and 2016, the Company recorded $0 and $12,000, respectively, in revenues from AEG. At September 30, 2017, the Company has an 18.75% equity ownership in AEG and one designated board seat provided that the Company maintains an equity ownership position greater than 5%. At September 30, 2017, the Company recorded $6,000 as an Investment in AEG on its Balance Sheet under equity method of accounting (see Note 3).

 

 

 

 10 

 

 

On June 1, 2017, the Company acquired a 2.91% interest in Clean Energy Solutions, LLC’s (“CES”) outstanding membership interest units. The Company has accounted for this investment by the cost method because the membership interest units of that company are unlisted and the criteria for using the equity method of accounting are not satisfied as the Company is not able to exercise significant influence over CES. CES is a customer of the Company who is in discussion for future GKG contracts. At September 30, 2017, the Company’s interest in CES is recorded at $0.

 

NOTE 9 – COMMITMENTS AND CONTINGENCIES

 

Leases

 

The Company currently has no long term office lease. The Company leases land in San Diego County, California where it grows Giant King Grass. Rent and utility expense charged to operations for the three months ended September 30, 2017 and 2016, was $4,000 and $7,000, respectively. Rent and utility expense charged to operations for the nine months ended September 30, 2017 and 2016 was $9,000 and $13,000, respectively.

 

On August 31, 2017, the Company notified the landlord of the land being leased in San Diego to cancel the lease.

 

Collaborative Agreements

 

We are a party to certain collaborative agreements with various entities for the joint operation of test plots to establish that GKG grows well in the area and optimal agronomic practices are developed. These agreements are in the form of development collaborations and licensing agreements. Under these agreements, we have granted rights to grow and use of GKG. In return, we are entitled to receive certain payments for the operations of the test plots and license fees on the harvesting of GKG should it ultimately be commercialized.

 

All of our collaborative agreements are subject to termination by either party, without significant financial penalty. Under the terms of these agreements, upon a termination we are entitled to reacquire all rights in our technology at no cost and are free to re-license the technology to other collaborative partners.

 

Revenue earned from collaborative agreements is comprised of negotiated payments for the establishment, evaluation and operations of GKG test plots. Deferred revenue represents customer payments received which are related to future performance. Generally, for collaborative agreements establishing test plots, the Company recognizes revenue only after the Giant King Grass is planted in the customer’s location. Until that time any money received is recorded as deferred revenue. During the three months ended September 30, 2017 and 2016, the Company received $0 and $25,000, respectively, in payments under these collaborative agreements. During the nine months ended September 30, 2017 and 2016, the Company received $0 and $80,000, respectively, in payments under these collaborative agreements. The Company recognized revenue from these collaborative agreements of $0 and $36,000 for the three months ended September 30, 2017 and 2016, respectively. The Company recognized revenue from these collaborative agreements of $101,000 and $92,000 for the nine months ended September 30, 2017 and 2016, respectively.

 

Global Supply, License, and Commercialization Agreement

 

Executed on April 4, 2016 and effective as of March 28, 2016, the Company, VGE and Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA") owned by VGE, entered into the Global Supply, License, and Commercialization Agreement (the "New Agreement").

  

Prior to the New Agreement, IPA and VGE had entered into a certain Supply and Commercialization Agreement dated September 30, 2012 regarding a license and supply arrangement between IPA and VGE regarding Giant King Grass ("IPA-VGE Agreement"). In turn, VGE and the Company also entered into a certain Supply and Commercialization Agreement dated September 30, 2012 regarding a license and supply arrangement between VGE and the Company regarding Giant King Grass ("VGE-VIASPACE Agreement").

 

Under the New Agreement, VGE and the Company terminated the VGE-VIASPACE Agreement and IPA directly granted the Company an exclusive, perpetual license to commercialize its intellectual property rights to three (3) types of high yield, non-genetically modified grasses ("Three GK Grasses") throughout the world except Cambodia, People’s Republic of China, Taiwan, Thailand, Myanmar, Malaysia, Laos, Vietnam and Singapore ("VIASPACE Territory"). It and VGE agreed to subordinate the terms of the IPA-VGE Agreement to the terms of the New Agreement. IPA also granted the right to use and market the name "Giant King Grass" and other related names.

 

 

 

 11 

 

 

The Company would owe royalty payments on the Net Sales of the Three GK Grasses. This license would be sublicenseable in the VIASPACE Territory. IPA held all rights of ownership to the Three GK Grasses. The Company would own any grasses resulting from any modifications or improvements to the Three GK Grasses. IPA would use commercially reasonable efforts to maintain its intellectual property rights. The Company would use commercially reasonable efforts to commercialize the Three GK Grasses throughout the VIASPACE Territory.

  

Employment Agreements

 

On July 25, 2017, the Company announced that effective July 31, 2017, Haris Basit resigned as CEO of the Company to move to a position leading a Silicon Valley based technologycompany. Mr. Basit became Vice-Chairman of the Company’s Board of Directors and thus continue to be involved in the overall strategic direction of the Company. During this transition of leadership, Dr. Kevin Schewe, who is the largest shareholder of the Company and Board Chairman, becomes the acting CEO.

  

Effective October 1, 2016, the Company entered into one-year employment agreements with Carl Kukkonen and Stephen Muzi. Dr. Kukkonen serves as Chief Technology Officer of the Company and Mr. Muzi serves as Chief Financial Officer, Treasurer and Secretary. Dr. Kukkonen will receive a salary of $84,000 per annum and Mr. Muzi would receive $64,000 per annum. Each of them would also be entitled to customary insurance and health benefits, and reimbursement for out-of-pocket expenses in the course of his employment. Dr. Kukkonen is to receive 20 business days paid leave per year and Mr. Muzi is to receive 10 business days paid leave. Additionally, Dr. Kukkonen will be awarded a bonus of 10% of the gross revenue generated by the Company up to a maximum of $100,000. Mr. Muzi has since resigned as CFO, Treasurer and Secretary effective as of September 30, 2017. Dr. Schewe is acting CFO.

 

Litigation

 

The Company is not party to any material legal proceedings at the present time.

 

NOTE 10 – SUBSEQUENT EVENTS

 

On October 20, 2017, the Company issued 1,920,000 shares of common stock to a consultant of the Company.  The shares were issued at fair market value of approximately $1,920 on the date of the issuance.

 

 

 

 

 

 

 

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

The following discussion contains certain statements that constitute “forward-looking statements”. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition or Plan of Operation.”  These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control.  Our future results may differ materially from those currently anticipated depending on a variety of factors, including those described below under “Risks Related to Our Future Operations” and our filings with the Securities and Exchange Commission. The following should be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this Report and in conjunction with our 2016 Annual Report on Form 10-K as filed with the SEC.

 

VIASPACE Overview

 

Description of Business – VIASPACE Inc. (“we”, “us”, “VIASPACE”, or the “Company”) was founded in July 1998. Its business involves renewable energy and is based on biomass, in particular our license to a dedicated energy crop with the trademark “Giant King® Grass” (“GKG”). Through a license for GKG we obtained from Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA China") which is owned by VIASPACE Green Energy Inc. (“VGE”), we are able to commercialize GKG throughout the world, except for the People’s Republic of China (“China”) and the Republic of China (“Taiwan”).

 

GKG can be burned in 100% biomass power plants to generate electricity; made into pellets that can be burned together with coal to reduce carbon emissions from existing power plants; generate bio methane through anaerobic digestion, and can be used as a feedstock for low carbon liquid biofuels for transportation, biochemicals and bio plastics. Cellulosic ethanol, bio butanol and other liquid cellulosic biofuels, do not use corn or other food sources as feedstock. GKG can also be used as animal feed. GKG and other plants absorb and store carbon dioxide from the atmosphere as they grow. When they are burned, they release the carbon dioxide back into the atmosphere, but it is the same carbon dioxide that was removed from the atmosphere, and so this process is carbon neutral. Small amounts of fossil fuel are used by the farm equipment, transportation of GKG and fertilizer, so that the overall process of growing and burning GKG probably has some net carbon dioxide emissions, but much lower emissions than burning coal or other fossil fuels directly to create the same amount of energy. GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals.

 

Critical accounting policies and estimates

 

Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR60”) issued by the SEC, suggests companies provide additional disclosure and commentary on those accounting policies considered most critical. FRR 60 considers an accounting policy critical if it is important to the Company’s financial condition and results of operations, and requires significant judgment and estimates on the part of management in its application. For a summary of the Company’s significant accounting policies, including the critical accounting policies discussed below, see the accompanying notes to the financial statements.

  

The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, which are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The result of these evaluations forms the basis for making judgments about the carrying values of assets and liabilities and the reported amount of expenses that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions. The following accounting policies discussed below require significant management judgments and estimates.

 

The Company has four revenue models for GKG: 1. grass plantation integrated with a power plant or processing facility such as a pellet mill under company or joint venture control; 2. contract plantation establishment, support and licensing for a customer that owns and operates the plantation and power plant; 3. collaborative agreements to establish a test plot in the customer’s location to determine that GKG grows sufficiently for the customer to use in their particular application; and 4. consulting agreement services for customers considering the establishment of a grass plantation in their particular country or location. Revenue earned from collaborative agreements is comprised of negotiated payments for the operations of the test plots. Deferred revenue represents payments received which are related to future performance. For the three and nine months ended September 30, 2017 and 2016, the Company has recognized revenues under revenue models 3 and 4.

  

 

 

 13 

 

 

With regard to revenue recognition in connection with agreements that include multiple deliverables, management reviews the relevant terms of the agreements and determines whether such deliverables should be accounted for as a single unit of accounting in accordance with FASB ASC 605-25, Multiple-Element Arrangements. If it is determined that the items do not have stand-alone value, then such deliverables are accounted for as a single unit of accounting and any payments received pursuant to such agreement, including any upfront or development milestone payments and any payments received for support services, will be deferred and included in deferred revenue within our balance sheet until such time as management can estimate when all of such deliverables will be delivered, if ever. Management reviews and reevaluates such conclusions as each item in the arrangement is delivered and circumstances of the development arrangement change.

 

The Company accounts for equity instruments issued to consultants and vendors in exchange for goods and services in accordance with the provisions of FASB ASC Topic 505-50, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods or Services” and “Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other than Employees”. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement. In accordance with FASB ASC Topic 505-50, an asset acquired in exchange for the issuance of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor's balance sheet once the equity instrument is granted for accounting purposes. Accordingly, the Company records the fair value of the fully vested, non-forfeitable common stock issued for future consulting services as prepaid expenses in its balance sheet.

 

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. There is no assurance that actual results will not differ from these estimates.

 

Results of Operations

 

Three Months Ended September 30, 2017 Compared to September 30, 2016

 

Revenues

 

Revenues were $33,000 and $36,000 for the three months ended September 30, 2017 and 2016, respectively, a decrease of $3,000. The revenues relate to collaborative agreements for the joint operation of test plots to establish whether Giant King Grass grows well in the applicable customer’s countries and optimal agronomic practices are developed, and also for consulting and engineering work performed for customers requesting assistance in power plant design and feasibility studies for customers considering using Giant King Grass in their energy project.

 

Cost of Revenues

 

Costs of revenues were $2,000 and $0 for the three months ended September 30, 2017 and 2016, respectively, an increase of $2,000. The costs incurred by the Company to support the collaborative agreements and the consulting and engineering work include travel costs and external consulting costs. The Company will send personnel or consultants to oversee the initial plantings of Giant King Grass at the customer’s locations.

 

Gross Profit

 

The resulting effect on these changes in revenues and cost of revenues for the three months ended September 30, 2017 compared to the same period in 2016 was a decrease in gross profit from a gross profit $36,000 for the three months ended September 30, 2016 to a gross profit of $31,000 for the three months ended September 30, 2017, a decrease of $5,000.

 

Operations Expenses

 

Operations expenses were $8,000 and $9,000 for the three months ended September 30, 2017 and September 30, 2016, a decrease of $1,000. Labor and consulting costs were $1,000 in 2017, unchanged from $1,000 in 2017. Water and rent costs were lower by $3,000 during 2017 as compared with 2016 due to less water usage. Operations expenses consist of plantation expenses related to the Company’s test plot in California and Hawaii and costs associated with agronomy support and travel for potential customers.

  

 

 

 14 

 

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $267,000 and $226,000 for the three months ended September 30, 2017 and 2016, respectively, an increase of $41,000. Stock option compensation expense increased $56,000 in 2017 as compared with 2016 due to increased stock option grants in 2017. Payroll and benefit costs were lower by $38,000 in 2017 compared with the same period of 2016. Stock compensation to non-officers was lower by $36,000 in 2017 versus 2016 due to no compensation expense in 2017 related to officer family members purchasing common stock of the Company at a discount to market. Consulting fees increased $2,000 in 2017. Insurance costs increased $10,000 in 2017 compared to 2016 due to cancelling the Directors’ and Officers’ insurance policy.  Accounting and legal fees were the same in 2017 as compared with 2016. Bad debt of $45,000 was recorded against billing which had occurred in early spring. Ongoing negotiation caused adjustments in the final agreement which was completed in July. Both parties agreed that the billing done earlier in the year would not be paid.

   

Loss from Operations

 

The resulting effect on these changes in gross profits, operations expenses, and selling, general and administrative expenses was a decrease in loss from operations in 2017. For the three months ended September 30, 2017, the Company had a loss from operations of $244,000 compared with a loss from operations of $285,000 for the three months ended September 30, 2016, a decrease of $41,000.

 

Interest Expense

 

Interest expense was $48,000 and $82,000 for the three months ended September 30, 2017 and 2016, respectively, a decrease of $34,000. This is due to a decrease in the amount of the discount recognized in 2017 as compared to 2016, related to decreased officer convertible loans made to the Company in 2017.

 

Other Expenses

 

The Company recorded other expense of $2,000 for the three months ended September 30, 2017 and $4,000 for the same period in 2016, a decrease of $2,000. The decrease is related to a decrease in the fair value of the Company’s minority interest in AEG.

 

Nine Months Ended September 30, 2017 Compared to September 30, 2016

 

Revenues

 

Revenues were $101,000 and $92,000 for the nine months ended September 30, 2017 and 2016, respectively, an increase of $9,000. The revenues relate to collaborative agreements for the joint operation of test plots to establish whether Giant King Grass grows well in the applicable customer’s countries and optimal agronomic practices are developed, and also for consulting and engineering work performed for customers requesting assistance in power plant design and feasibility studies for customers considering using Giant King Grass in their energy project.

 

Cost of Revenues

 

Costs of revenues were $16,000 and $18,000 for the nine months ended September 30, 2017 and 2016, respectively, a decrease of $2,000. The costs incurred by the Company to support the collaborative agreements and the consulting and engineering work include travel costs and external consulting costs. The Company will send personnel or consultants to oversee the initial plantings of Giant King Grass at the customer’s locations.

 

Gross Profit

 

The resulting effect on these changes in revenues and cost of revenues for the nine months ended September 30, 2017 compared to the same period in 2016 was an increase in gross profit from a gross profit $74,000 for the nine months ended September 30, 2016 to a gross profit of $85,000 for the nine months ended September 30, 2017, an increase of $11,000.

 

Operations Expenses

 

Operations expenses were $29,000 and $27,000 for the nine months ended September 30, 2017 and September 30, 2016, an increase of $2,000. Labor and consulting costs increased by $7,000 in 2017. Water and rent costs were lower by $4,000 during 2017 as compared with 2016 due to lower water usage. Other operations expenses were lower by $4,000 in 2017 as compared to the same period in 2016. Operations expenses consist of plantation expenses related to the Company’s test plot in California and Hawaii and costs associated with agronomy support and travel for potential customers.

  

 

 

 15 

 

 

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $703,000 and $817,000 for the nine months ended September 30, 2017 and 2016, respectively, a decrease of $114,000. Stock option compensation expense increased $120,000 in 2017 as compared with 2016 due to increased stock option grants in 2017. Payroll and benefit costs were lower by $71,000 in 2017 compared with the same period of 2016. Stock compensation to non-officers was lower by $91,000 in 2017 versus 2016 due to no compensation expense in 2017 related to officer family members purchasing common stock of the Company at a discount to market. Consulting fees were lower by $65,000 due to lower outside service consultant’s costs. Insurance costs decreased $40,000 in 2017 compared to 2016 due to reduced directors’ and officers’ insurance costs. Accounting fees were lower by $11,000 in 2017 as compared with 2016. A $45,000 charge to bad debt was recorded in 2017 compared to $0 for 2016. Other costs increased $4,000 in 2017 as compared to 2016.

   

Loss from Operations

 

The resulting effect on these changes in gross profits, operations expenses, and selling, general and administrative expenses was a decrease in loss from operations in 2017. For the nine months ended September 30, 2017, the Company had a loss from operations of $646,000 compared with a loss from operations of $770,000 for the nine months ended September 30, 2016, a decrease of $124,000.

 

Interest Expense

 

Interest expense was $141,000 and $243,000 for the nine months ended September 30, 2017 and 2016, respectively, a decrease of $102,000. This is due to a decrease in the amount of the discount recognized in 2017 as compared to 2016, related to decreased officer convertible loans made to the Company in 2017.

 

Other Expenses

 

The Company recorded other expense of $8,000 for the nine months ended September 30, 2017 and $22,000 for the same period in 2016, a decrease of $14,000. The decrease is related to a decrease in the fair value of the Company’s minority interest in AEG.

  

Other Income

 

The Company recorded other income of $16,000 for the nine months ended September 30, 2016 and $0 for the same period in 2017. The Company reversed royalty expense no longer owed to VGE at September 30, 2016, that was accrued on the Company’s Balance Sheet at December 31, 2015, as a result of a new Global Supply, License, and Commercialization Agreement the Company entered into with VGE and Guangzhou Inter-Pacific Arts Corp. effective March 28, 2016 which eliminated any past claims either party had with each other.

 

Liquidity and Capital Resources

 

The Company’s net loss for the nine months ended September 30, 2017 was $796,000. Non-cash expenses totaled $516,000 for the nine months ended September 30, 2017 primarily due to stock options expense, stock compensation expense, amortization of debt discount and loss on minority interest. Changes in operating assets and liabilities provided $127,000 of cash in 2017. Net cash used by operating activities for operations was $152,000 for the nine months ended September 30, 2017.

 

The Company has incurred significant losses from operations, resulting in an accumulated deficit of $54,243,000 at September 30, 2017. The Company expects such losses to continue. However, on November 30, 2016, the Company entered in a Loan Agreement with its former CEO Haris Basit whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on February 23, 2017, the Company entered in a Loan Agreement with Director and acting CEO Kevin Schewe whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on July 25, 2017, the Company entered in a Loan Agreement with CTO Carl Kukkonen whereby he agreed to fund the Company $25,000 over a two-year period. The Company received $80,000 from Dr. Schewe related to these Loan Agreements during the nine months ended September 30, 2017. The Company received $47,500 from Mr. Basit related to these Loan Agreements during the nine months ended September 30, 2017. The Company also received $11,500 from Dr. Kukkonen related to these Loan Agreements during the nine months ended September 30, 2017. During the nine months ended September 30, 2017, the Company received capital of $5,000 through the sales of unregistered shares of common stock to a non-related party.

  

 

 

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As of filing date of this Form 10-Q, the Company had remaining availability under Dr. Schewe’s note of $20,000, remaining availability under Mr. Basit’s note of $27,500 and remaining availability under Dr. Kukkonen’s note of $13,500. The Company expects contracts related to Giant King Grass, loans from Dr. Schewe, Mr. Basit and Dr. Kukkonen, and occasional direct purchases of stock from investors to fund the operations of the Company for the foreseeable future. However, no assurance can be given that Dr. Schewe, Mr. Basit or Dr. Kukkonen will continue to fund the Company or that sales contracts will be obtained in the future, or if they are obtained, that they will be profitable. Accordingly, there continues to be substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any other adjustments that might result from the outcome of these uncertainties. Additionally, based upon our current policy of investing any available cash back into our operations, we do not plan to distribute any cash to our shareholders in the foreseeable future.

  

Contractual Obligations

 

There are no long-term contractual obligations other than employment agreements as detailed below.

   

Employment Agreements

 

Effective July 10, 2015, the Company entered into a two-year employment agreement with Haris Basit, former CEO and current Vice-Chairman of the Board of Directors of the Company. Mr. Basit will receive $120,000 per annum and be entitled to a bonus as determined by the Company’s Board of Directors and reimbursement for out-of-pocket expenses in the course of his employment. Additionally, Mr. Basit is to receive 20 business days paid leave per year. On July 10, 2015, the Company agreed to issue Mr. Basit 25,000,000 stock options at fair market value based on the closing price of the Company’s common stock as traded on the OTC Market as of July 10, 2015. These stock options are vested immediately but otherwise shall be subject to the terms of the 2015 option plan. Additionally, the Company agreed to issue Mr. Basit 18,750,000 stock options to be issued every three months (quarterly) over the term of his employment agreement which runs from July 10, 2015 through July 9, 2017, with the first issuance on October 10, 2015, at fair market value based on the closing price of the Company’s common stock as traded on the OTC Market on the date of each grant. Stock options shall vest immediately upon each issuance and shall be otherwise subject to the terms of the 2015 option plan. In the case of a change of control of the Company, the issuance schedule shall be accelerated by one year. Stock options shall have an exercise term of ten years from date of issuance, not to exceed the expiration date of the 2015 option plan. The Employment Agreement was terminated upon Mr. Basit’s resignation.

 

Effective October 1, 2016, the Company entered into one-year employment agreements with Carl Kukkonen and Stephen Muzi. Dr. Kukkonen serves as Chief Technology Officer of the Company and Mr. Muzi serves as Chief Financial Officer, Treasurer and Secretary. Dr. Kukkonen will receive a salary of $84,000 per annum and Mr. Muzi would receive $64,000 per annum. Each of them would also be entitled to customary insurance and health benefits, and reimbursement for out-of-pocket expenses in the course of his employment. Dr. Kukkonen is to receive 20 business days paid leave per year and Mr. Muzi is to receive 10 business days paid leave. Additionally, Dr. Kukkonen will be awarded a bonus of 10% of the gross revenue generated by the Company up to a maximum of $100,000. Mr. Muzi resigned as CFO, Treasurer and Secretary effective as of September 30, 2017 and his employment agreement was terminated as of such date.

  

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

This information is not required of smaller reporting companies.

  

ITEM 4. CONTROLS AND PROCEDURES

 

We maintain a system of disclosure controls and procedures that are designed for the purpose of ensuring that information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Principal Accounting Officer, as appropriate to allow timely decisions regarding required disclosures.

 

For the period ended September 30, 2017, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act. In the course of this evaluation, our management considered the material weakness in our internal control over financial reporting as discussed in our Annual Report on Form 10-K for the period ended December 31, 2016. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. To overcome this weakness, our principal executive and financial officers have reviewed and provided additional substantive accounting information and data in connection with the preparation of this quarterly report. Therefore, despite the weaknesses identified, our principal executive and financial officers believe that there are no material inaccuracies or omissions of material facts necessary to make the statements included in this report not misleading in light of the circumstances under which they are made.

  

 

 

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Changes in Internal Control over Financial Reporting

 

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financing reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

 

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2017 that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The Company does not have any material legal proceedings as of September 30, 2017.

 

ITEM 1A. RISK FACTORS

 

Risk Factors Which May Affect Future Results

 

The Company cautions that the following important factors, among others, in some cases have affected and in the future could affect the Company’s actual results and could cause such results to differ materially from those expressed in forward-looking statements made by or on behalf of the Company.

 

There have been no material changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, other than as set forth below:

 

Risks Related to our Grass Business

 

If we fail to comply with our obligations in our intellectual property licenses, we could lose license rights that are important to our business.

 

Executed on April 4, 2016 and effective as of March 28, 2016, the Company, VGE and IPA China, entered into the Global Supply, License, and Commercialization Agreement (the “New Agreement”).

 

Under the New Agreement, VGE and the Company terminated the VGE-VIASPACE Agreement and IPA directly granted the Company an exclusive, perpetual license to commercialize its intellectual property rights to three (3) types of high yield, non-genetically modified grasses (“Three GK Grasses”) throughout the world except Cambodia, People’s Republic of China, Taiwan, Thailand, Myanmar, Malaysia, Laos, Vietnam and Singapore (“VIASPACE Territory”). It and VGE agreed to subordinate the terms of the IPA-VGE Agreement to the terms of the New Agreement. IPA China also granted the right to use and market the name “Giant King Grass” and other related names.

 

The Company would owe royalty payments on the Net Sales of the Three GK Grasses. This license would be sublicenseable in the VIASPACE Territory. IPA China held all rights of ownership to the Three GK Grasses. The Company would own any grasses resulting from any modifications or improvements to the Three GK Grasses. IPA China would use commercially reasonable efforts to maintain its intellectual property rights. The Company would use commercially reasonable efforts to commercialize the Three GK Grasses throughout the VIASPACE Territory.

 

If the Company does not make its required royalty payments, it could lose its license.

 

If we lose key personnel or are unable to hire additional qualified personnel, it could impact our ability to grow our business.

 

We believe our future success will depend in large part upon our ability to attract and retain highly skilled technical, managerial, sales and marketing, finance and operations personnel. We face intense competition for all such personnel, and we may not be able to attract and retain these individuals. Our failure to do so could delay product development, affect the quality of our products and services, and/or prevent us from sustaining or growing our business. In addition, employees may leave our company and subsequently compete against us.

 

Effective July 31, 2017, Mr. Haris Basit resigned as our Chief Executive Officer to work for a technology company in an industry unrelated to the Company's industry. Dr. Kevin Schewe, the Company's largest shareholder and current Chairman of the Board, became our acting Chief Executive Officer. Effective September 30, 2017, Mr. Stephen Muzi resigned as our Chief Financial Officer and was replaced by Dr. Schewe. Mr. Basit's and Mr. Muzi’s recent departure may impact the Company's ability to grow our business.

 

Key personnel include Dr. Schewe and Dr. Carl Kukkonen, our Chief Technology Officer. The loss of key personnel, especially if without advanced notice, could harm our ability to maintain and build our business operations. Furthermore, we have no key man life insurance for any of our key employees.

 

 

 

 19 

 

 

Risks Related To An Investment In Our Stock

 

We have incurred losses and anticipate continued losses for the foreseeable future.

 

Our net loss for the nine months ended September 30, 2017 and the year ended December 31, 2016 was $796,000 and $1,019,000, respectively. We have not yet achieved profitability and expect to continue to incur net losses until we recognize increased higher revenues from GKG related sales. Because we do not have an operating history upon which an evaluation of our prospects can be based, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies seeking to develop new and rapidly evolving technologies. To address these risks, we must, among other things, respond to competitive factors, continue to attract, retain and motivate qualified personnel and continue to develop our technologies. We may not be successful in addressing these risks. We can give no assurance that we will achieve or sustain profitability.

    

Any future sale of a substantial number of shares of our common stock could depress the trading price of our common stock, lower our value and make it more difficult for us to raise capital.

 

Any sale of a substantial number of shares of our common stock (or the prospect of sales) may depress the price of our common stock. In particular, we will need to raise additional capital to maintain any ongoing business. We anticipate that the issuance of newly-issued shares to maintain our business will likely be very dilutive. In addition, these sales could lower our value and make it more difficult for us to raise capital. Further, the timing of the sale of the shares of our common stock may occur at a time when we would otherwise be able to obtain additional equity capital on terms more favorable to us.

 

The Company has 3,900,000,000 authorized shares of common stock, of which 3,400,594,447 were accounted for by our transfer agent as issued and outstanding as of September 30, 2017. Of these issued and outstanding shares, 1,946,159,702 shares (57.2%) are currently held by our executive officers, directors, and principal shareholders including related parties (including Mr. Haris Basit, former CEO and Director; Dr. Carl Kukkonen, CTO and Director; Mr. Stephen J. Muzi, former CFO; Ms. Angelina Galiteva, Director; Dr. Kevin L. Schewe, acting CEO, CFO and Director; Mr. Sung Hsien Chang, former director of the Company; Inter Pacific Arts Corporation, a former subsidiary of the Company; and Almaden Energy Group, a related party).  Of the shares issued and outstanding at September 30, 2017, 2,113,300,338 are accounted by our transfer agent as restricted under Rule 144.  These shares could be released in the future if requested by the holder of the shares, subject to volume and manner of sale restrictions under Rule 144.  1,287,294,109 shares of the Company’s common stock are accounted for by our transfer agent as free trading at September 30, 2017. 100,000,000 common shares are accounted for by our transfer agent as issued and outstanding, however, for accounting purposes the Company accounts for these as unissued since they are forfeitable. Outstanding common shares excluding these forfeitable shares are 3,300,594,447 at September 30, 2017.

 

We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares currently held by management and principal shareholders), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock.

 

Our executive officers, directors (including current and former) and principal shareholders own 57.2% of our common stock and one director holds a share of Series A Preferred Stock entitling it to votes of 50.1% on outstanding voting matters, which allows him to control substantially all matters requiring shareholder approval, and their interests may not align with the interests of our other shareholders.

 

Our executive officers, directors (including current and former) and principal shareholders hold 57.2% of our outstanding shares as of September 30, 2017. In addition, on May 14, 2010, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation of Series A Preferred Stock. The Certificate was approved by the Board and did not require shareholder vote. The Certificate created a new class of preferred stock known as Series A Preferred Stock. There is one share designated as Series A Preferred Stock. One share of Series A Preferred Stock is entitled to 50.1% of the outstanding votes on all shareholder voting matters. Series A Preferred Stock has no dividend rights and no rights upon a liquidation event and is subject to cancellation when certain conditions are met.

 

On May 14, 2010, the Company issued one share of Series A Preferred Stock to Mr. Chang related to the acquisition of IPA by VIASPACE and VGE. This empowers Chang with supermajority voting rights even after he holds less than a majority of outstanding voting securities. Under the term sheet relating to the VGE Recapitalization, Chang gave a proxy to Director Dr. Schewe during the term of any GKG sublicense from VGE. Dr. Schewe may be willing to provide additional financing to the Company. In the event he provides such financing, his ownership in the Company will further increase.

 

 

 

 20 

 

 

Effective as of September 30, 2012, and pursuant to an Agreement to Grant Voting Rights and Transfer Preferred Share executed by Chang and Director Kevin Schewe, Chang granted Schewe an irrevocable proxy that permitted Schewe to vote the Preferred Share. This proxy lasts so long as the License remained exclusive to the Company. Upon the earlier of (i) the expiration of five years or (ii) the date when the Company reached a market capitalization of at least $50 million, the proxy would be cancelled as the Preferred Share would be transferred from Chang to Schewe. 

  

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On July 25, 2017, the Company issued 41,218,638 unregistered shares of common stock to Carl Kukkonen, CTO of the Company. The shares were issued related to the conversion by Dr. Kukkonen of one convertible note as discussed in detail in Note 5. The Company relied upon Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of its stock. It believed that Section 4(2) was available because the offer and sale was not a public offering of its securities and there was no general solicitation or general advertising involved in the offer or sale.

 

On July 25, 2017, the Company issued 17,921,147 unregistered shares of common stock to Haris Basit, former CEO and current Director of the Company. The shares were issued related to the conversion by Mr. Basit of one convertible note as discussed in detail in Note 5. The Company relied upon Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of its stock. It believed that Section 4(2) was available because the offer and sale was not a public offering of its securities and there was no general solicitation or general advertising involved in the offer or sale.

 

On July 25, 2017, the Company issued 35,842,294 unregistered shares of common stock to Kevin Schewe, CEO and Director of the Company. The shares were issued related to the conversion by Dr. Schewe of one convertible note as discussed in detail in Note 5. The Company relied upon Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of its stock. It believed that Section 4(2) was available because the offer and sale was not a public offering of its securities and there was no general solicitation or general advertising involved in the offer or sale.

 

On August 15, 2017, the Company issued 21,428,571 unregistered shares of common stock to Haris Basit, former CEO and current Director of the Company. The shares were issued related to the conversion by Mr. Basit of one convertible note as discussed in detail in Note 5. The Company relied upon Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of its stock. It believed that Section 4(2) was available because the offer and sale was not a public offering of its securities and there was no general solicitation or general advertising involved in the offer or sale.

 

On August 15, 2017, the Company issued 53,571,429 unregistered shares of common stock to Kevin Schewe, CEO and Director of the Company of the Company. The shares were issued related to the conversion by Dr. Schewe of one convertible note as discussed in detail in Note 5. The Company relied upon Section 4(2) of the Securities Act of 1933, as amended, for the offer and sale of its stock. It believed that Section 4(2) was available because the offer and sale was not a public offering of its securities and there was no general solicitation or general advertising involved in the offer or sale.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

  

 

 21 

 

 

ITEM 6. EXHIBITS

 

(a) Exhibits

 

10.1 Senior Convertible Promissory Note between Registrant and Haris Basit dated July 25, 2017 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed July 31, 2017).
10.2 Senior Convertible Promissory Note between Registrant and Kevin Schewe dated July 25, 2017 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed July 31, 2017)
10.3 Senior Convertible Promissory Note between Registrant and Carl Kukkonen dated July 25, 2017 (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed July 31, 2017).
10.4 Senior Convertible Promissory Note between Registrant and Kevin Schewe dated August 15, 2017 (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed August 18, 2017)
10.5 Senior Convertible Promissory Note between Registrant and Haris Basit dated August 15, 2017 (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed August 18, 2017).
   
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. *
101.INS XBRL Instance Document *
101.SCH XBRL Schema Document *
101.CAL XBRL Calculation Linkbase Document *
101.DEF XBRL Definition Linkbase Document *
101.LAB XBRL Label Linkbase Document *
101.PRE XBRL Presentation Linkbase Document *

 

* Filed herewith.

  

[SIGNATURES PAGE FOLLOWS]

 

 

 

 

 

 

 22 

 

 

SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

VIASPACE Inc.

(Registrant)

 
       
Date: November 20, 2017 By: /s/ Kevin Schewe  
    Kevin Schewe  
    Chief Executive Officer (Principal Executive Officer)  
       
       
Date: November 20, 2017 By: /s/ Kevin Schewe  
    Kevin Schewe  
    Chief Financial Officer (Principal Financial and Accounting Officer)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 23 

 

EX-31.1 2 viaspace_10q-ex3101.htm CERTIFICATION

EXHIBIT 31.1

    

CERTIFICATION

 

I, Kevin Schewe, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of VIASPACE Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

 

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

 

Date: November 20, 2017 By: /s/ Kevin Schewe  
    Kevin Schewe  
    Chief Executive Officer  
    (principal executive officer)  

 

EX-31.2 3 viaspace_10q-ex3102.htm CERTIFICATION

EXHIBIT 31.2

   

CERTIFICATION

 

I, Kevin Schewe, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of VIASPACE Inc.;

 

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

 

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c. Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

  d. Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

 

5. The small business issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

 

  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal controls over financial reporting.

 

Date: November 20, 2017 By: /s/ Kevin Schewe  
    Kevin Schewe  
    Chief Financial Officer  
    (principal financial and accounting officer)  

 

EX-32 4 viaspace_10q-ex32.htm CERTIFICATION

EXHIBIT 32

  

CERTIFICATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(SUBSECTIONS (a) AND (b) OF SECTION 1350, CHAPTER 63 OF TITLE 18,

UNITED STATES CODE)

 

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United States Code), each of the undersigned officers of VIASPACE Inc., a Nevada corporation (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2017 as filed with the Securities and Exchange Commission (the “10-Q Report”) that:

 

  (1)   the 10-Q Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  (2)   the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company.    

 

       
Date: November 20, 2017   /s/ Kevin Schewe  
    Kevin Schewe  
    Chief Executive Officer (principal executive officer)  
       
Date: November 20, 2017   /s/ Kevin Schewe  
    Kevin Schewe  
    Chief Financial Officer (principal financial and accounting officer)  

 

 

 

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GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt">&#160;</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font-size: 8pt"><b><i>Going Concern &#8211; </i></b>The Company has incurred significant losses from operations, resulting in an accumulated deficit of $54,243,000. The Company expects such losses to continue. However, on November 30, 2016, the Company entered in a Loan Agreement with Vice Chairman Haris Basit whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on February 23, 2017, the Company entered in a Loan Agreement with CEO Kevin Schewe whereby he agreed to fund the Company $100,000 over a two-year period. 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Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS CURRENT ASSETS Cash and equivalents Prepaid expenses TOTAL CURRENT ASSETS OTHER ASSETS: Investment in Almaden Energy Group Other assets TOTAL OTHER ASSETS TOTAL ASSETS LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable Accrued expenses Unearned revenue Related party payables TOTAL CURRENT LIABILITIES COMMITMENTS AND CONTINGENCIES (Note 9) SHAREHOLDERS' DEFICIT: Preferred stock, $0.0001 par value in 2017 and 2016, 10,000,000 shares authorized, one share of Series A preferred stock issued and outstanding in 2017 and 2016 Common stock, $0.0001 par value in 2017 and 2016, 3,900,000,000 shares authorized, 3,400,594,447 shares issued and 3,300,594,447 shares outstanding as of September 30, 2017, and 2,919,472,132 shares issued and 2,819,472,132 shares outstanding as of December 31, 2016 Additional paid in capital Accumulated deficit Total shareholders' deficit TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT Preferred stock par value Preferred stock shares authorized Preferred stock, shares issued Preferred stock, shares outstanding Common stock par value Common stock shares authorized Common stock, shares issued Common stock, shares outstanding Income Statement [Abstract] REVENUES COST OF REVENUES GROSS PROFIT (LOSS) OPERATING EXPENSES Operations Selling, general and administrative Total operating expenses LOSS FROM OPERATIONS OTHER INCOME (EXPENSE) Interest expense Other expense Other income Total other income (expense) LOSS BEFORE INCOME TAXES INCOME TAXES NET LOSS LOSS PER SHARE OF COMMON STOCK - 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potentially antidilutive Computation of basic and diluted net loss per share Statement [Table] Statement [Line Items] Stock issued for future services, shares Stock issued for future services, value Equity investment percentage Dividends from equity investment Investment Loss in investment Number of Shares Outstanding, beginning balance Granted Exercised Cancelled and forfeited Outstanding, ending balance Exercisable, ending balance Weighted Average Exercise Price Per Share Outstanding, beginning balance Weighted average exercise price, granted Weighted average exercise price, exercised Weighted average exercise price, cancelled and forfeited Outstanding, ending balance Exercisable, ending balance Weighted Average Remaining Contractual Terms in Years Weighted Average Remaining Contractual Term, outstanding Weighted Average Remaining Contractual Term, exercisable Aggregate Intrinsic Value Outstanding, ending balance Exercisable, ending balance Stock compensation expense Options available for future grant Unrecognized compensation costs related to non-vested shares Weighted average period of unrecognized compensation costs Proceeds from related party Discount on note due to beneficial conversion feature Loans converted into shares, loan amount converted Loans converted into shares, shares issued Convertible notes payable Remaining availability under the note Stock issued for future expenses, shares issued Stock issued for cash, shares issued Stock issued for cash, value Stock issued for services, shares Stock issued for services, value Preferred stock shares outstanding Common stock equivalents excluded from EPS Basic and diluted net income (loss) per share: Numerator : Net loss attributable to common stock Denominator Weighted average shares of common stock outstanding Net loss per share of common stock, basic and diluted Related party cash payable Related party common stock payable, value Shares for deferred compensation Salary payable Options granted Equity method investment percentage Revenue from related party Rent Expense Revenue received from collaborative agreements Revenue recognized from collaborative agreements Almaden Energy Group Member Changs LLC Cash paid during the period for: Consultant Member Convertible loans converted to equity Deferred 2009 Member Deferred 2010 Member Deferred 2011 Member Denominator Document and Entity Information Funding Source Member Harris Basit Member Schewe Member Stock issued for future expenses, shares issued Common stock issued for future services Stock issued for future services, shares Stock issued for future services, value Common stock cleared for use for future services Aggregate Intrinsic Value [Abstract] Assets, Current Other Assets, Noncurrent Assets Liabilities, Current Stockholders' Equity Attributable to Parent Liabilities and Equity Gross Profit Operating Costs and Expenses Operating Income (Loss) Interest Expense Other Expenses Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest Increase (Decrease) in Accounts Receivable Increase (Decrease) in Prepaid Expense Increase (Decrease) in Accounts Payable Increase (Decrease) in Deferred Revenue Cash and Cash Equivalents, Period Increase (Decrease) Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value EX-101.PRE 10 vspc-20170930_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.8.0.1
Document and Entity Information - shares
9 Months Ended
Sep. 30, 2017
Nov. 20, 2017
Document And Entity Information    
Entity Registrant Name VIASPACE Inc.  
Entity Central Index Key 0001270200  
Document Type 10-Q  
Document Period End Date Sep. 30, 2017  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   3,402,514,447
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2017  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.8.0.1
BALANCE SHEETS (Unaudited) - USD ($)
Sep. 30, 2017
Dec. 31, 2016
CURRENT ASSETS    
Cash and equivalents $ 11,000 $ 19,000
Prepaid expenses 38,000 14,000
TOTAL CURRENT ASSETS 49,000 33,000
OTHER ASSETS:    
Investment in Almaden Energy Group 6,000 14,000
Other assets 2,000 2,000
TOTAL OTHER ASSETS 8,000 16,000
TOTAL ASSETS 57,000 49,000
CURRENT LIABILITIES    
Accounts payable 93,000 68,000
Accrued expenses 22,000 29,000
Unearned revenue 20,000 20,000
Related party payables 749,000 640,000
TOTAL CURRENT LIABILITIES 884,000 757,000
SHAREHOLDERS' DEFICIT:    
Preferred stock, $0.0001 par value in 2017 and 2016, 10,000,000 shares authorized, one share of Series A preferred stock issued and outstanding in 2017 and 2016 0 0
Common stock, $0.0001 par value in 2017 and 2016, 3,900,000,000 shares authorized, 3,400,594,447 shares issued and 3,300,594,447 shares outstanding as of September 30, 2017, and 2,919,472,132 shares issued and 2,819,472,132 shares outstanding as of December 31, 2016 330,000 282,000
Additional paid in capital 53,086,000 52,458,000
Accumulated deficit (54,243,000) (53,448,000)
Total shareholders' deficit (827,000) (708,000)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ 57,000 $ 49,000
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.8.0.1
BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares
Sep. 30, 2017
Dec. 31, 2016
Statement of Financial Position [Abstract]    
Preferred stock par value $ 0.0001 $ .0001
Preferred stock shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 1 1
Preferred stock, shares outstanding 1 1
Common stock par value $ 0.0001 $ .0001
Common stock shares authorized 3,900,000,000 3,900,000,000
Common stock, shares issued 3,400,594,447 2,919,472,132
Common stock, shares outstanding 3,300,594,447 2,819,472,132
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.8.0.1
STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Income Statement [Abstract]        
REVENUES $ 33,000 $ 36,000 $ 101,000 $ 92,000
COST OF REVENUES 2,000 0 16,000 18,000
GROSS PROFIT (LOSS) 31,000 36,000 85,000 74,000
OPERATING EXPENSES        
Operations 8,000 9,000 29,000 27,000
Selling, general and administrative 267,000 226,000 703,000 817,000
Total operating expenses 275,000 235,000 732,000 844,000
LOSS FROM OPERATIONS (244,000) (199,000) (647,000) (770,000)
OTHER INCOME (EXPENSE)        
Interest expense (48,000) (82,000) (141,000) (243,000)
Other expense (2,000) (4,000) (8,000) (22,000)
Other income 0 0 0 16,000
Total other income (expense) (50,000) (86,000) (149,000) (249,000)
LOSS BEFORE INCOME TAXES (294,000) (285,000) (796,000) (1,019,000)
INCOME TAXES 0 0 0 0
NET LOSS $ (294,000) $ (285,000) $ (796,000) $ (1,019,000)
LOSS PER SHARE OF COMMON STOCK - Basic and diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
WEIGHTED AVERAGE SHARES OUTSTANDING - Basic and diluted 3,237,284,099 2,509,093,098 3,051,228,069 2,310,258,331
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.8.0.1
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (796,000) $ (1,019,000)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock option and stock compensation 317,000 288,000
Stock issued for consulting expense 52,000 109,000
Amortization of discounts on notes payable 139,000 241,000
Loss on minority investment in Almaden Energy Group 8,000 21,000
(Increase) decrease in operating assets:    
Accounts receivable 0 41,000
Prepaid expenses 1,000 66,000
Increase (decrease) in operating liabilities:    
Accounts payable 25,000 19,000
Accrued expenses and other (7,000) (45,000)
Related party 109,000 7,000
Unearned revenue 0 (11,000)
Net cash used in operating activities (152,000) (283,000)
CASH FLOWS FROM INVESTING ACTIVITIES    
Net cash used in investing activities 0 0
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from convertible notes payable - related party 139,000 241,000
Stock issued for investment by related parties 0 44,000
Stock issued for investment by non-related party 5,000 5,000
Net cash provided by financing activities 144,000 290,000
NET INCREASE IN CASH AND CASH EQUIVALENTS (8,000) 7,000
CASH AND EQUIVALENTS, Beginning of period 19,000 10,000
CASH AND EQUIVALENTS, End of period 11,000 17,000
Cash paid during the period for:    
Interest 0 0
Income taxes 0 0
Supplemental Disclosure of Non-Cash Activities    
Common stock issued for future services, value 100,000,000 100,000,000
Discount on loans from beneficial conversion feature 139,000 241,000
Common stock cleared for use for future services 75,000 0
Convertible loans converted to equity $ 139,000 $ 241,000
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.8.0.1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2017
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business – VIASPACE Inc. (“we”, “us”, “VIASPACE”, or the “Company”) was founded in July 1998. Its business involves renewable energy and is based on biomass, in particular our license to a dedicated energy crop with the trademark “Giant King® Grass” (“GKG”). Through a license for GKG we obtained from Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA China") which is owned by VIASPACE Green Energy Inc. (“VGE”), we are able to commercialize GKG throughout the world, except for the People’s Republic of China (“China”) and the Republic of China (“Taiwan”).

 

GKG can be burned in 100% biomass power plants to generate electricity; made into pellets that can be burned together with coal to reduce carbon emissions from existing power plants; generate bio methane through anaerobic digestion, and can be used as a feedstock for low carbon liquid biofuels for transportation, biochemicals and bio plastics. Cellulosic ethanol, bio butanol and other liquid cellulosic biofuels, do not use corn or other food sources as feedstock. GKG can also be used as animal feed. GKG and other plants absorb and store carbon dioxide from the atmosphere as they grow. When they are burned, they release the carbon dioxide back into the atmosphere, but it is the same carbon dioxide that was removed from the atmosphere, and so this process is carbon neutral. Small amounts of fossil fuel are used by the farm equipment, transportation of GKG and fertilizer, so that the overall process of growing and burning GKG probably has some net carbon dioxide emissions, but much lower emissions than burning coal or other fossil fuels directly to create the same amount of energy. GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals.

 

Going Concern – The Company has incurred significant losses from operations, resulting in an accumulated deficit of $54,243,000. The Company expects such losses to continue. However, on November 30, 2016, the Company entered in a Loan Agreement with Vice Chairman Haris Basit whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on February 23, 2017, the Company entered in a Loan Agreement with CEO Kevin Schewe whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on July 25, 2017, the Company entered in a Loan Agreement with CTO Carl Kukkonen whereby he agreed to fund the Company $25,000 over a two-year period. The Company expects loans from Mr. Basit, Dr. Schewe and Dr. Kukkonen and revenue generated from future contracts using the license it has for Giant King Grass to fund operations for the foreseeable future. However, no assurance can be given that Mr. Basit, Dr. Schewe or Dr. Kukkonen will continue to fund the Company or that sales contracts will be obtained in the future, or if they are obtained, that they will be profitable. Accordingly, there continues to be substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any other adjustments that might result from the outcome of these uncertainties.

 

Basis of Presentation – The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company's annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.

 

Results of operations for the interim periods are not indicative of annual results.

 

Recent Accounting StandardsIn May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. In April 2016, May 2016 and December 2016, the FASB issued additional guidance, addressed implementation issues and provided technical corrections. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained earnings (deficit). The guidance is effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.8.0.1
2. PREPAID EXPENSES
9 Months Ended
Sep. 30, 2017
Prepaid Expense and Other Assets, Current [Abstract]  
PREPAID EXPENSES

The Company has entered into agreements with certain of its consultants and vendors whereby the Company issued unregistered shares of common stock in exchange for services to be provided to the Company. The Company has engaged a third-party provider to pay certain expenses of the Company on behalf of the Company. As compensation for the payment of these expenses on behalf of the Company, the Company pays the provider in shares of common stock equivalent to the expense paid plus a fee equal to 15% of the expense paid. During 2017, the third-party provider cleared 50,000,000 shares of the Company’s common stock for future services valued at $75,000. As of September 30, 2017 and December 31, 2016, included in prepaid expenses for this third-party provider is $38,000 and $13,000, respectively, for shares of stock issued to the provider in excess of amounts paid on the Company’s behalf.

  

Other prepaid expenses (non-stock related) were $0 and $1,000 at September 30, 2017 and December 31, 2016, respectively.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.8.0.1
3. INVESTMENT IN ALMADEN ENERGY GROUP
9 Months Ended
Sep. 30, 2017
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENT IN ALMADEN ENERGY GROUP

The investment in Almaden Energy Group, LLC (“AEG”) represents an 18.75% interest in that company’s outstanding membership interest units which became effective April 15, 2015. The Company originally accounted for this investment by the cost method because the membership interest units of AEG are unlisted and the criteria for using the equity method of accounting are not satisfied as the Company is not able to exercise significant influence over AEG. However, upon the Company hiring the CEO of AEG as its CEO in July 2015, the Company changed the method of its investment in AEG to the equity method. Dividends are recognized in income when declared and totaled $0 for 2017 and 2016. The carrying value of the investment is $6,000 and $14,000 as of September 30, 2017 and December 31, 2016, respectively. We recorded other expense of approximately $8,000 in the Company’s Statements of Operation during the nine months ended September 30, 2017, related to a loss on investment in AEG. See Note 8 for additional related party transactions with AEG.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.8.0.1
4. STOCK OPTIONS AND ISSUED STOCK
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
STOCK OPTIONS AND ISSUED STOCK

The fair value of each stock option granted is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model has assumptions for risk free interest rates, dividends, stock volatility and expected life of an option grant. The risk free interest rate is based upon market yields for United States Treasury debt securities at a maturity near the term remaining on the option. Dividend rates are based on the Company’s dividend history. The stock volatility factor is based on the historical volatility of the Company’s stock price. The expected life of an option grant is based on management’s estimate as no options have been exercised in the Plan to date. The Company calculated a forfeiture rate for employees and directors based on historical information. A forfeiture rate of 0% is used for options granted to consultants. The fair value of each option grant to employees, directors and consultants is calculated by the Black-Scholes method and is recognized as compensation expense on a straight-line basis over the vesting period of each stock option award. The risk-free interest rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.

 

    2017  
Dividends     0%  
Volatility factor     140.17%-140.25%  
Expected life     8.53 years  
Annual forfeiture rate     0%  
         

  

The following is a summary of the Company’s stock option activity for the nine months ended at September 30, 2017:

 

   Number of
Shares
   Weighted-
Average
Exercise
Price Per
Share
   Weighted-
Average
Remaining
Contractual
Term In Years
   Aggregate
Intrinsic
Value
 
Outstanding at December 31, 2016   380,730,000   $0.0028           
Granted   68,750,000    0.0016           
Exercised                  
Cancelled and forfeited                  
Outstanding at September 30, 2017   449,480,000   $0.0026    8.53   $ 
Exercisable at September 30, 2017   418,855,000   $0.0027    8.48   $ 

 

Stock options totaling 68,750,000 were granted during the nine months ended September 30, 2017. The Plan recorded $317,000 of compensation expense for employees and director stock options in 2017. At September 30, 2017, there was $49,000 of unrecognized compensation costs related to non-vested share-based compensation arrangements under the Plan that is expected to be recognized over a weighted average period of approximately nine months. There were no options exercised during the nine months ended September 30, 2017.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.8.0.1
5. CONVERTIBLE NOTE PAYABLE TO RELATED PARTY
9 Months Ended
Sep. 30, 2017
Debt Disclosure [Abstract]  
CONVERTIBLE NOTE PAYABLE TO RELATED PARTY

Loan Agreement with Haris Basit

 

Effective November 30, 2016, the Company entered into a Loan Agreement with Director Haris Basit whereby Mr. Basit agreed to loan up to $100,000 to the Company over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Mr. Basit’s request, into a fixed number of shares of the Company’s common stock based on the closing price of the Company’s common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Mr. Basit will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.

  

During the nine months ended September 30, 2017, Mr. Basit made loans of $47,500 to the Company. The Company recorded a discount on the loans of $47,500 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During 2017, Mr. Basit converted loans totaling $47,500 into 140,958,681 common shares of the Company. At the time of the conversions, the company recorded the discount as additional interest expense. There are $0 loans outstanding at September 30, 2017. As of September 30, 2017, the Company had remaining availability under the note of $27,500.

 

Loan Agreement with Kevin Schewe

 

Effective February 23, 2017, the Company entered into a Loan Agreement with CEO Kevin Schewe whereby Dr. Schewe agreed to loan up to $100,000 to the Company over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Dr. Schewe’s request, into a fixed number of shares of the Company’s common stock based on the closing price of the Company’s common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Dr. Schewe will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.

  

During the nine months ended September 30, 2017, Dr. Schewe made loans of $80,000 to the Company. The Company recorded a discount on the loans of $80,000 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During 2017, Dr. Schewe converted loans totaling $80,000 into 242,278,404 common shares of the Company. At the time of the conversions, the company recorded the discount as additional interest expense. There are $0 loans outstanding at September 30, 2017. As of September 30, 2017, the Company had remaining availability under the note of $20,000.

 

Loan Agreement with Carl Kukkonen

 

Effective July 25, 2017, the Company entered into a Loan Agreement with CTO Carl Kukkonen whereby Dr. Kukkonen agreed to loan up to $25,000 to the Company over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Dr. Kukkonen’s request, into a fixed number of shares of the Company’s common stock based on the closing price of the Company’s common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Dr. Kukkonen will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.

  

During the nine months ended September 30, 2017, Dr. Kukkonen made loans of $11,500 to the Company. The Company recorded a discount on the loans of $11,500 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During 2017, Dr. Kukkonen converted loans totaling $11,500 into 41,218,638 common shares of the Company. At the time of the conversions, the company recorded the discount as additional interest expense. There are $0 loans outstanding at September 30, 2017. As of September 30, 2017, the Company had remaining availability under the note of $13,500.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.8.0.1
6. STOCKHOLDERS' EQUITY
9 Months Ended
Sep. 30, 2017
Equity [Abstract]  
STOCKHOLDERS' EQUITY

Preferred Stock

 

At September 30, 2017 and December 31, 2016, the number of authorized shares of the Company’s preferred stock was 10,000,000. The par value of the preferred stock is $0.0001.

 

At September 30, 2017 and December 31, 2016, there is one share of Series A Preferred Stock outstanding.

  

Common Stock

 

As of January 1, 2017, the number of authorized shares of the Company’s common stock was 3,900,000,000. The par value of the common stock is $0.0001.

 

During 2017, the Company issued 50,000,000 unregistered restricted shares of common stock respectively to a funding source so that the funding source can pay for future expenses on behalf of the Company. The shares are issued to the funding source to cover the amount of future expenses plus a fee of 15% of such future expenses. At the time of the future payment of the expenses incurred by the Company, the common stock and additional paid in capital are credited for the amount of the future payment plus 15%. During the period ending September 30, 2017, there is no accounting impact from this transaction because the shares remain in the Company's possession.

 

On January 9, 2017, the Company entered into Subscription Agreement with a non-related party to purchase 5,586,592 shares of common stock at a purchase price of $0.000895 per share for $5,000. The purchase price per share was equal to 50% of the average closing price of the Company's common stock for the 20 trading days immediately preceding the date of the investment. The Company issued such common stock on the date of such Subscription Agreement.

  

During 2017, the Company issued 1,080,000 shares of common stock to a consultant of the Company. The shares were issued at fair market value of approximately $1,920 on the date of the issuance.

 

During 2017, the Company issued 242,278,404 shares of common stock to CEO Kevin Schewe as he converted loans into shares of common stock as allowed under an agreement he has with the Company as discussed in Note 5. During 2017, the Company issued 140,958,681 shares of common stock to Director Haris Basit as he converted loans into shares of common stock as allowed under an agreement he has with the Company as discussed in Note 5. During 2017, the Company issued 41,218,638 shares of common stock to CTO Carl Kukkonen as he converted loans into shares of common stock as allowed under an agreement he has with the Company as discussed in Note 5.

 

As of September 30, 2017, there were 3,300,594,447 shares of common stock outstanding.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.8.0.1
7. NET LOSS PER SHARE
9 Months Ended
Sep. 30, 2017
Earnings Per Share [Abstract]  
NET LOSS PER SHARE

The Company computes net loss per share in accordance with FASB ASC Topic 260. Under its provisions, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted earnings would customarily include, if dilutive, potential shares of common stock issuable upon the exercise of stock options and warrants. The dilutive effect of outstanding stock options and warrants is reflected in earnings per share in accordance with FASB ASC Topic 260 by application of the treasury stock method. For the periods presented, the computation of diluted loss per share equaled basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.

 

The following table sets forth common stock equivalents (potential common stock) at September 30, 2017 and 2016 that are not included in the loss per share calculation since their effect would be anti-dilutive for the periods indicated:

  

   2017   2016 
Stock Options   418,855,000    239,480,000 

  

The following table sets forth the computation of basic and diluted net loss per share for 2017 and 2016, respectively:

 

   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2017   2016   2017   2016 
Basic and diluted net loss per share:                    
                     
Numerator:                    
Net loss attributable to common stock  $(294,000)  $(285,000)  $(796,000)  $(1,019,000)
                     
Denominator:                    
Weighted average shares of common stock outstanding   3,237,284,099    2,509,093,098    3,051,228,069    2,310,258,331 
                     
Net loss per share of common stock, basic and diluted  $0.00   $0.00   $0.00   $0.00 
XML 23 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
8. RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2017
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

Included in the Company’s balance sheets at September 30, 2017 and December 31, 2016 are Related Party Payables of $749,000 and $640,000, respectively. The Company has a payable of $689,000 and $640,000, at September 30, 2017 and December 31, 2016 owed to Dr. Carl Kukkonen, CTO. Of the amount owed to Dr. Kukkonen, there is a cash component totaling $185,000 and a common stock component totaling $504,000. Dr. Kukkonen deferred a portion of his 2009, 2010 and 2011 stock awards and is entitled to the following unregistered shares of Company common stock at September 30, 2017: 11,195,707 shares for deferred 2009 compensation; 8,467,939 shares for deferred 2010 compensation; and 24,730,678 shares for deferred 2011 compensation. The Company also owes Director Haris Basit $60,000 at September 30, 2017, representing salary earned but not paid. Mr. Basit has also been granted 56,250,000 options at September 30, 2017

 

The Company has a loan agreement with CEO Dr. Kevin Schewe, Director Haris Basit and CTO Carl Kukkonen which is described in Note 5.

    

On April 13, 2015, the Company entered into a Giant King Grass supply contract with Almaden Energy Group, LLC. (“AEG”). AEG is developing an animal feed project in the United States for the domestic and global market. The Company granted AEG a license to grow Giant King Grass only for animal feed, nursery and research purposes anywhere within the 48 contiguous United States. AEG is permitted to sell Giant King Grass anywhere in the world with the exception of the State of Hawaii. The CEO of AEG is also the former CEO and current member of the Board of Directors of the Company. For the nine months ended September 30, 2017 and 2016, the Company recorded $0 and $12,000, respectively, in revenues from AEG. At September 30, 2017, the Company has an 18.75% equity ownership in AEG and one designated board seat provided that the Company maintains an equity ownership position greater than 5%. At September 30, 2017, the Company recorded $6,000 as an Investment in AEG on its Balance Sheet under equity method of accounting (see Note 3).

 

On June 1, 2017, the Company acquired a 2.91% interest in Clean Energy Solutions, LLC’s (“CES”) outstanding membership interest units. The Company has accounted for this investment by the cost method because the membership interest units of that company are unlisted and the criteria for using the equity method of accounting are not satisfied as the Company is not able to exercise significant influence over CES. CES is a customer of the Company who is in discussion for future GKG contracts. At September 30, 2017, the Company’s interest in CES is recorded at $0.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.8.0.1
9. COMMITMENTS AND CONTINGENCIES
9 Months Ended
Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

Leases

 

The Company currently has no long term office lease. The Company leases land in San Diego County, California where it grows Giant King Grass. Rent and utility expense charged to operations for the three months ended September 30, 2017 and 2016, was $4,000 and $7,000, respectively. Rent and utility expense charged to operations for the nine months ended September 30, 2017 and 2016 was $9,000 and $13,000, respectively.

 

On August 31, 2017, the Company notified the landlord of the land being leased in San Diego to cancel the lease.

 

Collaborative Agreements

 

We are a party to certain collaborative agreements with various entities for the joint operation of test plots to establish that GKG grows well in the area and optimal agronomic practices are developed. These agreements are in the form of development collaborations and licensing agreements. Under these agreements, we have granted rights to grow and use of GKG. In return, we are entitled to receive certain payments for the operations of the test plots and license fees on the harvesting of GKG should it ultimately be commercialized.

 

All of our collaborative agreements are subject to termination by either party, without significant financial penalty. Under the terms of these agreements, upon a termination we are entitled to reacquire all rights in our technology at no cost and are free to re-license the technology to other collaborative partners.

 

Revenue earned from collaborative agreements is comprised of negotiated payments for the establishment, evaluation and operations of GKG test plots. Deferred revenue represents customer payments received which are related to future performance. Generally, for collaborative agreements establishing test plots, the Company recognizes revenue only after the Giant King Grass is planted in the customer’s location. Until that time any money received is recorded as deferred revenue. During the three months ended September 30, 2017 and 2016, the Company received $0 and $25,000, respectively, in payments under these collaborative agreements. During the nine months ended September 30, 2017 and 2016, the Company received $0 and $80,000, respectively, in payments under these collaborative agreements. The Company recognized revenue from these collaborative agreements of $0 and $36,000 for the three months ended September 30, 2017 and 2016, respectively. The Company recognized revenue from these collaborative agreements of $101,000 and $92,000 for the nine months ended September 30, 2017 and 2016, respectively.

 

Global Supply, License, and Commercialization Agreement

 

Executed on April 4, 2016 and effective as of March 28, 2016, the Company, VGE and Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA") owned by VGE, entered into the Global Supply, License, and Commercialization Agreement (the "New Agreement").

  

Prior to the New Agreement, IPA and VGE had entered into a certain Supply and Commercialization Agreement dated September 30, 2012 regarding a license and supply arrangement between IPA and VGE regarding Giant King Grass ("IPA-VGE Agreement"). In turn, VGE and the Company also entered into a certain Supply and Commercialization Agreement dated September 30, 2012 regarding a license and supply arrangement between VGE and the Company regarding Giant King Grass ("VGE-VIASPACE Agreement").

 

Under the New Agreement, VGE and the Company terminated the VGE-VIASPACE Agreement and IPA directly granted the Company an exclusive, perpetual license to commercialize its intellectual property rights to three (3) types of high yield, non-genetically modified grasses ("Three GK Grasses") throughout the world except Cambodia, People’s Republic of China, Taiwan, Thailand, Myanmar, Malaysia, Laos, Vietnam and Singapore ("VIASPACE Territory"). It and VGE agreed to subordinate the terms of the IPA-VGE Agreement to the terms of the New Agreement. IPA also granted the right to use and market the name "Giant King Grass" and other related names.

 

The Company would owe royalty payments on the Net Sales of the Three GK Grasses. This license would be sublicenseable in the VIASPACE Territory. IPA held all rights of ownership to the Three GK Grasses. The Company would own any grasses resulting from any modifications or improvements to the Three GK Grasses. IPA would use commercially reasonable efforts to maintain its intellectual property rights. The Company would use commercially reasonable efforts to commercialize the Three GK Grasses throughout the VIASPACE Territory.

  

Employment Agreements

 

On July 25, 2017, the Company announced that effective July 31, 2017, Haris Basit resigned as CEO of the Company to move to a position leading a Silicon Valley based technologycompany. Mr. Basit became Vice-Chairman of the Company’s Board of Directors and thus continue to be involved in the overall strategic direction of the Company. During this transition of leadership, Dr. Kevin Schewe, who is the largest shareholder of the Company and Board Chairman, becomes the acting CEO.

  

Effective October 1, 2016, the Company entered into one-year employment agreements with Carl Kukkonen and Stephen Muzi. Dr. Kukkonen serves as Chief Technology Officer of the Company and Mr. Muzi serves as Chief Financial Officer, Treasurer and Secretary. Dr. Kukkonen will receive a salary of $84,000 per annum and Mr. Muzi would receive $64,000 per annum. Each of them would also be entitled to customary insurance and health benefits, and reimbursement for out-of-pocket expenses in the course of his employment. Dr. Kukkonen is to receive 20 business days paid leave per year and Mr. Muzi is to receive 10 business days paid leave. Additionally, Dr. Kukkonen will be awarded a bonus of 10% of the gross revenue generated by the Company up to a maximum of $100,000. Mr. Muzi has since resigned as CFO, Treasurer and Secretary effective as of September 30, 2017. Dr. Schewe is acting CFO.

 

Litigation

 

The Company is not party to any material legal proceedings at the present time.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
10. SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2017
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

On October 20, 2017, the Company issued 1,920,000 shares of common stock to a consultant of the Company.  The shares were issued at fair market value of approximately $1,920 on the date of the issuance.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.8.0.1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2017
Accounting Policies [Abstract]  
Description of Business

Description of Business – VIASPACE Inc. (“we”, “us”, “VIASPACE”, or the “Company”) was founded in July 1998. Its business involves renewable energy and is based on biomass, in particular our license to a dedicated energy crop with the trademark “Giant King® Grass” (“GKG”). Through a license for GKG we obtained from Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA China") which is owned by VIASPACE Green Energy Inc. (“VGE”), we are able to commercialize GKG throughout the world, except for the People’s Republic of China (“China”) and the Republic of China (“Taiwan”).

 

GKG can be burned in 100% biomass power plants to generate electricity; made into pellets that can be burned together with coal to reduce carbon emissions from existing power plants; generate bio methane through anaerobic digestion, and can be used as a feedstock for low carbon liquid biofuels for transportation, biochemicals and bio plastics. Cellulosic ethanol, bio butanol and other liquid cellulosic biofuels, do not use corn or other food sources as feedstock. GKG can also be used as animal feed. GKG and other plants absorb and store carbon dioxide from the atmosphere as they grow. When they are burned, they release the carbon dioxide back into the atmosphere, but it is the same carbon dioxide that was removed from the atmosphere, and so this process is carbon neutral. Small amounts of fossil fuel are used by the farm equipment, transportation of GKG and fertilizer, so that the overall process of growing and burning GKG probably has some net carbon dioxide emissions, but much lower emissions than burning coal or other fossil fuels directly to create the same amount of energy. GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals.

Going Concern

Going Concern – The Company has incurred significant losses from operations, resulting in an accumulated deficit of $54,243,000. The Company expects such losses to continue. However, on November 30, 2016, the Company entered in a Loan Agreement with Vice Chairman Haris Basit whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on February 23, 2017, the Company entered in a Loan Agreement with CEO Kevin Schewe whereby he agreed to fund the Company $100,000 over a two-year period. In addition, on July 25, 2017, the Company entered in a Loan Agreement with CTO Carl Kukkonen whereby he agreed to fund the Company $25,000 over a two-year period. The Company expects loans from Mr. Basit, Dr. Schewe and Dr. Kukkonen and revenue generated from future contracts using the license it has for Giant King Grass to fund operations for the foreseeable future. However, no assurance can be given that Mr. Basit, Dr. Schewe or Dr. Kukkonen will continue to fund the Company or that sales contracts will be obtained in the future, or if they are obtained, that they will be profitable. Accordingly, there continues to be substantial doubt as to the Company’s ability to continue as a going concern. The financial statements do not include any other adjustments that might result from the outcome of these uncertainties.

Basis of Presentation

Basis of Presentation – The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company's annual report on Form 10-K. The Company follows the same accounting policies in the preparation of interim reports.

 

Results of operations for the interim periods are not indicative of annual results.

Recent Accounting Standards

Recent Accounting StandardsIn May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. In April 2016, May 2016 and December 2016, the FASB issued additional guidance, addressed implementation issues and provided technical corrections. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained earnings (deficit). The guidance is effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.8.0.1
4. STOCK OPTIONS, WARRANTS AND ISSUED STOCKS (Tables)
9 Months Ended
Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Assumptions
    2017  
Dividends     0%  
Volatility factor     140.17%-140.25%  
Expected life     8.53 years  
Annual forfeiture rate     0%  
         
Option activity
   Number of
Shares
   Weighted-
Average
Exercise
Price Per
Share
   Weighted-
Average
Remaining
Contractual
Term In Years
   Aggregate
Intrinsic
Value
 
Outstanding at December 31, 2016   380,730,000   $0.0028           
Granted   68,750,000    0.0016           
Exercised                  
Cancelled and forfeited                  
Outstanding at September 30, 2017   449,480,000   $0.0026    8.53   $ 
Exercisable at September 30, 2017   418,855,000   $0.0027    8.48   $ 
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.8.0.1
7. NET LOSS PER SHARE (Tables)
9 Months Ended
Sep. 30, 2017
Earnings Per Share [Abstract]  
Common stock equivalents - potentially antidilutive
   2017   2016 
Stock Options   418,855,000    239,480,000 
Computation of basic and diluted net loss per share
   Three Months Ended
September 30,
   Nine Months Ended
September 30,
 
   2017   2016   2017   2016 
Basic and diluted net loss per share:                    
                     
Numerator:                    
Net loss attributable to common stock  $(294,000)  $(285,000)  $(796,000)  $(1,019,000)
                     
Denominator:                    
Weighted average shares of common stock outstanding   3,237,284,099    2,509,093,098    3,051,228,069    2,310,258,331 
                     
Net loss per share of common stock, basic and diluted  $0.00   $0.00   $0.00   $0.00 
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.8.0.1
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
Sep. 30, 2017
Dec. 31, 2016
Accounting Policies [Abstract]    
Accumulated deficit $ (54,243,000) $ (53,448,000)
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
2. PREPAID EXPENSES (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Prepaid expenses $ 38,000 $ 14,000
Stock Related Expenses [Member]    
Prepaid expenses 38,000 13,000
Non-Stock Related Expenses [Member]    
Prepaid expenses $ 0 $ 1,000
Third-Party provider [Member]    
Stock issued for future services, shares 50,000,000  
Stock issued for future services, value $ 75,000  
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.8.0.1
3. INVESTMENT IN ALMADEN ENERGY GROUP (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Investment $ 6,000   $ 14,000
Loss in investment $ (8,000) $ (21,000)  
Almaden Energy Group [Member]      
Equity investment percentage 18.75%    
Dividends from equity investment $ 0   0
Investment 6,000   $ 14,000
Loss in investment $ (8,000)    
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
4. STOCK OPTIONS, WARRANTS AND ISSUED STOCK (Details-Option activity)
9 Months Ended
Sep. 30, 2017
USD ($)
$ / shares
shares
Number of Shares  
Outstanding, beginning balance | shares 380,730,000
Granted | shares 68,750,000
Exercised | shares 0
Cancelled and forfeited | shares 0
Outstanding, ending balance | shares 449,480,000
Exercisable, ending balance | shares 418,855,000
Weighted Average Exercise Price Per Share  
Outstanding, beginning balance | $ / shares $ .0028
Weighted average exercise price, granted | $ / shares .0016
Weighted average exercise price, exercised | $ / shares
Weighted average exercise price, cancelled and forfeited | $ / shares
Outstanding, ending balance | $ / shares .0026
Exercisable, ending balance | $ / shares $ .0027
Weighted Average Remaining Contractual Terms in Years  
Weighted Average Remaining Contractual Term, outstanding 8 years 6 months 11 days
Weighted Average Remaining Contractual Term, exercisable 8 years 5 months 23 days
Aggregate Intrinsic Value  
Outstanding, ending balance | $ $ 0
Exercisable, ending balance | $ $ 0
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.8.0.1
4. STOCK OPTIONS, WARRANTS AND ISSUED STOCK (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]    
Stock compensation expense $ 317,000 $ 288,000
Unrecognized compensation costs related to non-vested shares $ 49,000  
Weighted average period of unrecognized compensation costs 9 months  
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.8.0.1
5. CONVERTIBLE NOTES PAYABLE TO RELATED PARTY (Details Narrative)
9 Months Ended
Sep. 30, 2017
USD ($)
shares
Haris Basit [Member]  
Proceeds from related party $ 47,500
Discount on note due to beneficial conversion feature 47,500
Loans converted into shares, loan amount converted $ 47,500
Loans converted into shares, shares issued | shares 140,958,681
Convertible notes payable $ 0
Remaining availability under the note 27,500
Dr. Kevin Schewe [Member]  
Proceeds from related party 80,000
Discount on note due to beneficial conversion feature 80,000
Loans converted into shares, loan amount converted $ 80,000
Loans converted into shares, shares issued | shares 242,278,404
Convertible notes payable $ 0
Remaining availability under the note 20,000
Kukkonen [Member]  
Proceeds from related party 11,500
Discount on note due to beneficial conversion feature 11,500
Loans converted into shares, loan amount converted $ 11,500
Loans converted into shares, shares issued | shares 41,218,638
Convertible notes payable $ 0
Remaining availability under the note $ 13,500
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
6. STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2017
Dec. 31, 2016
Preferred stock shares outstanding 1 1
Series A Preferred Stock [Member]    
Preferred stock shares outstanding 1 1
Schewe [Member]    
Loans converted into shares, shares issued 242,278,404  
Haris Basit [Member]    
Loans converted into shares, shares issued 140,958,681  
Kukkonen [Member]    
Loans converted into shares, shares issued 41,218,638  
Funding Source [Member]    
Stock issued for future expenses, shares issued 50,000,000  
Non-Related Party [Member] | January 9, 2017 [Member]    
Stock issued for cash, shares issued 5,586,592  
Stock issued for cash, value $ 5,000  
Consultant [Member]    
Stock issued for services, shares 1,080,000  
Stock issued for services, value $ 1,920  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.8.0.1
7. NET LOSS PER SHARE (Details-Equivalents) - shares
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Earnings Per Share [Abstract]    
Common stock equivalents excluded from EPS 418,855,000 236,480,000
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.8.0.1
7. NET LOSS PER SHARE (Details-EPS) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Basic and diluted net income (loss) per share:        
Numerator : Net loss attributable to common stock $ (294,000) $ (285,000) $ (796,000) $ (1,019,000)
Denominator        
Weighted average shares of common stock outstanding 3,237,284,099 2,509,093,098 3,051,228,069 2,310,258,331
Net loss per share of common stock, basic and diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.8.0.1
8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Dec. 31, 2016
Related party payables $ 749,000   $ 640,000
Options granted 68,750,000    
Investment in Almaden Energy Group $ 6,000   14,000
Almaden Energy Group [Member]      
Investment in Almaden Energy Group $ 6,000   14,000
Equity method investment percentage 18.75%    
Clean Energy Solutions [Member]      
Investment in Almaden Energy Group $ 0    
Equity method investment percentage 2.91%    
Carl Kukkonen [Member]      
Related party payables $ 689,000   $ 640,000
Related party cash payable 185,000    
Related party common stock payable, value 504,000    
Carl Kukkonen [Member] | 2009 Deferred [Member]      
Shares for deferred compensation     11,195,707
Carl Kukkonen [Member] | 2010 Deferred [Member]      
Shares for deferred compensation     8,467,939
Carl Kukkonen [Member] | 2011 Deferred [Member]      
Shares for deferred compensation     24,730,678
Harris Basit [Member]      
Salary payable $ 60,000    
Options granted 56,250,000    
Almaden Energy Group [Member]      
Revenue from related party $ 0 $ 12,000  
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.8.0.1
9. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2017
Sep. 30, 2016
Sep. 30, 2017
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]        
Rent Expense $ 4,000 $ 7,000 $ 9,000 $ 13,000
Revenue received from collaborative agreements 0 22,000 0 80,000
Revenue recognized from collaborative agreements $ 0 $ 36,000 $ 101,000 $ 92,000
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