UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-Q
| ☒ | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the Quarterly Period ended September 30, 2016
| ☐ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission file number: 000-27866
POWERVERDE, INC.
(Exact name of Registrant as specified in its charter)
| Delaware | 88-0271109 | |
| (State
or other jurisdiction of incorporation or organization) |
(IRS
Employer Identification No.) |
420 S. Dixie Highway Suite 4-B
Coral Gables, FL 33146
(Address of principal executive offices)
(305) 666-0024
(Registrant’s telephone number including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 past 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ 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 ☐ 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.
| ☐ | Large accelerated filer | ☐ | Accelerated filer |
| ☐ | Non-accelerated filer | ☒ | Smaller reporting company |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of November 14, 2016 the issuer had 31,750,106 shares of common stock outstanding.
Index to Form 10-Q
Item 1. Condensed Consolidated Financial Statements
PowerVerde, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
September 30, 2016 (Unaudited) and December 31, 2015
| 2016 | 2015 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 5,675 | $ | 5,601 | ||||
| Accounts receivable | 89,118 | 220,158 | ||||||
| Prepaid expenses | 31,426 | 13,332 | ||||||
| Total Current Assets | 126,219 | 239,091 | ||||||
| Property and Equipment | ||||||||
| Property and equipment, net of accumulated depreciation of $81,591 and $70,792, respectively | 26,050 | 36,849 | ||||||
| Other Assets | ||||||||
| Intellectual Property, net of accumulated amortization of $674,670 and $665,532 | 17,604 | 26,742 | ||||||
| License, net of accumulated amortization of $3,322 and $0, respectively | 96,678 | — | ||||||
| Total Other Assets | 114,282 | 26,742 | ||||||
| Total Assets | $ | 266,551 | $ | 302,682 | ||||
| Liabilities and Stockholders’ Deficiency | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 38,166 | $ | 41,951 | ||||
| Payable to related party | — | 26,000 | ||||||
| Note payable to related parties | 421,785 | 412,115 | ||||||
| Note payable | — | 47,569 | ||||||
| Total Current Liabilities | 459,951 | 527,635 | ||||||
| Total Liabilities | 459,951 | 527,635 | ||||||
| Stockholders’ Deficiency | ||||||||
| Preferred Stock: | ||||||||
| 50,000,000 preferred shares authorized, 0 preferred shares issued at September 30, 2016 and December 31, 2015 | — | — | ||||||
| Common stock: | ||||||||
| 200,000,000 common shares authorized, par value $0.0001 per share, 31,750,106 common shares issued and outstanding at September 30, 2016 and December 31, 2015 | 3,981 | 3,981 | ||||||
| Additional paid-in capital | 12,126,831 | 11,921,516 | ||||||
| Treasury stock, 8,550,000 shares at cost | (491,139 | ) | (491,139 | ) | ||||
| Accumulated deficit | (11,833,073 | ) | (11,659,311 | ) | ||||
| Total Stockholders’ Deficiency | (193,400 | ) | (224,953 | ) | ||||
| Total Liabilities and Stockholders’ Deficiency | $ | 266,551 | $ | 302,682 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PowerVerde, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
For the three and nine months ended September 30, 2016 and 2015
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Royalty revenue | $ | 89,118 | $ | 122,107 | $ | 417,074 | $ | 309,703 | ||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | 177,885 | 51,847 | 282,339 | 192,827 | ||||||||||||
| General and administrative | 55,485 | 52,895 | 262,599 | 212,565 | ||||||||||||
| Total Operating Expenses | 233,370 | 104,742 | 544,938 | 405,392 | ||||||||||||
| Income (Loss) from Operations | (144,252 | ) | 17,365 | (127,864 | ) | (95,689 | ) | |||||||||
| Other Income (Expenses) | ||||||||||||||||
| Interest income | — | 570 | — | 570 | ||||||||||||
| Interest expense | (17,338 | ) | (13,718 | ) | (45,898 | ) | (41,429 | ) | ||||||||
| Total Other Income (Expense) | (17,338 | ) | (13,148 | ) | (45,898 | ) | (40,859 | ) | ||||||||
| Income (Loss) before Income Taxes | (161,590 | ) | 4,217 | (173,761 | ) | (136,548 | ) | |||||||||
| Provision for Income Taxes | — | — | — | — | ||||||||||||
| Net Income (Loss) | $ | (161,590 | ) | $ | 4,217 | $ | (173,761 | ) | $ | (136,548 | ) | |||||
| Net Loss per Share - Basic and Diluted | $ | (0.005 | ) | $ | — | $ | (0.005 | ) | $ | (0.004 | ) | |||||
| Weighted Average Common Shares Outstanding - Basic and Diluted | 31,750,106 | 31,750,106 | 31,750,106 | 31,750,106 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PowerVerde, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
For the nine months ended September 30, 2016 and 2015
(Unaudited)
| 2016 | 2015 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | (173,761 | ) | $ | (136,548 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 23,259 | 69,650 | ||||||
| Amortization of discount | 12,920 | 9,634 | ||||||
| Stock based compensation | 202,065 | 2,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and prepaid expenses | 112,946 | 65,787 | ||||||
| Employee advances | — | 12,292 | ||||||
| Interest receivable, related party | — | (570 | ) | |||||
| Accounts payable and accrued expenses | (3,786 | ) | (8,580 | ) | ||||
| Payable to related parties | (26,000 | ) | (13,900 | ) | ||||
| Cash Provided by (Used in) Operating Activities | 147,643 | (235 | ) | |||||
| Cash Flows From Investing Activities | ||||||||
| Purchase of intellectual property | — | (16,116 | ) | |||||
| Cash Used in Investing Activities | — | (16,116 | ) | |||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from note payable, related party | 25,000 | 25,000 | ||||||
| Principal payments on notes payable, related parties | (25,000 | ) | — | |||||
| Principal payments on notes payable | (147,569 | ) | — | |||||
| Cash (Used in) Provided by Financing Activities | (147,569 | ) | 25,000 | |||||
| Net Increase in Cash and Cash Equivalents | 74 | 8,649 | ||||||
| Cash and Cash Equivalents at Beginning of Period | 5,601 | 4,736 | ||||||
| Cash and Cash Equivalents at End of Period | $ | 5,675 | $ | 13,385 | ||||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid during the period for interest | $ | 24,175 | $ | 19,835 | ||||
| Cash paid during the period for income taxes | $ | — | $ | — | ||||
| Supplemental Disclosure of Non-Cash Activities | ||||||||
| Note Receivable in connection with IP acquisition | $ | — | $ | 38,000 | ||||
| Note Payable in connection with license and IP acquisition | $ | 100,000 | $ | 58,436 | ||||
| Interest Receivable in connection with IP acquisition | $ | — | $ | 3,718 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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PowerVerde, Inc. and Subsidiary
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2016
Note 1 – Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Annual Report of PowerVerde, Inc. (“PowerVerde,” “we,” “us,” “our,” or the “Company”) as of and for the year ended December 31, 2015. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results to be expected for the full year or for future periods. The condensed consolidated financial statements include the accounts of PowerVerde, Inc., formerly known as Vyrex Corporation (the “Company”), and PowerVerde Systems, Inc., formerly known as PowerVerde, Inc., its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation.
Note 2 – Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has had recurring operating losses and negative cash flows from operations. Those factors, as well as uncertainty in securing additional funds for continued operations, create an uncertainty about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 3 – Summary of Significant Accounting Policies
Nature of Business
The Company is devoting substantially all of its present efforts to establish a new business involving the development and commercialization of clean energy electric power generation systems, and none of its planned principal operations have commenced. However, royalties from licenses unrelated to planned principal operations continue to be recognized as revenue.
Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable
Accounts receivable consist of balances due from royalties in connection with the license agreement with VDF FutureCeuticals, Inc. The Company monitors accounts receivable and provides allowances when considered necessary. At September 30, 2016, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided.
Revenue Recognition
Royalty revenue from royalty agreements unrelated to the Company’s planned operations is recognized in accordance with the terms of the specific agreement. Revenues recognized under these agreements amount to 100% of total revenues for the nine months ended September 30, 2016 and 2015.
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Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred.
Impairment of Long-Lived Assets
Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. No impairment losses have been recognized during the nine months ended September 30, 2016 or 2015.
Stock-based Compensation
The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.
Common Stock Purchase Warrants
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company, or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of December 31, 2015 and September 30, 2016 were classified as equity.
Accounting for Uncertainty in Income Taxes
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Research and Development Costs
The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $282,339 and $192,827 for the nine months ended September 30, 2016 and 2015, respectively.
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Earnings (Loss) Per Share
Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 4,350,000 shares and options for 5,750,500 shares were excluded from weighted average common shares outstanding on a diluted basis.
Financial instruments
The Company carries cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes payable, at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature. The Company also carries notes payable to related parties at historical cost less discounts from warrants issued as loan financing costs. The fair value of such notes is significantly similar to the face value of the notes ($400,000).
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Note 4 – Recent Accounting Pronouncements
Refer to the consolidated financial statements and footnotes thereto included in the PowerVerde, Inc. Annual Report on Form 10-K for the year ended December 31, 2015 for recent accounting pronouncements. Other pronouncements have been issued but the Company does not believe that their adoption will have a significant impact on the financial position or results of operations.
Note 5 – Intellectual Property
Intellectual Property partially consists of technology acquired from the purchase of 100% of the membership interests of Cornerstone Conservation Group LLC (“Cornerstone”) on March 30, 2012 for $659,440. Accumulated amortization with respect to this intellectual property was $659,440 at September 30, 2016.
On June 30, 2015, the Company entered into an Assignment Agreement with VyrexIP Holdings Inc., a company owned by Company shareholder Edward Gomez, for the purchase of intellectual property. The net price of these assets was comprised of a down payment of $16,116 and a $58,436 promissory note to the seller due July 15, 2016, partially offset by assignment by the seller to the Company of a $38,000 promissory note due November 14, 2015, issued by the seller’s licensee Epalex Corporation, a company of which Mr. Gomez is chairman and a major stockholder. This note was paid in full as of March 31, 2016. Accumulated amortization with respect to this intellectual property was $15,230 at September 30, 2016.
On June 1, 2016, the Company entered into a ten year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in the manufacturing of planetary rotor expanders and the incorporation of same in the Company’s distributed electric power generation systems. The license agreement also grants the Company an exclusive license to sell the expanders whether manufactured by Helidyne or by the Company. The Company’s royalty obligation begins on the earlier of the commercialization of the product or three years from the effective date of the agreement. Once the royalty obligation begins, the minimum annual royalty is $50,000 for the first six years, and $100,000 for the remainder of the agreement.
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The license acquisition fee of $100,000 is to be paid in four consecutive monthly installments beginning June 1, 2016. This was paid in full as of September 30, 2016. The license acquisition fee is being amortized over a ten year period. The amortization expense for the three months ended September 30, 2016, was $2,500.
For each of the nine months ended September 30, 2016 and 2015, amortization expense was $12,460 and $58,000 and accumulated amortization of the intangible asset- intellectual property was $677,992 at September 30, 2016.
Future amortization of the intangible assets of intellectual property and license agreement was as follows as of September 30, 2016:
| Year ending December 31: | |||||
| 2016 | $ | 5,546 | |||
| 2017 | 22,184 | ||||
| 2018 | 12,374 | ||||
| 2019 | 10,000 | ||||
| 2020 | 10,000 | ||||
| Thereafter | 54,178 | ||||
| Total | $ | 114,282 | |||
Note 6 – Stockholders’ Deficiency
Warrants
A summary of warrants issued, exercised and expired during the nine months ended September 30, 2016 is as follows:
| Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||||
| Balance at December 31, 2015 | 4,480,000 | $ | .58 | $ | 45,000 | ||||||||
| Issued | 925,000 | .15 | — | ||||||||||
| Expired | (1,055,000 | ) | (1.05 | ) | — | ||||||||
| Balance at September 30, 2016 | 4,350,000 | $ | .37 | $ | 45,000 | ||||||||
A warrant for the purchase of 900,000 shares of common stock was issued in June 2016 to a stockholder at an exercise price of $0.11 per share in consideration for the Company utilizing his facility space from January 2013 to December 2015. The fair market value of the warrant was determined to be $0.08 per share, or $72,000, which is included in the general and administrative expenses as stock compensation expense.
In July 2016, a warrant for the purchase of 25,000 shares of common stock was issued to a stockholder as additional consideration for a $25,000 loan. See Note 8. The fair market value of the warrant was determined to be $0.13 per share, or $3,250, which was recorded as interest expense.
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Note 7 – Stock Options
Stock option activity for the nine months ended September 30, 2016, is summarized as follows:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||
| Options outstanding at December 31, 2015 | 4,750,000 | $ | 0.34 | 6.00 | |||||||||
| Grant | 1,000,500 | 0.19 | — | ||||||||||
| Expired/forfeited | — | — | — | ||||||||||
| Options outstanding at September 30, 2016 | 5,750,500 | $ | 0.28 | 5.37 | |||||||||
Total stock option compensation for the nine months ended September 30, 2016 and 2015 was $130,065 and $0, respectively. There is no unrecognized compensation expense associated with the options.
Note 8 - Notes Payable to Related Parties
Notes payable at December 31, 2015 included a $47,569 promissory note to VyrexIP Holdings Inc. for the purchase of intellectual property. The Company agreed to pay principal plus accrued interest over 10 monthly payments of $6,080, each due on the 15th day of each month, beginning October 15, 2015. This note was paid in full, with accrued interest, in April 2016.
Notes payable to related parties at September 30, 2016 consist of notes payable to stockholders of $400,000 (issued in 2012), less unamortized discount of $3,215 related to common stock warrants that had been issued to the stockholders with the notes. The discount is being amortized over the extended term of the notes, which are due in one principal payment on December 31, 2016. Interest is payable semiannually at 10%. The note is collateralized by all receivables now or hereafter existing pursuant to the license agreement with VDF FutureCeuticals, Inc. discussed in Note 3.
The notes payable to related parties at September 30, 2016 also includes a promissory note to a stockholder for $25,000. The principal balance and interest at 10% was due October 31, 2016. On October 26, 2016, the lender extended the maturity date of the note to January 31, 2017 in exchange for an additional 25,000 warrants with an exercise price of $0.15.
Payable to related party consists primarily of a $20,000 unsecured note payable to Company shareholder Edward Gomez bearing interest at 10%. On June 11, 2015, the lender extended the maturity date on the balance of the note to July 31, 2016. This note was paid in full, with accrued interest, in July 2016.
Note 9 - Commitments and Contingencies
On June 25, 2015, Company consultant Hank Leibowitz assigned to the Company a patent he obtained for a system and method for using high temperature sources in Rankine cycle power systems. The Company has agreed to pay Mr. Leibowitz a 2% royalty for any and all revenues of products and/or project sales by the Company based on the subject patent.
The Company’s license agreement with VDF FutureCeuticals, Inc., which has generated all of the Company’s revenues since 2012, will terminate in March 2018, when the underlying patents expire.
On June 1, 2016, the Company entered into a ten year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in manufacturing and to sell Helidyne expanders. As part of the licensing agreement the Company committed to purchase two 50 kW expanders, at a price of $25,000 each, on or before the sixth month anniversary of the agreement. The $50,000 is payable in two monthly installments of $25,000 beginning October 2016.
The Company agreed to pay Helidyne LLC a royalty of 3% of sales, subject to a minimum annual royalty of $50,000 beginning on the earlier of commercialization of the product or three years from the effective date of the agreement.
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Note 10 - Related Party Transactions
Since July 2010, the accounting firm J.L. Hofmann & Associates, P.A. (“JLHPA”), whose principal is the Company’s CFO John L. Hofmann, has provided financial consulting and accounting services to the Company. The Company paid $28,815 and $30,695 to JLHPA for its services in the nine months ended September 30, 2016 and 2015, respectively.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
Readers are cautioned that the statements in this Report that are not descriptions of historical facts may be forward-looking statements that are subject to risks and uncertainties. This Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on the beliefs of our management, as well as on assumptions made by and information currently available to us as of the date of this Report. When used in this Report, the words “plan,” “will,” “may,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “project” and similar expressions are intended to identify such forward-looking statements. Although we believe these statements are reasonable, actual actions, operations and results could differ materially from those indicated by such forward-looking statements as a result of the risk factors included in our 2015 Annual Report, or other factors. We must caution, however, that this list of factors may not be exhaustive and that these or other factors, many of which are outside of our control, could have a material adverse effect on us and our ability to achieve our objectives. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above.
The following discussion and analysis should be read in conjunction with the financial statements and notes thereto appearing elsewhere herein.
Critical Accounting Policies
The condensed consolidated financial statements of PowerVerde, Inc. are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these condensed consolidated financial statements requires our management to make estimates and assumptions about future events that effect the amounts reported in the financial statements and related notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. We believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of financial statements.
Accounting for Uncertainty in Income Taxes
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Based on our evaluation, we have concluded that there are no significant uncertain tax positions requiring recognition in our condensed consolidated financial statements. Our evaluation was performed for the tax years ended December 31, 2012, 2013, 2014 and 2015, the tax years which remain subject to examination by major tax jurisdictions as of September 30, 2016.
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We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our financial results. In the event we have received an assessment for interest and/or penalties, it has been classified in the condensed consolidated financial statements as general and administrative expense.
Revenue Recognition
Licensing and royalty revenue from royalty agreements unrelated to the Company’s planned operations is recognized in accordance with the terms of the specific agreement. Revenues recognized under these agreements amount to 100% of total revenues for the nine months ended September 30, 2016 and 2015.
Common Stock Purchase Warrants
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, Derivatives and Hedging – Contracts in Entity’s Own Equity (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or netshare settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company, or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of September 30, 2016 and 2015 were classified as equity
Intellectual Property
The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company uses an estimate of the undiscounted cash flows over the remaining life of its long-lived assets, or related group of assets where applicable, in measuring whether the assets to be held and used will be realizable. In the event of impairment, the Company would discount the future cash flows using its then estimated incremental borrowing rate to estimate the amount of the impairment.
Stock-based compensation.
We account for stock-based compensation based on ASC Topic 718-Stock Compensation which requires expensing of stock options and other share-based payments based on the fair value of each stock option awarded. The fair value of each stock option is estimated on the date of grant using the Black-Scholes valuation model. This model requires management to estimate the expected volatility, expected dividends, and expected term as inputs to the valuation model.
Overview
From January 1991 until October 2005, the Company devoted substantially all of its efforts and resources to research and development related to its unsuccessful Biotech Business, in particular the study of biological oxidation and antioxidation directed to the development of potential therapeutic products for the treatment of various diseases and conditions. In the most recent years, the Company’s research focused mainly on targeted antioxidant therapeutics and nutraceuticals. The Company, has generated only limited revenue from product sales and has relied primarily on equity financing, licensing revenues, and various debt instruments for its working capital. The Company has been unprofitable since its inception.
Following the cessation of material Biotech Business operations in October 2005, the Company turned its primary focus to seeking an appropriate merger partner for its public shell. This resulted in the February 2008 Merger with Vyrex. In March 2009, we assigned most of our Biotech intellectual property other than our rights under existing licensing agreements (the “Biotech IP”) to an investor in exchange for his agreement to pay all future expenses relating to the Biotech IP and to pay us 20% of any net proceeds received from future sale and/or licensing of the Biotech IP. We do not expect this arrangement to generate material revenues.
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Since the Merger, we have focused on the development, testing and commercialization of our electric power systems, in particular, their applicability to thermal and natural gas pipeline operations. Our business is subject to significant risks, including the risks inherent in our research and development efforts, uncertainties associated with obtaining and enforcing patents and intense competition. See “Risk Factors.”
Except as specifically noted to the contrary, the following discussion relates only to PowerVerde since, as a result of the Merger, the only historical financial statements presented for the Company in periods following the Merger are those of the operating entity, PowerVerde.
Results of Operations
Three Months Ended September 30, 2016 as Compared to Three Months Ended September 30, 2015
Since inception, we have focused on the development, testing and commercialization of our clean energy electric power generation systems. We had no revenues from sales in the third quarter of 2016 and 2015 – but we recorded $89,118 and $122,107 in Biotech IP licensing fees (based on pre-Merger contracts), respectively. In both years, we had substantial expenses due to our ongoing research and development activities and efforts to commercialize our systems, as well as substantial administrative expenses associated with our status as a public company. Our research and development expenses increased by $126,038 (243.1%) in the third quarter of 2016 as compared to 2015, due mainly to the stock options issued in July 2016. Our general and administrative expenses increased by $2,590 (5.0%) in the third quarter of 2016 as compared to 2015, due mainly to increased amortization expenses for the acquisition of the Helidyne license agreement. Our net loss was $161,590 in the third quarter of 2016, compared to net income of $4,217 in the third quarter of 2015. We expect substantial net losses will continue until we are able to successfully commercialize and market our systems, as to which there can be no assurance.
Nine Months Ended September 30, 2016 as Compared to Nine Months Ended September 30, 2015
Since inception, we have focused on the development, testing and commercialization of our clean energy electric power generation systems. We had no revenues from sales in the first nine months of 2016 and 2015 – but we recorded $417,074 and $309,703 in Biotech IP licensing fees (based on pre-Merger contracts), respectively. In both years, we had substantial expenses due to our ongoing research and development activities and efforts to commercialize our systems, as well as substantial administrative expenses associated with our status as a public company. Our research and development expenses increased by $89,512 (46.4%) in the first nine months of 2016 as compared to 2015. This increase is due mainly to the stock options issued in July 2016. Our general and administrative expenses increased by $50,033 (23.5%) in the first nine months of 2016 as compared to 2015, due mainly to the warrants issued in 2016. Our net loss was $173,761 in the first nine months of 2016, a 27.3% increase from the net loss of $136,548 in the first nine months of 2015. Substantial net losses will continue until we are able to successfully commercialize and market our systems, as to which there can be no assurance.
Liquidity and Capital Resources
We have financed our operations since inception through the sale of debt and equity securities and through Biotech IP licensing revenues. As of September 30, 2016, we had a working capital deficit of $333,732 compared to a working capital deficit of $288,544 at December 31, 2015. This decrease in working capital is due primarily to the note payable to related parties (issued in 2012) that is due on December 31, 2016.
We expect 2016 Biotech IP revenues to approximate the 2015 levels; however, there can be no assurance that this revenue level will be achieved.
We continue to seek funding from private debt and equity investors, as we need to promptly raise substantial additional capital in order to finance our plan of operations. There can be no assurance that we will be able to raise the necessary funds on commercially acceptable terms if at all. If we do not raise the necessary funds, we may be forced to cease operations.
11
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and President, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of financial statements.
All internal controls over financial reporting, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding of controls. Therefore, even effective internal control over financial reporting can provide only reasonable, and not absolute, assurance with respect to financial statement preparation and presentation. Further, because of changes in conditions, the effectiveness of internal controls over financial reporting may vary over time. Because of its inherent limitations, internal controls over financial reporting may also fail to prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—An Integrated Framework. Based on this evaluation, our management concluded that, as of September 30, 2016, our internal control over financial reporting was effective.
No Attestation Report
This quarterly report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this quarterly report.
Changes in Internal Control Over Financial Reporting
There were no significant changes in internal control over financial reporting during the third quarter of 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
12
None.
There are no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors,” of the 2015 Annual Report. Please refer to that section for disclosure regarding the risks and uncertainties related to our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Not applicable.
| (a) | Exhibits |
| 31.1 | Certification of Principal Executive Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS | XBRL INSTANCE DOCUMENT |
| 101.SCH | XBRL TAXONOMY EXTENSION SCHEMA |
| 101.CAL | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
| 101.DEF | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
| 101.LAB | XBRL TAXONOMY EXTENSION LABEL LINKBASE |
| 101.PRE | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
13
In accordance with Section 13(a) or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| POWERVERDE, INC. | ||
| Dated: November 14, 2016 | By: | /s/ Richard H. Davis |
| Richard H. Davis | ||
| Chief Executive Officer | ||
| Dated: November 14, 2016 | By: | /s/ John L. Hofmann |
| John L. Hofmann | ||
| Chief Financial Officer | ||
14
Exhibit Index
| Exhibit No. |
Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | XBRL INSTANCE DOCUMENT | |
| 101.SCH | XBRL TAXONOMY EXTENSION SCHEMA | |
| 101.CAL | XBRL TAXONOMY EXTENSION CALCULATION LINKBASE | |
| 101.DEF | XBRL TAXONOMY EXTENSION DEFINITION LINKBASE | |
| 101.LAB | XBRL TAXONOMY EXTENSION LABEL LINKBASE | |
| 101.PRE | XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE | |
15
Exhibit 31.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard H. Davis, certify that:
| 1. | I have reviewed this Form 10-Q of PowerVerde, 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 presented in this report; |
| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the 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 officers 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: | November 14, 2016 | /s/ Richard H. Davis |
| Richard H. Davis, Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John L. Hofmann, certify that:
| 1. | I have reviewed this Form 10-Q of PowerVerde, 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 presented in this report; |
| 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the 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 officers 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: | November 14, 2016 | /s/ John L. Hofmann |
| John L. Hofmann, Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Richard H. Davis, certify as follows:
| 1. | To the best of my knowledge, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, fully complies in all material respects with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and |
| 2. | To the best of my knowledge, based upon a review of the report, the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ Richard H. Davis | |
| Richard H. Davis | ||
| Chief Executive Officer November 14, 2016 | ||
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, John L. Hofmann, certify as follows:
| 1. | To the best of my knowledge, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, fully complies in all material respects with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and |
| 2. | To the best of my knowledge, based upon a review of the report, the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| By: | /s/ John L. Hofmann | |
| John L. Hofmann | ||
| Chief Financial Officer November 14, 2016 | ||
Document and Entity Information - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2016 |
Nov. 30, 2016 |
|
| Document and Entity Information: | ||
| Entity Registrant Name | POWERVERDE, INC. | |
| Document Type | 10-Q | |
| Document Period End Date | Sep. 30, 2016 | |
| Amendment Flag | false | |
| Entity Central Index Key | 0000933972 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Common Stock, Shares Outstanding | 31,750,106 | |
| Entity Filer Category | Non-accelerated Filer | |
| Document Fiscal Year Focus | 2016 | |
| Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
|---|---|---|
| Assets | ||
| Property and equipment accumulated depreciation | $ 81,591 | $ 70,792 |
| Intellectual Property accumulated amortization | 677,992 | 665,532 |
| License accumulated amortization | $ 3,322 | $ 0 |
| Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Common Stock, par value | $ 0.0001 | $ 0.0001 |
| Common Stock, shares authorized | 200,000,000 | 200,000,000 |
| Common Stock, shares issued | 31,750,106 | 31,750,106 |
| Common Stock, shares outstanding | 31,750,106 | 31,750,106 |
| Treasury stock | 8,550,000 | 8,550,000 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
| Revenues [Abstract] | ||||
| Royalty revenue | $ 89,118 | $ 122,107 | $ 417,074 | $ 309,703 |
| Operating Expenses | ||||
| Research and development | 177,885 | 51,847 | 282,339 | 192,827 |
| General and administrative | 55,485 | 52,895 | 262,599 | 212,565 |
| Total Operating Expenses | 233,370 | 104,742 | 544,938 | 405,392 |
| Income (Loss) from Operations | (144,252) | 17,365 | (127,864) | (95,689) |
| Other Income (Expenses) | ||||
| Interest income | 570 | 570 | ||
| Interest expense | (17,338) | (13,718) | (45,898) | (41,429) |
| Total Other Income (Expense) | (17,338) | (13,148) | (45,898) | (40,859) |
| Income (Loss) before Income Taxes | (161,590) | 4,217 | (173,761) | (136,548) |
| Provision for Income Taxes | ||||
| Net Income (Loss) | $ (161,590) | $ 4,217 | $ (173,761) | $ (136,548) |
| Net Loss per Share - Basic and Diluted | $ (0.005) | $ (0.005) | $ (0.004) | |
| Weighted Average Common Shares Outstanding - Basic and Diluted | 31,750,106 | 31,750,106 | 31,750,106 | 31,750,106 |
Condensed Consolidated Financial Statements |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Condensed Consolidated Financial Statements | Note 1 – Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial statements prepared in accordance with instructions for Form 10-Q, include all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the results for the periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the Annual Report of PowerVerde, Inc. (“PowerVerde,” “we,” “us,” “our,” or the “Company”) as of and for the year ended December 31, 2015. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results to be expected for the full year or for future periods. The condensed consolidated financial statements include the accounts of PowerVerde, Inc., formerly known as Vyrex Corporation (the “Company”), and PowerVerde Systems, Inc., formerly known as PowerVerde, Inc., its wholly-owned subsidiary. Intercompany balances and transactions have been eliminated in consolidation. |
Going Concern |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Going Concern: | |
| Going Concern | Note 2 – Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has had recurring operating losses and negative cash flows from operations. Those factors, as well as uncertainty in securing additional funds for continued operations, create an uncertainty about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Summary of Significant Accounting Policies |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Summary of Significant Accounting Policies | |
| Summary of Significant Accounting Policies | Note 3 – Summary of Significant Accounting Policies
Nature of Business
The Company is devoting substantially all of its present efforts to establish a new business involving the development and commercialization of clean energy electric power generation systems, and none of its planned principal operations have commenced. However, royalties from licenses unrelated to planned principal operations continue to be recognized as revenue.
Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable
Accounts receivable consist of balances due from royalties in connection with the license agreement with VDF FutureCeuticals, Inc. The Company monitors accounts receivable and provides allowances when considered necessary. At September 30, 2016, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided.
Revenue Recognition
Royalty revenue from royalty agreements unrelated to the Company’s planned operations is recognized in accordance with the terms of the specific agreement. Revenues recognized under these agreements amount to 100% of total revenues for the nine months ended September 30, 2016 and 2015.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred.
Impairment of Long-Lived Assets
Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. No impairment losses have been recognized during the nine months ended September 30, 2016 or 2015.
Stock-based Compensation
The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term.
Common Stock Purchase Warrants
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company, or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of December 31, 2015 and September 30, 2016 were classified as equity.
Accounting for Uncertainty in Income Taxes
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Research and Development Costs
The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $282,339 and $192,827 for the nine months ended September 30, 2016 and 2015, respectively.
Earnings (Loss) Per Share
Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 4,350,000 shares and options for 5,750,500 shares were excluded from weighted average common shares outstanding on a diluted basis.
Financial instruments
The Company carries cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes payable, at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature. The Company also carries notes payable to related parties at historical cost less discounts from warrants issued as loan financing costs. The fair value of such notes is significantly similar to the face value of the notes ($400,000).
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Recent Accounting Prouncements | |
| Recent Accounting Pronouncements | Note 4 – Recent Accounting Pronouncements
Refer to the consolidated financial statements and footnotes thereto included in the PowerVerde, Inc. Annual Report on Form 10-K for the year ended December 31, 2015 for recent accounting pronouncements. Other pronouncements have been issued but the Company does not believe that their adoption will have a significant impact on the financial position or results of operations. |
Intellectual Property and License Agreement |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Intellectual Property and License Agreement | Note 5 – Intellectual Property
Intellectual Property partially consists of technology acquired from the purchase of 100% of the membership interests of Cornerstone Conservation Group LLC (“Cornerstone”) on March 30, 2012 for $659,440. Accumulated amortization with respect to this intellectual property was $659,440 at September 30, 2016.
On June 30, 2015, the Company entered into an Assignment Agreement with VyrexIP Holdings Inc., a company owned by Company shareholder Edward Gomez, for the purchase of intellectual property. The net price of these assets was comprised of a down payment of $16,116 and a $58,436 promissory note to the seller due July 15, 2016, partially offset by assignment by the seller to the Company of a $38,000 promissory note due November 14, 2015, issued by the seller’s licensee Epalex Corporation, a company of which Mr. Gomez is chairman and a major stockholder. This note was paid in full as of March 31, 2016. Accumulated amortization with respect to this intellectual property was $15,230 at September 30, 2016.
On June 1, 2016, the Company entered into a ten year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in the manufacturing of planetary rotor expanders and the incorporation of same in the Company’s distributed electric power generation systems. The license agreement also grants the Company an exclusive license to sell the expanders whether manufactured by Helidyne or by the Company. The Company’s royalty obligation begins on the earlier of the commercialization of the product or three years from the effective date of the agreement. Once the royalty obligation begins, the minimum annual royalty is $50,000 for the first six years, and $100,000 for the remainder of the agreement.
The license acquisition fee of $100,000 is to be paid in four consecutive monthly installments beginning June 1, 2016. This was paid in full as of September 30, 2016. The license acquisition fee is being amortized over a ten year period. The amortization expense for the three months ended September 30, 2016, was $2,500.
For each of the nine months ended September 30, 2016 and 2015, amortization expense was $12,460 and $58,000 and accumulated amortization of the intangible asset- intellectual property was $677,992 at September 30, 2016.
Future amortization of the intangible assets of intellectual property and license agreement was as follows as of September 30, 2016:
|
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Stockholders' Deficiency |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Deficiency | Note 6 – Stockholders’ Deficiency
Warrants
A summary of warrants issued, exercised and expired during the nine months ended September 30, 2016 is as follows:
A warrant for the purchase of 900,000 shares of common stock was issued in June 2016 to a stockholder at an exercise price of $0.11 per share in consideration for the Company utilizing his facility space from January 2013 to December 2015. The fair market value of the warrant was determined to be $0.08 per share, or $72,000, which is included in the general and administrative expenses as stock compensation expense.
In July 2016, a warrant for the purchase of 25,000 shares of common stock was issued to a stockholder as additional consideration for a $25,000 loan. See Note 8. The fair market value of the warrant was determined to be $0.13 per share, or $3,250, which was recorded as interest expense. |
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Stock Options |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options | Note 7 – Stock Options
Stock option activity for the nine months ended September 30, 2016, is summarized as follows:
Total stock option compensation for the nine months ended September 30, 2016 and 2015 was $130,065 and $0, respectively. There is no unrecognized compensation expense associated with the options. |
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Notes Payable to Related Parties |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Notes Payable to Related Parties | |
| Notes Payable to Related Parties | Note 8 - Notes Payable to Related Parties
Notes payable at December 31, 2015 included a $47,569 promissory note to VyrexIP Holdings Inc. for the purchase of intellectual property. The Company agreed to pay principal plus accrued interest over 10 monthly payments of $6,080, each due on the 15th day of each month, beginning October 15, 2015. This note was paid in full, with accrued interest, in April 2016.
Notes payable to related parties at September 30, 2016 consist of notes payable to stockholders of $400,000 (issued in 2012), less unamortized discount of $3,215 related to common stock warrants that had been issued to the stockholders with the notes. The discount is being amortized over the extended term of the notes, which are due in one principal payment on December 31, 2016. Interest is payable semiannually at 10%. The note is collateralized by all receivables now or hereafter existing pursuant to the license agreement with VDF FutureCeuticals, Inc. discussed in Note 3.
The notes payable to related parties at September 30, 2016 also includes a promissory note to a stockholder for $25,000. The principal balance and interest at 10% was due October 31, 2016. On October 26, 2016, the lender extended the maturity date of the note to January 31, 2017 in exchange for an additional 25,000 warrants with an exercise price of $0.15.
Payable to related party consists primarily of a $20,000 unsecured note payable to Company shareholder Edward Gomez bearing interest at 10%. On June 11, 2015, the lender extended the maturity date on the balance of the note to July 31, 2016. This note was paid in full, with accrued interest, in July 2016. |
Commitments and Contingencies |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Commitment and Contingencies: | |
| Commitments and Contingencies | Note 9 - Commitments and Contingencies
On June 25, 2015, Company consultant Hank Leibowitz assigned to the Company a patent he obtained for a system and method for using high temperature sources in Rankine cycle power systems. The Company has agreed to pay Mr. Leibowitz a 2% royalty for any and all revenues of products and/or project sales by the Company based on the subject patent.
The Company’s license agreement with VDF FutureCeuticals, Inc., which has generated all of the Company’s revenues since 2012, will terminate in March 2018, when the underlying patents expire.
On June 1, 2016, the Company entered into a ten year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in manufacturing and to sell Helidyne expanders. As part of the licensing agreement the Company committed to purchase two 50 kW expanders, at a price of $25,000 each, on or before the sixth month anniversary of the agreement. The $50,000 is payable in two monthly installments of $25,000 beginning October 2016.
The Company agreed to pay Helidyne LLC a royalty of 3% of sales, subject to a minimum annual royalty of $50,000 beginning on the earlier of commercialization of the product or three years from the effective date of the agreement. |
Related Party Transactions |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Related Party Transactions | |
| Related Party Transactions | Note 10 - Related Party Transactions
Since July 2010, the accounting firm J.L. Hofmann & Associates, P.A. (“JLHPA”), whose principal is the Company’s CFO John L. Hofmann, has provided financial consulting and accounting services to the Company. The Company paid $28,815 and $30,695 to JLHPA for its services in the nine months ended September 30, 2016 and 2015, respectively. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
|---|---|
Sep. 30, 2016 | |
| Summary of Significant Accounting Policies | |
| Nature of Business | Nature of Business
The Company is devoting substantially all of its present efforts to establish a new business involving the development and commercialization of clean energy electric power generation systems, and none of its planned principal operations have commenced. However, royalties from licenses unrelated to planned principal operations continue to be recognized as revenue. |
| Cash Equivalents | Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. |
| Accounts Receivables | Accounts Receivable
Accounts receivable consist of balances due from royalties in connection with the license agreement with VDF FutureCeuticals, Inc. The Company monitors accounts receivable and provides allowances when considered necessary. At September 30, 2016, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided. |
| Revenue Recognition | Revenue Recognition
Royalty revenue from royalty agreements unrelated to the Company’s planned operations is recognized in accordance with the terms of the specific agreement. Revenues recognized under these agreements amount to 100% of total revenues for the nine months ended September 30, 2016 and 2015. |
| Property and Equipment | Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Expenditures for major betterments and additions are capitalized, while replacement, maintenance and repairs, which do not extend the lives of the respective assets, are expensed as incurred. |
| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets
Impairment losses are recorded on long-lived assets (property, equipment and intellectual property) used in operations when impairment indicators are present and the undiscounted expected cash flows estimated to be generated by those assets are less than the carrying value of such assets. No impairment losses have been recognized during the nine months ended September 30, 2016 or 2015. |
| Stock-based Compensation | Stock-based Compensation
The Company has accounted for stock-based compensation under the provisions of ASC Topic 718 – “Stock Compensation” which requires the use of the fair-value based method to determine compensation for all arrangements under which employees and others receive shares of stock or equity instruments (stock options and common stock purchase warrants). The fair value of each stock option award is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatilities are based on historical volatility of peer companies and other factors estimated over the expected term of the stock options. The expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the period of the expected term. |
| Common Stock Purchase Warrants | Common Stock Purchase Warrants
The Company accounts for common stock purchase warrants in accordance with ASC Topic 815- 40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” (“ASC 815-40”). Based on the provisions of ASC 815- 40, the Company classifies as equity any contracts that (i) require physical settlement or net-share settlement, or (ii) gives the Company a choice of net-cash settlement or settlement in its own shares (physical settlement or net-share settlement). The Company classifies as assets or liabilities any contracts that (i) require net-cash settlement including a requirement to net cash settle the contract if an event occurs and if that event is outside the control of the Company, or (ii) give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). All outstanding warrants as of December 31, 2015 and September 30, 2016 were classified as equity. |
| Accounting for Uncertainty in Income Taxes | Accounting for Uncertainty in Income Taxes
The Company follows the provisions of ASC Topic 740-10, “Accounting for Uncertainty in Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. |
| Research and Development Costs | Research and Development Costs
The Company’s research and development costs are expensed in the period in which they are incurred. Such expenditures amounted to $282,339 and $192,827 for the nine months ended September 30, 2016 and 2015, respectively. |
| Earnings (Loss) Per Share | Earnings (Loss) Per Share
Earnings (loss) per share is computed in accordance with FASB ASC Topic 260, “Earnings per Share”. Diluted earnings per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Certain common stock equivalents were not included in the earnings (loss) per share calculation as their effect would be anti-dilutive. Warrants exercisable for 4,350,000 shares and options for 5,750,500 shares were excluded from weighted average common shares outstanding on a diluted basis. |
| Financial instruments | Financial instruments
The Company carries cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, and notes payable, at historical costs. The respective estimated fair values of these assets and liabilities approximate carrying values due to their current nature. The Company also carries notes payable to related parties at historical cost less discounts from warrants issued as loan financing costs. The fair value of such notes is significantly similar to the face value of the notes ($400,000). |
| Use of Estimates | Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. |
Intellectual Property and License Agreement (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Intellectual Property Tables | |||||||||||||||||||||||||||||||||||||||||||||||||
| Future amortization of the intangible asset | Future amortization of the intangible assets of intellectual property and license agreement was as follows as of September 30, 2016:
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Stockholders' Deficiency (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders Deficiency Tables | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of warrants | A summary of warrants issued, exercised and expired during the nine months ended September 30, 2016 is as follows:
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Stock Options (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option activity: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Option | Stock option activity for the nine months ended September 30, 2016, is summarized as follows:
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Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
| Antidilutive Securities Excluded and Imapirment charges | ||
| Number of warrants excluded from weighted average common shares outstanding on a diluted basis. | 4,350,000 | |
| Number of options excluded from weighted average common shares outstanding on a diluted basis. | 5,750,500 | |
| Revenue percentage | 100.00% | 100.00% |
| Research and development costs | $ 282,339 | $ 192,827 |
| Fair value of notes | $ 400,000 | |
Intellectual Property and License Agreement (Details) |
Sep. 30, 2016
USD ($)
|
|---|---|
| Year ending December 31: | |
| 2016 | $ 5,546 |
| 2017 | 22,184 |
| 2018 | 12,374 |
| 2019 | 10,000 |
| 2020 | 10,000 |
| Thereafter | 54,178 |
| Total | $ 114,282 |
Intellectual Property and License Agreement (Details Narrative) - USD ($) |
3 Months Ended | 4 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|---|
Mar. 31, 2015 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Nov. 14, 2015 |
Mar. 30, 2012 |
|
| Amortization expense | $ 2,500 | $ 12,460 | $ 58,000 | ||||
| Accumulated amortization of the intangible asset- intellectual property | 677,992 | $ 665,532 | |||||
| Promissory note down payment | $ 16,116 | 16,116 | |||||
| Promissory note due | $ 58,436 | $ 58,436 | $ 38,000 | ||||
| Promissory note due date | Jul. 15, 2016 | ||||||
| Note Payable in connection with IP acquisition | 100,000 | ||||||
| License agreement | 100,000 | ||||||
| Cornerstone | |||||||
| Percentage of membership interests purchased | 100.00% | ||||||
| Business Acquisition, Transaction Costs | $ 659,440 | ||||||
| Accumulated amortization of the intangible asset- intellectual property | 659,440 | ||||||
| VyrexIP Holdings Inc | |||||||
| Accumulated amortization of the intangible asset- intellectual property | $ 15,230 | ||||||
Stockholders' Deficiency (Details) - Warrant [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2016
$ / shares
shares
| |
| Balance at December 31, 2015 | shares | 4,480,000 |
| Shares Issued | shares | 925,000 |
| Shares Expired | shares | (1,055,000) |
| Balance at June 30, 2016 | shares | 4,350,000 |
| Weighted Average Exercise Price Balance at December 31, 2015 | $ 0.58 |
| Weighted Average Exercise Price Issued | 0.15 |
| Weighted Average Exercise Price Expired | (1.05) |
| Weighted Average Exercise Price Balance at June 30, 2016 | 0.37 |
| Aggregate Intrinsic Value Balance at December 31, 2015 | 45,000 |
| Aggregate Intrinsic Value Issued | |
| Aggregate Intrinsic Value Expired | |
| Aggregate Intrinsic Value Balance at June 30, 2016 | $ 45,000 |
Stockholders' Deficiency (Details Narrative) |
9 Months Ended |
|---|---|
|
Sep. 30, 2016
USD ($)
$ / shares
shares
| |
| Notes payable to stockholders | $ | $ 400,000 |
| Warrant [Member] | |
| Shares Issued | shares | 925,000 |
| exercise price | shares | 0.11 |
| fair market value of the warrant, per share | $ / shares | $ 0.08 |
| fair market value of the warrant, value | $ | $ 25,000 |
Stock Options (Details) - Options [Member] - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2016 |
Dec. 31, 2015 |
|
| Shares | ||
| Balance at December 31, 2015 | 4,750,000 | |
| Granted | 1,000,500 | |
| Expired/forfeited | ||
| Balance at June 30, 2016 | 5,750,000 | 4,750,000 |
| Weighted Average Exercise Price | ||
| Balance at December 31, 2015 | $ 0.34 | |
| Granted | 0.19 | |
| Expired/forfeited | ||
| Balance at June 30, 2016 | $ 0.28 | $ 0.34 |
| Weighted Average Remaining Contractual Life (Years) | ||
| Options outstanding | 5 years 4 months 13 days | 6 years |
Stock Options (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
| Share-based Compensation | $ 0 | $ 0 |
| Unrecognized stock-based compensation | $ 130,065 | $ 0 |
Notes Payable to Related Parties (Details Narrative) - USD ($) |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
|
| Notes payable to stockholders | $ 400,000 | ||
| Unamortized discount | $ 3,215 | $ 9,673 | |
| Interest rate | 10.00% | 10.00% | |
| Promissory note [Member] | |||
| Notes payable to stockholders | $ 47,569 | ||
| Edward Gomez [Member] | |||
| Interest rate | 10.00% | ||
| Unsecured note payable | $ 20,000 | ||
| Extending maturity date | July 31, 2016 |
Commitments and Contingencies (Details Narrative) - USD ($) |
Sep. 30, 2016 |
Jun. 25, 2015 |
|---|---|---|
| Royalty percentage | 2.00% | |
| Helidyne LLC [Member] | ||
| Royalty percentage | 3.00% | |
| Annual Royalty | $ 50,000 |
Related Party Transactions (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
| Related Party Transactions | ||
| Financial consulting and accounting services | $ 28,815 | $ 30,695 |
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