0001010549-18-000448.txt : 20181119 0001010549-18-000448.hdr.sgml : 20181119 20181119173056 ACCESSION NUMBER: 0001010549-18-000448 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181119 DATE AS OF CHANGE: 20181119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENWAY TECHNOLOGIES INC CENTRAL INDEX KEY: 0001572386 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 900893594 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55030 FILM NUMBER: 181193571 BUSINESS ADDRESS: STREET 1: 8851 CAMP BOWIE WEST BLVD STREET 2: SUITE 240 CITY: FORT WORTH STATE: TX ZIP: 76116 BUSINESS PHONE: 817-346-6900 MAIL ADDRESS: STREET 1: 8851 CAMP BOWIE WEST BLVD STREET 2: SUITE 240 CITY: FORT WORTH STATE: TX ZIP: 76116 FORMER COMPANY: FORMER CONFORMED NAME: UMED HOLDINGS, INC. DATE OF NAME CHANGE: 20130318 10-Q 1 greenway10q.htm

  

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________________

FORM 10-Q

[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2018

[  ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 000-55030

_____________________________________

GREENWAY TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

   

Texas

(State or other jurisdiction of

incorporation or organization)

 

90-0893594

(I.R.S. Employer Identification Number)

1521 North Cooper Street, Suite 205

Arlington, Texas

(Address of principal executive offices)

76011

(Zip Code)

800-289-2515

(Registrant’s telephone number, including area code)

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 requirement for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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 [  ]

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

 

   
Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At November 19, 2018, the registrant had outstanding 286,703,915 shares of its Class A common stock and 0 shares of Class B common stock.

1 
 

Table of Contents

 

 

 

Part I- Financial Information.     
      
Item 1. Financial Statements & NOTES   1 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   17 
Item 3. Quantitative and Qualitative Disclosures about Market Risk   24 
Item 4. Controls and Procedures   24 
      
Part II- Other Information     
      
Item 1. Legal Proceedings   26 
Item 1A. Risk Factors   26 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   26 
Item 3. Defaults Upon Senior Securities   27 
Item 4. Mine Safety Disclosures   27 
Item 5. Other Information   27 
Item 6. Exhibits   28 
Signatures   31 

 

 

 

 

2 
 

 

PART I – FINANCIAL INFORMATION

  Item 1. Financial Statements.

 

GREENWAY TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheet

(Unaudited)

       
    September 30,    December 31, 
    2018    2017 
Assets          
Current Assets          
Cash  $39,248   $91,518 
Prepaid expense        157,500 
    Total Current Assets   39,248    249,018 
Fixed assets          
Property & equipment   4,015    4,015 
Less depreciation   4,015    4,015 
    0    0 
Other Assets   19,000    20,000 
           Total Assets  $58,248   $269,018 
     Liabilities & Stockholders’ Deficit          
Current Liabilities          
Accounts payable  $285,503   $140,039 
Stockholder advances   130,538    1,500 
Accrued management fees   1,626,602    1,666,602 
Notes payable   200,000    153,841 
Accrued expenses   588,378    778,760 
Current portion of convertible note payable, net of          
discount of $52,958 and $81,833   257,709    150,834 
Derivative liability – warrants   87,556    105,643 
           Total Current Liabilities   3,176,286    2,997,219 
Long term convertible note payable, less current portion        84,000 
Total Liabilities   3,176,286    3,081,219 
Commitments and contingencies          
Stockholders’ Deficit          
Common Class B stock, 20,000,000 shares authorized, par value $0.0001, 0 shares issued and outstanding at September 30, 2018          
and December 31, 2107   0    0 
Common Class A stock 300,000,000 shares authorized, par value $0.0001, 286,703,915 and 287,681,826 issued and outstanding at          
September 30, 2018 and December 31, 2017, respectively   28,652    28,771 
Additional paid-in capital   21,989,916    20,782,630 
Accumulated deficit   (25,136,606)   (23,623,602)
           Total Stockholders’ Deficit     (3,180,038)       (2,812,201 )
Total Liabilities & Stockholders’ Deficit   $ 58,248     $ 269,018  

See the accompanying notes to unaudited condensed consolidated financial statements.



3 
 

 

GREENWAY TECHNOLOGIES, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

For the three months ended September 30, 2018 and 2017

       
    2018    2017 
Sales  $0   $0 
Expenses          
  General and administrative   219,574    1,089,635 
  Research and development   75,000    183,512 
  Depreciation   0    99 
Total Expense   294,574    1,273,246 
Operating loss   (294,574)   (1,273,246)
Other income (expenses)          
 Gain (loss) on change in fair value of derivative   (56,168)   (26,329)
 Interest (expense) income   5,476    (120)
 Gain on settlement of research and development agreement   210,000      
           
Total other income (expense)   159,308    (26,449)
Loss before income taxes   (135,266)   (1,299,695)
Provision for income taxes   0    0 
Net loss   (135,266)  $(1,299,695)
Net loss per share;          
  Basic and diluted net loss per shares   (0.00)  $(0.00)
Weighted average shares          
Outstanding;          
  Basic and diluted   286,703,915    275,893,004 

 

 

 

 

See the accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

4 
 

GREENWAY TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations – Unaudited
For the nine months ended September 30, 2018 and 2017
       
       
    2018    2017 
Sales   —      —   
           
Expenses          
  General and administrative   1,031,381    7,046,787 
  Research and development   616,283    521,444 
  Depreciation   —      297 
Total Expense   1,647,664    7,568,528 
           
Operating loss   1,647,664    7,568,528 
           
Other income (expenses)          
 Gain (loss) on change in fair value of derivative   (18,581)    (15,933)
Interest (expense) income   (28,760)    9,285 
Warrant conversion gain   180,000     
Settlement expense - loan agreement   (208,000)     
Gain on settlement of research development agreement   210,000     
Total other income (expense)   (140,073)   (6,648)
           
Loss before income taxes   (1,513,005)    (7,575,176)
Provision for income taxes   —      —   
Net loss   (1,513,005)    (7,575,176)
           
Net loss per share;          
  Basic and diluted net loss per shares   0.00   $(0.03)
Weighted average shares          
Outstanding;          
  Basic and diluted   286,703,915    269,789,181 

 

5 
 

GREENWAY TECHNOLOGIES, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the three months ended September 30, 2018 and 2017

         
    2018   2017
Cash Flows from Operating Activities                
Net Loss from operations   $ (1,513,005)     $ (7,575,176)  
Adjustments to reconcile net loss to net cash used in                
 Operating activities:                
   Depreciation     0       298  
   Stock based compensation     0       5,320,938  
   (Gain) loss on derivative     (18,581)       (8.908)  
   Debt discount     28,875       0  
Stockholder dispute settlement             390,300  
   Changes in operating assets and liabilities:                
   Prepaid expense     157,500       13,476  
   Accounts payable and accrued expenses     345,576       411,144  
   Accrued management fees     (40,000)       (152,500)  
   Gain on contract cancellation     (180,000)       (15,000)  
   Gain on settlement of debt              
   Settlement of R&D Agreement     (210,000)       0  
   Settlement of debt instrument through issuance of shares of common stock     208,000       (569,508)  
Net Cash Used in Operating Activities     (1,221,635)       (1,615,428)  
Cash Flows from Investing Activities      0       0  
Cash Flows from Financing Activities                
                 
   Repayments on shareholder advances     (51,341)       (59,690)  
   Repayments on note payable     130,038       (8,000)  
   Repayments on convertible note payable     (8,500)       (120,753)  
   Proceeds from sale of common stock     999,168       1,961,750  
   Proceeds from issuance of debt instruments     100,000       0  
Net Cash Provided by Financing Activities     1,377,365       1,713,799  
Net (Decrease) Increase in Cash     (52,270)       98,371  
Cash Beginning of Period     91,518       67,964  
Cash End of Period   $ 39,248     $ 166,335  
   Shares returned and cancelled   $ 8,733,164     $ 0  

 

 

 

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

 

6 
 

 

GREENWAY TECHNOLOGIES, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2018

(Unaudited)

NOTE 1 – ORGANIZATION

Nature of Operations

Greenway Technologies, Inc. (“Greenway Technologies,” “GTI,” or the “Company”) was organized on March 13, 2002, under the laws of the State of Texas as Dynalyst Manufacturing Corporation.  On August 18, 2009, in connection with a merger with Universal Media Corporation, a privately held Nevada company, the Company changed its name to Universal Media Corporation (“Universal Media”). The Company changed its name to UMED Holdings, Inc. on March 23, 2011, and to Greenway Technologies, Inc. on September 23, 2017.

The Company’s primary mission is to operate as a holding company to provide funding for commercializing the proprietary processes and products held by its 100% owned subsidiary, Greenway Innovative Energy, Inc. (“GIE”).

In September 2010, the Company acquired 1,440 acres of placer mining claims on Bureau of Land Management land in Mohave County, Arizona. See discussion in Note 3. Due to the Company not producing any revenue from its BLM mining leases since its acquisition of the leases, the Company recognized an impairment charge of $100,000 during the year ended December 31, 2014. The Company believes that this investment could be productive if sufficient resources are committed to its development. However, at this time, the Company has made the decision to commit is resources to commercialization of the Gas-To-Liquids (“GTL”) technology owned by GIE.

In August 2012, the Company acquired 100% of Greenway Innovative Energy, Inc. (“GIE”) which owns patents and trade secrets for a proprietary process and related technology to convert natural gas into synthesis gas (syngas), and then to liquid fuels, also known as gas-to-liquids or “GTL” processing. In addition to its usefulness in the GTL process, syngas is an important intermediate gas used by industry in the production of ammonia, methane, liquid fuels, and other downstream products.

The Company’s unique reforming process is called Fractional Thermal Oxidation™ (FTO). The Company believes it will be able to offer a new economical, relatively small scale (125 to 2,475 barrels/day) method of converting natural gas into liquid fuels that can be located in field locations where applicable to smaller scale GTL processing requirements. Commercialization of its proprietary reforming and GTL processes are the primary focus of the Company.

NOTE 2 - BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES

Principles of Consolidation

The accompanying condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

7 
 

 

The accompanying condensed consolidated financial statements include the accounts of the following entities.

Name of Entity  %      Entity  Incorporation  Relationship
Greenway Technologies, Inc.       Corporation    Texas    Parent 
Universal Media Corporation  100%   Corporation    Wyoming    Subsidiary 
Greenway Innovative Energy, Inc.  100%   Corporation    Nevada    Subsidiary 
Logistix Technology Systems, Inc.  100%   Corporation    Texas    Subsidiary 

 

Going Concern Uncertainties

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying condensed consolidated financial statements, the Company sustained a loss of approximately $.135 million for the three-month and $1.513 million for the nine-month period ended September 30, 2018 and has a working capital deficiency of approximately $3.1 million and an accumulated deficit of approximately $25.1 million at September 30, 2018. a working capital deficiency of approximately $3.0 million and an accumulated deficit of approximately $25 million at September 30, 2018. The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern for the next twelve months.

With the successful test of the Company’s G-Reformer® unit and FTO process during the first quarter 2018, the Company has had discussions with a number of oil and gas companies, smaller oil and gas operators and investors regarding potential funding for a commercial scale GTL plant using the Company’s unique GTL system. A commercial GTL plant will include the Company’s proprietary G-Reformer®, a Fischer-Tropsch unit, and all necessary components to develop a fully functional GTL plant with a targeted minimum output of ~125 barrels/day of high-cetane blendstock (diesel fuel). Should an agreement be reached with any of these parties, such relationship would be anticipated to provide funding for a plant, as well as sufficient additional operating capital for the Company to independently continue operations. While there are no assurances that financing for an initial plant will be obtained on acceptable terms and in a timely manner, the failure to obtain the necessary working capital may cause the Company to move in one or more alternate directions to transition the Company’s GTL system into production.

In addition, the Company is also seeking agreements and/or partnerships with other GTL system providers to use the Company’s proprietary G-Reformer® technology as part of existing, planned, or new GTL systems. There are no assurances that such agreements and partnerships will be obtained on acceptable terms and in a timely manner, and the failure to obtain the necessary working capital may cause the Company to move in one or more alternate directions to monetize its proprietary G-Reformer® technology.

The accompanying condensed consolidated financial statements do not include any adjustment to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies applied in the presentation of the condensed consolidated financial statements are as follows.

Property and Equipment

Property and equipment are recorded at cost. Major additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold, are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale or salvage value are recorded as a gain or loss on sale of equipment. Depreciation is computed using the straight-line method over the useful life of the assets. The Company continues to use its fully depreciated property and equipment.

8 
 

 

 Impairment of Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with Accounting Standards Codification, ASC Topic 360, Property, Plant and Equipment. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.

Revenue Recognition

 

The Company has not, to date, generated any revenues. 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three-months or less to be cash equivalents. There were no cash equivalents at September 30, 2018, or December 31, 2017.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

The Company has adopted the provisions of FASB ASC 740-10-05 Accounting for Uncertainty in Income Taxes. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Open tax years, subject to IRS examination include 2013 – 2016.

Net Loss Per Share, basic and diluted

Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Shares issuable upon the exercise of warrants or beneficial conversion features (23,696,156) have been excluded as a common stock equivalent in the diluted loss per share because their effect would be anti-dilutive.

Derivative Instruments

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

9 
 

 

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

See Notes 6 and 7 below for disclosures associated with the Company’s convertible notes payable and warrants.

 

Fair Value of Financial Instruments

Effective January 1, 2008, fair value measurements are determined by the Company’s adoption of authoritative guidance issued by the FASB, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities, as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three levels as follows:

 

Level 1 – Valuation based on unadjusted quoted market prices in active markets for identical assets or liabilities.

 

Level 2 – Valuation based on, observable inputs (other than level one prices), quoted market prices for similar assets such as at the measurement date; quoted prices in the market that are not active; or other inputs that are observable, either directly or indirectly.

Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

Original Issue Discount

For certain convertible debt issued, the Company provides the debt holder with an original issue discount (“OID”). An OID is the difference between the original cash proceeds and the amount of the note upon maturity. The Note is originally recorded for the total amount payable. The OID is amortized into interest expense pro-rata over the term of the Note.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s notes recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, receivables, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments.

The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017:

 

Description Level 1   Level 2   Level 3  
September 30, 2018 Derivative Liabilities $ 0   $ 0   $ 87,557  
December 31, 2017 Derivative Liabilities $ 0   $ 0   $ 105,643  

The following assets and liabilities are measured on the balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation of the beginning and ending balances of the liabilities:

10 
 

 

 The change in the notes payable at fair value for the nine-month period ended September 30, 2018, is as follows: 

                          
    Fair
Value
    Change in    New         

Fair

Value

 
    January 1, 2018    

Fair

Value

    

Convertible

Notes

    

 

Conversions

    September 30, 2018 
                          
 Derivative Liabilities  $105,643   $18,581   $0   $0   $(87,557)

 

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest income and expense in the accompanying condensed consolidated financial statements.

 

Stock Based Compensation

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

At September 30, 2018, the Company did not have any outstanding stock options.

Concentration and Credit Risk 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash with high credit quality institutions. At times, such deposits may be in excess of the FDIC insurance limit.

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $75,000 net a credit of $210,000 recognized as income during the period, and $232,068 and $177,658 during the three-months ended September 30, 2018 and 2017, respectively.

Issuance of Common Stock

The issuance of common stock for other than cash is recorded by the Company at market values.

Impact of New Accounting Standards

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

11 
 

 

NOTE 4 – PROPERTY, PLANT, AND EQUIPMENT

 

   Range of Lives
in Years
 

 

September 30, 2018

  December 31, 2017
Equipment   5   $2,032   $2,032 
Furniture and fixtures   5    1,983    1,983 
         4,015    4,015 
Less accumulated depreciation        (4,015)   (4,015)
        $0   $0 

Depreciation expense was $0 and $99 for the three-months ended September 30, 2018 and 2017, respectively.

 

NOTE 5 – TERM NOTES PAYABLE

Term notes payable consisted of the following at September 30, 2018 and December 31, 2017:

   2018  2017
       
Unsecured note payable dated March 8, 2016 to an individual at 5% interest, payable upon the Company’s availability of cash  $0   $13,500 
Unsecured note payable dated November 13, 2017 to a corporation at $10,000 lump sum interest at maturity on February 28, 2018. The terms are being re-negotiated with the noteholder.   100,000    100,000 
Unsecured note payable dated December 28, 2017 to a corporation, due January 3, 2018        53,842 
Unsecured note payable dated November 13, 2017 to a corporation at $10,000 lump sum interest at maturity on February 28, 2018. The terms are being re-negotiated with the noteholder.   100,000    100,000 

 

Total term notes

  $200,000   $153,842 

 

NOTE 6 – 2017 CONVERTIBLE PROMISSORY NOTES

The Company issued a $166,667 convertible promissory note bearing interest at 4.50% per annum to an accredited investor, the first installment of $86,667 is payable on December 20, 2018 and $80,000 plus accrued interest on December 20, 2019. The holder has the right to convert the note into common stock of the Company at a conversion price of $0.08 per share for each one dollar of cash payment which may be due, (which would be 1,083,337 shares for the $86,667 payment and 1,000,000 shares for the $80,000 payment).

The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note did not result in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. As of December 31, 2017, the discount related to the beneficial conversion feature on the note was valued at $27,083 based on the $0.013 difference between the market price of $0.093 and the conversion price of $0.08 times the 2,083,325 conversion shares. As of and during the three-months ended September 30, 2018, the remaining discount was $16,927 and $3,386 of the discount was amortized.

The Company issued a $150,000 convertible promissory note on January 16, 2018 bearing interest at 4.50% per annum to an accredited investor, payable in equal installments of $6,000 plus accrued interest until the principal and accrued interest are paid in full. The Company paid $6,000 on the note during the nine-months ended September 30, 2018, with the net convertible note payable now $144,000. The holder has the right to convert the note into common stock of the Company at a conversion price of equal to 70% of the prior twenty (20) days average closing market price of the Company’s common stock.

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The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note resulted in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the note was valued at $58,494 based on the difference between the fair value of the 1,578,947 convertible shares at the valuation date and the $150,000 note value. The discount related to the beneficial conversion feature is being amortized over the term of the debt. The discount related to the beneficial conversion feature on the note was valued at $150,000 based on the Black-Scholes Model. As of and during the three-months ended September 30, 2018, the remaining discount was $36,031,711 and $22,463 of the discount was amortized. The derivative liability for this note at September 30, 2018 was $68,056. This note is in default and the terms are being re-negotiated between the parties. At this time, the ultimate terms of the note are not determined and may not include any conversion features. Under the circumstances, there is no basis for continuing treating the note as requiring derivative accounting.

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NOTE 7 – CONVERTIBLE PROMISSORY NOTE

May 2016 Convertible Note

On May 4, 2016, the Company issued a $224,000 convertible promissory note bearing interest at 10.0% per annum to an accredited investor, payable beginning November 10, 2016, in monthly installments of $44,800 plus accrued interest and a cash premium equal to 10.0% of the installment amount. The convertible promissory note was paid in full on March 4, 2017. The holder had the right under certain circumstances to convert the note into common stock of the Company at a conversion price equal to 70% of the average of the 3 lowest volume weighted average trading prices during the 20-day period ending on the latest complete trading day prior to the conversion date.

The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note resulted in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the note was valued at $224,000 based on the Black-Scholes Model. The discount related to the beneficial conversion feature ($51,829) was amortized over the term of the debt (10 months). For the year ended December 31, 2017, the Company recognized interest expense of $9,327 related to the amortization of the discount.

In connection with the issuance of the $224,000 note, the Company recorded debt issue cost and discount as follows:

    $20,000 original issue discount and $4,000 debt issue cost, which was amortized over 10 months, with amortization of $4,000 for twelve-months ended December 31, 2017.
    The convertible promissory note was paid in full on March 10, 2017, reducing the embedded derivative for the 2016 beneficial conversion right to zero at December 31, 2017.

September 2014 Convertible Note 

In connection with the issuance of a $158,000 convertible promissory note in 2014 (repaid in July 2015), the Company issued warrants to purchase shares of common stock.

 

    · Warrants – recorded at fair value ($79,537) upon issuance, and marked -to-market on the balance sheet at $58,317 as of September 30, 2018 and $47,149 as of December 31, 2017, which was computed as follows:

 

    Commitment Date  
Expected dividends   0%
Expected volatility   175.59%  
Expected term: conversion feature   2 years  

  

A controversy and litigation between the lender and the Company emerged regarding the number of warrants attached to the loan agreement. The parties reached a settlement whereby the Company issued 1,600,000 shares of freely-tradable stock to the lender. As a result of the settlement, all of the remaining balance sheet amounts relating to the promissory note were eliminated in the quarter ended September 30, 2018. The Company recorded Settlement Expense in the amount of $208,000 and Gain on Exchange in Fair Value of Derivative in the amount of $58,316.

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NOTE 8 – ACCRUED EXPENSES

 

Accrued expenses consisted of the following at September 30, 2018 and December 31, 2017:

    2018    

 

2017

 
             
Accrued consulting fees   $ 249,500     $ 249,500  
Accrued expense related to shareholder dispute     0       330,000  
Accrued expense related to warrant exercise     0       180,000  
Other accrued expenses        332,234       12,000  
Accrued interest expense     6,644       7,260  
Total accrued expenses   $ 588,378     $ 778,760  

 

NOTE 9– CAPITAL STRUCTURE

 

The Company is authorized to issue 300,000,000 shares of Class A common stock with a par value of $.0001 per share and 20,000,000 shares of Class B stock with a par value of $.0001 per share. Each Class A common stock share has one voting right and the right to dividends, if and when declared by the Board of Directors. Class B common stock does not vote.

 

Class A Common Stock

 

At September 30, 2018, there were 286,703,915 shares of class A common stock issued and outstanding.

 

During the three-months ended September, 2018, the Company:

 

·In connection with the issuance of a Promissory Note to a lender, the lender was issued a Warrant entitling the lender to acquire 366,667 shares of Class A Common stock at an exercise price of $.01 (one penny) per share. The Warrant must be exercised in full within 15 years of the Note end date.

 

Class B Stock 

 

At September 30, 2018 and 2017, there were 0 and 126,938 shares of class B stock issued and outstanding, respectively.

 

During the year ended December 31, 2017, the Company; exchanged 630,000 shares of class A common stock for 62,986 class B shares with a shareholder who held class B shares from the 2009 merger agreement between the Company and Dynalyst Manufacturing Corporation which set a conversion rate of 15 to 1. The Company negotiated the 630,000 shares when the class B shareholder elected to convert.

 

· Exchanged (on a one for one basis) 63,932 shares of class A common stock for 63,932 class B shares with shareholders who acquired the class B shares after the 2009 merger agreement between the Company and Dynalyst Manufacturing Corporation.

 

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Stock options, warrants and other rights

 

At September 30, 2018, the Company has not adopted any employee stock option plans.

On February 3, 2017, the Company issued 6,000,000 warrants (4,000,000 at $0.35 for two years and 2,000,000 at $0.45 for three years) as part of a separation agreement with a co-founder and former president. The Company valued the warrants as of September 30, 2017, at $639,284 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 455%, expected conversion term of two and three years and risk-free interest rate of 1.75%.

On November 30, 2017, the Company issued 1,000,000 warrants at $0.30 for three years as part of a settlement of a shareholder dispute with MTG Holdings, Inc. The Company valued the warrants as of December 31, 2017, at $95,846 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 116%, expected conversion term of three years and risk-free interest rate of 1.37%.

On January 8, 2018, the Company issued 4,000,000 warrants to a director, which were provided in lieu of 3,000,000 shares that the director returned to the Company and were subsequently cancelled, at $0.10 per share which expire in three years.

 

On September 14, 2018, in connection with the issuance of a Promissory Note to a lender, the lender was issued a Warrant entitling the lender to acquire 366,667 shares of Class A Common stock at an exercise price of $.01 (one penny) per share. The Warrant must be exercised in full within 15 years of the Note end date.

 

NOTE 10 - RELATED PARTY TRANSACTIONS

 

Shareholders made loans and advances to the Company in the amounts of $202,740, consisting of advances made by Kevin Jones of $102,740, Greg Sanders of approximately $1,400 and a loan made by Randolf Patterson of $100,000 during the three-months ended September 30, 2018. With respect to the Patterson loan, Mr. Jones holds the direct collateral interest in the note through his wholly-owned Maybert LLC, and the parties share such interests on a pro rata basis.

 

On October 23, 2018, Christine Early (Kevin Jones’ spouse and separate shareholder) made a $100,000 loan to the Company, and on November 6, 2018, Michael Wykrent (shareholder) made a $100,000 loan to the Company, both loans being secured by Maybert LLC, a Texas company controlled by Kevin Jones. With respect to these loans, MR. Jones holds the direct collateral interest in the note through his wholly-owned Maybert LC, and the parties share such interests on a pro rata basis.

 

NOTE 11 – INCOME TAXES

 

At September 30, 2018 and December 31, 2017, the Company had approximately $18 million and $16.4 million, respectively, of net operating losses ("NOL") carry forwards for federal and state income tax purposes. These losses are available for future years and expire through 2034. Utilization of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue Code Section 382.

 

The provision for income taxes for continuing operations consists of the following components for the nine-months ended September 30, 2018 and the year ended December 31, 2017:

 

  2018   2017  
         
Current   $ -     $ -  
Deferred     -       -  
   Total tax provision for (benefit from) income taxes   $ -     $ -  

 

 

A comparison of the provision for income tax expense at the federal statutory rate of 21% for the three-months ended September 30, 2018 and the year ended December 31, 2017, the Company's effective rate is as follows:

 

   2018  2017
       
Federal statutory rate   (21.0)    (21.0) 
State tax, net of federal benefit   (0.0)    (0.0) 
Permanent differences and other including surtax exemption   0.0    0.0 
Temporary difference   (15.9)    (15.9) 
Valuation allowance   36.9    36.9 
Effective tax rate   0.0%   0.0%

The net deferred tax assets and liabilities included in the financial statements consist of the following amounts at September 30, 2018 and December 31, 2017:


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    2018    

 

2017

 
Deferred tax assets            
Net operating loss carry forwards   $ 17,916,878     $ 16,403,873  
Deferred compensation     797,035       821,572  
Stock based compensation     2,900,734       2,900,734  
Other     581,639       581,639  
Total     22,196,286       20,707,818  
Less valuation allowance     (22,196,286 )     (20,707,818 )
Deferred tax asset     -       -  
Deferred tax liabilities                
Depreciation and amortization   $ -     $ -  
Net long-term deferred tax asset   $ -     $ -  

  

The change in the valuation allowance was $1,399,009 and $12,784,855 for the three-months ended September 30, 2018 and the year ended December 31, 2017, respectively.  The Company has recorded a 100% valuation allowance related to the deferred tax asset for the loss from operations, interest expense, interest income and other income subsequent to the change in ownership, which amounted to $22,196,2867 and $20,707,818 at September 30, 2018 and December 31, 2017, respectively.

 

Utilization of the Company’s net operating losses may be subject to substantial annual limitation if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions. Such an ownership change would substantially increase the possibility of net operating losses expiring before complete utilization.

 

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, historical taxable income including available net operating loss carry forwards to offset taxable income, and projected future taxable income in making this assessment.

 

NOTE 12 – COMMITMENTS 

 

Employment Agreements 

In August 2012, the Company entered into employment agreements with the president and chairman of the board of Greenway Innovative Energy, Inc. for a term of 5 years with compensation of $90,000 per year. In September of 2014, the president's employment agreement was amended to increase his annual pay to $180,000. By its terms, the employment agreement automatically renewed on August 12, 2018 for a successive one-year period. During the three-months ended September 30, 2017, the Company paid and accrued a total of $45,000 on the employment agreement.

In the August 2012 acquisition agreement with Greenway Innovative Energy, Inc., the Company agreed to issue an additional 7,500,000 shares of restricted common stock when the first GTL unit is built and becomes operational and is capable of producing 2,000 barrels of diesel or jet fuel per day and pay Greenway Innovative Energy a 2% royalty on all gross production sales on each unit placed in production. In connection with a settlement agreement with one of the prior owners of Greenway Innovative Energy, Inc., the Company replaced 3,750,000 of the shares with a different amount of shares and other consideration. As a result, only 3,750,000 shares are committed to be issued under this agreement.

 

Effective May 10, 2018, the Company entered into employment agreements with John Olynick, as President and Ransom Jones, as Chief Financial Officer, respectively. The terms and conditions of their employment agreements are identical. John Olynick, as President earns a salary of $120,000 per year. Ransom Jones, as Chief Financial Officer, earns a salary of $120,000 per year. Mr. Jones also serves as the Company’s Secretary and Treasurer. During each year that their Agreements are in effect, they are each entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year. Under their employment agreements, Mr. Olynick and Mr. Jones were each issued 250,000 shares of Common Stock, par value $.0001 during the three months ended September 30, 2018. On the date of issuance, the stock was valued at $.06 per share and the Company recorded an expense of $30,000. They are also entitled to participate in the Company’s benefit plans.

 

The foregoing summary of the Employment Agreements is qualified in its entirety by reference to the actual true and correct Employment Agreements, copies of which are attached hereto as Exhibit 10.39 and 10.40.


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Consulting Agreement

 

On November 28, 2017, the Company entered into a three-year consulting agreement with Chisos Equity Consultants, LLC for public relations, consulting and corporate communications services. The initial payment was 1,800,000 shares of the Company’s restricted common stock. Additional payments upon the Company’s common stock reaching certain price points are follows;

 

  · 500,000 shares at the time our common stock reaches $0.25 per share during the first year
  · 500,000 shares at the time our common stock reaches $0.45 per share during the first year
  · 1,000,000 shares at the time our common stock reaches $0.90 per share during the first or second year
  · 2,000,000 shares at the time our common stock reaches $1.50 per share during the first or second year
  · 3,000,000 shares at the time our common stock reaches $2.00 per share during the term of the agreement
  · 1,000,000 shares at the time our common stock reaches $10.00 per share during the term of the agreement

 

Due to a breach under the Agreement, the Board of Directors of the Company on June 22, 2018, voted to terminate the Agreement. Based on the termination, all warrants to purchase the Company’s common stock were cancelled.

 

  Leases  

 

In October 2015, the Company signed a new two-year lease for new office space of approximately 1,800 square feet at the rate of $2,417 for the first twelve months and $2,495 for the second twelve months. During the nine months ended September 30, 2018 and 2017, the Company expensed $14,510 and $8,640, respectively, in rent expense. The Company terminated the lease effective August 31, 2018 and has no further financial obligations under the lease.

 

Greenway Innovative Energy, Inc. rents approximately 600 square feet of office space at 1511 North Cooper St., Suite 207, Arlington, Texas 76011, at a rate of $871 per month.

 

The Company pays approximately $11,600 in annual maintenance fees on its Arizona BLM mining leases, in addition to 10% royalties based on production.

 

Legal  

 

The Company has been named as a co-defendant in an action brought against the Company and Mamaki Tea, Inc., alleging, among other things, that the Company was named as a co-guarantor on an $850,000 foreclosed note. Management does not believe the ultimate resolution will have an adverse impact on the Company’s financial condition or results of operations.

On April 22, 2016, Greenway Technologies filed suit under Cause No. DC-16-004718, in the 193rd District Court, Dallas County, Texas against Mamaki of Hawaii, Inc. (“Mamaki”), Hawaiian Beverages, Inc.(“HBI”), Curtis Borman and Lee Jenison for breach of a Stock Purchase Agreement dated October 29, 2015, wherein the Company sold its shares in Mamaki to HBI for $700,000 (along with the assumption of certain debt). The Company maintained its guaranty on the original loan as a component of the sale transaction. The Defendants failed to make payments of $150,000 each on November 30, 2015, December 28, 2015 and January 27, 2016. On January 13, 2017, the parties executed a Settlement and Mutual Release Agreement (Agreement). However, the Defendants again defaulted in their payment obligations under this new Agreement. Curtis Borman and Lee Jennison were co-guarantors of the obligations of Mamaki and HBI. To secure their guaranties, each of Curtis Borman and Lee Jennsion posted 1,241,500 and 1,000,000 shares, respectively, of the Company. Under the Agreement, the shares were valued at $.20. Due to the default under the Agreement, these shares were returned to the Company’s treasury shares. Curtis Borman subsequently filed for bankruptcy and the property was liquidated for $600,000, applied against the prior loan amount, leaving a remaining guaranteed loan payment balance of approximately $700,000, including accrued interest and legal fees. The Company is currently in negotiations with the note holders and anticipates a positive resolution.

 

Wildcat Consulting Group LLC (“Wildcat”) filed a civil lawsuit against Greenway Technologies, Inc. on September 27, 2018 for an alleged breach of contract. The Company answered the lawsuit and asserted a number of affirmative defenses. Greenway is confident in its defenses and intends to vigorously defend its interests.

 

See Subsequent Events Note 13.

 

NOTE 13-SUBSEQUENT EVENTS

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On October 23, 2018, Christine Early (Kevin Jones’ spouse and separate shareholder) made a $100,000 loan to the Company, and on November 6, 2018, Michael Wykrent (shareholder) made a $100,000 loan to the Company, both loans being secured by Maybert LLC, a Texas company controlled by Kevin Jones.

 

On October 19, 2018, a Form PREC14A was filed by a number of shareholders, (the “Committee”) holding greater than 10% of the Company’s outstanding Class A Common stock in an attempt to call a Special Meeting of the Greenway Technologies shareholders. The purpose of the meeting is to elect 4 new directors to the Board that would effectively eliminate 4 of the sitting Directors. Two sitting directors, T. Craig Takacs and D. Patrick Six are included in this action and will retain their seats as Directors if the Committee is successful. The non-filing directors and management oppose this action, and have filed an objection with the SEC.

 

  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

THE FOLLOWING DISCUSSION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS AND RELATED NOTES INCLUDED ELSEWHERE IN THIS REPORT ON FORM 10-Q.

The following discussion and analysis of financial condition, results of operations, liquidity, and capital resources, should be read in conjunction with our audited consolidated financial statements and notes thereto appearing elsewhere in this report, which have been prepared assuming that we will continue as a going concern, and in conjunction with our Annual Form 10-K/A filed on April 16, 2018. As discussed in Note 2 to the consolidated financial statements, our recurring net losses and inability to generate sufficient cash flows to meet our obligations and sustain our operations raise substantial doubt about our ability to continue as a going concern. Management’s plans concerning these matters are also discussed in Note 2 to the consolidated financial statements. This discussion contains forward-looking statements that involve risks and uncertainties, including information with respect to our plans, intentions and strategies for our businesses. Our actual results may differ materially from those estimated or projected in any of these forward-looking statements.

Unless the context otherwise suggests, “we,” “our,” “us,” and similar terms, as well as references to “UMED” and “Greenway Technologies,” all refer to Greenway Technologies, Inc, as of the date of this report.

 

Overview

Greenway Technologies, UMED Holdings, Inc. (“Greenway” or “UMED”) was originally incorporated as Dynalyst Manufacturing Corporation (“Dynalyst”) under the laws of the State of Texas on March 13, 2002.

In connection with the merger with Universal Media Corporation (“UMC”), a Nevada corporation, on August 17, 2009, the Company changed its name to Universal Media Corporation. The transaction was accounted for as a reverse merger, and Universal Media Corporation was the acquiring company on the basis that Universal Media Corporation’s senior management became the entire senior management of the merged entity and there was a change of control of Dynalyst. The transaction was accounted for as recapitalization of Dynalyst’s capital structure. In connection with the merger, Dynalyst issued 57,500,000 restricted common shares to the shareholders of Universal Media Corporation for 100% of Universal Media Corporation.

On August 18, 2009, Dynalyst approved the amendment of its Articles of Incorporation and filed with the Texas Secretary of State an amendment to change its name to Universal Media Corporation and approved the increase in authorized shares to 300,000,000 shares of common A stock, par value $0.0001 and 20,000,000 shares of common B, par value $0.0001.

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On March 23, 2011, Universal Media Corporation approved the amendment of its Articles of Incorporation and filed with the Texas Secretary of State an amendment to change its name to UMED Holdings, Inc.

On June 22, 2017, UMED Holdings, Inc. approved the amendment of its certificate of formation and filed on June 23, 2017, with the Texas Secretary of State, an amendment to change the company name to Greenway Technologies, Inc.

Greenway Technologies, Inc. is a holding company with present interests in energy and mining. The corporate offices and the Company’s wholly-owned subsidiary, Greenway Innovative Energy, Inc. (“GIE”), offices are located at 1521 North Cooper Street, Suite 207, Arlington, Texas 76011.

The Company will be unable to pay its obligations in the normal course of business or service its debt in a timely manner throughout 2018 without raising additional debt or equity capital. There can be no assurance that additional debt or equity capital will be raised.

Greenway Technologies is currently evaluating strategic alternatives that include the following: (i) entering into joint ventures or partnerships with existing oil and gas producers or refiners to exploit the Company’s patented technology, (ii) licensing or selling rights to its technology, (iii) raising additional equity capital through the issuance of shares or (iv) entering into or issuing debt instruments. This process is ongoing and can be lengthy and has inherent costs and risks. There can be no assurance that the exploration of strategic alternatives will result in any specific action to alleviate our 12 month working capital needs or result in any other transaction.

Energy Interest

 

In August of 2012, the Company acquired Greenway Innovative Energy, Inc. Greenway Innovative Energy (“GIE”) began work in 2009 on its gas-to-liquids (GTL) system to economically covert natural gas into high-cetane liquid fuels while making no wax product and avoiding the need for further refining. In 2011, Greenway Innovative Energy engaged Houston-based Commonwealth Engineering to design a 1,500 barrel/day GTL system based on steam methane reforming (SMR). This form of reforming proved to be too expensive for commercialization. As a result, GIE embarked on a redesign of the reforming process, with such redesigned process and methodology leading to the issuance of patents in 2013 as described below.

On February 15, 2013, GIE filed for a patent on its GTL technology. U.S. Patent number 8,574,501 was issued on November 5, 2013.

 

ABSTRACT:

A method and apparatus for converting natural gas from a source, such as a wellhead, pipeline, or a storage facility, into hydrocarbon liquid stable at room temperature, comprising a skid or trailer mounted portable gas to liquids reactor. The reactor includes a preprocessor which desulfurizes and dehydrates the natural gas, a first stage reactor which transforms the preprocessed natural gas into synthesis gas, and a liquid production unit using a Fischer-Tropsch or similar polymerization process. The hydrocarbon liquid may be stored in a portable tank for later transportation or further processed on site.

 

On November 4, 2013, GIE filed for a second patent covering other aspects of the design.

 

Also, in November, 2013, GIE reinstated a Sponsored Research Agreement (“SRA”) with the University of Texas at Arlington (“UTA”), which is ongoing and continues to the present. The original agreement was initiated in 2009 for GTL proof of concept, scalability, and portability. Under the 2013 agreement, and based on the GIE’s ideas and vision, UTA began research focused solely on catalyst studies for the Fischer-Tropsch (FT) component of the GIE’s GTL system design with a goal of developing a lab platform capable of running 24/7 catalyst testing for one week or longer to prove the viability and commerciality of the process. Under the agreement, parametric studies were conducted for process conditions including reaction temperature and space velocity.

 

On June 26, 2017, Greenway Technologies, in conjunction with UTA, announced that it had successfully demonstrated its GTL technology at the Conrad Greer Laboratory at UTA proving the viability of the GTL system. 

 

On March 6, 2018, the Company announced the completion of its first G-Reformer® system, which converts natural gas into synthesis gas. The G-Reformer® is a critical component of the company’s innovative Greer-Wright Gas-to-Liquids system which converts natural gas into liquid fuels. A team consisting of individuals from Greenway Technologies, Inc. and its wholly-owned subsidiary, Greenway Innovative Energy, the University of Texas at Arlington (UTA), and Industrial Refractory Services, Inc. worked together to calibrate the newly-built G-Reformer®. The G-Reformer® testing performed at that time substantiated the units’ synthesis gas generation capability and demonstrated additional proficiencies within certain prior prescribed testing metrics.

 

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The Company believes that the G-Reformer® is a major innovation in gas reforming and GTL technology. It is superior to legacy technologies which are costly, have a larger footprint, and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas, all markets the Company seeks to service. This technology, based around the G-Reformer®, is unique in that it allows for transportable GTL plants with a smaller footprint, when compared to legacy large-scale technologies. The Company believes its technologies and processes will allow for GTL plants with substantially lower up-front and ongoing costs resulting in profitable operations. Greenway Technologies is now working to commercialize both its G-Reformer® and its GTL solutions and is in discussions with a number of oil and gas companies, smaller oil and gas operators, and other interested parties to obtain joint venture or other forms of capital funding to build its first complete gas-to-liquid plant using Greenway’s proprietary GTL conversion processes. The Company is also exploring licensing its G-Reformer® product with representatives of various industries.

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Mining Interest

In December 2010, UMED acquired the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona for 5,066,000 shares of our restricted common stock. Early indications, from samples taken and processed, provided reason to believe that the potential recovery value of the metals located on the 1,440 acres is significant, but actual mining and processing will determine the ultimate value which may be realized from this property holding. The Company is currently exploring strategic options to partner or sell its interest in this acreage.

Going Concern

As of September 30, 2018, the Company has an accumulated deficit of $25,136,606. During the three-months ended September 30, 2018, the Company used net cash of $432,867 for operating activities. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

While the Company is attempting to commence operations and generate revenues, the current cash position is not sufficient to support its daily operations. Management intends to raise additional funds by way of a public or private offering or both. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. While management believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s ability to continue as a going concern is dependent upon our ability to further implement our business plan and generate revenues.

Three-months Ended September 30, 2018, Compared to Three-months Ended September 30, 2017.

Revenues.

During the three-months ended September 30, 2018, and 2017, the Company had no revenues from operations. Management is aggressively looking for ways to leverage our technology to develop revenue streams.

Operating Expenses.

Consulting Fees. During the three-months ended September 30, 2018, consulting expense increased to $64,120 as compared to $46,000 from the prior year three-months ended September 30, 2017. The increase was primarily the result of increased use of consultants in conducting operations.

Officer Compensation. During the three-months ended September 30, 2018, officer compensation increased to $60,000as compared to $40,000 from the prior year three-months ended September 30, 2017. Officer compensation decreased due to two factors. On May 10, 2018, the Company hired a President and Chief Financial Officer. Under their Employment Agreements, the Company accrued $60,000 in officer compensation for the quarter.

Operating Expenses. During the three-months ended September 30, 2018, operating expenses decreased to $(39,546) as compared to $171,960 from the prior year three-months ended September 30, 2017. The decrease was primarily due to a reversal of a previously accrued research and development expense of $210,000 that was accrued at the end of the second quarter 2018.. Legal expenses decreased to $32,300 in the three-months ended September 30, 2018, compared to $55,438 in the three-months ended September 30, 2017.

Interest Expense. During the three-months ended September 30, 2018, interest expense decreased to $(5,476) as compared to interest expense of $120 in the prior year three-months ended September 30, 2017. The decrease was primarily due to $13,540 reversal of accrued interest on a cancelled note and the amortization of debt issue cost related to convertible promissory notes issued in the fourth quarter of 2017.

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Derivative Adjustment. During the three-months ended September 30, 2018, the loss on derivative adjustment was $56,168 as compared to a loss of $26,329 for the prior year three-months ended September 30, 2017. The change was due to the convertible note payable being paid in first quarter 2017 and the derivative liability for the three-months ended September 30, 2018 being calculated on a new note issued in the third quarter of 2017, which had warrants attached, using the Black-Scholes Model only on the warrants.

Net Loss from Operations. Our net loss from operations decreased to $135,266 for the three-months ended September 30, 2018 compared to a loss of $1,299,695 for the three-months ended September 30, 2017. The decrease was primarily due to decrease the changes in expenses, as described above.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash. The following table provides certain selected balance sheet comparisons between September 30, 2018, and December 31, 2017:

 

   September 30,  December 31,  $  %
   2018  2017  Change  Change
             
Working Capital                    
Cash  $39,248   $91,518   $(52,270)   (57)%
Total current assets  $58,248   $249,018   $(190,770)   (77)%
Total assets  $58,248   $269,018   $(210,770)   (78)%
Accounts payable and accrued liabilities  $2,6312,021   $2,586,901   $44,120   2%
Notes payable and accrued interest  $357,709   $388,675   $(30,966)   (8)%
Derivative liability  $87,556   $105,643   $(18,087)    (17)%
Total current liabilities  $3,176,286   $2,997,219   $179,067   6%
Total liabilities  $3,176,286   $3,081,219   $95,067   3%

 

In the three-months ended September 30, 2018, the Company’s working capital deficit increased by $158,599 as a result of a increase in current assets of $34,401 and an increase in accounts payable and accrued liabilities of $193,000,

Operating activities

Net cash used in continuing operating activities during the three-months ended September 30, 2018, was $(101,967) as compared to $(553,268) for the three-months ended September 30, 2017. Items totaling approximately $33,001 contributing to the net cash used in continuing operating activities for the three-months ended September 30, 2018, include:

 

 

 

$(135,266) net loss, offset by

$(21,209) loss on derivatives

   

$ 48,775 debt issue costs amortized

$ (77,612) decrease in accounts payable and accrued expenses

$ (20,000) decrease in accrued management fees

$ 103,047 increase in shareholder advances

Net cash used in continuing operating activities for the three-months ended September 30, 2017, was $(553,268). Items totaling approximately $527,746 contributing to the net cash used in continuing operating activities for the three-months ended September 30, 2017, include: 

23 
 

 

 

 

$390,300 settlement of stockholder dispute,

   

$ 298 of depreciation,

$ 137,148 increase in accounts payable and accrued expenses

Investing activities

The Company had no investing activities during the three-months ended September 30, 2018 and 2017.

Financing Activities

Net cash provided by financing activities was $100,000 for the three-months ended September 30, 2018, composed of $100,000 in loans to the Company. See Note 5.

Seasonality

The Company does not anticipate that our business will be affected by seasonal factors.

Impact of Inflation

General inflation in the economy has driven the operating expenses of many businesses higher. The Company will continuously seek methods of reducing costs and streamlining operations while maximizing efficiency through improved internal operating procedures and controls. While the Company’s businesses are subject to inflation as described above, management believes that inflation currently does not have a material effect on our operating results. However, inflation may become a factor in the future.

Commitments

Employment Agreements.

In August 2012, The Company entered into an employment agreement with the president and chairman of the board of Greenway Innovative Energy, Inc. for a term of five years with compensation of $90,000 per year. In September 2014, the president’s employment agreement was amended to increase his annual pay to $180,000. By its terms, the employment agreement automatically renewed on August 12, 2018 for a successive one-year period. During the three-months ended September 30, 2017, the Company paid and accrued a total of $45,000 for the Greenway Innovative Energy president.

 

Effective May 10, 2018, the Company entered into employment agreements with John Olynick, as President and Ransom Jones, as Chief Financial Officer, respectively. The terms and conditions of their employment agreements are identical. John Olynick, as President earns a salary of $120,000 per year. Ransom Jones, as Chief Financial Officer, earns a salary of $120,000 per year. Mr. Jones also serves as the Company’s Secretary and Treasurer. During each year that their Agreements are in effect, they are each entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year. They are also entitled to certain additional stock grants based on the performance of the Company during the term of their employment. They are each entitled to a grant of common stock (the “Stock Grant”) on the Effective Date equal to 250,000 shares each of the Company’s Common Stock, par value $.0001 per share (the “Common Stock”), such shares vesting immediately. They are also entitled to participate in the Company’s benefit plans.

 

The foregoing summary of the Employment Agreements is qualified in its entirety by reference to the actual true and correct Employment Agreements, copies of which are attached hereto as Exhibit 10.39 and 10.40.

In the August 2012 acquisition agreement with Greenway Innovative Energy, Inc., The Company agreed to issue an additional 7,500,000 shares of restricted common stock when the first portable GTL unit is built and becomes operational and is capable of producing 2,000 barrels of diesel or jet fuel per day and to pay Greenway Innovative Energy a 2% royalty on all gross production sales on each unit placed in production. In connection with a settlement agreement with one of the prior owners of Greenway Innovative Energy, Inc., the Company replaced 3,750,000 of the shares with a different amount of shares and other consideration. As a result, only 3,750,000 shares are committed to be issued under this agreement.

24 
 

Leases.

In October 2015, the Company entered into a two-year lease for approximately 1,800 square feet a base rate of $2,417 per month. During the three-months ended September 30, 2018, and 2017, the Company expensed $26,992 and $35,023. The Company terminated the lease effective August 31, 2018 and has no further financial obligations under the lease.

 

Greenway Innovative Energy, Inc. rents approximately 600 square feet of office space at 1511 North Cooper St., Suite 207, Arlington, Texas 76011, at a rate of $871 per month.

Mining Interest.

In December 2010, the Company acquired from Melek Mining, Inc. and 4HM Partners, LLC the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona for 5,066,000 shares of restricted common stock. Our minimum commitment for 2018 is approximately $11,160 in annual maintenance fees, which was paid when due in September 2018, to the United States Bureau of Land Management (“BLM”). If and once production begins, royalties will be owed to the BLM equal to 10% of production. As of the date of this report, the mining claims are not covered by any lease agreement; we file an annual maintenance fee form to hold the claims.

 

Consulting Agreement

On November 28, 2017, the Company entered into a three-year consulting agreement with Chisos Equity Consultants, LLC for public relations, consulting and corporate communications services. The initial payment was 1,800,000 shares of its restricted common stock. Additional payments upon our common stock reaching certain price points as follows;

  · 500,000 shares at the time our common stock reaches $0.25 per share during the first year
  · 500,000 shares at the time our common stock reaches $0.45 per share during the first year
  · 1,000,000 shares at the time our common stock reaches $0.90 per share during the first or second year
  · 2,000,000 shares at the time our common stock reaches $1.50 per share during the first or second year
  · 3,000,000 shares at the time our common stock reaches $2.00 per share during the term of the agreement
  · 1,000,000 shares at the time our common stock reaches $10.00 per share during the term of the agreement

 

 Due to a breach under the Agreement, the Board of Directors of the Company on June 22, 2018 voted to terminate the Agreement. Based on the termination, all warrants to purchase the Company’s common stock were cancelled.

Critical Accounting Policies

Financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies include revenue recognition and impairment of long-lived assets.

The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements.” Sales are recorded when products are shipped to customers. Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded.

The Company evaluates long-lived assets for financial impairment on a regular basis in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” which evaluates the recoverability of long-lived assets not held for sale by measuring the carrying amount of the assets against the estimated discounted future cash flows associated with them. At the time such evaluations indicate that the future discounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values.

25 
 

 

Quantitative and Qualitative Disclosures About Market Risk

The Company conducts all transactions, including those with foreign suppliers and customers, in U.S. dollars. The Company is therefore not directly subject to the risks of foreign currency fluctuations and do not hedge or otherwise deal in currency instruments in an attempt to minimize such risks. Demand from foreign customers and the ability or willingness of foreign suppliers to perform their obligations to us may be affected by the relative change in value of such customer or supplier’s domestic currency to the value of the U.S. dollar. Furthermore, changes in the relative value of the U.S. dollar may change the price of products relative to the prices of our foreign competitors.

Stock-Based Compensation

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

Recently Issued Accounting Pronouncements

In September 2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation.” The update removes all incremental financial reporting requirements from GAAP for development stage entities, including the removal of Topic 915 from the FASB Accounting Standards Codification. In addition, the update adds an example disclosure in Risks and Uncertainties (Topic 275) to illustrate one way that an entity that has not begun planned principal operations could provide information about the risks and uncertainties related to Greenway Technologies’ current activities. Furthermore, the update removes an exception provided to development stage entities in Consolidations (Topic 810) for determining whether an entity is a variable interest entity-which may change the consolidation analysis, consolidation decision, and disclosure requirements for a company that has an interest in a company in the development stage. The update is effective for the annual reporting periods beginning after December 15, 2014, including interim periods therein. Early application with the first annual reporting period or interim period for which the entity’s financial statements have not yet been issued (Public business entities) or made available for issuance (other entities). We adopted this pronouncement for the three-months ended September 30, 2018.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

 

  Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There has been no material change in our market risks since the end of the fiscal year 2017.

 

 

Item 4.

Controls and Procedures.

Disclosure Controls and Procedures

The term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (15 U.S.C. 78a, et seq) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

26 
 

 

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive officer and principal financial officer and effected by our board of directors, management and other personnel, 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 and includes those policies and procedures that:

 

  ·

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and

dispositions of the assets of the issuer;

 

  ·

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the

issuer is being made only in accordance with authorizations of management and directors of the issuer; and

 

  ·

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or

disposition of the issuer’s assets that could have a material effect on the financial statements.

 

The Company’s management, including the chief executive and chief financial officer, does not expect that the Company’s disclosure controls and procedures or internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of inherent limitations in all control systems, internal control over financial reporting may not prevent or detect misstatements, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In March 2018, the Company conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control -- Integrated Framework,” issued by the Committee of Sponsoring Organizations revised 2013 (“COSO”) of the Treadway Commission. Based upon this assessment, we determined that our internal control over financial reporting is ineffective.

The matters involving internal controls and procedures that our management considers to be material weaknesses under COSO and SEC rules are: (1) lack of a functioning audit committee and lack of independent directors on our board of directors, resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned potential material weaknesses were identified by our chief financial officer in connection with the preparation of our financial statements as of September 30, 2018, who communicated the matters to our management and board of directors.

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, the lack of a functioning audit committee and lack of a majority of independent directors on our board of directors resulting in potentially ineffective oversight in the establishment and monitoring of required internal controls and procedures, can impact our financial statements.

27 
 

 

Management’s Remediation Initiatives

Although the Company is unable to meet the standards under COSO because of limited funds, the Company is committed to improving its financial organization. As funds become available, the Company will undertake to: (1) create positions to segregate duties consistent with control objectives, (2) increase personnel resources and technical accounting expertise within the accounting function (3) appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and (4) prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

The Company will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within Greenway Technologies have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.

 

 PART II – OTHER INFORMATION

 

  Item 1. Legal Proceedings.

 

The Company has been named as a co-defendant in an action brought against us and Mamaki Tea, Inc., alleging, among other things, that the Company was named as a co-guarantor on an $850,000 foreclosed note. Management does not believe the ultimate resolution will have an adverse impact on the financial condition or results of operations.

On April 22, 2016, Greenway Technologies filed suit under Cause No. DC-16-004718, in the 193rd District Court, Dallas County, Texas against Mamaki of Hawaii, Inc. (“Mamaki”), Hawaiian Beverages, Inc.(“HBI”), Curtis Borman and Lee Jenison for breach of a Stock Purchase Agreement dated October 29, 2015, wherein the Company sold shares in Mamaki to HBI for $700,000 (along with the assumption of certain debt). The Company maintained its guaranty on the original loan as a component of the sale transaction. The Defendants failed to make payments of $150,000 each on November 30, 2015, December 28, 2015 and January 27, 2016. On January 13, 2017, we executed a Settlement and Mutual Release Agreement with the Defendants. However, the Defendants again defaulted in their payment obligations under Settlement and Mutual Release Agreement. Curtis Borman subsequently filed for bankruptcy and the property was liquidated for $600,000, applied against the prior loan amount, leaving a remaining guaranteed loan payment balance of approximately $700,000, including accrued interest and legal fees. The Company is currently in negotiations with the note holders and anticipates a positive resolution.

 

On April 9, 2108, the Company and Tonaquint, Inc. agreed to settle on Tonaquint’s exercise of a warrant option with a one-time issuance from Greenway Technologies of 1,600,000 shares of our common stock subject to a weekly leak out restriction equal to the greater of $10,000.00 and 8% of the weekly trading volume. Further, the issuance of stock will be done in connection with a legal opinion pursuant to Rule 144.

 

On September 27, 2018, Wildcat Consulting Group LLC (“Wildcat”) filed a civil lawsuit against Greenway Technologies, Inc. for an alleged breach of contract. The Company answered the lawsuit and asserted a number of affirmative defenses. Greenway is confident in its defenses and intends to vigorously defend its interests.

 

  Item 1A. Risk Factors.

Not applicable.

 

  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

 

28 
 

 

 

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

 

None. 

 

  Item 3. Defaults Upon Senior Securities.

Not applicable.

 

  Item 4. Mine Safety Disclosures

Not applicable.

 

  Item 5. Other Information.

None.

 

29 
 

 

 

  Item 6. Exhibits.

 

Exhibit No. Identification of Exhibit
2.1** Combination Agreement executed as of August 18, 2009, between Dynalyst Manufacturing Corporation and Universal Media Corporation, filed as Exhibit 10.2 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
3.1** Articles of Incorporation of Dynalyst Manufacturing Corporation filed with the Secretary of State of Texas on March 13, 2002, filed as Exhibit 3.1 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
3.2** Articles of Amendment of Articles of Incorporation of Dynalyst Manufacturing Corporation filed with the Secretary of State of Texas on September 7, 2006, filed as Exhibit 3.2 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
3.3** Articles of Amendment of Articles of Incorporation of Dynalyst Manufacturing Corporation filed with the Secretary of State of Texas on August 28, 2009, changing the corporate name to Universal Media Corporation, filed as Exhibit 3.3 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
3.4** Articles of Amendment of Articles of Incorporation of Universal Media Corporation filed with the Secretary of State of Texas on March 23, 2011, changing the corporate name to UMED Holdings, Inc., filed as Exhibit 3.4 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
3.5** Articles of Amendment of Certificate of Formation of UMED Holdings, Inc. filed with the Secretary of State of Texas on September 23, 2017, changing the corporate name to Greenway Technologies, Inc., filed as Exhibit 3.1 to the registrant’s Form 8-K/A on July 20, 2017, Commission File Number 000-55030.
3.6** Bylaws of Dynalyst Manufacturing Corporation, filed as Exhibit 3.5 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
3.7** Articles of Incorporation of Greenway Innovative Energy, Inc. filed with the Secretary of State of Nevada on July 6, 2012, filed as Exhibit 3.7 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
3.8** Bylaws of Greenway Innovative Energy, Inc., filed as Exhibit 3.8 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.1** Code of Ethics for Senior Financial Officers, filed as Exhibit 10.1 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.2** Purchase Agreement dated as of May 1, 2012, between Universal Media Corporation and Mamaki Tea & Extract, Inc., filed as Exhibit 10.3 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.3** Addendum and Modification to Purchase Agreement dated as of December 31, 2012, between Universal Media Corporation and Mamaki of Hawaii, Inc. formerly Mamaki Tea & Extract, Inc., filed as Exhibit 10.4 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.4** Second Addendum and Modification to Purchase Agreement dated as of December 31, 2012, between Universal Media Corporation and Mamaki of Hawaii, Inc. formerly Mamaki Tea & Extract, Inc., filed as Exhibit 10.5 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.5** Purchase Agreement dated August 29th, 2012, between Universal Media Corporation and Greenway Innovative Energy, Inc., filed as Exhibit 10.6 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.6** Purchase Agreement dated as of February 23, 2012, between Rig Support Services, Inc. and UMED Holdings, Inc., filed as Exhibit 10.7 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.7** Asset Purchase Agreement dated as of October 2, 2011, between Jet Regulators, L.C., R/T Jet Tech, L.P. and UMED Holdings, Inc., filed as Exhibit 10.8 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.8** Employee Agreement dated May 27, 2011, between UMED Holdings, Inc. and Kevin Bentley, filed as Exhibit 10.9 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.9** Employee Agreement dated May 27, 2011, between UMED Holdings, Inc. Randy Moseley, filed as Exhibit 10.10 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
30 
 

 

10.10** Employee Agreement dated May 27, 2011, between UMED Holdings, Inc. and Richard Halden, filed as Exhibit 10.11 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.11** Employee Agreement dated August 29, 2012, between UMED Holdings, Inc. and Raymond Wright, filed as Exhibit 10.12 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.12** Employee Agreement dated August 29, 2012, between UMED Holdings, Inc. and Conrad Greer, filed as Exhibit 10.13 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.13** Consulting Agreement dated May 27, 2011, between UMED Holdings, Inc. and Jabez Capital Group, LLC, filed as Exhibit 10.14 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.14** Promissory Note in the amount of $850,000 dated August 17, 2012, executed by Mamaki Tea, Inc. payable to Southwest Capital Funding, Ltd., filed as Exhibit 10.15 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.15** Modification of Note and Liens effective as of October 1, 2012, between Southwest Capital Funding, Ltd. and Mamaki Tea, Inc., filed as Exhibit 10.16 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.16** Second Modification of Note and Liens effective as of December 20, 2012, between Southwest Capital Funding, Ltd., Mamaki Tea, Inc., and Mamaki of Hawaii, Inc., filed as Exhibit 10.17 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.17** Promissory Note in the amount of $150,000 dated August 17, 2012, executed by Mamaki Tea, Inc. payable to Robert R. Romer, filed as Exhibit 10.18 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.18** Addendum and Modification to Purchase Agreement dated as of December 31, 2012, between Rig Support Services, Inc. and UMED Holdings, Inc., filed as Exhibit 10.19 to the registrant’s registration statement on Form 10-12G on August 29, 2013, Commission File Number 000-55030.
10.19** Securities Purchase Agreement dated September 18, 2014, between UMED Holdings, Inc. and Tonaquint, Inc., filed as Exhibit 10.19 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.20** Promissory Note in the amount of $158,000 dated September 18, 2014, executed by UMED Holdings, Inc. payable to Tonaquint, Inc., filed as Exhibit 10.20 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.21** Warrant dated September 18, 2014, for $47,400 worth of UMED Holdings, Inc. shares issued to Tonaquint, Inc., filed as Exhibit 10.21 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.22** Office Lease Agreement dated October 2015, between UMED Holdings, Inc. and The Atrium Remains the Same, LLC, filed as Exhibit 10.22 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.23** Warrant dated October 31, 2015, for 4,000,000 shares issued to Norman T. Reynolds, Esq, filed as Exhibit 10.23 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.24** Promissory Note in the amount of $36,000 dated March 8, 2016, executed by UMED Holdings, Inc. payable to Peter C. Wilson, filed as Exhibit 10.24 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.25** Convertible Promissory Note in the amount of $224,000 dated May 4, 2016, executed by UMED Holdings, Inc. payable to Tonaquint, Inc., filed as Exhibit 10.25 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.26** Severance and Release Agreement by and between UMED Holdings, Inc. and Randy Moseley dated November 11, 2016, filed as Exhibit 10.26 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.27** Settlement and Mutual Release Agreement dated January 13, 2017, executed by UMED Holdings, Inc. in connection with Cause No. DC-16-004718, in the 193rd District Court, Dallas County, Texas against Mamaki of Hawaii, Inc., Hawaiian Beverages, Inc., Curtis Borman, and Lee Jenison, filed as Exhibit 10.27 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.

 

 

31 
 

 

10.28** Warrant dated February 1, 2017, for 2,000,000 shares issued to Richard J. Halden, filed as Exhibit 10.28 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.29** Warrant dated February 1, 2017, for 4,000,000 shares issued to Richard J. Halden, filed as Exhibit 10.29 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.30** Severance and Release Agreement by and between UMED Holdings, Inc. and Richard Halden dated February 1, 2017, filed as Exhibit 10.30 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.31** Assignment Agreement dated December 27, 2010, between Melek Mining, Inc., 4HM Partners, LLC, and UMED Holdings, Inc., filed as Exhibit 10.31 to the registrant’s Form 10-Q/A, amendment No. 1, on September 21, 2017, Commission File Number 000-55030.
10.32** Consulting Agreement by and between the registrant and Chisos Equity Consultants, LLC, as Amended February 16, 2018, and March 19, 2018, filed as Exhibit 10.1 to the registrant’s Form 8-K, on March 21, 2018, Commission File Number 000-55030.
10.33** Promissory Note in the amount of $100,000 dated November 13, 2017, executed by Greenway Technologies, Inc. to Wildcat Consulting Group LLC.as Exhibit 10.33 to the registrant’s Form 10K on April 5, 2018, Commission File Number 000-55030.
10.34** Subordinated Convertible Promissory Note in the amount of $166,667 dated December 20, 2017, executed by Greenway Technologies, Inc. payable to Tunstall Canyon Group LLC filed at Exhibit 10.34 to the registrant’s Form 10K on April 5, 2018, Commission File Number 000-55030.
10.35** Warrant dated November 30, 2017 for 1,000,000 shares issued to MTG Holdings, LTD. filed at Exhibit 10.34 to the registrant’s Form 10K on April 5, 2018, Commission File Number 000-55030.
10.36** Greer Family Trust Promissory Note and Settlement. filed at Exhibit 10.34 to the registrant’s Form 10K on April 5, 2018, Commission File Number 000-55030.
10.37** Warrant dated January 8, 2018 for 4,000,000 shares issued to Kent Harer.
10.38** Settlement agreement by and between Greenway Technologies, Inc. and Tonaquint, Inc. dated April 9, 2018.
10.39** Employment agreement with John Olynick, as President, dated May 10, 2018.
10.40** Employment agreement with Ransom Jones, as Chief Financial Officer, Secretary and Treasurer, dated May 10, 2018.
31.1* Certification of John Olynick, President of Greenway Technologies, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2* Certification of Ransom Jones, Chief Financial Officer and Principal Accounting Officer of Greenway Technologies, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.1* Certification of John Olynick, President of Greenway Technologies, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
32.2* Certification of Ransom Jones, Chief Financial Officer and Principal Accounting Officer of Greenway Technologies, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

____________

*         Filed herewith.

**       Previously filed.

 

32 
 

 

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER 

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Olynick, certify that:

1.       I have reviewed this Form 10-Q of Greenway Technologies, 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 registrant as of, and for, the periods present in this report;

4.       The registrant’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 13-a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)       Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 19, 2018.   /s/ John Olynick
    John Olynick
    President

 

33 
 

 

 

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER 

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ransom Jones, certify that:

1.       I have reviewed this Form 10-Q of Greenway Technologies, 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 registrant as of, and for, the periods present in this report;

4.       The registrant’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 13-a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

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

(a)       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)       Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2018.   /s/ Ransom Jones
    Ransom Jones
    Chief Financial Officer and Principal Accounting Officer

 

 

34 
 

 

 

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of Greenway Technologies, Inc. for the fiscal quarter ending September 30, 2018, I, John Olynick, President of Greenway Technologies, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

1.       Such Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2018, 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 such Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2018, fairly presents, in all material respects, the financial condition and results of operations of Greenway Technologies, Inc.

Date: November 19, 2018.   /s/ John Olynick
    John Olynick
    President

 

 

35 
 

 

 

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of Greenway Technologies, Inc. for the fiscal quarter ending September 30, 2018, I, Ransom Jones, Chief Financial Officer of Greenway Technologies, Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that:

1.       Such Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2018, 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 such Quarterly Report on Form 10-Q for the fiscal quarter ending September 30, 2018, fairly presents, in all material respects, the financial condition and results of operations of Greenway Technologies, Inc.

 

Date: November 19, 2018.   /s/ Ransom Jones
    Ransom Jones
    Chief Financial Officer and Principal Accounting Officer

36 
 

 

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GREENWAY TECHNOLOGIES, INC.

Date: November 19, 2018. By /s/ John Olynick
    John Olynick
    President
  By  /s/ Ransom Jones
    Ransom Jones
    Chief Financial Officer and Principal Accounting Officer
     

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Accrued management fees (40,000) (152,500)
Gain of contract cancellation (180,000) (15,000)
Gain on settlement of debt
Settlement on R&D Agreement (210,000) 0
Settlement of debt instrument through issuance of shares of common stock 208,000 (569,508)
Net Cash Used in Operating Activities (1,221,635) (1,615,428)
Cash Flows from Investing Activities: 0 0
Cash Flows from Financing Activities    
Repayments on shareholder advances (51,341) (59,690)
Shareholder advances 130,038 (8,000)
Repayments on note payable (8,500) (120,753)
Proceeds from sale of common stock 999,168 1,961,750
Proceeds from issuance of debt instruments 100,000 0
Net Cash Provided by Financing Activities 1,377,365 1,713,799
Net (Decrease) Increase in Cash (52,270) 98,371
Cash Beginning of Period 91,518 67,964
Cash End of Period $ 39,248 $ 166,335
Shares returned and cancelled 8,733,164 0
XML 13 R6.htm IDEA: XBRL DOCUMENT v3.10.0.1
1. ORGANIZATION
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
ORGANIZATION

NOTE 1 – ORGANIZATION

Nature of Operations

Greenway Technologies, Inc. (“Greenway Technologies,” “GTI,” or the “Company”) was organized on March 13, 2002, under the laws of the State of Texas as Dynalyst Manufacturing Corporation.  On August 18, 2009, in connection with a merger with Universal Media Corporation, a privately held Nevada company, the Company changed its name to Universal Media Corporation (“Universal Media”). The Company changed its name to UMED Holdings, Inc. on March 23, 2011, and to Greenway Technologies, Inc. on September 23, 2017.

The Company’s primary mission is to operate as a holding company to provide funding for commercializing the proprietary processes and products held by its 100% owned subsidiary, Greenway Innovative Energy, Inc. (“GIE”).

In September 2010, the Company acquired 1,440 acres of placer mining claims on Bureau of Land Management land in Mohave County, Arizona. See discussion in Note 3. Due to the Company not producing any revenue from its BLM mining leases since its acquisition of the leases, the Company recognized an impairment charge of $100,000 during the year ended December 31, 2014. The Company believes that this investment could be productive if sufficient resources are committed to its development. However, at this time, the Company has made the decision to commit is resources to commercialization of the Gas-To-Liquids (“GTL”) technology owned by GIE.

In August 2012, the Company acquired 100% of Greenway Innovative Energy, Inc. (“GIE”) which owns patents and trade secrets for a proprietary process and related technology to convert natural gas into synthesis gas (syngas), and then to liquid fuels, also known as gas-to-liquids or “GTL” processing. In addition to its usefulness in the GTL process, syngas is an important intermediate gas used by industry in the production of ammonia, methane, liquid fuels, and other downstream products.

The Company’s unique reforming process is called Fractional Thermal Oxidation™ (FTO). The Company believes it will be able to offer a new economical, relatively small scale (125 to 2,475 barrels/day) method of converting natural gas into liquid fuels that can be located in field locations where applicable to smaller scale GTL processing requirements. Commercialization of its proprietary reforming and GTL processes are the primary focus of the Company.

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2. BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES

NOTE 2 - BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES

Principles of Consolidation

The accompanying condensed consolidated financial statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company accounts and transactions are eliminated in consolidation.

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulations S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

 

The accompanying condensed consolidated financial statements include the accounts of the following entities.

Name of Entity  %      Entity  Incorporation  Relationship
Greenway Technologies, Inc.       Corporation    Texas    Parent 
Universal Media Corporation  100%   Corporation    Wyoming    Subsidiary 
Greenway Innovative Energy, Inc.  100%   Corporation    Nevada    Subsidiary 
Logistix Technology Systems, Inc.  100%   Corporation    Texas    Subsidiary 

 

Going Concern Uncertainties

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying condensed consolidated financial statements, the Company sustained a loss of approximately $.135 million for the three-month and $1.513 million for the nine-month period ended September 30, 2018 and has a working capital deficiency of approximately $3.1 million and an accumulated deficit of approximately $25.1 million at September 30, 2018. a working capital deficiency of approximately $3.0 million and an accumulated deficit of approximately $25 million at September 30, 2018. The ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern for the next twelve months.

With the successful test of the Company’s G-Reformer® unit and FTO process during the first quarter 2018, the Company has had discussions with a number of oil and gas companies, smaller oil and gas operators and investors regarding potential funding for a commercial scale GTL plant using the Company’s unique GTL system. A commercial GTL plant will include the Company’s proprietary G-Reformer®, a Fischer-Tropsch unit, and all necessary components to develop a fully functional GTL plant with a targeted minimum output of ~125 barrels/day of high-cetane blendstock (diesel fuel). Should an agreement be reached with any of these parties, such relationship would be anticipated to provide funding for a plant, as well as sufficient additional operating capital for the Company to independently continue operations. While there are no assurances that financing for an initial plant will be obtained on acceptable terms and in a timely manner, the failure to obtain the necessary working capital may cause the Company to move in one or more alternate directions to transition the Company’s GTL system into production.

In addition, the Company is also seeking agreements and/or partnerships with other GTL system providers to use the Company’s proprietary G-Reformer® technology as part of existing, planned, or new GTL systems. There are no assurances that such agreements and partnerships will be obtained on acceptable terms and in a timely manner, and the failure to obtain the necessary working capital may cause the Company to move in one or more alternate directions to monetize its proprietary G-Reformer® technology.

The accompanying condensed consolidated financial statements do not include any adjustment to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of significant accounting policies applied in the presentation of the condensed consolidated financial statements are as follows.

Property and Equipment

Property and equipment are recorded at cost. Major additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold, are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale or salvage value are recorded as a gain or loss on sale of equipment. Depreciation is computed using the straight-line method over the useful life of the assets. The Company continues to use its fully depreciated property and equipment.

 

 Impairment of Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with Accounting Standards Codification, ASC Topic 360, Property, Plant and Equipment. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.

Revenue Recognition

 

The Company has not, to date, generated any revenues. 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three-months or less to be cash equivalents. There were no cash equivalents at September 30, 2018, or December 31, 2017.

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

The Company has adopted the provisions of FASB ASC 740-10-05 Accounting for Uncertainty in Income Taxes. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Open tax years, subject to IRS examination include 2013 – 2016.

Net Loss Per Share, basic and diluted

Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Shares issuable upon the exercise of warrants or beneficial conversion features (23,696,156) have been excluded as a common stock equivalent in the diluted loss per share because their effect would be anti-dilutive.

Derivative Instruments

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

 

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

See Notes 6 and 7 below for disclosures associated with the Company’s convertible notes payable and warrants.

 

Fair Value of Financial Instruments

Effective January 1, 2008, fair value measurements are determined by the Company’s adoption of authoritative guidance issued by the FASB, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities, as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three levels as follows:

 

Level 1 – Valuation based on unadjusted quoted market prices in active markets for identical assets or liabilities.

 

Level 2 – Valuation based on, observable inputs (other than level one prices), quoted market prices for similar assets such as at the measurement date; quoted prices in the market that are not active; or other inputs that are observable, either directly or indirectly.

Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

Original Issue Discount

For certain convertible debt issued, the Company provides the debt holder with an original issue discount (“OID”). An OID is the difference between the original cash proceeds and the amount of the note upon maturity. The Note is originally recorded for the total amount payable. The OID is amortized into interest expense pro-rata over the term of the Note.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s notes recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, receivables, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments.

The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017:

 

Description Level 1   Level 2   Level 3  
September 30, 2018 Derivative Liabilities $ 0   $ 0   $ 87,557  
December 31, 2017 Derivative Liabilities $ 0   $ 0   $ 105,643  

The following assets and liabilities are measured on the balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation of the beginning and ending balances of the liabilities:

 

 The change in the notes payable at fair value for the nine-month period ended September 30, 2018, is as follows: 

                          
    Fair
Value
    Change in    New         

Fair

Value

 
    January 1, 2018    

Fair

Value

    

Convertible

Notes

    

 

Conversions

    September 30, 2018 
                          
 Derivative Liabilities  $105,643   $18,581   $0   $0   $(87,557)

 

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest income and expense in the accompanying condensed consolidated financial statements.

 

Stock Based Compensation

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

At September 30, 2018, the Company did not have any outstanding stock options.

Concentration and Credit Risk 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash with high credit quality institutions. At times, such deposits may be in excess of the FDIC insurance limit.

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $75,000 net a credit of $210,000 recognized as income during the period, and $232,068 and $177,658 during the three-months ended September 30, 2018 and 2017, respectively.

Issuance of Common Stock

The issuance of common stock for other than cash is recorded by the Company at market values.

Impact of New Accounting Standards

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

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4. PROPERTY, PLANT, AND EQUIPMENT
9 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT, AND EQUIPMENT

NOTE 4 – PROPERTY, PLANT, AND EQUIPMENT

 

   Range of Lives
in Years
 

 

September 30, 2018

  December 31, 2017
Equipment   5   $2,032   $2,032 
Furniture and fixtures   5    1,983    1,983 
         4,015    4,015 
Less accumulated depreciation        (4,015)   (4,015)
        $0   $0 

Depreciation expense was $0 and $99 for the three-months ended September 30, 2018 and 2017, respectively.

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5. TERM NOTES PAYABLE
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
TERM NOTES PAYABLE

NOTE 5 – TERM NOTES PAYABLE

Term notes payable consisted of the following at September 30, 2018 and December 31, 2017:

   2018  2017
       
Unsecured note payable dated March 8, 2016 to an individual at 5% interest, payable upon the Company’s availability of cash  $0   $13,500 
Unsecured note payable dated November 13, 2017 to a corporation at $10,000 lump sum interest at maturity on February 28, 2018. The terms are being re-negotiated with the noteholder.   100,000    100,000 
Unsecured note payable dated December 28, 2017 to a corporation, due January 3, 2018        53,842 
Unsecured note payable dated November 13, 2017 to a corporation at $10,000 lump sum interest at maturity on February 28, 2018. The terms are being re-negotiated with the noteholder.   100,000    100,000 

 

Total term notes

  $200,000   $153,842 

 

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6. CONVERTIBLE PROMISSORY NOTES 2017
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
2017 CONVERTIBLE PROMISSORY NOTES

NOTE 6 – 2017 CONVERTIBLE PROMISSORY NOTES

The Company issued a $166,667 convertible promissory note bearing interest at 4.50% per annum to an accredited investor, the first installment of $86,667 is payable on December 20, 2018 and $80,000 plus accrued interest on December 20, 2019. The holder has the right to convert the note into common stock of the Company at a conversion price of $0.08 per share for each one dollar of cash payment which may be due, (which would be 1,083,337 shares for the $86,667 payment and 1,000,000 shares for the $80,000 payment).

The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note did not result in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. As of December 31, 2017, the discount related to the beneficial conversion feature on the note was valued at $27,083 based on the $0.013 difference between the market price of $0.093 and the conversion price of $0.08 times the 2,083,325 conversion shares. As of and during the three-months ended September 30, 2018, the remaining discount was $16,927 and $3,386 of the discount was amortized.

The Company issued a $150,000 convertible promissory note on January 16, 2018 bearing interest at 4.50% per annum to an accredited investor, payable in equal installments of $6,000 plus accrued interest until the principal and accrued interest are paid in full. The Company paid $6,000 on the note during the nine-months ended September 30, 2018, with the net convertible note payable now $144,000. The holder has the right to convert the note into common stock of the Company at a conversion price of equal to 70% of the prior twenty (20) days average closing market price of the Company’s common stock.

The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note resulted in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the note was valued at $58,494 based on the difference between the fair value of the 1,578,947 convertible shares at the valuation date and the $150,000 note value. The discount related to the beneficial conversion feature is being amortized over the term of the debt. The discount related to the beneficial conversion feature on the note was valued at $150,000 based on the Black-Scholes Model. As of and during the three-months ended September 30, 2018, the remaining discount was $36,031,711 and $22,463 of the discount was amortized. The derivative liability for this note at September 30, 2018 was $68,056. This note is in default and the terms are being re-negotiated between the parties. At this time, the ultimate terms of the note are not determined and may not include any conversion features. Under the circumstances, there is no basis for continuing treating the note as requiring derivative accounting.

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7. CONVERTIBLE PROMISSORY NOTES
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
CONVERTIBLE PROMISSORY NOTES

NOTE 7 – CONVERTIBLE PROMISSORY NOTE

May 2016 Convertible Note

On May 4, 2016, the Company issued a $224,000 convertible promissory note bearing interest at 10.0% per annum to an accredited investor, payable beginning November 10, 2016, in monthly installments of $44,800 plus accrued interest and a cash premium equal to 10.0% of the installment amount. The convertible promissory note was paid in full on March 4, 2017. The holder had the right under certain circumstances to convert the note into common stock of the Company at a conversion price equal to 70% of the average of the 3 lowest volume weighted average trading prices during the 20-day period ending on the latest complete trading day prior to the conversion date.

The Company evaluated the terms of the convertible note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note resulted in a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. The discount related to the beneficial conversion feature on the note was valued at $224,000 based on the Black-Scholes Model. The discount related to the beneficial conversion feature ($51,829) was amortized over the term of the debt (10 months). For the year ended December 31, 2017, the Company recognized interest expense of $9,327 related to the amortization of the discount.

In connection with the issuance of the $224,000 note, the Company recorded debt issue cost and discount as follows:

    $20,000 original issue discount and $4,000 debt issue cost, which was amortized over 10 months, with amortization of $4,000 for twelve-months ended December 31, 2017.

 

    The convertible promissory note was paid in full on March 10, 2017, reducing the embedded derivative for the 2016 beneficial conversion right to zero at December 31, 2017.

September 2014 Convertible Note 

In connection with the issuance of a $158,000 convertible promissory note in 2014 (repaid in July 2015), the Company issued warrants to purchase shares of common stock.

 

    · Warrants – recorded at fair value ($79,537) upon issuance, and marked -to-market on the balance sheet at $58,317 as of September 30, 2018 and $47,149 as of December 31, 2017, which was computed as follows:

 

    Commitment Date  
Expected dividends   0%
Expected volatility   175.59%  
Expected term: conversion feature   2 years  

  

A controversy and litigation between the lender and the Company emerged regarding the number of warrants attached to the loan agreement. The parties reached a settlement whereby the Company issued 1,600,000 shares of freely-tradable stock to the lender. As a result of the settlement, all of the remaining balance sheet amounts relating to the promissory note were eliminated in the quarter ended September 30, 2018. The Company recorded Settlement Expense in the amount of $208,000 and Gain on Exchange in Fair Value of Derivative in the amount of $58,316.

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8. ACCRUED EXPENSES
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
ACCRUED EXPENSES

NOTE 8 – ACCRUED EXPENSES

 

Accrued expenses consisted of the following at September 30, 2018 and December 31, 2017:

    2018    

 

2017

 
             
Accrued consulting fees   $ 249,500     $ 249,500  
Accrued expense related to shareholder dispute     0       330,000  
Accrued expense related to warrant exercise     0       180,000  
Other accrued expenses        332,234       12,000  
Accrued interest expense     6,644       7,260  
Total accrued expenses   $ 588,378     $ 778,760  
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9. CAPITAL STRUCTURE
9 Months Ended
Sep. 30, 2018
Equity [Abstract]  
CAPITAL STRUCTURE

NOTE 9– CAPITAL STRUCTURE

 

The Company is authorized to issue 300,000,000 shares of Class A common stock with a par value of $.0001 per share and 20,000,000 shares of Class B stock with a par value of $.0001 per share. Each Class A common stock share has one voting right and the right to dividends, if and when declared by the Board of Directors. Class B common stock does not vote.

 

Class A Common Stock

 

At September 30, 2018, there were 286,703,915 shares of class A common stock issued and outstanding.

 

During the three-months ended September, 2018, the Company:

 

·In connection with the issuance of a Promissory Note to a lender, the lender was issued a Warrant entitling the lender to acquire 366,667 shares of Class A Common stock at an exercise price of $.01 (one penny) per share. The Warrant must be exercised in full within 15 years of the Note end date.

 

Class B Stock 

 

At September 30, 2018 and 2017, there were 0 and 126,938 shares of class B stock issued and outstanding, respectively.

 

During the year ended December 31, 2017, the Company; exchanged 630,000 shares of class A common stock for 62,986 class B shares with a shareholder who held class B shares from the 2009 merger agreement between the Company and Dynalyst Manufacturing Corporation which set a conversion rate of 15 to 1. The Company negotiated the 630,000 shares when the class B shareholder elected to convert.

 

· Exchanged (on a one for one basis) 63,932 shares of class A common stock for 63,932 class B shares with shareholders who acquired the class B shares after the 2009 merger agreement between the Company and Dynalyst Manufacturing Corporation.

 

 

  

Stock options, warrants and other rights

 

At September 30, 2018, the Company has not adopted any employee stock option plans.

On February 3, 2017, the Company issued 6,000,000 warrants (4,000,000 at $0.35 for two years and 2,000,000 at $0.45 for three years) as part of a separation agreement with a co-founder and former president. The Company valued the warrants as of September 30, 2017, at $639,284 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 455%, expected conversion term of two and three years and risk-free interest rate of 1.75%.

On November 30, 2017, the Company issued 1,000,000 warrants at $0.30 for three years as part of a settlement of a shareholder dispute with MTG Holdings, Inc. The Company valued the warrants as of December 31, 2017, at $95,846 using the Black-Scholes Model with expected dividend rate of 0%, expected volatility rate of 116%, expected conversion term of three years and risk-free interest rate of 1.37%.

On January 8, 2018, the Company issued 4,000,000 warrants to a director, which were provided in lieu of 3,000,000 shares that the director returned to the Company and were subsequently cancelled, at $0.10 per share which expire in three years.

 

On September 14, 2018, in connection with the issuance of a Promissory Note to a lender, the lender was issued a Warrant entitling the lender to acquire 366,667 shares of Class A Common stock at an exercise price of $.01 (one penny) per share. The Warrant must be exercised in full within 15 years of the Note end date.

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10. RELATED PARTY TRANSACTIONS
9 Months Ended
Sep. 30, 2018
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 10 - RELATED PARTY TRANSACTIONS

 

Shareholders made loans and advances to the Company in the amounts of $202,740, consisting of advances made by Kevin Jones of $102,740, Greg Sanders of approximately $1,400 and a loan made by Randolf Patterson of $100,000 during the three-months ended September 30, 2018. With respect to the Patterson loan, Mr. Jones holds the direct collateral interest in the note through his wholly-owned Maybert LLC, and the parties share such interests on a pro rata basis.

 

On October 23, 2018, Christine Early (Kevin Jones’ spouse and separate shareholder) made a $100,000 loan to the Company, and on November 6, 2018, Michael Wykrent (shareholder) made a $100,000 loan to the Company, both loans being secured by Maybert LLC, a Texas company controlled by Kevin Jones. With respect to these loans, MR. Jones holds the direct collateral interest in the note through his wholly-owned Maybert LC, and the parties share such interests on a pro rata basis.

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11. INCOME TAXES
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 11 – INCOME TAXES

 

At September 30, 2018 and December 31, 2017, the Company had approximately $18 million and $16.4 million, respectively, of net operating losses ("NOL") carry forwards for federal and state income tax purposes. These losses are available for future years and expire through 2034. Utilization of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue Code Section 382.

 

The provision for income taxes for continuing operations consists of the following components for the nine-months ended September 30, 2018 and the year ended December 31, 2017:

 

  2018   2017  
         
Current   $ -     $ -  
Deferred     -       -  
   Total tax provision for (benefit from) income taxes   $ -     $ -  

 

 

A comparison of the provision for income tax expense at the federal statutory rate of 21% for the three-months ended September 30, 2018 and the year ended December 31, 2017, the Company's effective rate is as follows:

 

   2018  2017
       
Federal statutory rate   (21.0)    (21.0) 
State tax, net of federal benefit   (0.0)    (0.0) 
Permanent differences and other including surtax exemption   0.0    0.0 
Temporary difference   (15.9)    (15.9) 
Valuation allowance   36.9    36.9 
Effective tax rate   0.0%   0.0%

The net deferred tax assets and liabilities included in the financial statements consist of the following amounts at September 30, 2018 and December 31, 2017:


    2018    

 

2017

 
Deferred tax assets            
Net operating loss carry forwards   $ 17,916,878     $ 16,403,873  
Deferred compensation     797,035       821,572  
Stock based compensation     2,900,734       2,900,734  
Other     581,639       581,639  
Total     22,196,286       20,707,818  
Less valuation allowance     (22,196,286 )     (20,707,818 )
Deferred tax asset     -       -  
Deferred tax liabilities                
Depreciation and amortization   $ -     $ -  
Net long-term deferred tax asset   $ -     $ -  

  

The change in the valuation allowance was $1,399,009 and $12,784,855 for the three-months ended September 30, 2018 and the year ended December 31, 2017, respectively.  The Company has recorded a 100% valuation allowance related to the deferred tax asset for the loss from operations, interest expense, interest income and other income subsequent to the change in ownership, which amounted to $22,196,2867 and $20,707,818 at September 30, 2018 and December 31, 2017, respectively.

 

Utilization of the Company’s net operating losses may be subject to substantial annual limitation if the Company experiences a 50% change in ownership, as provided by the Internal Revenue Code and similar state provisions. Such an ownership change would substantially increase the possibility of net operating losses expiring before complete utilization.

 

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, historical taxable income including available net operating loss carry forwards to offset taxable income, and projected future taxable income in making this assessment.

XML 24 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
12. COMMITMENTS
9 Months Ended
Sep. 30, 2018
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS

NOTE 12 – COMMITMENTS 

 

Employment Agreements 

In August 2012, the Company entered into employment agreements with the president and chairman of the board of Greenway Innovative Energy, Inc. for a term of 5 years with compensation of $90,000 per year. In September of 2014, the president's employment agreement was amended to increase his annual pay to $180,000. By its terms, the employment agreement automatically renewed on August 12, 2018 for a successive one-year period. During the three-months ended September 30, 2017, the Company paid and accrued a total of $45,000 on the employment agreement.

In the August 2012 acquisition agreement with Greenway Innovative Energy, Inc., the Company agreed to issue an additional 7,500,000 shares of restricted common stock when the first GTL unit is built and becomes operational and is capable of producing 2,000 barrels of diesel or jet fuel per day and pay Greenway Innovative Energy a 2% royalty on all gross production sales on each unit placed in production. In connection with a settlement agreement with one of the prior owners of Greenway Innovative Energy, Inc., the Company replaced 3,750,000 of the shares with a different amount of shares and other consideration. As a result, only 3,750,000 shares are committed to be issued under this agreement.

 

Effective May 10, 2018, the Company entered into employment agreements with John Olynick, as President and Ransom Jones, as Chief Financial Officer, respectively. The terms and conditions of their employment agreements are identical. John Olynick, as President earns a salary of $120,000 per year. Ransom Jones, as Chief Financial Officer, earns a salary of $120,000 per year. Mr. Jones also serves as the Company’s Secretary and Treasurer. During each year that their Agreements are in effect, they are each entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year. Under their employment agreements, Mr. Olynick and Mr. Jones were each issued 250,000 shares of Common Stock, par value $.0001 during the three months ended September 30, 2018. On the date of issuance, the stock was valued at $.06 per share and the Company recorded an expense of $30,000. They are also entitled to participate in the Company’s benefit plans.

 

The foregoing summary of the Employment Agreements is qualified in its entirety by reference to the actual true and correct Employment Agreements, copies of which are attached hereto as Exhibit 10.39 and 10.40.


 

Consulting Agreement

 

On November 28, 2017, the Company entered into a three-year consulting agreement with Chisos Equity Consultants, LLC for public relations, consulting and corporate communications services. The initial payment was 1,800,000 shares of the Company’s restricted common stock. Additional payments upon the Company’s common stock reaching certain price points are follows;

 

  · 500,000 shares at the time our common stock reaches $0.25 per share during the first year
  · 500,000 shares at the time our common stock reaches $0.45 per share during the first year
  · 1,000,000 shares at the time our common stock reaches $0.90 per share during the first or second year
  · 2,000,000 shares at the time our common stock reaches $1.50 per share during the first or second year
  · 3,000,000 shares at the time our common stock reaches $2.00 per share during the term of the agreement
  · 1,000,000 shares at the time our common stock reaches $10.00 per share during the term of the agreement

 

Due to a breach under the Agreement, the Board of Directors of the Company on June 22, 2018, voted to terminate the Agreement. Based on the termination, all warrants to purchase the Company’s common stock were cancelled.

 

  Leases  

 

In October 2015, the Company signed a new two-year lease for new office space of approximately 1,800 square feet at the rate of $2,417 for the first twelve months and $2,495 for the second twelve months. During the nine months ended September 30, 2018 and 2017, the Company expensed $14,510 and $8,640, respectively, in rent expense. The Company terminated the lease effective August 31, 2018 and has no further financial obligations under the lease.

 

Greenway Innovative Energy, Inc. rents approximately 600 square feet of office space at 1511 North Cooper St., Suite 207, Arlington, Texas 76011, at a rate of $871 per month.

 

The Company pays approximately $11,600 in annual maintenance fees on its Arizona BLM mining leases, in addition to 10% royalties based on production.

 

Legal  

 

The Company has been named as a co-defendant in an action brought against the Company and Mamaki Tea, Inc., alleging, among other things, that the Company was named as a co-guarantor on an $850,000 foreclosed note. Management does not believe the ultimate resolution will have an adverse impact on the Company’s financial condition or results of operations.

On April 22, 2016, Greenway Technologies filed suit under Cause No. DC-16-004718, in the 193rd District Court, Dallas County, Texas against Mamaki of Hawaii, Inc. (“Mamaki”), Hawaiian Beverages, Inc.(“HBI”), Curtis Borman and Lee Jenison for breach of a Stock Purchase Agreement dated October 29, 2015, wherein the Company sold its shares in Mamaki to HBI for $700,000 (along with the assumption of certain debt). The Company maintained its guaranty on the original loan as a component of the sale transaction. The Defendants failed to make payments of $150,000 each on November 30, 2015, December 28, 2015 and January 27, 2016. On January 13, 2017, the parties executed a Settlement and Mutual Release Agreement (Agreement). However, the Defendants again defaulted in their payment obligations under this new Agreement. Curtis Borman and Lee Jennison were co-guarantors of the obligations of Mamaki and HBI. To secure their guaranties, each of Curtis Borman and Lee Jennsion posted 1,241,500 and 1,000,000 shares, respectively, of the Company. Under the Agreement, the shares were valued at $.20. Due to the default under the Agreement, these shares were returned to the Company’s treasury shares. Curtis Borman subsequently filed for bankruptcy and the property was liquidated for $600,000, applied against the prior loan amount, leaving a remaining guaranteed loan payment balance of approximately $700,000, including accrued interest and legal fees. The Company is currently in negotiations with the note holders and anticipates a positive resolution.

 

Wildcat Consulting Group LLC (“Wildcat”) filed a civil lawsuit against Greenway Technologies, Inc. on September 27, 2018 for an alleged breach of contract. The Company answered the lawsuit and asserted a number of affirmative defenses. Greenway is confident in its defenses and intends to vigorously defend its interests.

 

See Subsequent Events Note 13.

XML 25 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
13. SUBSEQUENT EVENTS
9 Months Ended
Sep. 30, 2018
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 13-SUBSEQUENT EVENTS

 

On October 23, 2018, Christine Early (Kevin Jones’ spouse and separate shareholder) made a $100,000 loan to the Company, and on November 6, 2018, Michael Wykrent (shareholder) made a $100,000 loan to the Company, both loans being secured by Maybert LLC, a Texas company controlled by Kevin Jones.

 

On October 19, 2018, a Form PREC14A was filed by a number of shareholders, (the “Committee”) holding greater than 10% of the Company’s outstanding Class A Common stock in an attempt to call a Special Meeting of the Greenway Technologies shareholders. The purpose of the meeting is to elect 4 new directors to the Board that would effectively eliminate 4 of the sitting Directors. Two sitting directors, T. Craig Takacs and D. Patrick Six are included in this action and will retain their seats as Directors if the Committee is successful. The non-filing directors and management oppose this action, and have filed an objection with the SEC.

 

XML 26 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Property and Equipment

Property and Equipment

Property and equipment are recorded at cost. Major additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold, are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale or salvage value are recorded as a gain or loss on sale of equipment. Depreciation is computed using the straight-line method over the useful life of the assets. The Company continues to use its fully depreciated property and equipment.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with Accounting Standards Codification, ASC Topic 360, Property, Plant and Equipment. An asset or asset group is considered impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds its fair value. If estimated fair value is less than the book value, the asset is written down to the estimated fair value and an impairment loss is recognized.

Revenue Recognition

Revenue Recognition

 

The Company has not, to date, generated any revenues. 

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three-months or less to be cash equivalents. There were no cash equivalents at September 30, 2018, or December 31, 2017.

Income Taxes

Income Taxes

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

The Company has adopted the provisions of FASB ASC 740-10-05 Accounting for Uncertainty in Income Taxes. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Open tax years, subject to IRS examination include 2013 – 2016.

Net Loss Per Share, basic and diluted

Net Loss Per Share, basic and diluted

Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Shares issuable upon the exercise of warrants or beneficial conversion features (23,696,156) have been excluded as a common stock equivalent in the diluted loss per share because their effect would be anti-dilutive.

Derivative Instruments

Derivative Instruments

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

 

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

See Notes 6 and 7 below for disclosures associated with the Company’s convertible notes payable and warrants.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Effective January 1, 2008, fair value measurements are determined by the Company’s adoption of authoritative guidance issued by the FASB, with the exception of the application of the statement to non-recurring, non-financial assets and liabilities, as permitted. Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three levels as follows:

 

Level 1 – Valuation based on unadjusted quoted market prices in active markets for identical assets or liabilities.

 

Level 2 – Valuation based on, observable inputs (other than level one prices), quoted market prices for similar assets such as at the measurement date; quoted prices in the market that are not active; or other inputs that are observable, either directly or indirectly.

Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

Original Issue Discount

Original Issue Discount

For certain convertible debt issued, the Company provides the debt holder with an original issue discount (“OID”). An OID is the difference between the original cash proceeds and the amount of the note upon maturity. The Note is originally recorded for the total amount payable. The OID is amortized into interest expense pro-rata over the term of the Note.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The valuation of the Company’s notes recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market and (iii) contractual prices.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, receivables, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments.

The following table represents the Company’s assets and liabilities by level measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017:

 

Description Level 1   Level 2   Level 3  
September 30, 2018 Derivative Liabilities $ 0   $ 0   $ 87,557  
December 31, 2017 Derivative Liabilities $ 0   $ 0   $ 105,643  

The following assets and liabilities are measured on the balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions in their valuation. The following tables provide a reconciliation of the beginning and ending balances of the liabilities:

 

 The change in the notes payable at fair value for the nine-month period ended September 30, 2018, is as follows: 

                          
    Fair
Value
    Change in    New         

Fair

Value

 
    January 1, 2018    

Fair

Value

    

Convertible

Notes

    

 

Conversions

    September 30, 2018 
                          
 Derivative Liabilities  $106,643   $19,086   $0   $0   $(87,557)

 

All gains and losses on assets and liabilities measured at fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest income and expense in the accompanying condensed consolidated financial statements.

Stock Based Compensation

Stock Based Compensation

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

At September 30, 2018, the Company did not have any outstanding stock options.

Concentration and Credit Risk

Concentration and Credit Risk 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash with high credit quality institutions. At times, such deposits may be in excess of the FDIC insurance limit.

Research and Development

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company incurred research and development expenses of $232,068 and $177,658 during the three-months ended September 30, 2018 and 2017, respectively.

Issuance of Common Stock

Issuance of Common Stock

The issuance of common stock for other than cash is recorded by the Company at market values.

Impact of New Accounting Standards

Impact of New Accounting Standards

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

XML 27 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
2. BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES (Tables)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Schedule of subsidiaries

Name of Entity  %      Entity  Incorporation  Relationship
Greenway Technologies, Inc.       Corporation    Texas    Parent 
Universal Media Corporation  100%   Corporation    Wyoming    Subsidiary 
Greenway Innovative Energy, Inc.  100%   Corporation    Nevada    Subsidiary 
Logistix Technology Systems, Inc.  100%   Corporation    Texas    Subsidiary 

 

XML 28 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Schedule of Company's assets and liabilities by level measured at fair value on a recurring basis

Description Level 1   Level 2   Level 3  
September 30, 2018 Derivative Liabilities $ 0   $ 0   $ 87,557  
December 31, 2017 Derivative Liabilities $ 0   $ 0   $ 105,643  
Schedule of Change in the notes payable at fair value
                         
    Fair
Value
    Change in    New         

Fair

Value

 
    January 1, 2018    

Fair

Value

    

Convertible

Notes

    

 

Conversions

    September 30, 2018 
                          
 Derivative Liabilities  $105,643   $18,581   $0   $0   $(87,557)
XML 29 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
4. PROPERTY, PLANT, AND EQUIPMENT (Tables)
9 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
Schedule of Property, Plant and Equipment
   Range of Lives
in Years
 

 

September 30, 2018

  December 31, 2017
Equipment   5   $2,032   $2,032 
Furniture and fixtures   5    1,983    1,983 
         4,015    4,015 
Less accumulated depreciation        (4,015)   (4,015)
        $0   $0 
XML 30 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
5. TERM NOTES PAYABLE (Tables)
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Schedule of Term Notes Payable
  2018  2017
       
Unsecured note payable dated March 8, 2016 to an individual at 5% interest, payable upon the Company’s availability of cash  $0   $13,500 
Unsecured note payable dated November 13, 2017 to a corporation at $10,000 lump sum interest at maturity on February 28, 2018. The terms are being re-negotiated with the noteholder.   100,000    100,000 
Unsecured note payable dated December 28, 2017 to a corporation, due January 3, 2018        53,842 
Unsecured note payable dated November 13, 2017 to a corporation at $10,000 lump sum interest at maturity on February 28, 2018. The terms are being re-negotiated with the noteholder.   100,000    100,000 

 

Total term notes

  $200,000   $153,842 
XML 31 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
7. CONVERTIBLE PROMISSORY NOTES (Tables)
9 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Assumptions used for valuing warrants
  Commitment Date  
Expected dividends   0%
Expected volatility   175.59%  
Expected term: conversion feature   2 years  
XML 32 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
8. ACCRUED EXPENSES (Tables)
9 Months Ended
Sep. 30, 2018
Payables and Accruals [Abstract]  
Schedule of accrued expenses
  2018    

 

2017

 
             
Accrued consulting fees   $ 249,500     $ 249,500  
Accrued expense related to shareholder dispute     0       330,000  
Accrued expense related to warrant exercise     0       180,000  
Other accrued expenses        332,234       12,000  
Accrued interest expense     6,644       7,260  
Total accrued expenses   $ 588,378     $ 778,760  
XML 33 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
11. INCOME TAXES (Tables)
9 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Schedule of components of the provision for income taxes
2018   2017  
         
Current   $ -     $ -  
Deferred     -       -  
   Total tax provision for (benefit from) income taxes   $ -     $ -  
Schedule of income tax reconciliation
  2018  2017
       
Federal statutory rate   (21.0)    (21.0) 
State tax, net of federal benefit   (0.0)    (0.0) 
Permanent differences and other including surtax exemption   0.0    0.0 
Temporary difference   (15.9)    (15.9) 
Valuation allowance   36.9    36.9 
Effective tax rate   0.0%   0.0%
Schedule of net deferred tax assets and liabilities
  2018    

 

2017

 
Deferred tax assets            
Net operating loss carry forwards   $ 17,916,878     $ 16,403,873  
Deferred compensation     797,035       821,572  
Stock based compensation     2,900,734       2,900,734  
Other     581,639       581,639  
Total     22,196,286       20,707,818  
Less valuation allowance     (22,196,286 )     (20,707,818 )
Deferred tax asset     -       -  
Deferred tax liabilities                
Depreciation and amortization   $ -     $ -  
Net long-term deferred tax asset   $ -     $ -  
XML 34 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
2. BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES (Details)
9 Months Ended
Sep. 30, 2018
Logistix Technology Systems [Member]  
Ownership percentage 100.00%
State of incorporation Texas
Universal media Corp. [Member]  
Ownership percentage 100.00%
State of incorporation Wyoming
Greenway Innovative Energy [Member]  
Ownership percentage 100.00%
State of incorporation Nevada
XML 35 R28.htm IDEA: XBRL DOCUMENT v3.10.0.1
2. BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTIES (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Accounting Policies [Abstract]          
Net income (loss) $ (1,513,005) $ (7,575,176) $ (1,513,005) $ (7,575,176)  
Working capital (3,100,000)   (3,100,000)    
Accumulated deficit $ (25,136,606)   $ (25,136,606)   $ (23,623,602)
XML 36 R29.htm IDEA: XBRL DOCUMENT v3.10.0.1
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Fair value) - Fair Value, Measurements, Recurring [Member] - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Fair Value, Inputs, Level 3 [Member]    
Fair value derivative liabilities $ 87,557 $ 105,643
Fair Value, Inputs, Level 2 [Member]    
Fair value derivative liabilities 0 0
Fair Value, Inputs, Level 1 [Member]    
Fair value derivative liabilities $ 0 $ 0
XML 37 R30.htm IDEA: XBRL DOCUMENT v3.10.0.1
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Change in fair value)
9 Months Ended
Sep. 30, 2018
USD ($)
Accounting Policies [Abstract]  
Derivative liabilities, beginning balance $ 105,643
Change in fair value 18,581
Issuances 0
Conversions 0
Derivative liabilities, ending balance $ 87,556
XML 38 R31.htm IDEA: XBRL DOCUMENT v3.10.0.1
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Accounting Policies [Abstract]          
Cash equivalents $ 0   $ 0   $ 0
Antidilutive shares excluded from EPS     23,696,156    
Outstanding stock options 0   0    
Research and development expenses $ (135,000) $ 183,512 $ 75,000 $ 521,444  
Research and development income     $ 210,000    
XML 39 R32.htm IDEA: XBRL DOCUMENT v3.10.0.1
4. PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Property and equipment, gross $ 4,015 $ 4,015
Less: accumulated depreciation (4,015) (4,015)
Property and equipment, net 0 0
Equipment [Member]    
Property and equipment, gross 2,032 2,032
Furniture and Fixtures [Member]    
Property and equipment, gross $ 1,983 $ 1,983
XML 40 R33.htm IDEA: XBRL DOCUMENT v3.10.0.1
4. PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Jun. 30, 2018
Sep. 30, 2018
Sep. 30, 2017
Depreciation expense $ 0 $ 298   $ 297
Equipment [Member]          
Property usefule live     5 years    
Furniture and Fixtures [Member]          
Property usefule live     5 years    
XML 41 R34.htm IDEA: XBRL DOCUMENT v3.10.0.1
5. TERM NOTES PAYABLE (Details Narrative) - USD ($)
9 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Term note payable $ 200,000 $ 153,841
Term Note [Member]    
Term note payable $ 0 13,500
Debt issuance date Mar. 08, 2016  
TermNote2Member    
Term note payable $ 100,000 100,000
Debt issuance date Nov. 13, 2017  
Debt maturity date Feb. 28, 2018  
TermNote3Member    
Term note payable $ 0 $ 53,842
Debt issuance date Dec. 28, 2017  
Debt maturity date Jan. 03, 2018  
XML 42 R35.htm IDEA: XBRL DOCUMENT v3.10.0.1
6. CONVERTIBLE PROMISSORY NOTES 2017 (Details Narrative) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Dec. 31, 2017
Dec. 20, 2019
Unamortized discount $ 52,958   $ 52,958 $ 81,833  
Amortization of debt discount 28,875 $ 0      
2017 Convertible Promissory Notes [Member]          
Debt face amount 166,667   166,667    
Debt periodic payment amount     $ 86,667    
Debt first payment amount date     Dec. 20, 2018    
Debt conversion terms     The holder has the right to convert the note into common stock of the Company at a conversion price of $0.008 per share for each one dollar of cash payment which may be due, (which would be 1,083,333 shares for the $86,667 payment and 1,000,000 shares for the $80,000 payment.    
Beneficial conversion feature       27,083  
Unamortized discount 16,927   $ 16,927    
Amortization of debt discount     $ 3,386    
If converted, shares issuable     1,083,337    
Accrued interest payable         $ 80,000
2017 Convertible Promissory Notes 2 [Member]          
Debt face amount 150,000   $ 150,000    
Debt payment frequency     monthly    
Debt periodic payment amount     $ 6,000    
Debt conversion terms     The holder has the right to convert the note into common stock of the Company at a conversion price of equal to 70% of the prior twenty (20) days average closing market price of the Company?s common stock.    
Beneficial conversion feature     $ 58,494    
Unamortized discount 144,000   144,000    
Amortization of debt discount     22,463    
Derivative liability 68,056   $ 68,056    
If converted, shares issuable     1,578,947    
Payment made     $ 6,000    
May 2016 Convertible Note [Member]          
Debt face amount       $ 224,000  
Debt payment frequency       monthly  
Debt periodic payment amount       $ 44,800  
Debt first payment amount date       Nov. 10, 2056  
Amortization of debt discount       $ 9,327  
Convertible Notes Payable [Member]          
Unamortized discount $ 20,313   $ 20,313 81,833  
September 2014 Convertible Note [Member]          
Debt face amount       $ 158,000  
XML 43 R36.htm IDEA: XBRL DOCUMENT v3.10.0.1
7. CONVERTIBLE PROMISSORY NOTES (Details - Assumptions)
9 Months Ended
Sep. 30, 2018
Measurement Input Expected Dividend Rate [Member]  
Assumptions 0%
Measurement Input, Price Volatility [Member]  
Assumptions 175.59%
Measurement Input, Expected Term [Member]  
Assumptions 2 years
XML 44 R37.htm IDEA: XBRL DOCUMENT v3.10.0.1
7. CONVERTIBLE PROMISSORY NOTES (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Dec. 31, 2017
Amortization of debt discount $ 28,875 $ 0        
Derivative liability - warrants 87,556   $ 87,556   $ 87,556 $ 105,643
Settlement (expense) - loan agreement     (208,000) $ 0    
September 2014 Convertible Note [Member]            
Debt face value           158,000
Derivative liability - warrants           $ 47,149
Debt converted, stock issued         1,600,000  
Settlement (expense) - loan agreement         $ (208,000)  
Gain on exchanges in fair value of derivative         58,316  
2017 Convertible Promissory Notes 2 [Member]            
Debt face value 150,000   150,000   $ 150,000  
Debt payment frequency         monthly  
Debt periodic payment amount         $ 6,000  
Amortization of debt discount         22,463  
2017 Convertible Promissory Notes [Member]            
Debt face value $ 166,667   $ 166,667   166,667  
Debt periodic payment amount         $ 86,667  
Debt first payment amount date         Dec. 20, 2018  
Amortization of debt discount         $ 3,386  
May 2016 Convertible Note [Member]            
Debt issuance date           May 04, 2016
Debt face value           $ 224,000
Debt payment frequency           monthly
Debt periodic payment amount           $ 44,800
Debt first payment amount date           Nov. 10, 2056
Convertible note balance           $ 0
Amortization of debt discount           $ 9,327
XML 45 R38.htm IDEA: XBRL DOCUMENT v3.10.0.1
8. ACCRUED EXPENSES (Details) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Payables and Accruals [Abstract]    
Accrued consulting fees $ 249,500 $ 249,500
Accrued expense relating to shareholder dispute 0 330,000
Accrued expense for warrant exercise 0 180,000
Other accrued expenses 332,234 12,000
Accrued interest expense 6,644 7,260
Total accrued expenses $ 588,378 $ 778,760
XML 46 R39.htm IDEA: XBRL DOCUMENT v3.10.0.1
9. CAPITAL STRUCTURE (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Sep. 14, 2018
Jan. 08, 2018
Nov. 30, 2017
Feb. 03, 2017
Class A Common Stock            
Common stock, shares issued 286,703,915 286,703,915        
Common stock, shares outstanding 287,681,826 287,681,826        
Warrants [Member]            
Warrants issued     366,667 4,000,000 1,000,000 6,000,000
Fair value of warrants issued         $ 95,846 $ 639,284
Class B Common Stock | Shareholders [Member]            
Stock exchanged, shares exchanged   63,932        
Class B Common Stock | Shareholder [Member]            
Stock exchanged, shares exchanged   62,986        
Class A Common Stock | Shareholders [Member]            
Stock exchanged, shares issued   63,932        
Class A Common Stock | Shareholder [Member]            
Stock exchanged, shares issued   630,000        
Private Placements [Member] | Restricted Stock Class A [Member]            
Stock issued new, shares 4,780,254          
Proceeds from sale of stock $ 536,500          
XML 47 R40.htm IDEA: XBRL DOCUMENT v3.10.0.1
10. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
3 Months Ended
Sep. 30, 2018
Oct. 23, 2018
Proceeds from related parties $ 202,740  
Kevin Jones [Member]    
Proceeds from related parties 102,740  
Randolf Patterson [Member]    
Proceeds from related parties 100,000  
Greg Sanders [Member]    
Proceeds from related parties $ 1,400  
Christine Early [Member]    
Loans received   $ 100,000
XML 48 R41.htm IDEA: XBRL DOCUMENT v3.10.0.1
11. INCOME TAXES (Details - tax provision) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Income Tax Disclosure [Abstract]          
Current tax provision     $ 0   $ 0
Deferred tax provision     0   0
Total tax provision for (benefit from) income taxes $ 0 $ 0 $ 0
XML 49 R42.htm IDEA: XBRL DOCUMENT v3.10.0.1
11. INCOME TAXES (Details - Reconciliation)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]    
Federal statutory rate (21.00%) (21.00%)
State tax, net of federal benefit 0.00% 0.00%
Permanent differences and other including surtax exemption 0.00% 0.00%
Temporary difference (15.90%) (15.90%)
Valuation allowance 36.90% 36.90%
Effective tax rate 0.00% 0.00%
XML 50 R43.htm IDEA: XBRL DOCUMENT v3.10.0.1
11. INCOME TAXES (Details - Deferred taxes) - USD ($)
Sep. 30, 2018
Dec. 31, 2017
Deferred tax assets    
Net operating loss carry forwards $ 17,916,878 $ 16,403,873
Deferred compensation 797,035 821,572
Stock based compensation 2,900,734 2,900,734
Other 581,639 581,639
Total 22,196,286 20,707,818
Less valuation allowance (22,196,286) (20,707,818)
Deferred tax asset 0 0
Deferred tax liabilities    
Depreciation and amortization 0 0
Net long-term deferred tax asset $ 0 $ 0
XML 51 R44.htm IDEA: XBRL DOCUMENT v3.10.0.1
11. INCOME TAXES (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2018
Dec. 31, 2017
Income Tax Disclosure [Abstract]    
Net operating loss carryforward $ 18,000,000 $ 16,400,000
Operating loss carryforward expiration date Dec. 31, 2034  
Change in valuation allowance $ 1,399,009 12,784,855
Interest expense Income $ 22,196,286 $ 20,707,818
XML 52 R45.htm IDEA: XBRL DOCUMENT v3.10.0.1
12. COMMITMENTS (Details Narrative) - USD ($)
9 Months Ended 12 Months Ended 15 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Dec. 31, 2017
Mar. 17, 2018
Lease expense $ 14,510 $ 8,640    
Annual maintenance fees     $ 11,600  
Employment Agreement [Member]        
Compensation paid       $ 45,000
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