Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2014 |
Accounting Policies [Abstract] | ' |
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | ' |
Allowance for Accounts Receivable Doubtful Accounts |
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The Company is required to make judgments as to the collectibility of accounts receivable based on established aging policy, historical experience and future expectations. The allowances for doubtful accounts represent allowances for customer trade accounts that are estimated to be partially or entirely uncollectible. These allowances are used to reduce gross trade receivables to their net realizable value. The Company records these allowances based on estimates related to the following factors: (i) customer specific allowances; (ii) amounts based upon an aging schedule; and (iii) an estimated amount, based on our historical experience, for issues not yet identified. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2014 were $4,374 and $(4,720), respectively. Bad debt expense (recoveries), net for the three and nine months ended September 30, 2013 was $(2,050) and $18,809, respectively. |
Fair Value Measurement, Policy [Policy Text Block] | ' |
Fair Value Measurements |
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Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the fair value guidance establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: |
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Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. |
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Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace. |
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Level 3 - Unobservable inputs which are supported by little or no market activity. |
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The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
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The Company’s financial instruments include cash and cash equivalents, accounts receivable, other assets, accounts payable, accrued expenses, revolving credit loan, term loan payable and other liabilities. The book value of the financial instruments is representative of their fair values. In accordance with this guidance, the Company measures its cash equivalents at fair value. The Company’s cash equivalents are classified within Level 1. Cash equivalents are valued primarily using quoted market prices utilizing market observable inputs. At September 30, 2014 and December 31, 2013, cash equivalents consisted of money market funds measured at fair value on a recurring basis; fair value of the Company’s money market funds was approximately $1,157,000 and $961,000, respectively. |
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The Company adopted the Financial Accounting Standards Board (“FASB”) staff position that delayed the guidance on fair value measurements for non-financial assets and non-financial liabilities. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. |
Goodwill and Intangible Assets, Intangible Assets, Policy [Policy Text Block] | ' |
Intangible Assets |
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Intangible assets consist of the Talon trade name acquired in a purchase business combination, patents, licenses, intellectual property rights and technology. Intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually in accordance with the provisions of FASB Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other”. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives using the straight-line method, and are reviewed for impairment in accordance with the provisions of ASC 360, “Property, Plant and Equipment”. Costs incurred to renew or extend the term of recognized intangible assets are capitalized and amortized over the useful life of the asset. |
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In July 2012, the FASB issued Accounting Standards Update (“ASU”) 2012-02, “Intangibles – Goodwill and Other - Testing Indefinite-lived Intangible Assets for Impairment.” The updated guidance gave companies the option to first perform a qualitative assessment to determine whether it is more likely than not, defined as a likelihood of more than 50%, that an indefinite-lived intangible asset is impaired. If it is determined that it is more likely than not that an impairment exists, then the company is required to estimate the fair value of the indefinite-lived intangible assets and perform a quantitative impairment test in accordance with ASU 350-30. The updated guidance was effective for annual and interim indefinite lived intangibles asset impairment tests performed for fiscal years, and interim periods within those years, beginning after September 15, 2012. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. The Company completed the required assessment as of September 30, 2014 and December 31, 2013, and noted no impairment. |
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From time to time the Company makes investments in product and technical opportunities that are complimentary to or enhancements to its apparel accessories business. During the quarter ended September 30, 2014 the Company invested $40,037 in the acquisition of intellectual property rights complimentary to the Company’s Talon Zipper products. |
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Intangible assets as of September 30, 2014 and December 31, 2013 are as follows: |
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| | September 30, | | | December 31, | |
| | 2014 | | | 2013 | |
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Tradename - Talon trademark | | $ | 4,110,751 | | | $ | 4,110,751 | |
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Intellectual property rights | | | 218,759 | | | | 178,722 | |
Less: Accumulated amortization (10 to 17 years) | | | (32,175 | ) | | | (22,363 | ) |
Intellectual property rights, net | | | 186,584 | | | | 156,359 | |
Intangible assets, net | | $ | 4,297,335 | | | $ | 4,267,110 | |
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Amortization expense for intangible assets was $3,271 and $9,812 for the three and nine months ended September 30, 2014, and $3,271 and $9,562 for the three and nine months ended September 30, 2013, respectively. |
Stockholders' Equity Note, Redeemable Preferred Stock, Issue, Policy [Policy Text Block] | ' |
Convertible Preferred Stock |
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The Company had classified its conditionally redeemable Series B Convertible Preferred shares, which were subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity in the mezzanine section of the consolidated balance sheets, in accordance with the guidance enumerated in FASB ASC No. 480-10 “Distinguishing Liabilities from Equity”, FASB ASC No. 210 “Classification and Measurement of Redeemable Securities” and Rule 5-02.28 of Regulation S-X, when determining the classification and measurement of preferred stock (See Note 8). |
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The Company evaluated the conversion option of the Series B Convertible Preferred shares in accordance with FASB ASC No. 470-20, “Debt with Conversion and Other Options”, Accounting for Convertible Securities with Beneficial Conversion Features (“BCF”) or Contingently Adjustable Conversion Ratios. The Series B Convertible Preferred shares were initially recorded at their fair value minus the BCF and minus preferred stock issuance costs, and then were subsequently adjusted for changes in the preferred stock value in accordance with the following guidelines: |
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| ● | When an equity instrument is not currently redeemable, but it is probable that the equity instrument will become redeemable then changes in the redemption value are recognized as they occur, and the carrying amount of the instrument is adjusted to equal the current redemption value. An increase in the carrying amount of the instrument reduces income available to common stockholders in the calculation of earnings per share. | | | | | | |
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| ● | When the liquidation preference increases on preferred shares, it is added to the preferred stock carrying amount, and reduces income available to common stockholders in the calculation of earnings per share. | | | | | | |
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Accordingly, the Series B Convertible Preferred shares were reported at their liquidation preference amount. |
Cost of Sales, Policy [Policy Text Block] | ' |
Costs of Goods Sold – Cost of goods sold primarily includes expenses related to inventory purchases, customs, duty, freight, overhead expenses and reserves for obsolete inventory. Overhead expenses primarily consist of quality assurance costs, warehouse and operations salaries, and other warehouse expense. |
Selling, General and Administrative Expenses, Policy [Policy Text Block] | ' |
Sales and Marketing Expenses – Sales and marketing expenses primarily include sales salaries and commissions, travel and entertainment, marketing, advertising and other sales and product development related costs. Marketing and advertising efforts are expensed as incurred. |
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General and Administrative Expenses – General and administrative expenses primarily include administrative salaries, employee benefits, professional service fees, facility expenses, information technology costs, investor relations, travel and entertainment, depreciation and amortization, bad debts and other general corporate expenses. |
Interest Expense, Policy [Policy Text Block] | ' |
Interest Expense, net – Interest expense reflects the cost of borrowings and amortization of deferred financing costs. Interest expense for the three and nine months ended September 30, 2014 totaled $98,402 and $320,623, respectively. Interest expense for the three and nine months ended September 30, 2013 totaled $11,800 and $14,472, respectively. Interest income consists of earnings from cash held in interest bearing accounts. For the three and nine months ended September 30, 2014 the Company recorded interest income of $1,531 and $2,867, respectively. For the three and nine months ended September 30, 2013 the Company recorded interest income of $1,159 and $3,256, respectively. |
Foreign Currency Transactions and Translations Policy [Policy Text Block] | ' |
Foreign Currency Translation |
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The Company has operations and holds assets in various foreign countries. The local currency is the functional currency for the Company’s subsidiaries in China and India. Assets and liabilities are translated at end-of-period exchange rates while revenues and expenses are translated at the average exchange rates in effect during the period. Equity is translated at historical rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive income until the translation adjustments are realized. Included in accumulated other comprehensive income were a cumulative foreign currency translation gain of $115,501 and $114,785 as of September 30, 2014 and December 31, 2013, respectively. |
Comprehensive Income, Policy [Policy Text Block] | ' |
Comprehensive Income |
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Comprehensive income consists of net income and unrealized income (loss) on foreign currency translation adjustments. The foreign currency translation adjustment represents the net currency translation gains and losses related to our China and India subsidiaries, which have not been reflected in the net income for the periods presented. |
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The Company reports comprehensive income in accordance with Topic 220 “Comprehensive Income”, and utilizing the option provided under ASU 2011-05 “Presentation of Comprehensive Income” to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement. |
Use of Estimates, Policy [Policy Text Block] | ' |
Use of Estimates |
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The preparation of consolidated financial statements in conformity with generally accepted accounting principles 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 amounts of revenues and expenses during the year. The accounting estimates that require the Company’s most significant, difficult and subjective judgments include the valuation allowance for accounts receivable and inventory, and the assessment of recoverability of long-lived assets and intangible assets, stock-based compensation and the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions). Actual results could differ materially from the Company’s estimates. |
Reclassification, Policy [Policy Text Block] | ' |
Presentation |
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In order to facilitate the comparison of financial information, certain amounts reported in the prior year have been reclassified to conform to the current year presentation. |