Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 14, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PURADYN FILTER TECHNOLOGIES INC | |
Entity Central Index Key | 0001019787 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 69,016,468 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 175,303 | $ 112,769 |
Accounts receivable, net of allowance for uncollectible accounts of $17,000 and $17,000, respectively | 115,108 | 293,994 |
Inventories, net | 1,074,978 | 834,708 |
Prepaid expenses and other current assets | 53,985 | 66,290 |
Total current assets | 1,419,374 | 1,307,761 |
Property and equipment, net | 71,201 | 78,642 |
Operating Right of use asset | 846,744 | |
Other noncurrent assets | 475,283 | 483,974 |
Total assets | 2,812,602 | 1,870,377 |
Current liabilities: | ||
Accounts payable | 540,374 | 416,790 |
Accrued liabilities | 225,042 | 605,357 |
Operating lease liabilities | 174,435 | |
Deferred compensation | 1,502,823 | 1,564,253 |
Notes Payable - stockholders | 625,000 | 325,000 |
Total Current Liabilities | 3,067,674 | 2,911,400 |
Long-term operating lease liabilities | 743,651 | |
Notes Payable - stockholders | 8,385,132 | 7,989,622 |
Total Liabilities | 12,196,457 | 10,901,022 |
Commitments and contingencies (Note 11) | ||
Stockholders' deficit: | ||
Preferred stock, $.001 par value: Authorized shares - 500,000; None issued and outstanding | ||
Common stock, $.001 par value, Authorized shares - 100,000,000; Issued and outstanding 69,016,468 and 69,016,468, respectively | 69,016 | 69,016 |
Additional paid-in capital | 53,691,930 | 53,678,000 |
Accumulated deficit | (63,144,801) | (62,777,661) |
Total stockholders' deficit | (9,383,855) | (9,030,645) |
Total liabilities and stockholders' deficit | $ 2,812,602 | $ 1,870,377 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Allowance for uncollectible accounts of accounts receivable | $ 17,000 | $ 17,000 |
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value per share | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 69,016,468 | 69,016,468 |
Common stock, shares outstanding | 69,016,468 | 69,016,468 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Net sales | $ 482,993 | $ 885,740 |
Cost of products sold | 330,501 | 504,442 |
Gross Profit | 152,492 | 381,298 |
Costs and expenses: | ||
Salaries and wages | 228,578 | 193,268 |
Selling and administrative | 190,639 | 150,070 |
Loss on impairment of patents | 11,417 | |
Total operating costs | 430,634 | 343,338 |
Income / (Loss) from operations | (278,142) | 37,960 |
Other income (expense): | ||
Interest expense | (88,998) | (74,703) |
Total other expense, net | (88,998) | (74,703) |
Net loss before income tax expense | (367,140) | (36,743) |
Provision for income taxes | ||
Net loss | $ (367,140) | $ (36,743) |
Basic and diluted loss per common share | $ (0.01) | $ 0 |
Weighted average common shares outstanding basic and diluted | 69,016,468 | 69,016,468 |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Operating activities | ||
Net loss | $ (367,140) | $ (36,743) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 12,850 | 8,762 |
Provision for slow moving inventory | (40,537) | |
Compensation expense on stock-based arrangements with employees and consultants | 13,930 | 10,341 |
Impairment of capitalized patent costs | 11,417 | |
Amortization of Operating right of use asset | 40,265 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 178,886 | (150,082) |
Inventories | (199,732) | (53,342) |
Prepaid expenses and other current assets | 12,305 | 6,874 |
Other assets | 850 | |
Sales incentives | (99,128) | |
Accounts payable | 123,583 | 87,663 |
Accrued liabilities | 89,881 | 4,099 |
Deferred compensation | (61,430) | (51,051) |
Operating lease liabilities | (43,609) | |
Net cash used in operating activities | (229,331) | (271,757) |
Investing activities | ||
Capitalized patent costs | (8,135) | (20,192) |
Net cash used in investing activities | (8,135) | (20,192) |
Financing activities | ||
Cash overdraft | 38,449 | |
Proceeds from issuance of notes payable to stockholders | 300,000 | 200,000 |
Payment of capital lease obligations | (938) | |
Net cash provided by financing activities | 300,000 | 237,511 |
Net increase / (decrease) in cash | 62,534 | (54,438) |
Cash at beginning of period | 112,769 | 54,438 |
Cash at end of period | 175,303 | |
Supplemental cash flow information: | ||
Cash paid for interest | 61,164 | |
Cash paid for taxes | ||
Noncash investing and financing activities: | ||
Conversion of accrued interest into note payable | 395,510 | |
Operating right of use assets obtained in exchange for operating lease liabilities | $ 890,009 |
CONDENSED STATEMENTS OF CHANGES
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 69,016 | $ 53,599,160 | $ (62,561,279) | $ (8,893,103) | |
Balance, shares at Dec. 31, 2017 | 69,106,468 | ||||
Net loss | (36,743) | (36,743) | |||
Compensation expense associated with unvested option awards | 10,341 | 10,341 | |||
Balance at Mar. 31, 2018 | $ 69,016 | 53,609,501 | (62,598,022) | (8,919,505) | |
Balance, shares at Mar. 31, 2018 | 69,016,468 | ||||
Balance at Dec. 31, 2018 | $ 69,016 | 53,678,000 | (62,777,661) | (9,030,645) | |
Balance, shares at Dec. 31, 2018 | 69,106,468 | ||||
Net loss | (367,140) | (367,140) | |||
Compensation expense associated with unvested option awards | 13,930 | 13,930 | |||
Balance at Mar. 31, 2019 | $ 69,016 | $ 53,691,930 | $ (63,144,801) | $ (9,383,855) | |
Balance, shares at Mar. 31, 2019 | 69,016,468 |
Basis of Presentation, Going Co
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies | 1. Basis of Presentation, Going Concern and Summary of Significant Accounting Policies Organization Puradyn Filter Technologies Incorporated (the Company), a Delaware corporation, is engaged in the manufacturing, distribution and sale of bypass oil filtration systems under the trademark Puradyn ® Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the Company's financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018. Revenue Recognition The Company recognizes revenue from product sales to customers, distributors and resellers when products that do not require further services or installation by the Company are shipped, when there are no uncertainties surrounding customer acceptance, and when collectability is reasonably assured. Cash received by the Company prior to shipment is recorded as deferred revenue. Sales are made to customers under terms allowing certain limited rights of return and other limited product and performance warranties for which provision has been made in the accompanying unaudited condensed financial statements. Amounts billed to customers in sales transactions related to shipping and handling, represent revenues earned for the goods provided and are included in net sales. Costs of shipping and handling are included in cost of products sold. The Company accounts for revenue in accordance with Topic 606 which was adopted at the beginning of fiscal year 2018 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial. The adoption of these standards did not have a material impact on the Company's condensed statements of operations during the three months ended March 31, 2018. Use of Estimates The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying unaudited condensed financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with original maturities of three months or less at the time of purchase. At March 31, 2019 and December 31, 2018, the Company did not have any cash equivalents. Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued liabilities and notes payable to stockholder approximate their fair values as of March 31, 2019 and December 31, 2018, respectively, because of their short-term natures. Accounts Receivable Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. If market conditions decline, actual collection experience may not meet expectations and may result in decreased cash flows and increased bad debt expense. The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. Inventories Inventories are stated at the lower of cost or net realizable value using the first in, first out (FIFO) method. Net realizable value is defined as sales price less cost of completion, disposable and transportation and a normal profit margin. Production costs, consisting of labor and overhead, are applied to ending finished goods inventories at a rate based on estimated production capacity. Excess production costs are charged to cost of products sold. Provisions have been made to reduce excess or obsolete inventories to their net realizable value. Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets, except for assets held under capital leases, for which the Company records depreciation and amortization based on the shorter of the assets useful life or the term of the lease. The estimated useful lives of property and equipment range from 3 to 5 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred. Patents Patents are stated at cost. Amortization is provided using the straight-line method over the estimated useful lives of the patents. The estimated useful lives of patents are approximately 20 years. Upon retirement, the cost and related accumulated amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Impairment of Long-Lived Assets Management assesses the recoverability of its long-lived assets when indicators of impairment are present. If such indicators are present, recoverability of these assets is determined by comparing the undiscounted net cash flows estimated to result from those assets over the remaining life to the assets net carrying amounts. If the estimated undiscounted net cash flows are less than the net carrying amount, the assets would be adjusted to their fair value, based on appraisal or the present value of the undiscounted net cash flows. Sales Incentives and Consideration Paid to Customers The Company accounts for certain promotional costs such as sales incentives and cooperative advertising as a reduction of sales. Product Warranty Costs As required by FASB ASC 460, Guarantors Guarantees The Company accrues for warranty costs based on the expected material and labor costs to provide warranty replacement products. The methodology used in determining the liability for warranty cost is based upon historical information and experience. The Company's warranty reserve is included in accrued liabilities in the accompanying condensed financial statements and is calculated as the gross sales multiplied by the historical warranty expense return rate. For the three months ended March 2019, there was no change to the reserve for warranty liability as the reserve balance was deemed sufficient to absorb any warranty costs that might be incurred from the sales activity for the period. The following table shows the changes in the aggregate product warranty liability for the three months ended March 31, 2019: Balance as of December 31, 2018 $ 20,000 Less: Payments made Add: Provision for current period warranties Balance as of March 31, 2019 (unaudited) $ 20,000 Advertising Costs Advertising costs are expensed as incurred. During the three months ended March 31, 2019 and 2018, advertising costs incurred by the Company totaled approximately $4,670 and 0, respectively, and are included in selling and administrative expenses in the accompanying statements of operations. Engineering and Development Engineering and development costs are expensed as incurred. During the three months ended March 31, 2019 and 2018, engineering and development costs incurred by the Company totaled $2,365 and $1,429, respectively, and are included in selling and administrative expenses in the accompanying statements of operations. Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes Stock Option Plans We adopted FASB ASC 718, Compensation-Stock Compensation, Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable in accordance with , , Compensation-Stock Compensation, Credit Risk The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the FDIC insured limit of $250,000 are at risk. At March 31, 2019 and December 31, 2018, respectively, the Company did not have cash balances above the FDIC insured limit. The Company performs ongoing evaluations of its significant trade accounts receivable customers and generally does not require collateral. An allowance for doubtful accounts is maintained against trade accounts receivable at levels which management believes is sufficient to cover probable credit losses. The Company also has some customer concentrations, and the loss of business from one or a combination of these significant customers, or an unexpected deterioration in their financial condition, could adversely affect the Companys operations. Please refer to Note 15 for further details. Basic and Diluted Loss Per Share The Company uses ASC 260-10, Earnings Per Share Common stock equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive. The Company had net income for the three month period ended March 31, 2019. A separate computation of diluted earnings per share is presented using the treasury stock method and the common stock equivalents did not have any effect on net income per share. Leases In connection with our lease agreement for our Office in Boynton Beach, Florida, the Company adopted the provisions of ASU 2016-02, Leases Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Recent Accounting Pronouncements All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2019 | |
Going Concern [Abstract] | |
Going Concern | 2. Going Concern The Company's unaudited condensed financial statements have been prepared on the assumption that it will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company sustained losses since inception Company does not have sufficient revenues and income to fully fund the operations. During the three months ended March 31, 2019 and 2018 the Company used net cash in operations of $229,331 and $271,757, respectively. As a result, the Company has had to rely on stockholder loans and related parties to fund its activities to date. These recurring operating losses, liabilities exceeding assets and the reliance on cash inflows from two stockholders led the Companys independent registered public accounting firm, Liggett & Webb, P.A., to include a statement in its audit report relating to the Companys audited financial statements for the year ended December 31, 2018 expressing substantial doubt as to the Companys ability to continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of this uncertainty. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. Inventories Inventories consisted of the following at March 31, 2019 and December 31, 2018, respectively: March 31, 2019 December 31, 2018 (Unaudited) Raw materials $ 1,082,954 $ 1,053,147 Finished goods 427,550 257,623 Valuation allowance (435,526 ) (476,062 ) Total inventory, net $ 1,074,978 $ 834,708 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 2019 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Prepaid Expenses and Other Current Assets | 4. Prepaid Expenses and Other Current Assets At March 31, 2019 and December 31, 2018, prepaid expenses and other current assets consisted of the following: March 31, 2019 December 31, 2018 (Unaudited) Prepaid expenses $ 25,985 $ 27,854 Deposits 28,000 38,436 $ 53,985 $ 66,290 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 5. Property and Equipment At March 31, 2019 and December 31, 2018, property and equipment consisted of the following: March 31, 2019 December 31, 2018 (Unaudited) Machinery and equipment $ 1,030,196 $ 1,030,196 Furniture and fixtures 56,558 56,558 Leasehold improvements 188,012 188,012 Software and website development 88,842 88,842 Computer hardware and software 179,258 179,258 1,542,866 1,542,866 Less accumulated depreciation and amortization (1,471,665 ) (1,464,224 ) $ 71,201 $ 78,642 Depreciation and amortization expense of property and equipment for the three months ended March 31, 2019 and 2018 are $7,441 and $5,027, respectively. |
Patents
Patents | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents | 6. Patents Included in other noncurrent assets at March 31, 2019 and December 31, 2018 are capitalized patent costs as follows: March 31, 2019 December 31, 2018 (Unaudited) Patent costs $ 530,214 $ 533,496 Less accumulated amortization (89,902 ) (84,429 ) $ 440,312 $ 449,067 Amortization expense for the three months ended March 31, 2019 and 2018 are $5,409 and $3,735, respectively. During the three months ended March 31, 2019 the Company impaired $11,417 of patent costs as it was determined that it had no future economic value. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Leases | 7. Leases Operating right of use assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. As we have outstanding secured debt, we used the rate based on loan of 4%. Our office lease contains rent escalations over the lease term. We recognize expense for this office lease on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. The Company leases its office and warehouse facilities in Boynton Beach, Florida under a long-term non-cancellable lease agreement, which contains renewal options and rent escalation clauses. As of March 31, 2019, a security deposit of $34,970 is included in noncurrent assets in the accompanying balance sheet. On September 27, 2012 the Company entered into a non-cancellable six-year lease agreement for the same facilities commencing August 1, 2013 and expiring July 31, 2019. The total minimum lease payments over the remaining term of the current lease amount to $180,826. On June 29, 2018, the Company entered into a non-cancellable five-year lease for the same facilities commencing August 1, 2019 and expiring July 31, 2024. The lease will require an initial rent of $14,899 per month, beginning August 1, 2019 for the first year, increasing by 3% per year to $16,769 per month in the fifth year. In addition, the Company is responsible for all operating expenses and utilities. As part of the lease the landlord agreed to reimburse the Company $58,000 towards the replacement of air conditioning units, upon written request. As of December 31, 2018 the Company had received all of the reimbursement. In September 2018, the Company entered into a new capital lease for office equipment in the amount of $559, which commenced in December 2018 for a term of 48 months. Supplemental balance sheet information related to leases was as follows: March 31, Operating Leases Classification 2019 Right-of-use assets Operating right of use assets $ 846,744 Current lease liabilities Current operating lease liabilities 174,435 Non-current lease liabilities Long-term operating lease liabilities 743,651 Total lease liabilities $ 918,086 Lease term and discount rate were as follows: March 31, 2019 Weighted average remaining lease term (years) 5.29 Weighted average discount rate 4 % The component of lease costs were as follows: Three months ended March 31, 2019 Operating lease cost $ 46,669 Variable lease cost (1) 26,915 Total lease costs $ 73,584 (1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate. Supplemental disclosures of cash flow information related to leases were as follows: March 31, 2019 Cash paid for operating lease liabilities $ 43,616 Operating right of use assets obtained in exchange for operating lease liabilities $ 890,009 Maturities of lease liabilities were as follows as of March 31, 2019: Operating Leases Remainder of 2019 $ 135,639 2020 188,196 2021 193,627 2022 197,427 2023 197,807 2024 117,383 Total 1,030,079 Less: Imputed interest (111,993 ) Present value of lease liabilities $ 918,086 |
Accrued Liabilities
Accrued Liabilities | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities [Abstract] | |
Accrued Liabilities | 8. Accrued Liabilities At March 31, 2019 and December 31, 2018, accrued liabilities consisted of the following: March 31, 2019 December 31, 2018 (Unaudited) Accrued wages and benefits $ 41,361 $ 52,753 Accrued expenses relating to vendors and others 144,451 128,114 Accrued warranty costs 20,000 20,000 Accrued interest payable relating to stockholder notes 19,230 329,801 Deferred rent 74,689 $ 225,042 $ 605,357 |
Deferred Compensation
Deferred Compensation | 3 Months Ended |
Mar. 31, 2019 | |
Compensation Related Costs [Abstract] | |
Deferred Compensation | 9. Deferred Compensation Deferred compensation represents amounts owed to two current employees and two former employees for salary. As there is no written agreement with these employees which memorializes the terms of salary deferral, only a voluntary election to do so, it is possible that the employees could demand payment in full at any time. As of March 31, 2019 and December 31, 2018, the Company recorded deferred compensation of $1,502,823 and $1,564,253, respectively. |
Notes Payable to Stockholders -
Notes Payable to Stockholders - Related Party | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable to Stockholders - Related Party | 10. Notes Payable to Stockholders Related Party On March 28, 2002 the Company executed a binding agreement with one of its principal stockholders, who is also the Executive Chairman of the Board, to fund up to $6.1 million. Under the terms of the agreement, the Company can draw amounts as needed to fund operations. Amounts drawn bear interest at the BBA LIBOR Daily Floating Rate plus 1.4 percentage points (4.01% and 3.678% per annum at March 31, 2019 and 2018, respectively), payable monthly and were to become due and payable on December 31, 2005 or upon a change in control of the Company or the consummation of any other financing over $7.0 million. Beginning in March 2006, annually, through February 2012, the maturity date for the agreement was extended annually from December 31, 2007, to December 31, 2018. On May 9, 2018 he extended the maturity rate to December 31, 2019. On March 25, 2019 we entered into a note exchange agreement with our Executive Chairman pursuant to which he exchanged $7,989,622 of principal and $395,510 of accrued interest which would have been due on December 31, 2019 under an unsecured loan for a secured promissory note in the principal amount of $8,385,132. The secured note which matures on December 31, 2021, and bears interest at 4% per annum, payable monthly, is secured by a first position security interest in our assets. From January 1, 2019 through March 31, 2019, the Company received additional loans in the amount of $275,000 from the Companys Executive Chairman, as advances for working capital needs. The loans bear interest at the BBA Libor Daily Floating Rate plus 1.4 points. As of March 31, 2019 the total balance due was $600,000. In January 7, 2019, the Company received an additional loan in the amount of $25,000 from a stockholder and former member of the Board of Directors. The loan bears interest at a rate of 5% per annum and is due January 7, 2020. During the three months ended March 31, 2019 and 2018, the Company incurred interest expense of $84,939 and $74,673, respectively, on its loan from the Executive Chairman of the Board, which is included in interest expense in the accompanying condensed statements of operations, as well as interest expense of $288 and $308 for the three months ended March 31, 2019 and 2018, respectively, related to the loan from a former Board member. These amounts, in addition to interest expense of $4,059 and $30 for the three months ended March 31, 2019 and 2018, respectively, are related to financing and late fees. Notes payable and operating lease liabilities consisted of the following at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Notes payable to stockholders $ 9,010,132 $ 8,314,622 Operating lease liabilities 918,086 9,928,218 8,314,622 Less: current maturities (799,435 ) (325,000 ) Long-term maturities $ 9,128,783 $ 7,989,622 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Agreements On May 18, 2018 we entered into a letter agreement with Mr. Edward S. Vittoria pursuant to which he agreed to be employed by us as our Chief Executive Officer for an initial term ending May 31, 2019, which such term may be extended by mutual agreement upon terms and conditions to be mutually agreed upon prior to the expiration of such initial term. Under the terms of the letter agreement we agreed to pay him: (i) an annual base salary of $200,000, payable in accordance with our normal payroll practices; (ii) an annual cash bonus to be awarded by our Board of Directors in January in a minimum amount of $50,000; and (iii) granted him options to purchase 6,500,000 shares of our common stock, vesting one-third in arrears, at an exercise price equal to fair market value on the date of grant pursuant to the terms and conditions of our 2018 Equity Compensation Plan. He is also entitled to: (i) participate in all of our benefit programs currently existing or hereafter made available to executive and/or salaried; (ii) an amount of annual paid vacation consistent with his position and length of service to us; and (iii) reimbursement for all reasonable, out of-pocket expenses incurred by him. On October 20, 2009, the Company entered into a consulting agreement for management and strategic development services with Boxwood Associates, Inc., pursuant to which the Company pays a $2,000 monthly service fee. The contract remains in effect until terminated by either party providing 30 days written notice. A former member of our Board of Directors and a significant stockholder is President of Boxwood Associates, Inc. Refer to Note 13. |
Stock Options and Warrants
Stock Options and Warrants | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Options and Warrants | 12. Stock Options and Warrants For the three months ended March 31, 2019 and 2018, respectively, the Company recorded non-cash stock-based compensation expense of $13,930 and $10,341, relating to employee stock options and warrants issued for consulting services. Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable in accordance with FASB ASC 505, Equity, Compensation Stock Compensation On April 12, 2018 the Board of Directors approved the adoption of a 2018 Equity Compensation Plan. The Company has reserved 20,000,000 shares of our common stock for grants under this plan. The 2018 Plan provides for the granting of both incentive and non-qualified stock options to key personnel, including officers, directors, consultants and advisors to the Company, at the discretion of the Board of Directors. Each plan limits the exercise price of the options at no less than the quoted market price of the common stock on the date of grant. The option term is determined by the Board of the Directors, provided that no option may be exercisable more than 10 years after the date of its grant and, in the case of an incentive option granted to an eligible employee owning more than 10% of the Companys common stock, no more than five years after the date of the grant. Generally, under both plans, options to employees vest over three years at 33.33% per annum unless the Board of Directors designates a different vesting schedule. On March 28, 2019, the Company filed a definitive information statement on Schedule 14C with the Securities and Exchange Commission to notify our common shareholders that effective March 27, 2019, the holders of 35,713,727 shares of our common stock, representing 51.7% of the outstanding shares of our common stock, executed a written consent in lieu of a special meeting of shareholders ratifying the adoption of our 2018 Equity Compensation Plan, as amended. A summary of the Companys stock option plans as of March 31, 2019, and changes during the three-month period then ended is presented below: Three Months Ended March 31, 2019 Number of Options Weighted Average Exercise Price Options outstanding at December 31, 2018 11,785,000 $ 0.05 Options granted Options exercised Options forfeited Options expired Options at end of period 11,785,000 $ 0.05 Options exercisable at March 31, 2019 2,190,000 $ 0.19 Changes in the Companys non-vested options for the three months ended March 31, 2019 are summarized as follows: Three Months Ended March 31, 2019 Number of Options Weighted Average Exercise Price Nonvested options at December 31, 2018 9,595,000 $ 0.02 Granted Vested Forfeited Nonvested options at March 31, 2019 9,595,000 $ 0.02 Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding Remaining Average Contractual Life (In Years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.017- $0.30 11,785,000 8,06 $0.05 2,190,000 $0.19 Totals 11,785,000 8.06 $0.05 2,190,000 $0.19 A summary of the Companys warrant activity as of March 31, 2019 and changes during the three-month period then ended is presented below: Three months ended March 31, 2019 Warrants Weighted Warrants outstanding at December 31, 2018 773,336 $ 0.16 Granted Expired Warrants outstanding and exercisable at March 31, 2019 773,336 $ 0.16 Warrants Outstanding and Exercisable Range of Exercise Price Number Outstanding Remaining Average Contractual Life (In Years) Weighted Average Exercise Price $0.05 - $0.25 773,336 1.15 $ 0.16 Totals 773,336 1.15 $ 0.16 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 13. Related Party Transactions On March 28, 2002 the Company executed a binding agreement with one of its principal stockholders, who is also the Executive Chairman of the Board, to fund up to $6.1 million. Under the terms of the agreement, the Company can draw amounts as needed to fund operations. Amounts drawn bear interest at the BBA LIBOR Daily Floating Rate plus 1.4 percentage points (4.01% and 3.678% per annum at March 31, 2019 and 2018, respectively), payable monthly and were to become due and payable on December 31, 2005 or upon a change in control of the Company or the consummation of any other financing over $7.0 million. Beginning in March 2006, annually, through February 2012, the maturity date for the agreement was extended annually from December 31, 2007, to December 31, 2018. On May 9, 2018 he extended the maturity rate to December 31, 2019. On March 25, 2019 we entered into a note exchange agreement with our Executive Chairman pursuant to which he exchanged $7,989,622 of principal and $395,510 of accrued interest which would have been due on December 31, 2019 under an unsecured loan for a secured promissory note in the principal amount of $8,385,132. The secured note, which matures on December 31, 2021, and bears interest at 4% per annum, payable monthly, is secured by a first position security interest in our assets. (Refer to Note 10). From January 1, 2019 through March 31, 2019, the Company received additional loans in the amount of $275,000 from the Companys Executive Chairman, as advances for working capital needs. The loans bear interest at the BBA Libor Daily Floating Rate plus 1.4 points. As of March 31, 2019, the total balance due was $600,000. In January 7, 2019, the Company received an additional loan in the amount of $25,000 from a stockholder and former member of the Board of Directors. The loan bears interest at a rate of 5% per annum and is due January 7, 2020. On October 20, 2009, the Company entered into a consulting agreement with Boxwood Associates, Inc., whereby the Company pays $2,000 monthly for management and strategic development services performed. The contract remains in effect until terminated by either party providing 30 days written notice. During the three month periods ended March 31, 2019 and 2018, we paid Boxwood Associates, Inc. $6,000 and $6,000, respectively, under this agreement. A former member of our Board of Directors is President of Boxwood Associates, Inc. |
Major Customers
Major Customers | 3 Months Ended |
Mar. 31, 2019 | |
Risks and Uncertainties [Abstract] | |
Major Customers | 14. Major Customers There are concentrations of credit risk with respect to accounts receivables due to the amounts owed by two customers at March 31, 2019 whose balances each represented approximately 69% and 15%, for a total of 84% of total accounts receivables. Comparatively, there are concentrations of credit risk with respect to accounts receivables due to the amounts owed by two customers at December 31, 2018 whose balances each represented approximately 53%, and 30%, for a total of 83% of total accounts receivables. Sales to two customers for the three months ended March 31, 2019 were 56% and 25% for total of 81% of sales. During the three months ended March 31, 2018 sales from three customers represented 46%, 16%, and 10% for a total of 72% of sales. The loss of business from one or a combination of the Companys significant customers, or an unexpected deterioration in their financial condition, could adversely affect the Companys operations. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events Subsequent to March 31, 2019, the Company received additional loans in the amount of $200,000 from the Companys Executive Chairman, as advances for working capital needs. The loans bear interest at the BBA Libor Daily Floating Rate plus 1.4 points. |
Basis of Presentation, Going _2
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Organization | Organization Puradyn Filter Technologies Incorporated (the Company), a Delaware corporation, is engaged in the manufacturing, distribution and sale of bypass oil filtration systems under the trademark Puradyn ® |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim information and with the instructions to Form 10-Q and Regulation S-K. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments consisting of a normal and recurring nature considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2019 may not necessarily be indicative of the results that may be expected for the year ending December 31, 2019. For further information, refer to the Company's financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2018. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from product sales to customers, distributors and resellers when products that do not require further services or installation by the Company are shipped, when there are no uncertainties surrounding customer acceptance, and when collectability is reasonably assured. Cash received by the Company prior to shipment is recorded as deferred revenue. Sales are made to customers under terms allowing certain limited rights of return and other limited product and performance warranties for which provision has been made in the accompanying unaudited condensed financial statements. Amounts billed to customers in sales transactions related to shipping and handling, represent revenues earned for the goods provided and are included in net sales. Costs of shipping and handling are included in cost of products sold. The Company accounts for revenue in accordance with Topic 606 which was adopted at the beginning of fiscal year 2018 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial. The adoption of these standards did not have a material impact on the Company's condensed statements of operations during the three months ended March 31, 2018. |
Use of Estimates | Use of Estimates The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying unaudited condensed financial statements and accompanying notes. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with original maturities of three months or less at the time of purchase. At March 31, 2019 and December 31, 2018, the Company did not have any cash equivalents. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash, accounts receivable, prepaid expenses and other assets, accounts payable, accrued liabilities and notes payable to stockholder approximate their fair values as of March 31, 2019 and December 31, 2018, respectively, because of their short-term natures. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company's customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. If market conditions decline, actual collection experience may not meet expectations and may result in decreased cash flows and increased bad debt expense. The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value using the first in, first out (FIFO) method. Net realizable value is defined as sales price less cost of completion, disposable and transportation and a normal profit margin. Production costs, consisting of labor and overhead, are applied to ending finished goods inventories at a rate based on estimated production capacity. Excess production costs are charged to cost of products sold. Provisions have been made to reduce excess or obsolete inventories to their net realizable value. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets, except for assets held under capital leases, for which the Company records depreciation and amortization based on the shorter of the assets useful life or the term of the lease. The estimated useful lives of property and equipment range from 3 to 5 years. Upon sale or retirement, the cost and related accumulated depreciation and amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred. |
Patents | Patents Patents are stated at cost. Amortization is provided using the straight-line method over the estimated useful lives of the patents. The estimated useful lives of patents are approximately 20 years. Upon retirement, the cost and related accumulated amortization are eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Management assesses the recoverability of its long-lived assets when indicators of impairment are present. If such indicators are present, recoverability of these assets is determined by comparing the undiscounted net cash flows estimated to result from those assets over the remaining life to the assets net carrying amounts. If the estimated undiscounted net cash flows are less than the net carrying amount, the assets would be adjusted to their fair value, based on appraisal or the present value of the undiscounted net cash flows. |
Sales Incentives and Consideration Paid to Customers | Sales Incentives and Consideration Paid to Customers The Company accounts for certain promotional costs such as sales incentives and cooperative advertising as a reduction of sales. |
Product Warranty Costs | Product Warranty Costs As required by FASB ASC 460, Guarantors Guarantees The Company accrues for warranty costs based on the expected material and labor costs to provide warranty replacement products. The methodology used in determining the liability for warranty cost is based upon historical information and experience. The Company's warranty reserve is included in accrued liabilities in the accompanying condensed financial statements and is calculated as the gross sales multiplied by the historical warranty expense return rate. For the three months ended March 2019, there was no change to the reserve for warranty liability as the reserve balance was deemed sufficient to absorb any warranty costs that might be incurred from the sales activity for the period. The following table shows the changes in the aggregate product warranty liability for the three months ended March 31, 2019: Balance as of December 31, 2018 $ 20,000 Less: Payments made Add: Provision for current period warranties Balance as of March 31, 2019 (unaudited) $ 20,000 |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. During the three months ended March 31, 2019 and 2018, advertising costs incurred by the Company totaled approximately $4,670 and 0, respectively, and are included in selling and administrative expenses in the accompanying statements of operations. |
Engineering and Development | Engineering and Development Engineering and development costs are expensed as incurred. During the three months ended March 31, 2019 and 2018, engineering and development costs incurred by the Company totaled $2,365 and $1,429, respectively, and are included in selling and administrative expenses in the accompanying statements of operations. |
Income Taxes | Income Taxes The Company accounts for income taxes under FASB ASC 740, Income Taxes |
Stock Option Plans | Stock Option Plans We adopted FASB ASC 718, Compensation-Stock Compensation, Stock options and warrants issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option or warrant, whichever is more reliably measurable in accordance with , , Compensation-Stock Compensation, |
Credit Risk | Credit Risk The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the FDIC insured limit of $250,000 are at risk. At March 31, 2019 and December 31, 2018, respectively, the Company did not have cash balances above the FDIC insured limit. The Company performs ongoing evaluations of its significant trade accounts receivable customers and generally does not require collateral. An allowance for doubtful accounts is maintained against trade accounts receivable at levels which management believes is sufficient to cover probable credit losses. The Company also has some customer concentrations, and the loss of business from one or a combination of these significant customers, or an unexpected deterioration in their financial condition, could adversely affect the Companys operations. Please refer to Note 15 for further details. |
Basic and Diluted Loss Per Share | Basic and Diluted Loss Per Share The Company uses ASC 260-10, Earnings Per Share Common stock equivalent shares are excluded from the computation of net loss per share if their effect is anti-dilutive. The Company had net income for the three month period ended March 31, 2019. A separate computation of diluted earnings per share is presented using the treasury stock method and the common stock equivalents did not have any effect on net income per share. |
Leases | Leases In connection with our lease agreement for our Office in Boynton Beach, Florida, the Company adopted the provisions of ASU 2016-02, Leases |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable. |
Basis of Presentation, Going _3
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Product Warrant Liability | The following table shows the changes in the aggregate product warranty liability for the three months ended March 31, 2019: Balance as of December 31, 2018 $ 20,000 Less: Payments made Add: Provision for current period warranties Balance as of March 31, 2019 (unaudited) $ 20,000 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consisted of the following at March 31, 2019 and December 31, 2018, respectively: March 31, 2019 December 31, 2018 (Unaudited) Raw materials $ 1,082,954 $ 1,053,147 Finished goods 427,550 257,623 Valuation allowance (435,526 ) (476,062 ) Total inventory, net $ 1,074,978 $ 834,708 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Prepaid Expense and Other Assets, Current [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | At March 31, 2019 and December 31, 2018, prepaid expenses and other current assets consisted of the following: March 31, 2019 December 31, 2018 (Unaudited) Prepaid expenses $ 25,985 $ 27,854 Deposits 28,000 38,436 $ 53,985 $ 66,290 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | At March 31, 2019 and December 31, 2018, property and equipment consisted of the following: March 31, 2019 December 31, 2018 (Unaudited) Machinery and equipment $ 1,030,196 $ 1,030,196 Furniture and fixtures 56,558 56,558 Leasehold improvements 188,012 188,012 Software and website development 88,842 88,842 Computer hardware and software 179,258 179,258 1,542,866 1,542,866 Less accumulated depreciation and amortization (1,471,665 ) (1,464,224 ) $ 71,201 $ 78,642 |
Patents (Tables)
Patents (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of capitalized patent costs included in other assets | Included in other noncurrent assets at March 31, 2019 and December 31, 2018 are capitalized patent costs as follows: March 31, 2019 December 31, 2018 (Unaudited) Patent costs $ 530,214 $ 533,496 Less accumulated amortization (89,902 ) (84,429 ) $ 440,312 $ 449,067 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Leases [Abstract] | |
Schedule of Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases was as follows: March 31, Operating Leases Classification 2019 Right-of-use assets Operating right of use assets $ 846,744 Current lease liabilities Current operating lease liabilities 174,435 Non-current lease liabilities Long-term operating lease liabilities 743,651 Total lease liabilities $ 918,086 |
Schedule of Lease Term and Discount Rate | Lease term and discount rate were as follows: March 31, 2019 Weighted average remaining lease term (years) 5.29 Weighted average discount rate 4 % |
Schedule of Component of Lease Costs | The component of lease costs were as follows: Three months ended March 31, 2019 Operating lease cost $ 46,669 Variable lease cost (1) 26,915 Total lease costs $ 73,584 (1) Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate. |
Schedule of Supplemental Disclosures of Cash Flow Information Related to Leases | Supplemental disclosures of cash flow information related to leases were as follows: March 31, 2019 Cash paid for operating lease liabilities $ 43,616 Operating right of use assets obtained in exchange for operating lease liabilities $ 890,009 |
Schedule of Maturities of Lease Liabilities | Maturities of lease liabilities were as follows as of March 31, 2019: Operating Leases Remainder of 2019 $ 135,639 2020 188,196 2021 193,627 2022 197,427 2023 197,807 2024 117,383 Total 1,030,079 Less: Imputed interest (111,993 ) Present value of lease liabilities $ 918,086 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Accrued Liabilities [Abstract] | |
Schedule of Accrued Liabilities | At March 31, 2019 and December 31, 2018, accrued liabilities consisted of the following: March 31, 2019 December 31, 2018 (Unaudited) Accrued wages and benefits $ 41,361 $ 52,753 Accrued expenses relating to vendors and others 144,451 128,114 Accrued warranty costs 20,000 20,000 Accrued interest payable relating to stockholder notes 19,230 329,801 Deferred rent 74,689 $ 225,042 $ 605,357 |
Notes Payable to Stockholders_2
Notes Payable to Stockholders - Related Party (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable and Capital Leases | Notes payable and operating lease liabilities consisted of the following at March 31, 2019 and December 31, 2018: March 31, 2019 December 31, 2018 Notes payable to stockholders $ 9,010,132 $ 8,314,622 Operating lease liabilities 918,086 9,928,218 8,314,622 Less: current maturities (799,435 ) (325,000 ) Long-term maturities $ 9,128,783 $ 7,989,622 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Options Activity | A summary of the Companys stock option plans as of March 31, 2019, and changes during the three-month period then ended is presented below: Three Months Ended March 31, 2019 Number of Options Weighted Average Exercise Price Options outstanding at December 31, 2018 11,785,000 $ 0.05 Options granted Options exercised Options forfeited Options expired Options at end of period 11,785,000 $ 0.05 Options exercisable at March 31, 2019 2,190,000 $ 0.19 |
Schedule of Nonvested Options Activity | Changes in the Companys non-vested options for the three months ended March 31, 2019 are summarized as follows: Three Months Ended March 31, 2019 Number of Options Weighted Average Exercise Price Nonvested options at December 31, 2018 9,595,000 $ 0.02 Granted Vested Forfeited Nonvested options at March 31, 2019 9,595,000 $ 0.02 |
Summary of Options Outstanding by Price Range | Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding Remaining Average Contractual Life (In Years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price $0.017- $0.30 11,785,000 8,06 $0.05 2,190,000 $0.19 Totals 11,785,000 8.06 $0.05 2,190,000 $0.19 |
Summary of Warrants Activity | A summary of the Companys warrant activity as of March 31, 2019 and changes during the three-month period then ended is presented below: Three months ended March 31, 2019 Warrants Weighted Warrants outstanding at December 31, 2018 773,336 $ 0.16 Granted Expired Warrants outstanding and exercisable at March 31, 2019 773,336 $ 0.16 |
Summary of Warrants Outstanding and Exercisable by Price Range | Warrants Outstanding and Exercisable Range of Exercise Price Number Outstanding Remaining Average Contractual Life (In Years) Weighted Average Exercise Price $0.05 - $0.25 773,336 1.15 $ 0.16 Totals 773,336 1.15 $ 0.16 |
Basis of Presentation, Going _4
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Cash equivalents | |||
Estimated useful lives of patents | 20 years | ||
Advertising costs | $ 4,670 | $ 0 | |
Research and development costs | 2,365 | $ 1,429 | |
FDIC insured limit | $ 250,000 | $ 250,000 | |
Shares excluded from computation loss per share | 12,558,336 | 3,956,412 | |
Minimum [Member] | |||
Property and equipment, estimated useful life | 3 years | ||
Maximum [Member] | |||
Property and equipment, estimated useful life | 5 years |
Basis of Presentation, Going _5
Basis of Presentation, Going Concern and Summary of Significant Accounting Policies (Product Warrant Liability) (Details) | 3 Months Ended |
Mar. 31, 2019USD ($) | |
Accounting Policies [Abstract] | |
Balance as of December 31, 2018 | $ 20,000 |
Less: Payments made | |
Add: Provision for current period warranties | |
Balance as of March 31, 2019 (unaudited) | $ 20,000 |
Going Concern (Details)
Going Concern (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Going Concern [Abstract] | ||
Net cash used in operating activities | $ 229,331 | $ 271,757 |
Inventories (Details)
Inventories (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,082,954 | $ 1,053,147 |
Finished goods | 427,550 | 257,623 |
Valuation allowance | (435,526) | (476,062) |
Total inventory, net | $ 1,074,978 | $ 834,708 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 25,985 | $ 27,854 |
Deposits | 28,000 | 38,436 |
Prepaid expenses and other current assets | $ 53,985 | $ 66,290 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 1,542,866 | $ 1,542,866 | |
Less accumulated depreciation and amortization | (1,471,665) | (1,464,224) | |
Property and equipment, net | 71,201 | 78,642 | |
Depreciation and amortization expense of property and equipment | 7,441 | $ 5,027 | |
Machinery and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 1,030,196 | 1,030,196 | |
Furniture and Fixtures [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 56,558 | 56,558 | |
Leasehold Improvements [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 188,012 | 188,012 | |
Software and website development [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | 88,842 | 88,842 | |
Computer hardware and software [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, gross | $ 179,258 | $ 179,258 |
Patents (Details)
Patents (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Patent costs | $ 530,214 | $ 533,496 | |
Less accumulated amortization | (89,902) | (84,429) | |
Patent costs, less accumulated amortization | 440,312 | $ 449,067 | |
Amortization expense | 5,409 | $ 3,735 | |
Loss on impairment of patents | $ 11,417 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Jun. 29, 2018 | Sep. 27, 2012 | Sep. 30, 2018 | Mar. 31, 2019 | |
Operating Leased Assets [Line Items] | ||||
Security deposit | $ 34,970 | |||
Annual increase percentage | 3.00% | |||
Lease expiration date | Jul. 31, 2024 | |||
Maturity term of lease | 5 years | |||
Rent expense in fifth year | $ 16,769 | |||
Lease reimburse amount that is agreed by landlord | 58,000 | |||
Rent expense | $ 14,899 | |||
Office and Warehouse Facilities, Boynton Beach, Florida [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Aggregate total minimum lease payments | $ 180,826 | |||
Lease expiration date | Jul. 31, 2019 | |||
Maturity term of lease | 6 years | |||
New Capital Lease [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Maturity term of lease | 48 months | |||
Capital leased assets - office equipment, gross | $ 559 | |||
Secured Debt [Member] | ||||
Operating Leased Assets [Line Items] | ||||
Interest rate | 4.00% |
Leases (Schedule of Supplementa
Leases (Schedule of Supplemental Balance Sheet Information Related to Leases) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Operating Leases | ||
Right-of-use assets | $ 846,744 | |
Current lease liabilities | 174,435 | |
Non-current lease liabilities | 743,651 | |
Total lease liabilities | $ 918,086 |
Leases (Schedule of Lease Term
Leases (Schedule of Lease Term and Discount Rate) (Details) | Mar. 31, 2019 |
Leases [Abstract] | |
Weighted average remaining lease term (years) | 5 years 3 months 15 days |
Weighted average discount rate | 4.00% |
Leases (Schedule of Component o
Leases (Schedule of Component of Lease Costs) (Details) | 3 Months Ended | |
Mar. 31, 2019USD ($) | ||
Leases [Abstract] | ||
Operating lease cost | $ 46,669 | |
Variable lease cost | 26,915 | [1] |
Total lease costs | $ 73,584 | |
[1] | Variable lease cost primarily relates to common area maintenance, property taxes and insurance on leased real estate. |
Leases (Schedule of Supplemen_2
Leases (Schedule of Supplemental Disclosures of Cash Flow Information Related to Leases) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Leases [Abstract] | ||
Cash paid for operating lease liabilities | $ 43,616 | |
Operating right of use assets obtained in exchange for operating lease liabilities | $ 890,009 |
Leases (Schedule of Future Mini
Leases (Schedule of Future Minimum Lease Commitments) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Operating Leases | ||
Remainder of 2019 | $ 135,639 | |
2020 | 188,196 | |
2021 | 193,627 | |
2022 | 197,427 | |
2023 | 197,807 | |
2024 | 117,383 | |
Total | 1,030,079 | |
Less: Imputed interest | (111,993) | |
Present value of lease liabilities | $ 918,086 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Accrued Liabilities [Abstract] | ||
Accrued wages and benefits | $ 41,361 | $ 52,753 |
Accrued expenses relating to vendors and others | 144,451 | 128,114 |
Accrued warranty costs | 20,000 | 20,000 |
Accrued interest payable relating to stockholder notes | 19,230 | 329,801 |
Deferred rent | 74,689 | |
Accrued liabilities | $ 225,042 | $ 605,357 |
Deferred Compensation (Details)
Deferred Compensation (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Compensation Related Costs [Abstract] | ||
Deferred compensation | $ 1,502,823 | $ 1,564,253 |
Notes Payable to Stockholders_3
Notes Payable to Stockholders - Related Party (Details) - USD ($) | Jan. 07, 2019 | May 09, 2018 | Mar. 25, 2019 | Mar. 28, 2002 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Debt Instrument [Line Items] | |||||||
Accrued interest | $ 19,230 | $ 329,801 | |||||
Notes Payable - stockholders | 625,000 | $ 325,000 | |||||
Proceeds from related party debt | 300,000 | $ 200,000 | |||||
Note Payable to Chairman of Board [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Interest expense, debt | $ 84,939 | $ 74,673 | |||||
Executive Chairman [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Percent in addition to BBA LIBOR | 1.40% | ||||||
Proceeds from related party debt | $ 275,000 | ||||||
Due to related party | $ 600,000 | ||||||
Executive Chairman [Member] | Unsecured Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | $ 8,385,132 | ||||||
Maturity date | Dec. 31, 2019 | ||||||
Executive Chairman [Member] | Exchanged Amount [Member] | Unsecured Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | $ 7,989,622 | ||||||
Accrued interest | $ 395,510 | ||||||
Interest rate on outstanding term loan | 4.00% | ||||||
Maturity date | Dec. 31, 2021 | ||||||
Executive Officer [Member] | Note Payable to Chairman of Board [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | $ 6,100,000 | ||||||
Percent in addition to BBA LIBOR | 1.40% | ||||||
Interest rate on outstanding term loan | 4.01% | 3.678% | |||||
Maturity date | Dec. 31, 2005 | ||||||
Maximum amount of additional financing the company may obtain that will affect the repayment provisions of the debt instrument | $ 7,000,000 | ||||||
Chief Executive Officer [Member] | Note Payable to Chairman of Board [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Maturity date | Dec. 31, 2019 | ||||||
Board of Directors [Member] | Unsecured Loan [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Face amount of debt instrument | $ 25,000 | ||||||
Interest rate on outstanding term loan | 5.00% | ||||||
Maturity date | Jan. 7, 2020 | ||||||
Former Board of Directors Member [Member] | Note Payable to Chairman of Board [Member] | |||||||
Debt Instrument [Line Items] | |||||||
Interest expense, debt | $ 288 | $ 308 | |||||
Interest expense related to capital lease obligations | $ 4,059 | $ 30 |
Notes Payable to Stockholders_4
Notes Payable to Stockholders - Related Party (Schedule of Notes Payable and Capital Leases) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Debt Disclosure [Abstract] | ||
Notes payable to stockholders | $ 9,010,132 | $ 8,314,622 |
Operating lease liabilities | 918,086 | |
Total obligations | 9,928,218 | 8,314,622 |
Less: current maturities | (799,435) | (325,000) |
Long-term maturities | $ 9,128,783 | $ 7,989,622 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | Oct. 20, 2009 | May 18, 2018 | Mar. 31, 2019 |
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |||
Options granted | |||
Consulting Agreement with Boxwood Associates, Inc. [Member] | |||
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |||
Monthly fee under agreement | $ 2,000 | ||
Notice period to terminate the agreement | 30 days | ||
Letter agreement with Mr. Edward S. Vittoria [Member] | Chief Executive Officer [Member] | |||
Purchase Commitment, Excluding Long-term Commitment [Line Items] | |||
Annual base salary | $ 200,000 | ||
Options granted | 6,500,000 | ||
Cash portion of payment | $ 50,000 |
Stock Options and Warrants (Sto
Stock Options and Warrants (Stock Options Narrative) (Details) - USD ($) | Apr. 12, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 28, 2019 | Dec. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Compensation expense | $ 13,930 | $ 10,341 | |||
Unrecognized compensation cost | $ 110,662 | $ 4,027 | |||
Common stock shares outstanding | 69,016,468 | 69,016,468 | |||
2018 Equity Compensation Plan [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved for future issuance | 20,000,000 | ||||
Exercisable period | 10 years | ||||
Common stock shares outstanding | 35,713,727 | ||||
Percentage of common stock shares outstanding | 51.70% | ||||
Percentage of common stock own by employee | 10.00% | ||||
Grants period | 5 years | ||||
Vesting period | 3 years | ||||
Vesting percentage | 33.33% |
Stock Options and Warrants (Sum
Stock Options and Warrants (Summary of Stock Options Activity) (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Options | |
Options outstanding at December 31, 2018 | shares | 11,785,000 |
Options granted | shares | |
Options exercised | shares | |
Options forfeited | shares | |
Options expired | shares | |
Options at end of period | shares | 11,785,000 |
Options exercisable at March 31, 2019 | shares | 2,190,000 |
Weighted Average Exercise Price | |
Options outstanding at December 31, 2018 | $ / shares | $ 0.05 |
Options granted | $ / shares | |
Options exercised | $ / shares | |
Options forfeited | $ / shares | |
Options expired | $ / shares | |
Options at end of period | $ / shares | 0.05 |
Options exercisable at March 31, 2019 | $ / shares | $ 0.19 |
Stock Options and Warrants (Sch
Stock Options and Warrants (Schedule of Nonvested Options Activity) (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Non-Vested stock option activity, shares: | |
Nonvested options at December 31, 2018 | shares | 9,595,000 |
Granted | shares | |
Vested | shares | |
Forfeited | shares | |
Nonvested options at March 31, 2019 | shares | 9,595,000 |
Non-Vested stock option activity, weighted average exercise price: | |
Nonvested options at December 31, 2018 | $ / shares | $ 0.02 |
Granted | $ / shares | |
Vested | $ / shares | |
Forfeited | $ / shares | |
Nonvested options at March 31, 2019 | $ / shares | $ 0.02 |
Stock Options and Warrants (S_2
Stock Options and Warrants (Summary of Options Outstanding by Price Range) (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Number Outstanding | shares | 11,785,000 |
Remaining Average Contractual Life | 8 years 22 days |
Weighted Average Exercise Price, Outstanding | $ 0.05 |
Number Exercisable | shares | 2,190,000 |
Weighted Average Exercise Price, Exercisable | $ 0.19 |
Range of Exercise Price [Member] | |
Share-based Payment Arrangement, Option, Exercise Price Range [Line Items] | |
Range of Exercise Price, lower limit | 0.017 |
Range of Exercise Price, upper limit | $ 0.30 |
Number Outstanding | shares | 11,785,000 |
Remaining Average Contractual Life | 8 years 22 days |
Weighted Average Exercise Price, Outstanding | $ 0.05 |
Number Exercisable | shares | 2,190,000 |
Weighted Average Exercise Price, Exercisable | $ 0.19 |
Stock Options and Warrants (S_3
Stock Options and Warrants (Summary of Warrants Activity) (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Warrant activity, number of shares: | |
Warrants outstanding at December 31, 2018 | shares | 773,336 |
Granted | shares | |
Expired | shares | |
Warrants outstanding and exercisable at March 31, 2019 | shares | 773,336 |
Warrants outstanding at December 31, 2018 | $ / shares | $ 0.16 |
Granted | $ / shares | |
Expired | $ / shares | |
Warrants outstanding and exercisable at March 31, 2019 | $ / shares | $ 0.16 |
Stock Options and Warrants (S_4
Stock Options and Warrants (Summary of Warrants Outstanding by Price Range) (Details) | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options Exercise Price Range [Line Items] | |
Number outstanding | shares | 773,336 |
Remaining Average Contractual Life | 1 year 1 month 24 days |
Weighted average exercise price, outstanding | $ 0.16 |
Range of Exercise Price [Member] | |
Share Based Compensation Shares Authorized Under Equity Instruments Other Than Options Exercise Price Range [Line Items] | |
Range of exercise price, lower limit | 0.05 |
Range of exercise price, upper limit | $ 0.25 |
Number outstanding | shares | 773,336 |
Remaining Average Contractual Life | 1 year 1 month 24 days |
Weighted average exercise price, outstanding | $ 0.16 |
Related Party Transactions - Re
Related Party Transactions - Related Party (Details) - USD ($) | Jan. 07, 2019 | May 09, 2018 | Oct. 20, 2009 | Mar. 25, 2019 | Mar. 28, 2002 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Related Party Transaction [Line Items] | ||||||||
Accrued interest | $ 19,230 | $ 329,801 | ||||||
Proceeds from related party loan | 300,000 | $ 200,000 | ||||||
Consulting Agreement with Boxwood Associates, Inc. [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Monthly fee under agreement | $ 2,000 | |||||||
Notice period to terminate the agreement | 30 days | |||||||
Payments to consultants | $ 6,000 | $ 6,000 | ||||||
Executive Officer [Member] | Note Payable to Chairman of Board [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Face amount of debt instrument | $ 6,100,000 | |||||||
Percent in addition to BBA LIBOR | 1.40% | |||||||
Interest rate on outstanding term loan | 4.01% | 3.678% | ||||||
Maturity date | Dec. 31, 2005 | |||||||
Maximum amount of additional financing the company may obtain that will affect the repayment provisions of the debt instrument | $ 7,000,000 | |||||||
Chief Executive Officer [Member] | Note Payable to Chairman of Board [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Maturity date | Dec. 31, 2019 | |||||||
Executive Chairman [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Percent in addition to BBA LIBOR | 1.40% | |||||||
Proceeds from related party loan | $ 275,000 | |||||||
Due to related party | $ 600,000 | |||||||
Executive Chairman [Member] | Unsecured Debt [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Face amount of debt instrument | $ 8,385,132 | |||||||
Maturity date | Dec. 31, 2019 | |||||||
Executive Chairman [Member] | Exchanged Amount [Member] | Unsecured Debt [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Face amount of debt instrument | $ 7,989,622 | |||||||
Accrued interest | $ 395,510 | |||||||
Interest rate on outstanding term loan | 4.00% | |||||||
Maturity date | Dec. 31, 2021 | |||||||
Board of Directors [Member] | Unsecured Debt [Member] | ||||||||
Related Party Transaction [Line Items] | ||||||||
Face amount of debt instrument | $ 25,000 | |||||||
Interest rate on outstanding term loan | 5.00% | |||||||
Maturity date | Jan. 7, 2020 |
Major Customers (Details)
Major Customers (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2019USD ($)item | Mar. 31, 2018USD ($) | Dec. 31, 2018item | |
Concentration Risk [Line Items] | |||
Net sales | $ | $ 482,993 | $ 885,740 | |
Accounts Receivable [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 84.00% | 83.00% | |
Number of customers representing concentration risk percentage | item | 2 | 2 | |
Accounts Receivable [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 69.00% | 53.00% | |
Accounts Receivable [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 15.00% | 30.00% | |
Sales [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 81.00% | 72.00% | |
Sales [Member] | Customer One [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 56.00% | 46.00% | |
Sales [Member] | Customer Two [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 25.00% | 16.00% | |
Sales [Member] | Customer Three [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 10.00% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Subsequent Event [Line Items] | ||
Proceeds from related party debt | $ 300,000 | $ 200,000 |
Executive Chairman [Member] | ||
Subsequent Event [Line Items] | ||
Proceeds from related party debt | $ 275,000 | |
Basis spread in addition to BBA LIBOR | 1.40% | |
Executive Chairman [Member] | Additional Loan [Member] | ||
Subsequent Event [Line Items] | ||
Proceeds from related party debt | $ 200,000 | |
Basis spread in addition to BBA LIBOR | 1.40% |