See the accompanying notes to unaudited
condensed consolidated financial statements.
The accompanying notes are an integral
part of these unaudited condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
September 30, 2017
(Unaudited)
NOTE 1 – ORGANIZATION
Nature of Operations
Greenway Technologies, Inc. (“Greenway Technologies,”
“GTI,” or the “Company”) was organized on March 13, 2002, under the laws of the State of Texas as Dynalyst
Manufacturing Corporation. On August 18, 2009, in connection with a merger with Universal Media Corporation, a privately
held Nevada company, the Company changed its name to Universal Media Corporation (“Universal Media”). The
Company changed its name to UMED Holdings, Inc. on March 23, 2011, and to Greenway Technologies, Inc. on June 23, 2017.
The Company’s mission is to operate as a holding
company through the acquisition of businesses as wholly-owned subsidiaries that meet some key requirements: (1) solid management
that will not have to be replaced in the near future (2) the ability to grow with steady growth to follow and (3) an emphasis on
emerging core industry markets, such as energy and metals. It is the Company’s intention to add experienced
personnel and select strategic partners to manage and operate the acquired business units.
In September 2010, the Company acquired 1,440 acres
of placer mining claims on Bureau of Land Management land in Mohave County, Arizona. See discussion in Note 3. Due to the
Company not producing any revenues from its BLM mining leases since its acquisition of the leases, achieving a position of producing
cash flow levels to fund the development of its BLM mining leases in December 2010 and not having current resources for an appraisal,
we recognized an impairment charge of $100,000 during the year ended December 31, 2014.
In August 2012, the Company acquired 100% of Greenway
Innovative Energy, Inc. (sometimes, “GIE”) which owns patents and trade secrets for a proprietary process and related
technology to convert natural gas into synthesis gas (syngas). Syngas is an important intermediate gas used by industry in the
production of ammonia, methane, liquid fuels, and other downstream products. The Company’s unique process is called Fractional
Thermal Oxidation™ (FTO). When combined with Greenway Technologies’ Fischer-Tropsch (FT) system, we offer a new economical,
relatively small scale (125 to 2,475 bbls/day) method of converting gas-to-liquids (GTL) that can be located in field locations
where needed.
NOTE 2 - BASIS OF PRESENTATION AND GOING CONCERN
UNCERTAINTIES
Principles of Consolidation
The accompanying condensed consolidated financial
statements include the financial statements of the Company and its wholly-owned subsidiaries. All significant inter-company accounts
and transactions were eliminated in consolidation.
Basis of Presentation
The accompanying unaudited interim condensed consolidated
financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”)
for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulations S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the periods presented are not necessarily indicative of the results that may be
expected for the year ending December 31, 2017. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016.
The
accompanying condensed consolidated financial statements include the accounts of the following entities.
Name of Entity
|
|
%
|
|
Entity
|
|
Incorporation
|
|
Relationship
|
Greenway Technologies, Inc.
|
|
|
|
|
|
|
Corporation
|
|
|
|
Texas
|
|
|
|
Parent
|
|
Universal Media Corporation
|
|
|
100
|
%
|
|
|
Corporation
|
|
|
|
Wyoming
|
|
|
|
Subsidiary
|
|
Greenway Innovative Energy, Inc.
|
|
|
100
|
%
|
|
|
Corporation
|
|
|
|
Nevada
|
|
|
|
Subsidiary
|
|
Logistix Technology Systems, Inc.
|
|
|
100
|
%
|
|
|
Corporation
|
|
|
|
Texas
|
|
|
|
Subsidiary
|
|
Going Concern Uncertainties
The accompanying condensed consolidated financial
statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities
in the normal course of business. As shown in the accompanying condensed consolidated financial statements, the Company sustained
a loss of approximately $7.2 million for the nine-month period ended September 30, 2017, and has a working capital deficiency of
approximately $2 million and an accumulated deficit of approximately $21.7 million at September 30, 2017. The ability of the Company
to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations or on the ability of the
Company to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable
it to continue as a going concern for the next twelve months.
The Company is in discussions with several oil and
gas companies and other organizations regarding joint venture funding for its first gas-to-liquids (GTL) plant using the Company’s
unique GTL system. Should an agreement be made, the joint venture relationship will provide funding at a level of $20M to $50M
with an ongoing profit-sharing arrangement between the Company and the partner organizations and/or individuals with an economic
profile previously not achievable in the GTL industry segment. While there are no assurances that financing for the first plant
will be obtained on acceptable terms and in a timely manner, the failure to obtain the necessary working capital may cause the
Company to move in one or more alternate directions to shepherd this revolutionary GTL system into production. Several alternate
paths are under consideration in conjunction with the joint venture/profit sharing approach.
The accompanying condensed consolidated financial
statements do not include any adjustment to the recorded assets or liabilities that might be necessary should the Company have
to curtail operations or be unable to continue in existence.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies applied
in the presentation of the condensed consolidated financial statements are as follows.
Property and Equipment
Property and equipment is recorded at cost. Major
additions and improvements are capitalized. The cost and related accumulated depreciation of equipment retired or sold, are removed
from the accounts and any differences between the undepreciated amount and the proceeds from the sale or salvage value are recorded
as a gain or loss on sale of equipment. Depreciation is computed using the straight-line method over the estimated useful life
of the assets.
Impairment of Long-Lived Assets
The Company assesses the impairment of long-lived
assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable, in accordance with
Accounting Standards Codification, ASC Topic 360,
Property, Plant and Equipment
. An asset or asset group is considered
impaired if its carrying amount exceeds the undiscounted future net cash flow the asset or asset group is expected to generate. If
an asset or asset group is considered impaired, the impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds its fair value. If estimated fair value is less than the book value, the asset is written
down to the estimated fair value and an impairment loss is recognized.
Revenue Recognition
The FASB issued ASC 606 as guidance on the
recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing
and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption:
retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the
guidance recognized at the date of initial application (the cumulative catch-up transition method). The company will adopt the
guidance on January 1, 2018 and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’
equity upon adoption of the new standard is not expected to be material.
The Company has not, to date, generated
any revenues.
Use of Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially
from the estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with an original maturity of three-months or less to be cash equivalents. There were no cash equivalents at
September 30, 2017, or December 31, 2016.
Income Taxes
The Company accounts for income taxes in accordance
with FASB ASC 740, “Income Taxes,” which requires that the Company recognize deferred tax liabilities and assets based
on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted
tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the
change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not
that some or all deferred tax assets will not be realized.
The Company has adopted the provisions of FASB ASC
740-10-05
Accounting for Uncertainty in Income Taxes
. The ASC clarifies the accounting for uncertainty in income taxes recognized
in an enterprise’s financial statements. The ASC prescribes a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The
ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and
transition. Open tax years, subject to IRS examination include 2013 – 2016.
Net Loss Per Share, basic and diluted
Basic loss per share has been computed by dividing
net loss available to common shareholders by the weighted average number of common shares outstanding for the period. Shares issuable
upon the exercise of warrants (10,641,489) have been excluded as a common stock equivalent in the diluted loss per share because
their effect would be anti-dilutive.
Derivative Instruments
The Company accounts for derivative instruments in
accordance with Accounting Standards Codification 815,
Derivatives and Hedging (“ASC 815”),
which establishes
accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts,
and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in
the balance sheet and measure those instruments at fair value.
If certain conditions are met, a derivative may be
specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged
risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument,
the gain or loss is recognized in income in the period of change.
See Note 6 below for discussion regarding convertible
notes payable and warrants.
Fair Value of Financial Instruments
Effective January 1, 2008, fair value measurements
are determined by the Company’s adoption of authoritative guidance issued by the FASB, with the exception of the application
of the statement to non-recurring, non-financial assets and liabilities, as permitted. Fair value is defined in the authoritative
guidance as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy
was established, which prioritizes the inputs used in measuring fair value into three levels as follows:
Level 1 – Valuation based on unadjusted quoted market
prices in active markets for identical assets or liabilities.
Level 2 – Valuation based on, observable inputs
(other than level one prices), quoted market prices for similar assets such as at the measurement date; quoted prices in the market
that are not active; or other inputs that are observable, either directly or indirectly.
Level 3 – Valuation based on unobservable inputs
that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants
would use as fair value.
Original Issue Discount
For certain convertible debt issued, the Company provides
the debt holder with an original issue discount (“OID”). An OID is the difference between the original cash
proceeds and the amount of the note upon maturity. The Note is originally recorded for the total amount payable. The OID is amortized
into interest expense pro-rata over the term of the Note.
In instances where the determination of the fair
value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy
within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value
measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment, and considers factors specific to the asset or liability. The valuation of the Company’s
notes recorded at fair value is determined using Level 3 inputs, which consider (i) time value, (ii) current market and (iii)
contractual prices.
The carrying amounts of financial assets and liabilities,
such as cash and cash equivalents, receivables, accounts payable, notes payable and other payables, approximate their fair values
because of the short maturity of these instruments.
The following table represents the Company’s
assets and liabilities by level measured at fair value on a recurring basis at September 30, 2017:
Description
|
|
Level 1
|
|
|
Level 2
|
|
Level 3
|
|
Derivative Liabilities
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
47,149
|
|
The following assets and liabilities
are measured on the balance sheets at fair value on a recurring basis utilizing significant unobservable inputs or Level 3 assumptions
in their valuation. The following tables provide a reconciliation of the beginning and ending balances of the liabilities:
The change in the notes payable at fair value for
the nine-month period ended September 30, 2017, is as follows:
|
|
Fair
Value
|
|
Change in
|
|
New
|
|
|
|
Fair Value
|
|
|
January 1,
2017
|
|
Fair
Value
|
|
Convertible
Notes
|
|
Conversions
|
|
September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
(56,057
|
)
|
|
$
|
8,908
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(47,149
|
)
|
All gains and losses on assets and liabilities measured at
fair value on a recurring basis and classified as Level 3 within the fair value hierarchy are recognized in other interest income and
expense in the accompanying condensed consolidated financial statements.
Stock Based Compensation
The Company follows Accounting Standards Codification
subtopic 718-10,
Compensation
(“ASC 718-10”) which requires that all share-based payments to both employees
and non-employees be recognized in the income statement based on their fair values.
At September 30, 2017, the Company did not have any
outstanding stock options.
Concentration and Credit Risk
Financial instruments and related items, which potentially
subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash with high credit quality
institutions. At times, such deposits may be in excess of the FDIC insurance limit.
Research and Development
The Company accounts for research and development
costs in accordance with Accounting Standards Codification subtopic 730-10,
Research and Development
(“ASC 730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and
development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has
been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research
and development costs related to both present and future products are expensed in the period incurred. The Company incurred research
and development expenses of $521,444 and $618,007 during the nine-months ended September 30, 2017 and 2016, respectively.
Issuance of Common Stock
The issuance of common stock for other than cash is
recorded by the Company at market values.
Impact of New Accounting Standards
The FASB issued ASC 606 as guidance on the
recognition of revenue from contracts with customers in May 2014 with amendments in 2015 and 2016. Revenue recognition will depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The guidance also requires disclosures regarding the nature, amount, timing
and uncertainty of revenue and cash flows arising from contracts with customers. The guidance permits two methods of adoption:
retrospectively to each prior reporting period presented, or retrospectively with the cumulative effect of initially applying the
guidance recognized at the date of initial application (the cumulative catch-up transition method). The company will adopt the
guidance on January 1, 2019 and apply the cumulative catch-up transition method. The transition adjustment to be recorded to stockholders’
equity upon adoption of the new standard is not expected to be material.
Management does not believe that any other recently
issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed
consolidated financial statements.
NOTE 4 – PROPERTY, PLANT, AND EQUIPMENT
|
|
Range of Lives
in Years
|
|
September 30,
2017
|
|
December 31, 2016
|
Equipment
|
|
|
5
|
|
|
$
|
2,032
|
|
|
$
|
2,032
|
|
Furniture and fixtures
|
|
|
5
|
|
|
|
1,983
|
|
|
|
1,983
|
|
|
|
|
|
|
|
|
4,015
|
|
|
|
4,015
|
|
Less accumulated depreciation
|
|
|
|
|
|
|
(3,964
|
)
|
|
|
(3,666
|
)
|
|
|
|
|
|
|
$
|
51
|
|
|
$
|
349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for the periods ended September
30, 2017, and 2016
|
|
|
|
|
|
$
|
298
|
|
|
|
|
|
NOTE 5 – TERM NOTES PAYABLE
Term notes payable consisted of the following at September
30, 2017, and December 31, 2016:
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Unsecured note payable dated March 8, 2016, to an individual
|
|
|
|
|
|
|
at 5.0% interest, payable upon the Company’s availability of cash
|
|
$
|
5,500
|
|
|
$
|
13,500
|
|
NOTE 6 – CONVERTIBLE PROMISSORY NOTES
May 2016 Convertible Note
On May 4, 2016, the Company issued a $224,000 convertible
promissory note bearing interest at 10.0% per annum to an accredited investor, payable beginning November 10, 2016, in monthly
installments of $44,800 plus accrued interest and a cash premium equal to 10.0% of the installment amount. The convertible
promissory note was paid on March 4, 2017. The holder had the right under certain circumstances to convert the note into
common stock of the Company at a conversion price equal to 70% of the average of the 3 lowest volume weighted average trading prices
during the 20-day period ending on the latest complete trading day prior to the conversion date.
The Company evaluated the terms of the convertible
note in accordance with ASC 815-40, Contracts in Entity’s Own Equity, and concluded that the Convertible Note resulted in
a derivative. The Company evaluated the terms of the convertible note and concluded that there was a beneficial conversion feature
since the convertible note was convertible into shares of common stock at a discount to the market value of the common stock. The
discount related to the beneficial conversion feature on the note was valued at $224,000 based on the
Black-Scholes Model
.
The discount related to the beneficial conversion feature ($51,829) was amortized over the term of the debt (10 months). For
the nine-months ended September 30, 2017, the Company recognized interest expense of $9,327 related to the amortization of the
discount.
In connection with the issuance of the $224,000 note,
the Company recorded debt issue cost and discount as follows:
|
·
|
$20,000 original issue discount and $4,000 debt issue cost, which was amortized over 10 months, with amortization of $3,600 for nine-months ended September 30, 2017.
|
|
·
|
The convertible promissory note was paid in full on March 10, 2017, reducing the embedded derivative for the 2016 beneficial conversion right to zero at September 30, 2017.
|
September 2014 Convertible Note
In connection with the issuance of a $158,000 convertible
promissory note in 2014, the Company issued warrants to purchase shares of common stock.
|
·
|
Warrants – recorded at fair value ($79,537) upon issuance, and marked -to-market on the balance sheet at $47,149 as of September 30 2017, and $20,820 as of December 31, 2016, which was computed as follows:
|
|
|
Commitment Date
|
|
Expected dividends
|
|
|
0%
|
|
Expected volatility
|
|
|
119%
|
|
Expected term: conversion feature
|
|
2 years
|
|
Risk free interest rate
|
|
|
1.31%
|
|
NOTE 7 – ACCRUED EXPENSES
Accrued expenses consisted of
the following at September 30, 2017, and December 31, 2016:
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Accrued consulting fees
|
|
$
|
249,500
|
|
|
$
|
249,500
|
|
Accrued expense relating to shareholder dispute
|
|
|
330,000
|
|
|
|
0
|
|
Accrued expense for warrant exercise
|
|
|
59,000
|
|
|
|
0
|
|
Accrued interest expense
|
|
|
644
|
|
|
|
1,022
|
|
Total accrued expenses
|
|
$
|
639,144
|
|
|
$
|
250,522
|
|
NOTE 8– CAPITAL STRUCTURE
The Company is authorized to issue 300,000,000 shares
of class A common stock with a par value of $0.0001 per share and 20,000,000 shares of class B common with a par value of $0.0001
per share. Each common stock share has one voting right and the right to dividends, if and when declared by the Board
of Directors.
Class A Common Stock
At September 30, 2017, there were 278,252,004 shares
of class A common stock issued and outstanding.
During the three-month period ended September 30,
2017, the Company issued 2,092,631 shares of restricted common stock to 9 individuals through private placements for cash of $214,000
at an average price of $0.1023 per share.
During the three-month period ended September 30,
2017, the Company canceled 31,250 of treasury shares recorded at $5,000.
During the three-month period ended September 30,
2017, the Company canceled 2,241,500 shares turned back to the Company by shareholders of Mamaki of Hawaii, Inc. and were recorded
at par value of $0.0001 per share.
During the three-month period ended September 30,
2017, the Company issued 3,000,000 shares of restricted common stock to a shareholder to settle a dispute and valued the shares
$390,300.
All of our unregistered securities were issued in
reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D promulgated
under the Securities Act.
Treasury Shares
During the three-month period ended September 30,
2017, the Company repurchased 31,250 shares of common stock for $5,000. These shares were canceled on August 11, 2017.
During the three-month period ended September 30,
2017, the Company repurchased 860,110 shares of common stock for $64,508. These shares were carried as treasury shares at September
30, 2017.
Class B Common Stock
At September 30, 2017, there were 126,938 shares of
class B common stock issued and outstanding. Class B shares have no voting rights. Each class B share is convertible, at the option
of the class B shareholder, into one share of class A common stock.
Stock options, warrants and other rights
At September 30, 2017, the Company has not adopted
any employee stock option plans.
On October 31, 2015, the Company issued 4,000,000
warrants for legal work. The warrants are exercisable at $0.20 per share for a period of five years from the date of issue. The
Company valued the warrants as of December 31, 2015, at $386,549 using the
Black-Scholes Model
with expected dividend rate
of 0%, expected volatility rate of 189%, expected conversion term of 4.75 years and risk-free interest rate of 1.75%.
On February 3, 2017, the Company issued 6,000,000
warrants (4,000,000 at $0.35 for two years and 2,000,000 at $0.45 for three years) as part of a separation agreement with a co-founder
and former president. The Company valued the warrants as of March 31, 2017, at $639,284 using the
Black-Scholes Model
with
expected dividend rate of 0%, expected volatility rate of 787%, expected conversion term of two and three years and risk-free interest
rate of 1.75%.
NOTE 9 - RELATED PARTY TRANSACTIONS
Shareholders have made advances to the Company in
the amounts of $0 and $129,414 (Kevin Jones $109,414 and Tunstall Canyon Group LLC $20,000) during the nine-months ended September
30, 2017, and 2016, respectively. Tunstall Canyon Group, LLC elected to convert advances of $0 and $51,500 to shares
of common stock at market value ($0.08 per share) and Kevin Jones received repayments of $59,690 and $101,000 during the nine-months
ended September 30, 2017, and 2016, respectively.
NOTE 10 – INCOME TAXES
At September 30, 2017, and December 31, 2016, the
Company had approximately $8.0 million and $5.6 million, respectively, of net operating losses (“NOL”) carry forwards
for federal and state income tax purposes. These losses are available for future years and expire through 2034. Utilization
of these losses may be severely or completely limited if the Company undergoes an ownership change pursuant to Internal Revenue
Code Section 382.
The provision for income taxes for continuing operations
consists of the following components for the nine-months ended September 30, 2017, and the year ended December 31, 2016:
|
2017
|
|
2016
|
|
|
|
|
|
|
Current
|
|
$
|
0
|
|
|
$
|
0
|
|
Deferred
|
|
|
0
|
|
|
|
0
|
|
Total tax provision
|
|
$
|
0
|
|
|
$
|
0
|
|
A comparison of the provision for income
tax expense at the federal statutory rate of 34% for the nine-months ended September 30, 2017, and the year ended December 31,
2016, the Company’s effective rate is as follows:
|
|
2017
|
|
2016
|
|
|
|
|
|
Federal statutory rate
|
|
|
(34.0
|
)%
|
|
|
(34.0)
|
%
|
State tax, net of federal benefit
|
|
|
(0.0
|
)
|
|
|
(0.0
|
)
|
Permanent differences and other including surtax exemption
|
|
|
0.0
|
|
|
|
0.0
|
|
Valuation allowance
|
|
|
34.0
|
|
|
|
34.0
|
|
Effective tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The net deferred tax assets and
liabilities included in the financial statements consist of the following amounts at September 30, 2017, and December 31, 2016:
|
|
2017
|
|
|
2016
|
|
Deferred tax assets
|
|
|
|
|
|
|
Net operating loss carry forwards
|
|
$
|
7,964,631
|
|
|
$
|
5,602,576
|
|
Deferred compensation
|
|
|
2,379,698
|
|
|
|
2,570,198
|
|
Stock based compensation
|
|
|
10,486,062
|
|
|
|
5,165,124
|
|
Other
|
|
|
1,220,990
|
|
|
|
1,138,307
|
|
Total
|
|
|
22,051,381
|
|
|
|
14,476,205
|
|
Less valuation allowance
|
|
|
(22,051,381
|
)
|
|
|
(14,476,205
|
)
|
Deferred tax asset
|
|
|
0
|
|
|
|
0
|
|
Deferred tax liabilities
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
0
|
|
|
$
|
0
|
|
Net long-term deferred tax asset
|
|
$
|
0
|
|
|
$
|
0
|
|
The change in the valuation allowance was $7,575,176
and $1,935,510 for the nine-months ended September 30, 2017, and the year ended December 31, 2016, respectively. The Company
has recorded a 100% valuation allowance related to the deferred tax asset for the loss from operations, interest expense, interest
income and other income subsequent to the change in ownership, which amounted to $22,051,381 and $14,476,205 at September 30, 2017,
and December 31, 2016, respectively.
The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, historical taxable income including available net operating
loss carry forwards to offset taxable income, and projected future taxable income in making this assessment.
NOTE 11 – COMMITMENTS
Employment Agreements
In May 2011, the Company entered into employment agreements
with its chief executive officer, president and chief financial officer. The Agreements were for a term of five years
(ending on May, 31, 2016). During the nine-months ended September 30, 2016, the Company accrued a total of $150,000
as management fees in accordance with the terms of these agreements.
In August 2012, the Company entered into employment
agreements with the president and chairman of the board of Greenway Innovative Energy, Inc. for a term of five years with compensation
of $90,000 per year. In September 2014, the president’s employment agreement was amended to increase his annual pay to $180,000.
On April 30, 2015, accrual on the Greenway Innovative Energy chairman of the board agreement ceased due to his absence from the
Company for more than a year. During the nine-months ended September 30, 2017, the Company paid $120,000 and accrued $135,000 for
the Greenway Innovative Energy president. During the nine-months ended September 30, 2016, the Company paid $45,000 and accrued
$135,000 for the Greenway Innovative Energy president.
In the August 2012 acquisition agreement with Greenway
Innovative Energy, Inc., the Company agreed to issue an additional 7,500,000 shares of restricted common stock when the first portable
GTL unit is build and becomes operational and is capable of producing 2,000 barrels of diesel or jet fuel per day, and pay Greenway
Innovative Energy a 2% royalty on all gross production sales on each unit placed in production.
In October 2015, the Company entered into a two-year
lease for approximately 1,800 square feet a base rate of $2,417 per month. During the nine-months ended September 30, 2017, and
2016, respectively, the Company expensed $31,388 and $21,753.
The Company has a minimum commitment for 2017 of approximately
$11,160 in annual maintenance fees for its United States Bureau of Land Management (“BLM”) mining lease, which are
paid in August 2017. Once the Company enters the production phase, royalties owed to the BLM will be equal to 10% of
production. There is no actual lease agreement with the BLM, the Company files an annual maintenance fee form to hold the claims.
Legal
On April 22, 2016, the Company
filed suit under Cause No. DC-16-004718, in the 193rd District Court, Dallas County, Texas against Mamaki of Hawaii, Inc. (“Mamaki”),
Hawaiian Beverages, Inc.(“HBI”), Curtis Borman and Lee Jenison (collectively, the “Defendants”) for breach
of a Stock Purchase Agreement dated October 29, 2015, wherein the Company sold its shares in Mamaki to HBI for $700,000 (along
with the assumption of certain debt). The Defendants failed to make payments of $150,000 each on November 30, 2015, December 28,
2015, and January 27, 2016. On January 13, 2017, the Company executed a Settlement and Mutual Release Agreement with the Defendants.
The Defendants subsequently failed to make payments pursuant to the provisions of the Settlement and Mutual Release Agreement.
Due to the bankruptcy proceedings with respect to Curtis Borman, further action in the proceeding has been stayed.
On September 14, 2017, In The
Third Judicial District Court Of Salt Lake County State Of Utah, Tonaquint, Inc., a Utah Corporation, filed suit against Greenway
Technologies, Inc., (F.K.A. UMED Holdings, Inc.), under Case No. 170905756. Pursuant to a Securities Purchase Agreement (the "Purchase
Agreement") between Tonaquint, as buyer, and UMED, as seller, Tonaquint acquired a Convertible Promissory Note (the "Note"),
issued by UMED, and a Warrant to Purchase Shares of Common Stock (the "Warrant"). The Warrant allegedly provided Tonaquint
with "the right to purchase at any time on or after September 18, 2014a number of fully paid and non assessable shares of
UMED's common stock equal to $47,400.00 divided by the Market Price (as defined in the Note, as of September 18, 2014, as such
number may be adjusted from time to time pursuant to the terms and conditions of this Warrant to Purchase Shares of Common Stock."
Greenway Technologies disputes
that it has any obligation to issue shares pursuant to the Warrant. The parties have agreed to mediate the dispute.
NOTE 12 – SUBSEQUENT EVENTS
Subsequent to September 30, 2017, we sold 1,800,000
shares of our class A restricted common stock to three individuals for $180,000 ($0.10 per share).