Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 30, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | FLEXIBLE SOLUTIONS INTERNATIONAL INC | ||
Entity Central Index Key | 1,069,394 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 17,550,237 | ||
Entity Common Stock, Shares Outstanding | 11,427,991 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current | ||
Cash and cash equivalents | $ 2,498,738 | $ 747,517 |
Accounts receivable (see Note 3) | 1,954,877 | 2,322,373 |
Inventories (see Note 4) | 3,275,476 | 3,467,438 |
Prepaid expenses | 243,342 | 123,511 |
Total current assets | 7,972,433 | 6,660,839 |
Property, equipment and leaseholds, net (see Note 5) | 3,791,109 | 4,764,900 |
Patents (see Note 6) | 100,623 | 137,404 |
Long term deposits (see Note 7) | 10,169 | 4,425 |
Deferred tax asset (see Note 10) | 2,268,296 | 2,667,286 |
Total Assets | 14,142,630 | 14,234,854 |
Current | ||
Accounts payable and accrued liabilities | 826,315 | 815,141 |
Deferred revenue | 40,451 | 44,593 |
Income taxes payable | 293,238 | 140,842 |
Short term line of credit (Note 8) | 200,000 | 750,000 |
Current portion of long term debt (see Note 9) | 201,193 | 358,214 |
Total current liabilities | 1,561,197 | 2,108,790 |
Long term debt (see Note 9) | 553,282 | 754,475 |
Total liabilities | 2,114,479 | 2,863,265 |
Stockholders' Equity | ||
Capital stock (see Note 13) Authorized 50,000,000 common shares with a par value of $0.001 each 1,000,000 preferred shares with a par value of $0.01 each Issued and outstanding: 13,177,991 (2014: 13,169,991) common shares | 13,178 | 13,170 |
Capital in excess of par value | 16,317,225 | 16,227,121 |
Other comprehensive income | (1,205,798) | (267,552) |
Accumulated Deficit | (3,096,454) | (4,601,150) |
Total Stockholders' Equity | 12,028,151 | 11,371,589 |
Total Liabilities and Stockholders' Equity | $ 14,142,630 | $ 14,234,854 |
Commitments and Subsequent events (See Notes 15 and 16) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Stockholders' Equity | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Preferred stock, Issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 50,000,000 | 50,000,000 |
Common stock, Issued | 13,177,991 | 13,169,991 |
Common stock, Outstanding | 13,177,991 | 13,169,991 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Sales | $ 15,898,547 | $ 15,907,849 |
Cost of sales | 9,696,544 | 10,767,624 |
Gross profit | 6,202,003 | 5,140,225 |
Operating expenses | ||
Wages | 1,532,252 | 1,560,440 |
Administrative salaries and benefits | 715,773 | 782,856 |
Advertising and promotion | 34,445 | 36,047 |
Investor relations and transfer agent fee | 125,917 | 208,799 |
Office and miscellaneous | 308,016 | 366,995 |
Insurance | 292,460 | 299,545 |
Interest expense | 55,770 | 94,890 |
Rent | 127,916 | 169,461 |
Consulting | 131,714 | 225,424 |
Professional fees | 172,414 | 287,750 |
Travel | 109,051 | 138,884 |
Telecommunications | 34,473 | 31,046 |
Shipping | 20,660 | 30,328 |
Research | 95,265 | 134,981 |
Commissions | $ 122,868 | 121,351 |
Bad debt expense | 865 | |
Currency exchange | $ (55,892) | (75,406) |
Utilities | 28,434 | 65,191 |
Total operating expenses | 3,851,536 | 4,479,447 |
Operating income | 2,350,467 | $ 660,778 |
Loss on sale of equipment | (45,249) | |
Interest income | 2,963 | |
Income before income tax | 2,308,181 | $ 660,778 |
Income taxes (Note 10) | ||
Deferred income (expense) tax recovery | (38,157) | 164,611 |
Income tax expense | (765,328) | (422,044) |
Net income for the year | 1,504,696 | 403,345 |
Other comprehensive loss | (938,246) | (596,238) |
Comprehensive income (loss) | $ 566,450 | $ (192,893) |
Income per share (basic and diluted) (Note 11) | $ 0.11 | $ 0.03 |
Weighted average number of common shares (basic) | 13,173,827 | 13,169,991 |
Weighted average number of common shares (diluted) | 13,307,021 | 13,169,991 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Operating activities | ||
Net income | $ 1,504,696 | $ 403,345 |
Adjustments to reconcile net income to net cash: | ||
Stock based compensation | 82,112 | 91,168 |
Depreciation and amortization | 578,338 | 789,733 |
Deferred tax expense (recovery) | 38,157 | (164,611) |
Changes in non-cash working capital items: | ||
Decrease (Increase) in accounts receivable | 349,470 | (341,439) |
Decrease (Increase) in inventories | 125,047 | (441,490) |
(Increase) Decrease in prepaid expenses | (127,946) | (1,441) |
Increase (Decrease) in accounts payable | 38,523 | 271,103 |
Increase (Decrease) in taxes payable | 152,396 | 422,044 |
(Decrease) Increase deferred revenue | (4,142) | 33,786 |
Cash provided by operating activities | 2,736,651 | $ 1,062,198 |
Investing activities | ||
Long term deposits | (4,697) | |
Net purchase of property and equipment | (59,030) | $ (24,535) |
Cash used in investing activities | (63,727) | (24,535) |
Financing activities | ||
Repayment of short term line of credit | (550,000) | (650,000) |
Loan repayment | $ (343,661) | (1,135,043) |
Proceeds received from loan | $ 1,005,967 | |
Proceeds of issuance of common stock | $ 8,000 | |
Cash used in financing activities | (885,661) | $ (779,076) |
Effect of exchange rate changes on cash | (36,042) | (79,157) |
Inflow of cash | 1,751,221 | 179,430 |
Cash and cash equivalents, beginning | 747,517 | 568,087 |
Cash and cash equivalents, ending | 2,498,738 | $ 747,517 |
Supplemental disclosure of cash flow information: | ||
Income taxes paid | 785,000 | |
Interest paid | $ 55,770 | $ 96,220 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock | Capital in Excess of Par Value | Accumulated Earnings (Deficiency) | Other Comprehensive Income (Loss) | Total |
Begining Balance, Shares at Dec. 31, 2013 | 13,169,991 | ||||
Begining Balance, Amount at Dec. 31, 2013 | $ 13,170 | $ 16,135,953 | $ (5,004,495) | $ 328,686 | $ 11,473,314 |
Translation adjustment | $ (596,238) | (596,238) | |||
Net income | $ 403,345 | 403,345 | |||
Comprehensive income | (192,893) | ||||
Stock-based compensation | $ 91,168 | 91,168 | |||
Ending Balance, Shares at Dec. 31, 2014 | 13,169,991 | ||||
Ending Balance, Amount at Dec. 31, 2014 | $ 13,170 | $ 16,227,121 | $ (4,601,150) | $ (267,552) | 11,371,589 |
Translation adjustment | $ (938,246) | (938,246) | |||
Net income | $ 1,504,696 | 1,504,696 | |||
Comprehensive income | 566,450 | ||||
Common stock issued employee stock options, shares | 8,000 | ||||
Common stock issued employee stock options, amount | $ 8 | $ 7,992 | 8,000 | ||
Stock-based compensation | 82,112 | 82,112 | |||
Ending Balance, Shares at Dec. 31, 2015 | 13,177,991 | ||||
Ending Balance, Amount at Dec. 31, 2015 | $ 13,178 | $ 16,317,225 | $ (3,096,454) | $ (1,205,798) | $ 12,028,151 |
1. BASIS OF PRESENTATION
1. BASIS OF PRESENTATION | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
1. BASIS OF PRESENTATION | 1. Basis of Presentation These consolidated financial statements include the accounts of Flexible Solutions International, Inc. (the Company), and its wholly-owned subsidiaries Flexible Fermentation Ltd. (Flexible Ltd.), NanoChem Solutions Inc. (NanoChem), Flexible Solutions Ltd., Flexible Biomass LP, and FS Biomass Inc. All inter-company balances and transactions have been eliminated. The Company was incorporated May 12, 1998 in the State of Nevada and had no operations until June 30, 1998. Flexible Solutions International, Inc. and its subsidiaries develop, manufacture and market specialty chemicals which slow the evaporation of water. One product, HEATSAVR®, is marketed for use in swimming pools and spas where its use, by slowing the evaporation of water, allows the water to retain a higher temperature for a longer period of time and thereby reduces the energy required to maintain the desired temperature of the water in the pool. Another product, WATERSAVR®, is marketed for water conservation in irrigation canals, aquaculture, and reservoirs where its use slows water loss due to evaporation. In addition to the water conservation products, the Company also manufactures and markets water-soluble chemicals utilizing thermal polyaspartate biopolymers (hereinafter referred to as TPAs), which are beta-proteins manufactured from the common biological amino acid, L-aspartic. TPAs can be formulated to prevent corrosion and scaling in water piping within the petroleum, chemical, utility and mining industries. TPAs are also used as proteins to enhance fertilizers in improving crop yields and can be used as additives for household laundry detergents, consumer care products and pesticides. |
2. SIGNIFICANT ACCOUNTING POLIC
2. SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
2. SIGNIFICANT ACCOUNTING POLICIES | 2. Significant Accounting Policies. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern and reflect the policies outlined below. (a) Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with several financial institutions. (b) Inventories and Cost of Sales The Company has three major classes of inventory: finished goods, work in progress and raw materials. In all classes, inventory is valued at the lower of cost or market. Cost is determined on a first-in, first-out basis. Cost of sales includes all expenditures incurred in bringing the goods to the point of sale. Inventory costs and costs of sales include direct costs of the raw material, inbound freight charges, warehousing costs, handling costs (receiving and purchasing) and utilities and overhead expenses related to the Companys manufacturing and processing facilities. (c) Allowance for Doubtful Accounts The Company provides an allowance for doubtful accounts when management estimates collectibility to be uncertain. Accounts receivable are continually reviewed to determine which, if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and historical experience. (d) Property, Equipment and Leaseholds The following assets are recorded at cost and depreciated using the methods and annual rates shown below: Computer hardware 30% Declining balance Furniture and fixtures 20% Declining balance Manufacturing equipment 20% Declining balance Office equipment 20% Declining balance Boat 20% Declining balance Building and improvements 10% Declining balance Technology 20% Declining balance Leasehold improvements Straight-line over lease term Property and equipment are written down to net realizable value when management determines there has been a change in circumstances which indicates its carrying amount may not be recoverable. No write-downs have been necessary to date. (e) Impairment of Long-Lived Assets In accordance with FASB Codification Topic 360, Property, Plant and Equipment (ASC 360), the Company reviews long-lived assets, including, but not limited to, property and equipment, patents and other assets, for impairment annually or whenever events or changes in circumstances indicate the carrying amounts of assets may not be recoverable. The carrying value of long-lived assets is assessed for impairment by evaluating operating performance and future undiscounted cash flows of the underlying assets. If the expected future cash flows of an asset is less than its carrying value, an impairment measurement is indicated. Impairment charges are recorded to the extent that an assets carrying value exceeds its fair value. Accordingly, actual results could vary significantly from such estimates. There were no impairment charges during the periods presented. (f) Foreign Currency The functional currency of three of the Companys subsidiaries is the Canadian Dollar. The translation of the Canadian Dollar to the reporting currency of the Company, the U.S. Dollar, is performed for assets and liabilities using exchange rates in effect at the balance sheet date. Revenue and expense transactions are translated using average exchange rates prevailing during the year. Translation adjustments arising on conversion of the Companys financial statements from the subsidiarys functional currency, Canadian Dollars, into the reporting currency, U.S. Dollars, are excluded from the determination of income and are disclosed as other comprehensive income (loss) in the Statement of Comprehensive Income (Loss). Foreign exchange gains and losses relating to transactions not denominated in the applicable local currency are included in operating income if realized during the year and in comprehensive income (loss) if they remain unrealized at the end of the year. (g) Revenue Recognition Revenue from product sales is recognized at the time the product is shipped since title and risk of loss is transferred to the purchaser upon delivery to the carrier. Shipments are made F.O.B. shipping point. The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery to the carrier has occurred, the fee is fixed or determinable, collectability is reasonably assured and there are no significant remaining performance obligations. When significant post-delivery obligations exist, revenue is deferred until such obligations are fulfilled. To date there have been no such significant post-delivery obligations. Since the Companys inception, product returns have been insignificant; therefore, no provision has been established for estimate product returns. Deferred revenues consist of products sold to distributors with payment terms greater than the Companys customary business terms due to lack of credit history or operating in a new market in which the Company has no prior experience. The Company defers the recognition of revenue until the criteria for revenue recognition have been met, and payments become due or cash is received from these distributors. (h) Stock Issued in Exchange for Services The Companys common stock issued in exchange for services is valued at estimated fair market value based upon trading prices of the Companys common stock on the dates of the stock transactions. The corresponding expense of the services rendered is recognized over the period that the services are performed. (i) Stock based Compensation The Company recognizes compensation expense for all share-based payments, in accordance with FASB Codification Topic 718, Compensation Stock Compensation The fair value at grant date of stock options is estimated using the Black-Scholes-Merton option-pricing model. Compensation expense is recognized on a straight-line basis over the stock option vesting period based on the estimated number of stock options that are expected to vest. Shares are issued from treasury upon exercise of stock options. (j) Comprehensive Income Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to stockholders equity. The Companys other comprehensive income is primarily comprised of unrealized foreign exchange gains and losses. (k) Income Per Share Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share are calculated giving effect to the potential dilution of the exercise of options and warrants. Common equivalent shares, composed of incremental common shares issuable upon the exercise of stock options and warrants, are included in diluted net income per share to the extent that these shares are dilutive. Common equivalent shares that have an anti-dilutive effect on net income per share have been excluded from the calculation of diluted weighted average shares outstanding for the years ended December 31, 2015 and 2014. (l) Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and would impact the results of operations and cash flows. Estimates and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant areas requiring the use of management estimates include assumptions and estimates relating to the asset impairment analysis, share-based payments and warrants, valuation allowances for deferred income tax assets, determination of useful lives of property, plant and equipment, and the valuation of inventory. (m) Financial Instruments. The fair market value of the Companys financial instruments comprising cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short term line of credit were estimated to approximate their carrying values due to immediate or short-term maturity of these financial instruments. The Company maintains cash balances at financial institutions which at times, exceed federally insured amounts. The Company has not experienced any material losses in such accounts. The Company is exposed to foreign exchange and interest rate risk to the extent that market value rate fluctuations materially differ from financial assets and liabilities, subject to fixed long-term rates. (n) Fair Value of Financial Instruments. In August 2009, an update was made to Fair Value Measurements and Disclosures Measuring Liabilities at Fair Value. Fair Value Measurements and Disclosures Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs described below, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. ● Level 1 Quoted prices in active markets for identical assets or liabilities ● Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 Unobservable inputs that are supported by little or no market activity which is significant to the fair value of the assets or liabilities. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and short term line of credit for all periods presented approximate their respective carrying amounts due to the short term nature of these financial instruments. (o) Contingencies Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Legal fees associated with loss contingencies are expensed as incurred. (p) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance so that the assets are recognized only to the extent that when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Per FASB ASC 740 Income taxes, it is the Companys policy to provide for uncertain tax positions and the related interest and penalties based upon managements assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2015, the Company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized benefit is established or is required to pay amounts in excess of the liability, the Companys effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Companys tax positions are recorded as Interest Expense. (q) Risk Management The Companys credit risk is primarily attributable to its account receivables. The amounts presented in the accompanying consolidated balance sheets are net of allowances for doubtful accounts, estimated by the Companys management based on prior experience and the current economic environment. The Company is exposed to credit-related losses in the event of non-performance by counterparties to the financial instruments. Credit exposure is minimized by dealing with only credit worthy counterparties. Accounts receivable for the Companys three primary customers totaled $1,298,821 (66%) at December 31, 2015 (2014 - $1,769,113 or 76%). The credit risk on cash and cash equivalents is limited because the Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions. The Company is not exposed to significant interest rate risk to the extent that the long term debt maintained from the foreign government agencies is subject to a fixed rate of interest. In order to manage its exposure to foreign exchange risks, the Company is closely monitoring the fluctuations in the foreign currency exchange rates and the impact on the value of cash and cash equivalents, accounts receivable, and accounts payable. (r) Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board (the FASB) and the International Accounting Standards Board (the IASB) issued substantially converged final standards on revenue recognition. The FASB's Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), was issued in three parts: (a) Section A,Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606)and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40), (b) Section B,Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables and (c) Section C, Background Information and Basis for Conclusions. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new revenue recognition guidance becomes effective for the Company on December 15, 2017, and early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. In August 2014, the FASB issued new guidance on determining when and how to disclose going -concern uncertainties in the financial statements. The new guidance requires management to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about its ability to continue as a going concern. The guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. Upon adoption, the Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position. In June 2014, the FASB issued ASU No. 2014-12, Compensation Stock Compensation, an update to its accounting guidance related to share-based compensation. The guidance requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition, and therefore shall not be reflected in determining the fair value of the award at the grant date. The guidance is effective for annual and interim periods beginning after December 15, 2015. Adoption of this guidance is not expected to have any effect on the Companys consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, "Consolidation: Amendments to the Consolidation Analysis." This update improves targeted areas of the consolidation guidance and reduces the number of consolidation models. This update is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Adoption of this guidance is not expected to have any effect on the Companys consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. Under this ASU, inventory will be measured at the lower of cost and net realizable value and options that currently exist for market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of this guidance is not expected to have any effect on the Companys consolidated financial statements. |
3. ACCOUNTS RECEIVABLE
3. ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
3. ACCOUNTS RECEIVABLE | 3. Accounts Receivable 2015 2014 Accounts receivable $ 1,990,283 $ 2,363,492 Allowances for doubtful accounts (35,406 ) (41,119 ) $ 1,954,877 $ 2,322,373 |
4. INVENTORIES
4. INVENTORIES | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
4. INVENTORIES | 4. Inventories 2015 2014 Completed goods $ 1,162,571 $ 1,449,640 Work in progress 10,466 1,216 Raw materials 2,102,439 2,019,582 $ 3,275,476 $ 3,467,438 |
5. PROPERTY, EQUIPMENT AND LEAS
5. PROPERTY, EQUIPMENT AND LEASEHOLDS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
5. PROPERTY, EQUIPMENT AND LEASEHOLDS | 5. Property, Equipment and Leaseholds 2015 Accumulated 2015 Cost Depreciation Net Buildings $ 4,766,282 $ 2,774,306 $ 1,991,976 Computer hardware 88,026 82,811 5,215 Furniture and fixtures 29,147 20,774 8,373 Office equipment 17,214 16,054 1,160 Manufacturing equipment 5,074,079 3,770,819 1,303,260 Trailer 12,474 11,630 844 Boat 34,400 3,440 30,960 Leasehold improvements 29,604 29,604 Technology 98,701 78,961 19,740 Land 399,977 399,977 $ 10,549,904 $ 6,758,795 $ 3,791,109 2014 Accumulated 2014 Cost Depreciation Net Buildings $ 5,065,433 $ 2,653,287 $ 2,412,146 Computer hardware 97,124 89,083 8,041 Furniture and fixtures 25,548 21,906 3,642 Office equipment 20,537 18,807 1,730 Manufacturing equipment 5,710,354 3,864,204 1,846,150 Trailer 14,882 13,444 1,438 Technology 117,758 64,767 52,991 Land 438,762 438,762 $ 11,490,398 $ 6,725,498 $ 4,764,900 Amount of depreciation expense for 2015: $562,471 (2014: $771,385) and is included in cost of sales in the consolidated statements of operations and comprehensive income (loss). |
6. PATENTS
6. PATENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
6. PATENTS | 6. Patents 2015 Accumulated 2015 Patents $ 191,698 $ 91,075 $ 100,623 2014 Accumulated 2014 Patents $ 228,597 $ 91,193 $ 137,404 Decrease in 2015 cost was due to currency conversion. 2015 cost in Canadian dollars - $265,102 (2014 - $265,102 in Canadian dollars). Amount of amortization for 2015: $15,867 (2014: $18,348) and is included in cost of sales in the consolidated statements of operations and comprehensive income (loss). Estimated amortization expense over the next five years is as follows: 2016 $ 14,640 2017 14,640 2018 14,640 2019 14,640 2020 14,640 |
7. LONG TERM DEPOSITS
7. LONG TERM DEPOSITS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
7. LONG TERM DEPOSITS | 7. Long Term Deposits The Company has reclassified certain security deposits to better reflect their long term nature. Long term deposits consist of damage deposits held by landlords and security deposits held by various vendors. 2015 2014 Long term deposits $ 10,169 $ 4,425 |
8. SHORT-TERM LINE OF CREDIT
8. SHORT-TERM LINE OF CREDIT | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
8. SHORT-TERM LINE OF CREDIT | 8. Short-Term Line of Credit In April 2015, the Company signed a new agreement with Harris Bank to renew the expiring credit line. The revolving line of credit is for an aggregate amount of up to the lesser of (i) $3,000,000, or (ii) 75% of eligible domestic accounts receivable and certain foreign accounts receivable plus 40% of inventory. The loan has an annual interest rate of 3.75%. The Revolving Line of Credit contains customary affirmative and negative covenants, including the following: compliance with laws, provision of financial statements and periodic reports, payment of taxes, maintenance of inventory and insurance, maintenance of operating accounts at the Bank, the Banks access to collateral, formation or acquisition of subsidiaries, incurrence of indebtedness, dispositions of assets, granting liens, changes in business, ownership or business locations, engaging in mergers and acquisitions, making investments or distributions and affiliate transactions. The covenants also require that the Company maintain a minimum ratio of qualifying financial assets to the sum of qualifying financial obligations. As of December 31, 2015, Company was in compliance with all loan covenants. To secure the repayment of any amounts borrowed under the Revolving Line of Credit, the Company granted the Bank a security interest in substantially all of the assets of NanoChem Solutions Inc., exclusive of intellectual property assets. Short-term borrowings outstanding under the Revolving Line as of December 31, 2015 were $200,000 (2014 - $750,000). |
9. LONG TERM DEBT
9. LONG TERM DEBT | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
9. LONG TERM DEBT | 9. Long Term Debt ( a ) (b) (c) Harris Bank with a rate of prime plus 0.5% to be repaid over 5 years with equal monthly installments plus interest. This money was used to retire the AFSC debt and make the December 2014 payment on the AAFC loan. The balance owing at December 31, 2015 was US$754,475 (2014: $955,668). The Company has committed to the following repayments: 2016 $ 201,193 2017 $ 201,193 2018 $ 201,193 2019 $ 150,895 As of December 31, 2015, Company was in compliance with all loan covenants. Continuity 2015 2014 Balance, January 1 $ 1,112,689 1,297,830 Plus: Proceeds from loans - 1,005,967 Less: Payments on loan 337,631 982,973 Effect of exchange rate (20,583 ) (208,135 ) Balance, December 31 $ 754,475 $ 1,112,689 Outstanding balance at December 31, 2015 2014 a) Long term debt - AAFC $ - $ 157,5021 c) Long term debt - Harris 754,475 955,668 Long-term Debt $ 754,475 $ 1,112,689 Less: current portion (201,193 ) (358,214 ) $ 553,282 $ 754,475 |
10. INCOME TAX
10. INCOME TAX | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
10. INCOME TAX | 10. Income Tax The provision for income tax expense (benefit) is compromised of the following: 2015 2014 Current tax, federal $ 613,691 $ 345,547 Current tax, state 151,637 76,497 Current tax, foreign - - Current tax, total 765,328 422,044 Deferred income tax, federal 77,365 (64,746 ) Deferred income tax, state 19,116 (14,333 ) Deferred income tax, foreign (58,324 ) (85,532 ) Deferred income tax, total 38,157 (164,611 ) Total $ 803,485 $ 257,433 The following table reconciles the income tax benefit at the U.S. Federal statutory rate to income tax benefit at the Company's effective tax rates. 2015 2014 Income (loss) before taxes 2,308,181 660,780 US statutory tax rates 39.12 % 38.62 % Expected income tax (recovery) 902,845 255,193 Non-deductible items 39,872 (162,602 ) Change in estimates 12,336 (38,696 ) Change in enacted tax rate (158,840 ) - Option expired during the year 35,688 44,917 Functional currency adjustments - - Foreign tax rate difference (40,393 ) 172,818 Change in valuation allowance 11,977 (14,197 ) Total income taxes (recovery) 803,485 257,433 Current income tax expenses (recovery) 765,328 422,044 Deferred tax expenses (recovery) 38,157 (164,611 ) Total income taxes (recovery) 803,485 257,433 Deferred taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes. Deferred tax assets (liabilities) at December 31, 2015 and 2014 are comprised of the following: Canada 2015 2014 Non capital loss carryforwards 1,068,935 1,407,088 Patents 36,070 35,480 Fixed assets 809,404 780,396 Financial instruments - (6,045 ) 1,914,409 2,216,919 Valuation Allowance - - Net Deferred tax asset (liability) 1,914,409 2,216,919 USA 2015 2014 Fixed Assets 353,907 429,631 Stock-Based Compensation 206,648 215,429 560,556 645,060 Deferred tax asset not recognized 206,669 194,692 Net Deferred tax asset 353,886 450,368 The Company has non-operating loss carryforwards of approximately $3,959,018 (2014 - $5,628,353) which may be carried forward to apply against future year income tax for Canadian income tax purposes, subject to the final determination by taxation authorities, expiring in the following years: Expiry Loss 2027 322,794 2028 543,345 2029 748,420 2030 781,632 2031 900,002 2032 588,509 2033 74,316 2034 - Total 3,959,018 As at December 31, 2015, the Company has no net operating losses carryforward available for US tax purposes. Accounting for uncertainty for Income Tax Effective January 1, 2009, the Company adopted the interpretation for accounting for uncertainty in income taxes which was an interpretation of the accounting standard accounting for income taxes. This interpretation created a single model to address accounting for uncertainty in tax positions. This interpretation clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. As at December 31, 2015 and 2014, the Companys consolidated balance sheets did not reflect a liability for uncertain tax positions, nor any accrued penalties or interest associated with income tax uncertainties. The Company has no income tax examinations in progress. |
11. INCOME PER SHARE
11. INCOME PER SHARE | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
11. INCOME PER SHARE | 11. Income Per Share We present both basic and diluted income per share on the face of our consolidated statements of operations. Basic and diluted income per share are calculated as follows: 2015 2014 Net income $ 1,504,696 $ 403,345 Weighted average common shares outstanding: Basic Basic 13,173,827 13,169,991 Diluted 13,307,021 13,169,991 Net income per common share: Basic and Diluted $ 0.11 $ 0.03 Certain stock options whose terms and conditions are described in Note 12, Stock Options could potentially dilute basic EPS in the future, but were not included in the computation of diluted EPS because to do so would have been anti-dilutive. Those anti-dilutive options are as follows. 2015 2014 Anti-dilutive options 552,000 949,000 There were no preferred shares issued and outstanding during the years ended December 31, 2015 or 2014. |
12. STOCK OPTIONS
12. STOCK OPTIONS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
12. STOCK OPTIONS | 12. Stock Options The Company adopted a stock option plan ("Plan"). The purpose of this Plan is to provide additional incentives to key employees, officers, directors and consultants of the Company and its subsidiaries in order to help attract and retain the best available personnel for positions of responsibility and otherwise promote the success of the Companys business. It is intended that options issued under this Plan constitute non-qualified stock options. The general terms of awards under the option plan are that 100% of the options granted will vest the year following the grant. The maximum term of options granted is 5 years. The Company may issue stock options and stock bonuses for shares of its common stock to provide incentives to directors, key employees and other persons who contribute to the success of the Company. The exercise price of all incentive options are issued for not less than fair market value at the date of grant. The following table summarizes the Companys stock option activity for the years ended December 31, 2015 and 2014: Number of shares Exercise price per share Weighted average exercise price Balance, December 31, 2013 1,164,000 $ 1.21 - $2.45 $ 1.73 Granted 227,000 $ 1.00 1.21 $ 1.01 Cancelled or expired (265,000 ) $ 1.00 2.25 $ 1.91 Balance, December 31, 2014 1,126,000 $ 1.21 - $2.45 $ 1.54 Granted 317,000 $ 0.75 - 1.05 $ 0.89 Cancelled or expired (245,000 ) $ 1.05 2.22 $ 1.72 Exercised 8,000 $ 1.00 $ 1.00 Balance, December 31, 2015 1,190,000 $ 0.75 2.45 $ 1.34 Exercisable, December 31, 2015 1,032,000 $ 1.00 2.45 $ 1.43 The weighted-average remaining contractual life of outstanding options is 1.98 years. The aggregate intrinsic value of options outstanding at December 31, 2015 is $418,330. The fair value of each option grant is calculated using the following weighted average assumptions: Expected life years 3.0 % 3.0 % Interest rate 0.78 1.16 % 0.78 % Volatility 58-77 % 58 % Dividend yield -- % -- % Weighted average fair value of options granted $ 0.36-.37 $ 0.36 During the year ended December 31, 2015, the Company granted 100,000 (2014 100,000) stock options to consultants and has applied ASC 718 using the Black-Scholes option-pricing model, which resulted in additional expenses of $26,533 (2014 - $29,026). Options granted in other years resulted in additional expenses of $3,348 (2014 $13,375). During the year ended December 31, 2015, employees were granted 217,000 (2014 127,000) stock options, which resulted in additional expenses of $47,788 (2014 $25,223). Options granted in other years resulted in additional expenses in the amount of $4,591 for employees during the year ended December 31, 2015 (2014 - $23,543). There were 8,000 employee stock options exercised during the year ended December 31, 2015 (2014 nil). As of December 31, 2015, there was approximately $47,514 of compensation expense related to non-vested awards. This expense is expected to be recognized over a weighted average period of 1 year. |
13. CAPITAL STOCK
13. CAPITAL STOCK | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
13. CAPITAL STOCK | 13. Capital Stock The Company issued 8,000 shares upon the exercise of employee stock options in July 2015. During the year ended December 31, 2014, the Company did not issue any stock. |
14. SEGMENTED, SIGNIFICANT CUST
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY | 14. Segmented, Significant Customer Information and Economic Dependency The Company operates in two segments: (a) Energy and water conservation products (as shown under the column heading EWCP below), which consists of a (i) liquid swimming pool blanket which saves energy and water by inhibiting evaporation from the pool surface, and (ii) food-safe powdered form of the active ingredient within the liquid blanket and which is designed to be used in still or slow moving drinking water sources. (b) Biodegradable polymers (BCPAs), used by the petroleum, chemical, utility and mining industries to prevent corrosion and scaling in water piping. This product can also be used in detergents to increase biodegradability and in agriculture to increase crop yields by enhancing fertilizer uptake. The accounting policies of the segments are the same as those described in Note 2, Significant Accounting Policies The Companys reportable segments are strategic business units that offer different, but synergistic products and services. They are managed separately because each business requires different technology and marketing strategies. Year ended December 31, 2015: EWCP BCPA Consolidated Sales $ 687,828 $ 15,210,719 $ 15,898,547 Interest expense 1 55,769 55,770 Depreciation 384,909 193,429 578,338 Income tax expense (recovery) - 765,328 765,328 Segment profit (loss) (1,054,344 ) 2,559,040 1,504,696 Segment assets 2,211,931 1,679,801 3,891,732 Expenditures for segment assets (244,358 ) 303,388 59,030 Year ended December 31, 2014: EWCP BCPA Consolidated Sales $ 872,766 $ 15,035,083 $ 15,907,849 Interest expense 30,053 64,837 94,890 Depreciation 599,279 190,454 789,733 Income tax expense (recovery) - 422,044 422,044 Segment profit (loss) (1,499,350 ) 1,902,695 403,345 Segment assets 3,332,463 1,569,841 4,902,304 Expenditures for segment assets 6,156 18,379 24,535 Sales by territory are shown below: 2015 2014 Canada $ 404,880 $ 404,483 United States and abroad 15,493,667 15,503,366 Total $ 15,898,547 $ 15,907,849 The Companys long-lived assets (property, equipment, leaseholds and patents) are located in Canada and the United States as follows: 2015 2014 Canada $ 2,211,348 $ 3,331,879 United States 1,680,384 1,570,424 Total $ 3,891,732 $ 4,902,304 Three customers accounted for $10,421,165 (66%) of sales made in 2015 (2014 - $10,216,470 or 64%). |
15. COMMITMENTS
15. COMMITMENTS | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
15. COMMITMENTS | 15. Commitments The Company is committed to minimum rental payments for property and premises aggregating approximately $342,053 over the term of two leases, the last expiring on December 31, 2020. Commitments in the next five year are as follows: 2016 $ 73,733 2017 $ 65,280 2018 $ 66,480 2019 $ 67,680 2020 $ 68,880 |
16. SUBSEQUENT EVENTS
16. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
16. SUBSEQUENT EVENTS | 16. Subsequent Events. On January 6, 2016, the Company repurchased 1,750,000 shares at $0.90 per share. The shares were returned to the treasury and cancelled. |
2. SIGNIFICANT ACCOUNTING POL23
2. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Significant Accounting Policies Policies | |
Cash and Cash Equivalents | The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. Cash and cash equivalents are maintained with several financial institutions. |
Inventories and Cost of Sales | The Company has three major classes of inventory: finished goods, work in progress and raw materials. In all classes, inventory is valued at the lower of cost or market. Cost is determined on a first-in, first-out basis. Cost of sales includes all expenditures incurred in bringing the goods to the point of sale. Inventory costs and costs of sales include direct costs of the raw material, inbound freight charges, warehousing costs, handling costs (receiving and purchasing) and utilities and overhead expenses related to the Companys manufacturing and processing facilities. |
Allowance for Doubtful Accounts | The Company provides an allowance for doubtful accounts when management estimates collectibility to be uncertain. Accounts receivable are continually reviewed to determine which, if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and historical experience. |
Property, Equipment and Leaseholds | The following assets are recorded at cost and depreciated using the methods and annual rates shown below: Computer hardware 30% Declining balance Furniture and fixtures 20% Declining balance Manufacturing equipment 20% Declining balance Office equipment 20% Declining balance Boat 20% Declining balance Building and improvements 10% Declining balance Technology 20% Declining balance Leasehold improvements Straight-line over lease term Property and equipment are written down to net realizable value when management determines there has been a change in circumstances which indicates its carrying amount may not be recoverable. No write-downs have been necessary to date. |
Impairment of Long-Lived Assets | In accordance with FASB Codification Topic 360, Property, Plant and Equipment (ASC 360), the Company reviews long-lived assets, including, but not limited to, property and equipment, patents and other assets, for impairment annually or whenever events or changes in circumstances indicate the carrying amounts of assets may not be recoverable. The carrying value of long-lived assets is assessed for impairment by evaluating operating performance and future undiscounted cash flows of the underlying assets. If the expected future cash flows of an asset is less than its carrying value, an impairment measurement is indicated. Impairment charges are recorded to the extent that an assets carrying value exceeds its fair value. Accordingly, actual results could vary significantly from such estimates. There were no impairment charges during the periods presented. |
Foreign Currency | The functional currency of three of the Companys subsidiaries is the Canadian Dollar. The translation of the Canadian Dollar to the reporting currency of the Company, the U.S. Dollar, is performed for assets and liabilities using exchange rates in effect at the balance sheet date. Revenue and expense transactions are translated using average exchange rates prevailing during the year. Translation adjustments arising on conversion of the Companys financial statements from the subsidiarys functional currency, Canadian Dollars, into the reporting currency, U.S. Dollars, are excluded from the determination of income and are disclosed as other comprehensive income (loss) in the Statement of Comprehensive Income (Loss). Foreign exchange gains and losses relating to transactions not denominated in the applicable local currency are included in operating income if realized during the year and in comprehensive income (loss) if they remain unrealized at the end of the year. |
Revenue Recognition | Revenue from product sales is recognized at the time the product is shipped since title and risk of loss is transferred to the purchaser upon delivery to the carrier. Shipments are made F.O.B. shipping point. The Company recognizes revenue when there is persuasive evidence of an arrangement, delivery to the carrier has occurred, the fee is fixed or determinable, collectability is reasonably assured and there are no significant remaining performance obligations. When significant post-delivery obligations exist, revenue is deferred until such obligations are fulfilled. To date there have been no such significant post-delivery obligations. Since the Companys inception, product returns have been insignificant; therefore, no provision has been established for estimate product returns. Deferred revenues consist of products sold to distributors with payment terms greater than the Companys customary business terms due to lack of credit history or operating in a new market in which the Company has no prior experience. The Company defers the recognition of revenue until the criteria for revenue recognition have been met, and payments become due or cash is received from these distributors. |
Stock Issued in Exchange for Services | The Companys common stock issued in exchange for services is valued at estimated fair market value based upon trading prices of the Companys common stock on the dates of the stock transactions. The corresponding expense of the services rendered is recognized over the period that the services are performed. |
Stock-based Compensation | The Company recognizes compensation expense for all share-based payments, in accordance with FASB Codification Topic 718, Compensation Stock Compensation The fair value at grant date of stock options is estimated using the Black-Scholes-Merton option-pricing model. Compensation expense is recognized on a straight-line basis over the stock option vesting period based on the estimated number of stock options that are expected to vest. Shares are issued from treasury upon exercise of stock options. |
Comprehensive Income | Other comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included in comprehensive income, but are excluded from net income as these amounts are recorded directly as an adjustment to stockholders equity. The Companys other comprehensive income is primarily comprised of unrealized foreign exchange gains and losses. |
Income Per Share | Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share are calculated giving effect to the potential dilution of the exercise of options and warrants. Common equivalent shares, composed of incremental common shares issuable upon the exercise of stock options and warrants, are included in diluted net income per share to the extent that these shares are dilutive. Common equivalent shares that have an anti-dilutive effect on net income per share have been excluded from the calculation of diluted weighted average shares outstanding for the years ended December 31, 2015 and 2014. |
Use of Estimates | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and would impact the results of operations and cash flows. Estimates and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Significant areas requiring the use of management estimates include assumptions and estimates relating to the asset impairment analysis, share-based payments and warrants, valuation allowances for deferred income tax assets, determination of useful lives of property, plant and equipment, and the valuation of inventory. |
Financial Instruments | The fair market value of the Companys financial instruments comprising cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and short term line of credit were estimated to approximate their carrying values due to immediate or short-term maturity of these financial instruments. The Company maintains cash balances at financial institutions which at times, exceed federally insured amounts. The Company has not experienced any material losses in such accounts. The Company is exposed to foreign exchange and interest rate risk to the extent that market value rate fluctuations materially differ from financial assets and liabilities, subject to fixed long-term rates. |
Fair Value of Financial Instruments | In August 2009, an update was made to Fair Value Measurements and Disclosures Measuring Liabilities at Fair Value. Fair Value Measurements and Disclosures . Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs described below, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. ● Level 1 Quoted prices in active markets for identical assets or liabilities ● Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 Unobservable inputs that are supported by little or no market activity which is significant to the fair value of the assets or liabilities. The fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities and short term line of credit for all periods presented approximate their respective carrying amounts due to the short term nature of these financial instruments. |
Contingencies | Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company's financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Legal fees associated with loss contingencies are expensed as incurred. |
Income Taxes | Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance so that the assets are recognized only to the extent that when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Per FASB ASC 740 Income taxes, it is the Companys policy to provide for uncertain tax positions and the related interest and penalties based upon managements assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2015, the Company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized benefit is established or is required to pay amounts in excess of the liability, the Companys effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Companys tax positions are recorded as Interest Expense. |
Risk Management | The Companys credit risk is primarily attributable to its account receivables. The amounts presented in the accompanying consolidated balance sheets are net of allowances for doubtful accounts, estimated by the Companys management based on prior experience and the current economic environment. The Company is exposed to credit-related losses in the event of non-performance by counterparties to the financial instruments. Credit exposure is minimized by dealing with only credit worthy counterparties. Accounts receivable for the Companys three primary customers totaled $1,298,821 (66%) at December 31, 2015 (2014 - $1,769,113 or 76%). The credit risk on cash and cash equivalents is limited because the Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions. The Company is not exposed to significant interest rate risk to the extent that the long term debt maintained from the foreign government agencies is subject to a fixed rate of interest. In order to manage its exposure to foreign exchange risks, the Company is closely monitoring the fluctuations in the foreign currency exchange rates and the impact on the value of cash and cash equivalents, accounts receivable, and accounts payable. |
Recent Accounting Pronouncements | On May 28, 2014, the Financial Accounting Standards Board (the FASB) and the International Accounting Standards Board (the IASB) issued substantially converged final standards on revenue recognition. The FASB's Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), was issued in three parts: (a) Section A,Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606)and Other Assets and Deferred Costs-Contracts with Customers (Subtopic 340-40), (b) Section B,Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables and (c) Section C, Background Information and Basis for Conclusions. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The new revenue recognition guidance becomes effective for the Company on December 15, 2017, and early adoption is not permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures. In August 2014, the FASB issued new guidance on determining when and how to disclose going -concern uncertainties in the financial statements. The new guidance requires management to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about its ability to continue as a going concern. The guidance is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. Upon adoption, the Company does not believe this guidance will have a material impact on its consolidated results of operations or financial position. In June 2014, the FASB issued ASU No. 2014-12, Compensation Stock Compensation, an update to its accounting guidance related to share-based compensation. The guidance requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition, and therefore shall not be reflected in determining the fair value of the award at the grant date. The guidance is effective for annual and interim periods beginning after December 15, 2015. Adoption of this guidance is not expected to have any effect on the Companys consolidated financial statements. In February 2015, the FASB issued ASU No. 2015-02, "Consolidation: Amendments to the Consolidation Analysis." This update improves targeted areas of the consolidation guidance and reduces the number of consolidation models. This update is effective for annual and interim periods in fiscal years beginning after December 15, 2015. Adoption of this guidance is not expected to have any effect on the Companys consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. Under this ASU, inventory will be measured at the lower of cost and net realizable value and options that currently exist for market value will be eliminated. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. Adoption of this guidance is not expected to have any effect on the Companys consolidated financial statements. |
2. SIFNIFICANT ACCOUNTING POLIC
2. SIFNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Sifnificant Accounting Policies Tables | |
Method of Depreciation | The following assets are recorded at cost and depreciated using the methods and annual rates shown below: Computer hardware 30% Declining balance Furniture and fixtures 20% Declining balance Manufacturing equipment 20% Declining balance Office equipment 20% Declining balance Boat 20% Declining balance Building and improvements 10% Declining balance Technology 20% Declining balance Leasehold improvements Straight-line over lease term |
3. ACCOUNTS RECEIVABLE (Tables)
3. ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounts Receivable Tables | |
Accounts Receivable | 2015 2014 Accounts receivable $ 1,990,283 $ 2,363,492 Allowances for doubtful accounts (35,406 ) (41,119 ) $ 1,954,877 $ 2,322,373 |
4. INVENTORIES (Tables)
4. INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventories Tables | |
Inventories | 2015 2014 Completed goods $ 1,162,571 $ 1,449,640 Work in progress 10,466 1,216 Raw materials 2,102,439 2,019,582 $ 3,275,476 $ 3,467,438 |
5. PROPERTY, EQUIPMENT AND LE27
5. PROPERTY, EQUIPMENT AND LEASEHOLDS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property Equipment And Leaseholds Tables | |
Property, Plant & equipment | 2015 Accumulated 2015 Cost Depreciation Net Buildings $ 4,766,282 $ 2,774,306 $ 1,991,976 Computer hardware 88,026 82,811 5,215 Furniture and fixtures 29,147 20,774 8,373 Office equipment 17,214 16,054 1,160 Manufacturing equipment 5,074,079 3,770,819 1,303,260 Trailer 12,474 11,630 844 Boat 34,400 3,440 30,960 Leasehold improvements 29,604 29,604 Technology 98,701 78,961 19,740 Land 399,977 399,977 $ 10,549,904 $ 6,758,795 $ 3,791,109 2014 Accumulated 2014 Cost Depreciation Net Buildings $ 5,065,433 $ 2,653,287 $ 2,412,146 Computer hardware 97,124 89,083 8,041 Furniture and fixtures 25,548 21,906 3,642 Office equipment 20,537 18,807 1,730 Manufacturing equipment 5,710,354 3,864,204 1,846,150 Trailer 14,882 13,444 1,438 Technology 117,758 64,767 52,991 Land 438,762 438,762 $ 11,490,398 $ 6,725,498 $ 4,764,900 |
6. PATENTS (Tables)
6. PATENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Patents Tables | |
Patents | 2015 Accumulated 2015 Patents $ 191,698 $ 91,075 $ 100,623 2014 Accumulated 2014 Patents $ 228,597 $ 91,193 $ 137,404 |
Estimated depreciation expense | Estimated amortization expense over the next five years is as follows: 2016 $ 14,640 2017 14,640 2018 14,640 2019 14,640 2020 14,640 |
7. LONG TERM DEPOSITS (Tables)
7. LONG TERM DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Long Term Deposits Tables | |
Long Term Deposits | 2015 2014 Long term deposits $ 10,169 $ 4,425 |
9. LONG TERM DEBT (Tables)
9. LONG TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Long Term Debt Tables | |
Interest loan Repayment | 2016 $ 201,193 2017 $ 201,193 2018 $ 201,193 2019 $ 150,895 |
Outstanding balance loan | Continuity 2015 2014 Balance, January 1 $ 1,112,689 1,297,830 Plus: Proceeds from loans - 1,005,967 Less: Payments on loan 337,631 982,973 Effect of exchange rate (20,583 ) (208,135 ) Balance, December 31 $ 754,475 $ 1,112,689 Outstanding balance at December 31, 2015 2014 a) Long term debt - AAFC $ - $ 157,5021 c) Long term debt - Harris 754,475 955,668 Long-term Debt $ 754,475 $ 1,112,689 Less: current portion (201,193 ) (358,214 ) $ 553,282 $ 754,475 |
10. INCOME TAX (Tables)
10. INCOME TAX (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense (Benefit) | 2015 2014 Current tax, federal $ 613,691 $ 345,547 Current tax, state 151,637 76,497 Current tax, foreign - - Current tax, total 765,328 422,044 Deferred income tax, federal 77,365 (64,746 ) Deferred income tax, state 19,116 (14,333 ) Deferred income tax, foreign (58,324 ) (85,532 ) Deferred income tax, total 38,157 (164,611 ) Total $ 803,485 $ 257,433 |
Schedule of Reconcilation of Income Taxes | 2015 2014 Income (loss) before taxes 2,308,181 660,780 US statutory tax rates 39.12 % 38.62 % Expected income tax (recovery) 902,845 255,193 Non-deductible items 39,872 (162,602 ) Change in estimates 12,336 (38,696 ) Change in enacted tax rate (158,840 ) - Option expired during the year 35,688 44,917 Functional currency adjustments - - Foreign tax rate difference (40,393 ) 172,818 Change in valuation allowance 11,977 (14,197 ) Total income taxes (recovery) 803,485 257,433 Current income tax expenses (recovery) 765,328 422,044 Deferred tax expenses (recovery) 38,157 (164,611 ) Total income taxes (recovery) 803,485 257,433 |
Deferred tax assets (liabilities) | Canada 2015 2014 Non capital loss carryforwards 1,068,935 1,407,088 Patents 36,070 35,480 Fixed assets 809,404 780,396 Financial instruments - (6,045 ) 1,914,409 2,216,919 Valuation Allowance - - Net Deferred tax asset (liability) 1,914,409 2,216,919 USA 2015 2014 Fixed Assets 353,907 429,631 Stock-Based Compensation 206,648 215,429 560,556 645,060 Deferred tax asset not recognized 206,669 194,692 Net Deferred tax asset 353,886 450,368 |
Non operating loss carryforwards | Expiry Loss 2027 322,794 2028 543,345 2029 748,420 2030 781,632 2031 900,002 2032 588,509 2033 74,316 2034 - Total 3,959,018 |
11. INCOME PER SHARE (Tables)
11. INCOME PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |
Basic and diluted loss per share | 2015 2014 Net income $ 1,504,696 $ 403,345 Weighted average common shares outstanding: Basic Basic 13,173,827 13,169,991 Diluted 13,307,021 13,169,991 Net income per common share: Basic and Diluted $ 0.11 $ 0.03 |
Anti-dilutive options | 2015 2014 Anti-dilutive options 552,000 949,000 |
12. STOCK OPTIONS (Tables)
12. STOCK OPTIONS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
StockOptionsTablesAbstract | |
Stock option activity | Number of shares Exercise price Weighted average Balance, December 31, 2013 1,164,000 $ 1.21 - $2.45 $ 1.73 Granted 227,000 $ 1.00 1.21 $ 1.01 Cancelled or expired (265,000 ) $ 1.00 2.25 $ 1.91 Balance, December 31, 2014 1,126,000 $ 1.21 - $2.45 $ 1.54 Granted 317,000 $ 0.75 - 1.05 $ 0.89 Cancelled or expired (245,000 ) $ 1.05 2.22 $ 1.72 Exercised 8,000 $ 1.00 $ 1.00 Balance, December 31, 2015 1,190,000 $ 0.75 2.45 $ 1.34 Exercisable, December 31, 2015 1,032,000 $ 1.00 2.45 $ 1.43 |
Fair value of each option grant | Expected life years 3.0 % 3.0 % Interest rate 0.78 1.16 % 0.78 % Volatility 58-77 % 58 % Dividend yield -- % -- % Weighted average fair value of options granted $ 0.36-.37 $ 0.36 |
14. SEGMENTED, SIGNIFICANT CU34
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segmented Significant Customer Information And Economic Dependency Tables | |
Reportable segments | Year ended December 31, 2015: EWCP BCPA Consolidated Sales $ 687,828 $ 15,210,719 $ 15,898,547 Interest expense 1 55,769 55,770 Depreciation 384,909 193,429 578,338 Income tax expense (recovery) - 765,328 765,328 Segment profit (loss) (1,054,344 ) 2,559,040 1,504,696 Segment assets 2,211,931 1,679,801 3,891,732 Expenditures for segment assets (244,358 ) 303,388 59,030 Year ended December 31, 2014: EWCP BCPA Consolidated Sales $ 872,766 $ 15,035,083 $ 15,907,849 Interest expense 30,053 64,837 94,890 Depreciation 599,279 190,454 789,733 Income tax expense (recovery) - 422,044 422,044 Segment profit (loss) (1,499,350 ) 1,902,695 403,345 Segment assets 3,332,463 1,569,841 4,902,304 Expenditures for segment assets 6,156 18,379 24,535 |
Sales generated in the United States and Canada | Sales by territory are shown below: 2015 2014 Canada $ 404,880 $ 404,483 United States and abroad 15,493,667 15,503,366 Total $ 15,898,547 $ 15,907,849 |
Property, equipment, leasehold and patents are located in Canada and the United States | The Companys long-lived assets (property, equipment, leaseholds and patents) are located in Canada and the United States as follows: 2015 2014 Canada $ 2,211,348 $ 3,331,879 United States 1,680,384 1,570,424 Total $ 3,891,732 $ 4,902,304 |
15. COMMITMENTS (Tables)
15. COMMITMENTS (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments Tables | |
Commitments | Commitments in the next five year are as follows: 2016 $ 73,733 2017 $ 65,280 2018 $ 66,480 2019 $ 67,680 2020 $ 68,880 |
2. SIGNIFICANT ACCOUNTING POL36
2. SIGNIFICANT ACCOUNTING POLICIES (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Computer hardware [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | 30% Declining balance |
Furniture and fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | |
Manufacturing equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | |
Office equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | |
Boat [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | |
Building and Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | 10% Declining balance |
Technology [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate | |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Depreciation method used and annual rate |
2. SIGNIFICANT ACCOUNTING POL37
2. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Significant Accounting Policies Details Narrative | ||
Representation in Accounts receivable by primary customers | $ 1,298,821 | $ 1,769,113 |
Percentage Representation in Accounts receivable by primary customers | 66.00% | 76.00% |
3. ACCOUNTS RECEIVABLE (Details
3. ACCOUNTS RECEIVABLE (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Accounts Receivable Details | ||
Accounts receivable | $ 1,990,283 | $ 2,363,492 |
Allowances for doubtful accounts | (35,406) | (41,119) |
Total | $ 1,954,877 | $ 2,322,373 |
4. INVENTORIES (Details)
4. INVENTORIES (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventories Details | ||
Completed goods | $ 1,162,571 | $ 1,449,640 |
Work in progress | 10,466 | 1,216 |
Raw materials | 2,102,439 | 2,019,582 |
Inventories | $ 3,275,476 | $ 3,467,438 |
5. PROPERTY, EQUIPMENT AND LE40
5. PROPERTY, EQUIPMENT AND LEASEHOLDS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | $ 10,549,904 | $ 11,490,398 |
Accumulated Depreciation | 6,758,795 | 6,725,498 |
Property, Plant & equipment, Net | 3,791,109 | 4,764,900 |
Buildings [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 4,766,282 | 5,065,433 |
Accumulated Depreciation | 2,774,306 | 2,653,287 |
Property, Plant & equipment, Net | 1,991,976 | 2,412,146 |
Computer hardware [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 88,026 | 97,124 |
Accumulated Depreciation | 82,811 | 89,083 |
Property, Plant & equipment, Net | 5,215 | 8,041 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 29,147 | 25,548 |
Accumulated Depreciation | 20,774 | 21,906 |
Property, Plant & equipment, Net | 8,373 | 3,642 |
Office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 17,214 | 20,537 |
Accumulated Depreciation | 16,054 | 18,807 |
Property, Plant & equipment, Net | 1,160 | 1,730 |
Manufacturing equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 5,074,079 | 5,710,354 |
Accumulated Depreciation | 3,770,819 | 3,864,204 |
Property, Plant & equipment, Net | 1,303,260 | 1,846,150 |
Trailer [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 12,474 | 14,882 |
Accumulated Depreciation | 11,630 | 13,444 |
Property, Plant & equipment, Net | 844 | 1,438 |
Boat [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 34,400 | |
Accumulated Depreciation | 3,440 | |
Property, Plant & equipment, Net | 30,960 | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | $ 29,604 | |
Accumulated Depreciation | ||
Property, Plant & equipment, Net | $ 29,604 | |
Technology [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | 98,701 | 117,758 |
Accumulated Depreciation | 78,961 | 64,767 |
Property, Plant & equipment, Net | 19,740 | 52,991 |
Land [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant & equipment, Cost | $ 399,977 | $ 438,762 |
Accumulated Depreciation | ||
Property, Plant & equipment, Net | $ 399,977 | $ 438,762 |
5. PROPERTY, EQUIPMENT AND LE41
5. PROPERTY, EQUIPMENT AND LEASEHOLDS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property Equipment And Leaseholds Details Narrative | ||
Depreciation expense | $ 562,471 | $ 771,385 |
6. PATENTS (Details)
6. PATENTS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Patents Details | ||
Patents, Gross | $ 191,698 | $ 228,597 |
Accumulated Amortization | 91,075 | 91,193 |
Patents, net | $ 100,623 | $ 137,404 |
6. PATENTS (Details 1)
6. PATENTS (Details 1) | Dec. 31, 2015USD ($) |
Patents Details 1 | |
Estimated depreciation expense, 2016 | $ 14,640 |
Estimated depreciation expense, 2017 | 14,640 |
Estimated depreciation expense, 2018 | 14,640 |
Estimated depreciation expense, 2019 | 14,640 |
Estimated depreciation expense, 2020 | $ 14,640 |
6. PATENTS (Details Narrative)
6. PATENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Amortization | $ 15,867 | $ 18,348 |
Canadian Dollars [Member] | ||
Currency conversion in canadian dollars | $ 265,102 | $ 265,102 |
7. LONG TERM DEPOSITS (Details)
7. LONG TERM DEPOSITS (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Long Term Deposits Details | ||
Long term deposits | $ 10,169 | $ 4,425 |
8. SHORT-TERM LINE OF CREDIT (D
8. SHORT-TERM LINE OF CREDIT (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Short-term Line Of Credit Details Narrative | ||
Short-term borrowings outstanding | $ 200,000 | $ 750,000 |
9. LONG TERM DEBT (Details)
9. LONG TERM DEBT (Details) | Dec. 31, 2015USD ($) |
Long Term Debt Details | |
2,016 | $ 201,193 |
2,017 | 201,193 |
2,018 | 201,193 |
2,019 | $ 150,895 |
9. LONG TERM DEBT (Details 1)
9. LONG TERM DEBT (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Long Term Debt Details 1 | ||
Balance, January 1 | $ 1,112,689 | $ 1,297,830 |
Plus: Proceeds from loans | 1,005,967 | |
Less: Payments on loan | $ 337,631 | 982,973 |
Effect of exchange rate | (20,583) | (208,135) |
Balance, December 31 | $ 754,475 | $ 1,112,689 |
9. LONG TERM DEBT (Details 2)
9. LONG TERM DEBT (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Long term debt | $ 754,475 | $ 1,112,689 |
Less: current portion | (201,193) | (358,214) |
Long term debt outstanding Balance | $ 553,282 | 754,475 |
AAFC [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | 1,575,021 | |
Harris [Member] | ||
Debt Instrument [Line Items] | ||
Long term debt | $ 754,475 | $ 955,668 |
9. LONG TERM DEBT (Details Narr
9. LONG TERM DEBT (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
AAFC [Member] | |||
Debt Instrument [Line Items] | |||
Amount borrowed | $ 658,054 | $ 785,106 | |
Borrowing balance | 0 | 157,021 | |
Harris [Member] | |||
Debt Instrument [Line Items] | |||
Borrowing balance | $ 754,475 | $ 955,668 | $ 955,296 |
10. INCOME TAX (Details)
10. INCOME TAX (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Current tax, federal | $ 613,691 | $ 345,547 |
Current tax, state | $ 151,637 | $ 76,497 |
Current tax, foreign | ||
Current tax, total | $ 765,328 | $ 422,044 |
Deferred income tax, federal | 77,365 | (64,746) |
Deferred income tax, state | 19,116 | (14,333) |
Deferred income tax, foreign | (58,324) | (85,532) |
Deferred income tax, total | 38,157 | (164,611) |
Total | $ 803,485 | $ 257,433 |
10. INCOME TAX (Details 1)
10. INCOME TAX (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Income (loss) before taxes | $ 2,308,181 | $ 660,780 |
US statutory tax rates | 39.12% | 38.62% |
Expected income tax (recovery) | $ 902,845 | $ 255,193 |
Non-deductible items | 39,872 | (162,602) |
Change in estimates | 12,336 | $ (38,696) |
Change in enacted tax rate | (158,840) | |
Option expired during the year | $ 35,688 | $ 44,917 |
Functional currency adjustments | ||
Foreign tax rate difference | $ (40,393) | $ 172,818 |
Change in valuation allowance | 11,977 | (14,197) |
Total income taxes (recovery) | 803,485 | 257,433 |
Current income tax expenses (recovery) | 765,328 | 422,044 |
Deferred tax expenses (recovery) | 38,157 | (164,611) |
Total income taxes (recovery) | $ 803,485 | $ 257,433 |
10. INCOME TAX (Details 2)
10. INCOME TAX (Details 2) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Canada | ||
Non capital loss carryforwards | $ 1,068,935 | $ 1,407,088 |
Patents | 36,070 | 35,480 |
Fixed Assets | $ 809,404 | 780,396 |
Financial instruments | (6,045) | |
Deferred tax asset (liability) | $ 1,914,409 | $ 2,216,919 |
Valuation Allowance | ||
Net Deferred tax asset (liability) | $ 1,914,409 | $ 2,216,919 |
USA | ||
Fixed Assets | 353,907 | 429,631 |
Stock-Based Compensation | 206,648 | 215,429 |
Deferred tax asset | 560,556 | 645,060 |
Deferred tax asset not recognized | 206,669 | 194,692 |
Net Deferred tax asset | $ 353,886 | $ 450,368 |
10. INCOME TAX (Details 3)
10. INCOME TAX (Details 3) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
2,027 | $ 322,794 | |
2,028 | 543,345 | |
2,029 | 748,420 | |
2,030 | 781,632 | |
2,031 | 900,002 | |
2,032 | 588,509 | |
2,033 | $ 74,316 | |
2,034 | ||
Total | $ 3,959,018 | $ 5,628,353 |
10. INCOME TAX (Details Narrati
10. INCOME TAX (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 3,959,018 | $ 5,628,353 |
Deferred tax asset operating loss carry forward | $ 0 | $ 0 |
11. INCOME (LOSS) PER SHARE (De
11. INCOME (LOSS) PER SHARE (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | ||
Net income | $ 1,504,696 | $ 403,345 |
Weighted average common shares outstanding: Basic and diluted | ||
Basic | 13,173,827 | 13,169,991 |
Diluted | 13,307,021 | 13,169,991 |
Net income per common share: | ||
Basic and Diluted | $ 0.11 | $ 0.03 |
11. INCOME (LOSS) PER SHARE (57
11. INCOME (LOSS) PER SHARE (Details 1) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive options | 552,000 | 949,000 |
12. STOCK OPTIONS (Details)
12. STOCK OPTIONS (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Beginning Balance, Shares | 1,126,000 | 1,164,000 |
Granted, Shares | 317,000 | 227,000 |
Cancelled or expired, Shares | (245,000) | (265,000) |
Exercised, Shares | 8,000 | |
Ending Balance, Shares | 1,190,000 | 1,126,000 |
Exercisable shares | 1,032,000 | |
Exercised, Exercise price per share | $ 1 | |
Beginning Balance, Weighted average exercise price | 1.54 | $ 1.73 |
Granted, Weighted average exercise price | 0.89 | 1.01 |
Cancelled or expired, Weighted average exercise price | 1.72 | 1.91 |
Exercised, Weighted average exercise price | 1 | |
Ending Balance, Weighted average exercise price | 1.34 | 1.54 |
Exercisable Weighted average exercise price | 1.43 | |
Minimum [Member] | ||
Beginning Balance, Exercise price per share | 1.21 | 1.21 |
Granted, Exercise price per share | 0.75 | 1 |
Cancelled or expired, Exercise price per share | 1.05 | 1 |
Ending Balance, Exercise price per share | 0.75 | 1.21 |
Exercisable Exercise price per share | 1 | |
Maximum [Member] | ||
Beginning Balance, Exercise price per share | 2.45 | 2.45 |
Granted, Exercise price per share | 1.05 | 1.21 |
Cancelled or expired, Exercise price per share | 2.22 | 2.25 |
Ending Balance, Exercise price per share | 2.45 | $ 2.45 |
Exercisable Exercise price per share | $ 2.45 |
12. STOCK OPTIONS (Details 1)
12. STOCK OPTIONS (Details 1) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Expected life - years | 3 years | 3 years |
Interest rate | 0.78% | |
Volatility | 58.00% | |
Dividend yield | ||
Weighted average fair value of options granted | $ 0.36 | |
Minimum [Member] | ||
Interest rate | 0.78% | |
Volatility | 58.00% | |
Weighted average fair value of options granted | $ 0.36 | |
Maximum [Member] | ||
Interest rate | 1.16% | |
Volatility | 77.00% | |
Weighted average fair value of options granted | $ 0.37 |
12. STOCK OPTIONS (Details Narr
12. STOCK OPTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted-average remaining contractual life of outstanding options | 1 year 11 months 23 days | |
Aggregate intrinsic value of options outstanding | $ 418,330 | |
Options granted | 317,000 | 227,000 |
Compensation expense related to non-vested awards | $ 47,514 | |
Weighted average period of expenses | 1 year | |
Stock options exercised | 8,000 | |
Employees | ||
Options granted | 217,000 | 127,000 |
Additional Expenses due to Options granted | $ 47,788 | $ 25,223 |
Stock options exercised | 8,000 | |
Consultants | ||
Options granted | 100,000 | 100,000 |
Additional Expenses due to Options granted | $ 26,533 | $ 29,026 |
14. SEGMENTED, SIGNIFICANT CU61
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | $ 15,898,547 | $ 15,907,849 |
Interest expense | 55,770 | 94,890 |
Depreciation | 578,338 | 789,733 |
Income tax expense (recovery) | 765,328 | 422,044 |
Segment profit (loss) | 1,504,696 | 403,345 |
Segment assets | 3,891,732 | 4,902,304 |
Expenditures for segment assets | 59,030 | 24,535 |
BCPA [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | 15,210,719 | 15,035,083 |
Interest expense | 55,769 | 64,837 |
Depreciation | 193,429 | 190,454 |
Income tax expense (recovery) | 765,328 | 422,044 |
Segment profit (loss) | 2,559,040 | 1,902,695 |
Segment assets | 1,679,801 | 1,569,841 |
Expenditures for segment assets | 303,388 | 18,379 |
EWCP [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | 687,828 | 872,766 |
Interest expense | 1 | 30,053 |
Depreciation | $ 384,909 | $ 599,279 |
Income tax expense (recovery) | ||
Segment profit (loss) | $ (1,054,344) | $ (1,499,350) |
Segment assets | 2,211,931 | 3,332,463 |
Expenditures for segment assets | $ (244,358) | $ 6,156 |
14. SEGMENTED, SIGNIFICANT CU62
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | $ 15,898,547 | $ 15,907,849 |
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | 404,880 | 404,483 |
United States and abroad [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Sales | $ 15,493,667 | $ 15,503,366 |
14. SEGMENTED, SIGNIFICANT CU63
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, equipment, leasehold and patents | $ 3,891,732 | $ 4,902,304 |
Canada [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, equipment, leasehold and patents | 2,211,348 | 3,331,879 |
United States and abroad [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property, equipment, leasehold and patents | $ 1,680,384 | $ 1,570,424 |
14. SEGMENTED, SIGNIFICANT CU64
14. SEGMENTED, SIGNIFICANT CUSTOMER INFORMATION AND ECONOMIC DEPENDENCY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Segmented Significant Customer Information And Economic Dependency Details Narrative | ||
Customers accounted sales | $ 10,421,165 | $ 10,216,470 |
Percentage representation in sales | 66.00% | 64.00% |
15. COMMITMENTS (Details)
15. COMMITMENTS (Details) | Dec. 31, 2015USD ($) |
Commitments Details | |
2,016 | $ 73,733 |
2,017 | 65,280 |
2,018 | 66,480 |
2,019 | 67,680 |
2,020 | $ 68,880 |
15. COMMITMENTS (Details Narrat
15. COMMITMENTS (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Commitments Details Narrative | |
Total Due | $ 342,053 |
Lease expiry date | Dec. 31, 2020 |