10-Q

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 March 31, 2019

 ☐ 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.)

9300 S. Dadeland Blvd, Suite 600 

Miami, FL 33156

(Address of principal executive offices)

(305) 670-3370

(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 May 14, 2019, the issuer had 31,750,106 shares of common stock outstanding.

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Index to Form 10-Q

		Page
PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets at March 31, 2019 (Unaudited)   and December 31, 2018	1
	Condensed Consolidated Statements of Operations for the three months   ended March 31, 2019 and 2018 (Unaudited)	3
	Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the three months ended March 31, 2019 and 2018 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months   Ended March 31, 2019 and 2018 (Unaudited)	5
	Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	15
Item 4.	Controls and Procedures	15
PART II	OTHER INFORMATION	16
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	17
SIGNATURES		18

Cautionary Note Regarding Forward-Looking Information

This Form 10-Q contains certain statements related to future results of the Company that are considered “forward-looking statements” within the meaning of the Private Litigation Reform Act of 1995. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to, changes in political and economic conditions; interest rate fluctuation; competitive pricing pressures within the Company’s market; equity and fixed income market fluctuation; technological changes; changes in law; changes in fiscal, monetary, regulatory, and tax policies; monetary fluctuations as well as other risks and uncertainties detailed elsewhere in this Form 10-Q or from time-to-time in the filings of the Company with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

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PART I FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

PowerVerde, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
March 31, 2019 (Unaudited) and December 31, 2018

	2019		2018
Assets
Current Assets:
Cash and cash equivalents	$	218,143	$	8,482
Accounts receivable		5,000		10,000
Prepaid expenses and other current assets		15,574		10,866
Total Current Assets		238,717		29,348
Property and Equipment
Property and equipment, net of accumulated depreciation of $107,641 and $107,007, respectively		—		634
Other Assets
License, net of accumulated amortization of $28,322 and $25,822,   respectively		71,678		74,178
Total Other Assets		71,678		74,178
Total Assets	$	310,395	$	104,160
Liabilities and Stockholders’ (Deficit) Equity
Current Liabilities
Accounts payable and accrued expenses	$	72,801	$	39,136
Total Current Liabilities		72,801		39,136
Long Term Liabilities
Note Payable to related parties, net of loan costs		267,721		—
Total Long Term Liabilities		267,721		—
Total Liabilities		340,522		39,136

Stockholders’ Equity (Deficit)
Preferred Stock:
50,000,000 preferred shares authorized, 0 preferred shares issued   at March 31, 2019 and December 31, 2018		—			—
Common stock:
200,000,000 common shares authorized, par value $0.0001 per share, 40,300,106 common shares issued and 31,750,106 shares outstanding at March 31, 2019 and December 31, 2018		3,981			3,981
Additional paid-in capital		12,609,980			12,609,980
Treasury stock, 8,550,000 shares at cost		(491,139	)		(491,139	)
Accumulated deficit		(12,152,949	)		(12,057,798	)
Total Stockholders’ (Deficit) Equity		(30,127	)		65,024
Total Liabilities and Stockholders’ Equity (Deficit)	$	310,395		$	104,160

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 months ended March 31, 2019 and 2018
(Unaudited)

	2019			2018
Revenue	$	5,000		$	162,094
Operating Expenses
Research and development		35,059			35,292
General and administrative		60,798			70,394
Total Operating Expenses		95,857			105,686
(Loss) Income from Operations		(90,857	)		56,408
Other Income (Expenses)
Interest income		—			914
Interest expense		(4,294	)		(698	)
Total Other (Expense) Income		(4,294	)		216
(Loss) Income before Income Taxes		(95,151	)		56,624
Provision for Income Taxes		—			—
Net (Loss) Income	$	(95,151	)	$	56,624
Net (Loss) Income per Share - Basic and Diluted	$	0.00		$	0.00
Weighted Average Common Shares Outstanding - Basic and Diluted		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 Changes in Stockholders’ Equity (Deficit)

For the three months ended March 31, 2019 and 2018 

(Unaudited)

For the three months ended March 31, 2018
	Preferred stock		Common stock		Additional paid-in capital		Accumulated deficit			Treasury stock			Total
Balances at December 31, 2017	$	—		3,981		12,129,331		(11,378,720	)		(491,139	)		263,453
Net income								56,624						56,624
Balances at March 31, 2018				3,981		12,129,331		(11,322,096	)		(491,139	)		320,077

For the three months ended March 31, 2019
	Preferred stock		Common stock		Additional paid-in capital		Accumulated deficit			Treasury stock			Total
Balances at December 31, 2018	$	—		3,981		12,609,980		(12,057,798	)		(491,139	)		65,024
Net loss								(95,151	)					(95,151	)
Balances at March 31, 2019				3,981		12,609,980		(12,152,949	)		(491,139	)		(30,127	)

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 three months ended March 31, 2019 and 2018
(Unaudited)

	2019			2018
Cash Flows from Operating Activities
Net (Loss) income	$	(95,151	)	$	56,624
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		4,054			8,440
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other assets		292			200,400
Accounts payable and accrued expenses		33,665			(81,315	)
Cash (Used) Provided by Operating Activities		(57,140	)		184,149
Cash Flows from Financing Activities
Proceeds from notes payable, related party		290,000			—
Payments for debt issuance costs		(22,279	)		—
Payment on notes payable, related party		—			(150,000	)
Cash Provided by (used in) Financing Activities		267,721			(150,000	)
Net Change in Cash and Cash Equivalents		209,661			34,149
Cash and Cash Equivalents at Beginning of Period		8,482			1,336
Cash and Cash Equivalents at End of Period	$	218,143		$	35,485
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	—		$	698

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

March 31, 2019

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 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, 2018. The results of operations for the three months ended March 31, 2019, 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

We have financed our operations since inception through the sale of debt and equity securities and through Biotech IP licensing revenues which expired in March 2018. As of March 31, 2019, we had working capital of $165,916 compared to working capital deficit of $9,788 at December 31, 2018. This improvement in working capital is due primarily to the sale of related party notes payable during this period.

The Company has historically relied upon unrelated and related party debt and equity financing to fund its cash flow shortages and will require either additional debt or equity financing to sustain its operations. The Company’s revenues through 2018 were derived mainly from royalties under its biotech licensing agreement, which expired in March 2018. Those factors create substantial doubt about the Company’s ability to continue as a going concern.

The Company continues to seek funding from private debt and equity investors, as it needs to promptly raise substantial additional capital in order to finance its plan of operations. There can be no assurance that the Company will be able to promptly raise the necessary additional funds on commercially acceptable terms, if at all. If the Company does not raise the necessary funds, it may be forced to cease operations.

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 were recognized as revenue through March 2018, when the underlying license agreement terminated. No material revenues from this planned principal operation have been generated.

Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

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Accounts Receivable

Accounts receivable consist of balances due from assembly services. The Company monitors accounts receivable and provides allowances when considered necessary. At March 31, 2019, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided.

Revenue Recognition

Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the three months ended March 31, 2019 and 2018.

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 three months ended March 31, 2019 or 2018.

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, 2018 and March 31, 2019 were classified as equity.

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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 $35,059 and $35,292 for the three months ended March 31, 2019 and 2018, 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 3,675,000 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, 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 or market interest rates on interest bearing debt.

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

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs- Contracts with Customers, which discussed the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The impact of adoption of the new standard on our revenue recognition was not significant; accordingly, there was no cumulative effect adjustment of adoption on January 1, 2018 retained earnings.

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Note 4 – Recent Account Pronouncements (continued)

We have reviewed each of our current contracts for the related performance obligations and related revenue and expense recognition implications. A performance obligation under the new revenue standard is defined as a promise to provide a “distinct” good or service to a customer. The Company has determined that the assembly services is a performance obligation for which a transaction price has been established in the manufacturing agreement. The assembly of each unit stands on its own. Revenue related to assembly services is recognized as revenue when the assembled product is delivered to the customer. The Company has also determined that the performance obligation associated with our royalty revenues was the ongoing delivery of the license to which the royalties relate. Royalty revenues were recognized based on the contract royalty rate applied to licensee sales in the periods during which such sales occurred.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company adopted ASU Topic 842 on January 1, 2019 and such adoption did not have any impact on the Company’s financial statements.

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718).” ASU 2018-07 simplifies the accounting for nonemployee stock-based payment transactions. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018, and early application is permitted. The adoption of this guidance on January 1, 2019 did not have an impact on the Company’s financial statements.

Note 5 – Intellectual Property and License Agreement

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 in November 2015.

On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC for total consideration of $100,000 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 each of the first six years, and $100,000, per commercial year, for the remainder of the agreement.

For the three months ended March 31, 2019 and 2018, amortization expense was $2,500 and $4,874 respectively, and accumulated amortization of the intangible assets was $28,322 and $25,822 at March 31, 2019 and December 31, 2018, respectively.

Future amortization of the intangible assets is as follows as of March 31, 2019:

Year ending December 31:
2019	$	7,500
2020		10,000
2021		10,000
Thereafter		44,178
Total	$	71,678

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Note 6 – Stockholders’ Equity (Deficit)

Warrants

A summary of warrants issued, exercised and expired during the three months ended March 31, 2019 is as follows:

	Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance at December 31, 2018		975,000	$	.11	$	—
Issued		—		—		—
Expired		—		—		—
Balance at March 31, 2019		975,000	$	.11	$	—

Note 7 – Stock Options

Stock option activity for the quarter ended March 31, 2019, is summarized as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2018		11,180,500	$	0.20		7.02
Granted		—		—		—
Expired/forfeited		—		—		—
Options outstanding at March 31, 2019		11,180,500	$	0.20		6.27

Total stock option compensation for the three months ended March 31, 2019 and 2018 was $0. There is no unrecognized compensation expense associated with the options.

Note 8 – Notes Payable to Related Parties

In the first quarter of 2019, the Company issued Series B Convertible Promissory Notes totaling $290,000 to stockholders. The notes are to be paid in one principal payment, along with any unpaid interest, by December 31, 2021. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021.

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.

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On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in order to use Helidyne expanders in Powerverde systems 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 was payable in two monthly installments of $25,000 beginning October 2016. The Company had made payments totaling $38,750, towards the purchase of the expanders. Due to Helidyne’s failure to perform under the agreement, the Company has not made any further payments to Helidyne and does not intend to do so unless and until Helidyne performs as required. Helidyne has not objected to the Company’s position, and it is very unlikely that Helidyne will ever be able to perform.

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. This minimum royalty would be payable only if Helidyne performs as required, which is very unlikely, or if the Company elects to produce its own expanders using Helidyne technology. The Company does intend to produce these expanders directly or through a contract manufacturer in the future. See Note 5.

On April 15, 2017, the Company entered into an assembly agreement with Liberty Plugins, Inc. (“Liberty”) to assemble Liberty’s Hydra electronic vehicle charging systems and ship completed Hydras to Liberty’s facility in Santa Barbara, California (the “Liberty Agreement”). Liberty has agreed to pay $1,000 for the first 10 Hydras assembled in a month, $750 per Hydra for the next 10 Hydras assembled per month and $500 per Hydra for each Hydra assembled above 20 per month. The Company has never assembled/shipped more than 10 Hydras in any month and does not expect to do so in the future. As of March 31, 2019, the Company has built and shipped 70 Hydras. Revenue of $5,000 and $3,000 for these products is reflected in the net revenue on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2019 and 2018, respectively.

Note 10 - Related Party Transactions

Since July 2010, the accounting firm J.L. Hofmann & Associates, P.A. (“JLHPA”), whose principal is our CFO John L. Hofmann, has provided financial consulting and accounting services to the Company. In December 2017, J.L. Hofmann & Associates, P.A. merged with Kabat, Schertzer, De La Torre, Taraboulos & Co, LLC (“KSDT”). The Company paid $9,614 and $10,730 for its services in the three months ended March 31, 2019 and 2018, respectively.

Note 11 – Subsequent Events

The Company’s management evaluated subsequent events through May 14, 2019, in connection with the preparation of these condensed consolidated financial statements, which is the date these financial statements were available to be issued. There are no subsequent events to report as of this date, except that in May 2019 the Company issued a Series B Convertible Promissory Note in the principal amount of $10,000 to a stockholder in connection with a loan in the same amount. Consequently, Series B Convertible Promissory Notes have been issued in an aggregate principal amount of $300,000 during the first two quarters of 2019. See Note 8.

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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 2018 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, 2013, 2014, 2015, 2016, and 2017, the tax years which remain subject to examination by major tax jurisdictions as of March 31, 2019.

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.

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Revenue Recognition

Revenue from royalties and assembly services unrelated to the Company’s planned operations is recognized when the goods or services are transferred to the customer. Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the three months ended March 31, 2019 and 2018.

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 March 31, 2019 and 2018 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.

12

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” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2019.

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 March 31, 2019 as Compared to Three Months Ended March 31, 2018

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 quarter of 2019 and 2018 – but we recorded $0 and $159,094 in Biotech IP licensing fees (based on pre-Merger contracts), respectively. Also, we generated $5,000 and $3,000 in revenue for assembly revenues under the Liberty Agreement in the first quarter of 2019 and 2018, 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 have remained consistent in the first quarter of 2019 as compared to the first quarter of 2018. Our general and administrative expenses decreased by $9,596 in the first quarter of 2019 as compared to 2018, primarily because of decreased amortization and depreciation expense, as well as decreased legal fees. Primarily as a result of the March 2018 expiration of our Biotech IP license agreement, our net loss was $95,151 in the first quarter of 2019 as compared to net income of $56,624 in the first quarter of 2018. Substantial net losses are expected until we are able to successfully commercialize and market our systems, as to which there can be no assurance. Any taxes that might result from net income for financial reporting purposes would be eliminated through use of a portion of the Company’s net operating loss carryforward.

Liquidity and Capital Resources

We have financed our operations since inception principally through the sale of debt and equity securities. Also, from 2012 through March 2018 we received material amounts of Biotech IP licensing fees. As of March 31, 2019, we had working capital of $165,916 compared to a working capital deficit of $9,788 at December 31, 2018. Our improved working capital position is due primarily to the notes payable issued in the first quarter of 2019.

Our Biotech IP license agreement expired in March 2018 due to the expiration of our underlying patents. Consequently, we have no further material source of revenues. We are generating some revenue by using our employee to provide part-time skilled manufacturing services to a third party; however, we expect this arrangement to generate no more than $5,000 per month. We expect to generate substantial revenue from the 374Water/Duke project in 2019 if we receive the expected purchase order; however, there can be no assurance that we will receive the purchase order.

We continue to seek funding from private equity and debt investors, as we need to promptly raise substantial additional capital in order to finance our plan of operations and commercialize our systems. There can be no assurance that we will be able to promptly raise the necessary funds. If we do not promptly raise the necessary funds, we may be forced to cease operations.

13

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, 2018. 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 March 31, 2019, 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 first quarter of 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

14

PART II OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

There are no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors,” of the 2018 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.

In the first quarter of 2019, we issued Series B Convertible Promissory Notes totaling $290,000 to stockholders in connection with a loan in the same amount. The notes are to be paid in one principal payment, along with any unpaid interest, by December 31, 2021. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021.

In the second quarter of 2019, the Company issued a Series B Convertible Promissory Note in the principal amount of $10,000 to a stockholder in connection with a loan in the same amount.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

15

Item 6. Exhibits.

(a)	Exhibits
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

16

SIGNATURES

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: May 14, 2019	By:	/s/ Richard H. Davis
		Richard H. Davis
		Chief Executive Officer
Dated: May 14, 2019	By:	/s/ John L. Hofmann
		John L. Hofmann
		Chief Financial Officer

17

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

18 

EX-31.1

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:	May 14, 2019	/s/ Richard H. Davis
		Richard H. Davis, Chief Executive Officer

EX-31.2

 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:	May 14, 2019	/s/ John L. Hofmann
		John L. Hofmann, Chief Financial Officer

EX-32.1

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 March 31, 2019, 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 May 14, 2019

EX-32.2

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 March 31, 2019, 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 May 14, 2019

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 14, 2019
Document and Entity Information:
Entity Registrant Name	POWERVERDE, INC.
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
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
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Current Reporting Status	Yes
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current Assets:
Cash and cash equivalents	$ 218,143	$ 8,482
Accounts receivable	5,000	10,000
Prepaid expenses and other current assets	15,574	10,866
Total Current Assets	238,717	29,348
Property and Equipment
Property and equipment, net of accumulated depreciation of $107,641 and $107,007, respectively	0	634
Other Assets
License, net of accumulated amortization of $28,322 and $25,822, respectively	71,678	74,178
Total Other Assets	71,678	74,178
Total Assets	310,395	104,160
Current Liabilities
Accounts payable and accrued expenses	72,801	39,136
Total Current Liabilities	72,801	39,136
Long Term Liabilities
Note Payable to related parties, net of loan costs	267,721	0
Total Long Term Liabilities	267,721	0
Total Liabilities	340,522	39,136
Stockholders' Equity (Deficit)
Preferred stock: 50,000,000 preferred shares authorized, 0 preferred shares issued at March 31, 2019 and December 31, 2018	0	0
Common stock: 200,000,000 common shares authorized, par value $0.0001 per share, 40,300,106 common shares issued and 31,750,106 shares outstanding at March 31, 2019 and December 31, 2018	3,981	3,981
Additional paid-in capital	12,609,980	12,609,980
Treasury stock, 8,550,000 shares at cost	(491,139)	(491,139)
Accumulated deficit	(12,152,949)	(12,057,798)
Total Stockholders (Deficit) Equity	(30,127)	65,024
Total Liabilities and Stockholders' Equity (Deficit)	$ 310,395	$ 104,160

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Assets
Property and equipment, net of accumulated depreciation	$ 107,641	$ 107,007
License, net of accumulated amortization	$ 28,322	$ 25,822
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common Stock, par value	$ 0.0001	$ 0.0001
Common Stock, shares authorized	200,000,000	200,000,000
Common Stock, shares issued	40,300,106	40,300,106
Common Stock, shares outstanding	31,750,106	31,750,106
Treasury stock	8,550,000	8,550,000

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues [Abstract]
Revenue	$ 5,000	$ 162,094
Operating Expenses
Research and development	35,059	35,292
General and administrative	60,798	70,394
Total Operating Expenses	95,857	105,686
(Loss) Income from Operations	(90,857)	56,408
Other Income (Expenses)
Interest income	0	914
Interest expense	(4,294)	(698)
Total Other (Expense) Income	(4,294)	216
(Loss) Income before Income Taxes	(95,151)	56,624
Provision for Income Taxes	0	0
Net (Loss) Income	$ (95,151)	$ 56,624
Net (Loss) Income per Share - Basic and Diluted	$ 0	$ 0
Weighted Average Common Shares Outstanding - Basic and Diluted	31,750,106	31,750,106

XML

Condensed Consolidated Changes in Stockholders' Equity (Deficit) (Unaudited) - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Treasury Stock	Total
Balance at Dec. 31, 2017		$ 3,981	$ 12,129,331	$ (11,378,720)	$ (491,139)	$ 263,453
Net income (loss)				56,624		56,624
Balance at Mar. 31, 2018		3,981	12,129,331	(11,322,096)	(491,139)	320,077
Balance at Dec. 31, 2018		3,981	12,609,980	(12,057,798)	(491,139)	65,024
Net income (loss)				(95,151)		(95,151)
Balance at Mar. 31, 2019		$ 3,981	$ 12,609,980	$ (12,152,949)	$ (491,139)	$ (30,127)

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash Flows from Operating Activities
Net (Loss) income	$ (95,151)	$ 56,624
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization	4,054	8,440
Changes in operating assets and liabilities
Accounts receivable, prepaid expenses and other assets	292	200,400
Accounts payable and accrued expenses	33,665	(81,315)
Cash (Used) Provided by Operating Activities	(57,140)	184,149
Cash Flows from Financing Activities
Proceeds from notes payable, related party	290,000	0
Payments for debt issuance costs	(22,279)	0
Payment on notes payable, related party	0	(150,000)
Cash Provided by (used in) Financing Activities	267,721	(150,000)
Net Change in Cash and Cash Equivalents	209,661	34,149
Cash and cash equivalents at Beginning of Period	8,482	1,336
Cash and cash equivalents at End of Period	218,143	35,485
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$ 0	$ 698

XML

Condensed Consolidated Financial Statements

3 Months Ended

Mar. 31, 2019

Financial Statements

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 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, 2018. The results of operations for the three months ended March 31, 2019, 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.

XML

Going Concern

3 Months Ended

Mar. 31, 2019

Going Concern:

Going Concern

Note 2 – Going Concern

We have financed our operations since inception through the sale of debt and equity securities and through Biotech IP licensing revenues which expired in March 2018. As of March 31, 2019, we had working capital of $165,916 compared to working capital deficit of $9,788 at December 31, 2018. This improvement in working capital is due primarily to the sale of related party notes payable during this period.

The Company has historically relied upon unrelated and related party debt and equity financing to fund its cash flow shortages and will require either additional debt or equity financing to sustain its operations. The Company’s revenues through 2018 were derived mainly from royalties under its biotech licensing agreement, which expired in March 2018. Those factors create substantial doubt about the Company’s ability to continue as a going concern.

The Company continues to seek funding from private debt and equity investors, as it needs to promptly raise substantial additional capital in order to finance its plan of operations. There can be no assurance that the Company will be able to promptly raise the necessary additional funds on commercially acceptable terms, if at all. If the Company does not raise the necessary funds, it may be forced to cease operations.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Policy Text Block [Abstract]

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 were recognized as revenue through March 2018, when the underlying license agreement terminated. No material revenues from this planned principal operation have been generated.

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 assembly services. The Company monitors accounts receivable and provides allowances when considered necessary. At March 31, 2019, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided.

Revenue Recognition

Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the three months ended March 31, 2019 and 2018.

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 three months ended March 31, 2019 or 2018.

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, 2018 and March 31, 2019 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 $35,059 and $35,292 for the three months ended March 31, 2019 and 2018, 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 3,675,000 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, 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 or market interest rates on interest bearing debt.

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.

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Recent Accounting Prouncements

Recent Accounting Pronouncements

Note 4 – Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in ASU Topic 605, Revenue Recognition (“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 also includes Subtopic 340-40, Other Assets and Deferred Costs- Contracts with Customers, which discussed the deferral of incremental costs of obtaining a contract with a customer, including the period of amortization of such costs. The new standard was adopted by the Company in our fiscal year beginning January 1, 2018. The impact of adoption of the new standard on our revenue recognition was not significant; accordingly, there was no cumulative effect adjustment of adoption on January 1, 2018 retained earnings.

We have reviewed each of our current contracts for the related performance obligations and related revenue and expense recognition implications. A performance obligation under the new revenue standard is defined as a promise to provide a “distinct” good or service to a customer. The Company has determined that the assembly services is a performance obligation for which a transaction price has been established in the manufacturing agreement. The assembly of each unit stands on its own. Revenue related to assembly services is recognized as revenue when the assembled product is delivered to the customer. The Company has also determined that the performance obligation associated with our royalty revenues was the ongoing delivery of the license to which the royalties relate. Royalty revenues were recognized based on the contract royalty rate applied to licensee sales in the periods during which such sales occurred.

In February 2016, the FASB issued ASU 2016-02, “Leases,” which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company adopted ASU Topic 842 on January 1, 2019 and such adoption did not have any impact on the Company’s financial statements.

In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718).” ASU 2018-07 simplifies the accounting for nonemployee stock-based payment transactions. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018, and early application is permitted. The adoption of this guidance on January 1, 2019 did not have an impact on the Company’s financial statements.

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Intellectual Property and License Agreement

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Intellectual Property and License Agreement

Note 5 – Intellectual Property and License Agreement

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 in November 2015. Accumulated amortization with respect to this intellectual property was $74,178 and $71,678 at March 31, 2019 and December 31, 2018, respectively.

On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC for total consideration of $100,000 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 each of the first six years, and $100,000, per commercial year, for the remainder of the agreement.

For the three months ended March 31, 2019 and 2018, amortization expense was $2,500 and $4,874 respectively, and accumulated amortization of the intangible assets was $28,322 and $25,822 at March 31, 2019 and December 31, 2018, respectively.

Future amortization of the intangible assets is as follows as of March 31, 2019:

Year ending December 31:
2019	$	7,500
2020		10,000
2021		10,000
Thereafter		44,178
Total	$	71,678

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Stockholders' Equity (Deficit)

3 Months Ended

Mar. 31, 2019

Equity:

Stockholders’ Equity (Deficit)

Note 6 – Stockholders’ Equity (Deficit)

Warrants

A summary of warrants issued, exercised and expired during the three months ended March 31, 2019 is as follows:

	Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance at December 31, 2018		975,000	$	.11	$	—
Issued		—		—		—
Expired		—		—		—
Balance at March 31, 2019		975,000	$	.11	$	—

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Stock Options

3 Months Ended

Mar. 31, 2019

Stock Options

Stock Options

Note 7 – Stock Options

Stock option activity for the quarter ended March 31, 2019, is summarized as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2018		11,180,500	$	0.20		7.02
Granted		—		—		—
Expired/forfeited		—		—		—
Options outstanding at March 31, 2019		11,180,500	$	0.20		6.27

Total stock option compensation for the three months ended March 31, 2019 and 2018 was $0. There is no unrecognized compensation expense associated with the options.

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Notes Payable to Related Parties

3 Months Ended

Mar. 31, 2019

Notes Payable to Related Parties

Notes Payable to Related Parties

Note 8 – Notes Payable to Related Parties

In the first quarter of 2019, the Company issued Series B Convertible Promissory Notes totaling $290,000 to stockholders. The notes are to be paid in one principal payment, along with any unpaid interest, by December 31, 2021. Interest is payable semiannually at 10%. The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

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.

On June 1, 2016, the Company entered into a ten-year License Agreement with Helidyne LLC to utilize the Helidyne intellectual property in order to use Helidyne expanders in Powerverde systems 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 was payable in two monthly installments of $25,000 beginning October 2016. The Company had made payments totaling $38,750, towards the purchase of the expanders. Due to Helidyne’s failure to perform under the agreement, the Company has not made any further payments to Helidyne and does not intend to do so unless and until Helidyne performs as required. Helidyne has not objected to the Company’s position, and it is very unlikely that Helidyne will ever be able to perform.

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. This minimum royalty would be payable only if Helidyne performs as required, which is very unlikely, or if the Company elects to produce its own expanders using Helidyne technology. The Company does intend to produce these expanders directly or through a contract manufacturer in the future. See Note 5.

On April 15, 2017, the Company entered into an assembly agreement with Liberty Plugins, Inc. (“Liberty”) to assemble Liberty’s Hydra electronic vehicle charging systems and ship completed Hydras to Liberty’s facility in Santa Barbara, California (the “Liberty Agreement”). Liberty has agreed to pay $1,000 for the first 10 Hydras assembled in a month, $750 per Hydra for the next 10 Hydras assembled per month and $500 per Hydra for each Hydra assembled above 20 per month. The Company has never assembled/shipped more than 10 Hydras in any month and does not expect to do so in the future. As of March 31, 2019, the Company has built and shipped 70 Hydras. Revenue of $5,000 and $3,000 for these products is reflected in the net revenue on the Company’s condensed consolidated statements of operations for the three months ended March 31, 2019 and 2018, respectively.

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Related Party Transactions

3 Months Ended

Mar. 31, 2019

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 our CFO John L. Hofmann, has provided financial consulting and accounting services to the Company. In December 2017, J.L. Hofmann & Associates, P.A. merged with Kabat, Schertzer, De La Torre, Taraboulos & Co, LLC (“KSDT”). The Company paid $9,614 and $10,730 for its services in the three months ended March 31, 2019 and 2018, respectively.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

Note 11 – Subsequent Events

The Company’s management evaluated subsequent events through May 10, 2019, in connection with the preparation of these condensed consolidated financial statements, which is the date these financial statements were available to be issued. There are no subsequent events to report as of this date, except that in May 2019 the Company issued a Series B Convertible Promissory Note in the principal amount of $10,000 to a stockholder in connection with a loan in the same amount. Consequently, Series B Convertible Promissory Notes have been issued in an aggregate principal amount of $300,000 during the first two quarters of 2019. See Note 8.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Policy Text Block [Abstract]

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 were recognized as revenue through March 2018, when the underlying license agreement terminated. No material revenues from this planned principal operation have been generated.

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 assembly services. The Company monitors accounts receivable and provides allowances when considered necessary. At March 31, 2019, accounts receivable were considered to be fully collectible. Accordingly, no allowance for doubtful accounts was provided.

Revenue Recognition

Revenue Recognition

Royalties are recognized as earned in the period the sales to which the royalties relate occur. Manufacturing assembly services are recognized as revenue when the assembled product is delivered to the customer. Revenues recognized under these agreements amount to 100% of total revenues for the three months ended March 31, 2019 and 2018.

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 three months ended March 31, 2019 or 2018.

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, 2018 and March 31, 2019 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 $35,059 and $35,292 for the three months ended March 31, 2019 and 2018, 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 3,675,000 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, 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 or market interest rates on interest bearing debt.

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.

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Intellectual Property and License Agreement (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Future amortization of the intangible asset

Future amortization of the intangible assets is as follows as of March 31, 2019:

Year ending December 31:
2019	$	7,500
2020		10,000
2021		10,000
Thereafter		44,178
Total	$	71,678

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Stockholders' Equity (Deficit) (Tables)

3 Months Ended

Mar. 31, 2019

Equity:

Summary of warrants

A summary of warrants issued, exercised and expired during the three months ended March 31, 2019 is as follows:

	Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance at December 31, 2018		975,000	$	.11	$	—
Issued		—		—		—
Expired		—		—		—
Balance at March 31, 2019		975,000	$	.11	$	—

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Stock Options (Tables)

3 Months Ended

Mar. 31, 2019

Stock Options

Stock Option

Stock option activity for the quarter ended March 31, 2019, is summarized as follows:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Options outstanding at December 31, 2018		11,180,500	$	0.20		7.02
Granted		—		—		—
Expired/forfeited		—		—		—
Options outstanding at March 31, 2019		11,180,500	$	0.20		6.27

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Going Concern (Details Narrative) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Going Concern Details Narrative
Working capital deficit	$ 165,916	$ (9,788)

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenue percentage	100.00%	100.00%
Impairment losses	$ 0	$ 0
Research and development cost	$ 35,059	$ 35,292
Warrants
Antidilutive Excluded from Computation of Earnings Per Share, Amount	3,675,000
Option
Antidilutive Excluded from Computation of Earnings Per Share, Amount	5,750,500

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Intellectual Property and License Agreement (Details)	Mar. 31, 2019 USD ($)
Year ending December 31:
2019	$ 7,500
2020	10,000
2021	10,000
Thereafter	44,178
Total	$ 71,678

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Intellectual Property and License Agreement (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended
	Jun. 02, 2016	Jun. 30, 2015	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jun. 01, 2016
Amortization expense			$ 2,500	$ 4,874
Accumulated amortization of the intangible asset- intellectual property			$ 28,322		$ 25,822
Promissory note down payment		$ 16,116
Promissory note due		$ 58,436			$ 38,000
Promissory note due date		Jul. 15, 2016	Nov. 14, 2015
Helidyne LLC [Member]
Commercial royalty obligation	$ 100,000
Annual royalty						$ 50,000

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Stockholders' Equity (Deficit) (Details)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Warrants term
Balance at beginning | shares	975,000
Shares Issued | shares
Shares Expired | shares
Balance at end | shares	975,000
Weighted Average Exercise Price Balance at beginning	$ 0.11
Weighted Average Exercise Price Issued
Weighted Average Exercise Price Expired
Weighted Average Exercise Price Balance at end	0.11
Aggregate Intrinsic Value Balance at beginning
Aggregate Intrinsic Value Issued
Aggregate Intrinsic Value Expired
Aggregate Intrinsic Value Balance at end

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Stock Options (Details)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Shares
Granted
Expired/forfeited
Employee Stock Option [Member]
Shares
Begining Balance	11,180,500
Granted
Expired/forfeited
Ending Balance	11,180,500
Weighted Average Exercise Price
Options Outstanding, Begining Balance, Weighted Average Exercise Price | $ / shares	$ 0.2
Granted | $ / shares
Expired/forfeited | $ / shares
Options Outstanding, Ending Balance, Weighted Average Exercise Price | $ / shares	$ 0.2
Weighted Average Remaining Contractual Life (Years)
Options outstanding Begining	7 years 7 days
Options outstanding Ending	6 years 3 months 8 days

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Stock Options (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation expense	$ 0	$ 0
Unrecognized stock-based compensation	$ 0

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Notes Payable to Related Parties (Details Narrative)	3 Months Ended
	Mar. 31, 2019 USD ($)
Notes Payable To Related Parties
Notes payable to stockholders	$ 290,000
Maturity date	Dec. 31, 2021
Interest rate	10.00%
Notes payable description	The notes are convertible into common stock at a price of $.20 per share through December 31, 2019, $.30 per share from January 1, 2020 through December 31, 2020, and $.40 per share from January 1, 2021 through the maturity date of December 31, 2021.

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Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Oct. 01, 2016	Jun. 01, 2016	Jun. 25, 2015
Royalty percentage					2.00%
Company made payments	$ 38,750
Two monthly installments			$ 25,000
Revenue from product	$ 5,000	$ 3,000
Helidyne LLC [Member]
Royalty percentage				3.00%
Annual royalty				$ 50,000
Two monthly installments				50,000
Committed to purchase price				$ 25,000

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Related Party Transactions (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Related Party Transactions
Payments to related party	$ 9,614	$ 10,730

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Subsequent Events (Details Narrative)	May 14, 2019
Subsequent Event [Member]
Subsequent Event, Description	Company issued a Series B Convertible Promissory Note in the principal amount of $10,000 to a stockholder in connection with a loan in the same amount. Consequently, Series B Convertible Promissory Notes have been issued in an aggregate principal amount of $300,000 during the first two quarters of 2019.