Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Mar. 30, 2018 | Jun. 30, 2017 | |
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, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 12,914,521 | ||
Entity Common Stock, Shares Outstanding | 11,630,991 | ||
Trading Symbol | FSI | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current | ||
Cash and cash equivalents | $ 6,912,138 | $ 2,470,066 |
Accounts receivable (see Note 3) | 2,105,471 | 3,008,153 |
Inventories (see Note 4) | 4,686,852 | 3,786,093 |
Prepaid expenses | 255,080 | 228,699 |
Total current assets | 13,959,541 | 9,493,011 |
Property, equipment and leaseholds, net (see Note 5) | 1,938,509 | 3,393,944 |
Patents (see Note 6) | 79,452 | 95,890 |
Long term deposits (see Note 7) | 18,531 | 26,163 |
Investment (Note 8) | 13,414 | 122,480 |
Deferred tax asset (Note 11) | 1,763,923 | 2,026,999 |
Total Assets | 17,773,370 | 15,158,487 |
Current | ||
Accounts payable and accrued liabilities | 939,116 | 902,037 |
Deferred revenue | 208,608 | 95,308 |
Income taxes payable | 1,101,596 | 893,867 |
Short term line of credit (Note 9) | 250,000 | 250,000 |
Current portion of long term debt (Note 10) | 201,193 | 201,193 |
Total current liabilities | 2,700,513 | 2,342,405 |
Long term debt (Note 10) | 150,896 | 352,089 |
Total liabilities | 2,851,409 | 2,694,494 |
Stockholders' Equity | ||
Capital stock (see Note 14) 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: 11,597,991 (2016: 11,457,991) common shares | 11,598 | 11,458 |
Capital in excess of par value | 15,114,835 | 14,842,863 |
Other comprehensive loss | (656,093) | (1,087,208) |
Accumulated earnings (deficit) | 451,621 | (1,303,120) |
Total Stockholders' Equity | 14,921,961 | 12,463,993 |
Total Liabilities and Stockholders' Equity | 17,773,370 | 15,158,487 |
Commitments and Subsequent events (See Notes 16 and 17) |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 11,597,991 | 11,457,991 |
Common stock, shares outstanding | 11,597,991 | 11,457,991 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Sales | $ 15,494,325 | $ 16,246,014 |
Cost of sales | 9,508,827 | 9,256,526 |
Gross profit | 5,985,498 | 6,989,488 |
Operating Expenses | ||
Wages | 1,647,780 | 1,528,031 |
Administrative salaries and benefits | 1,007,850 | 838,837 |
Advertising and promotion | 18,257 | 21,199 |
Investor relations and transfer agent fee | 152,362 | 131,037 |
Office and miscellaneous | 238,195 | 269,800 |
Insurance | 285,418 | 301,856 |
Interest expense | 44,125 | 41,699 |
Rent | 241,286 | 117,715 |
Consulting | 133,949 | 119,198 |
Professional fees | 222,743 | 184,931 |
Travel | 137,392 | 140,340 |
Telecommunications | 26,071 | 24,363 |
Shipping | 19,624 | 16,338 |
Research | 98,928 | 95,098 |
Commissions | 112,678 | 66,839 |
Bad debt expense | 1,191 | |
Currency exchange | 64,870 | (10,602) |
Utilities | 21,339 | 17,495 |
Total operating expenses | 4,474,058 | 3,904,174 |
Operating income | 1,511,440 | 3,085,314 |
Gain on sale of equipment | 6,848 | |
Gain on involuntary disposition (net of tax) | 2,043,614 | |
Write down of inventory | (51,346) | |
Loss on investment | (84,066) | (15,086) |
Interest income | 913 | 2,184 |
Income before income tax | 3,420,555 | 3,079,260 |
Income taxes (Note 11) | ||
Deferred income (expense) tax recovery | (985,495) | (303,793) |
Income tax recovery (expense) | (680,319) | (982,133) |
Net income for the year | 1,754,741 | 1,793,334 |
Other comprehensive income | 431,115 | 118,590 |
Comprehensive income | $ 2,185,856 | $ 1,911,924 |
Income per share (basic) (Note 12) | $ 0.15 | $ 0.16 |
Income per share (diluted) (Note 12) | $ 0.15 | $ 0.15 |
Weighted average number of common shares (basic) | 11,485,580 | 11,464,270 |
Weighted average number of common shares (diluted) | 11,725,482 | 11,635,136 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Operating activities | ||
Net income | $ 1,754,741 | $ 1,793,334 |
Adjustments to reconcile net income to net cash: | ||
Stock based compensation | 116,092 | 66,318 |
Depreciation and amortization | 286,616 | 540,079 |
Loss on investment | 84,066 | 15,086 |
Decrease in deferred tax asset | 985,495 | 303,793 |
Write down of inventory | (51,346) | |
Gain on involuntary disposition | (2,043,614) | |
Changes in non-cash working capital items: | ||
(Increase) Decrease in accounts receivable | 912,056 | (1,199,267) |
(Increase) Decrease in inventories | (887,339) | (506,278) |
(Increase) Decrease in prepaid expenses | (23,758) | 15,793 |
Increase (Decrease) in accounts payable and accrued liabilities | (407,555) | 90,111 |
Increase (Decrease) in taxes payable | 207,729 | 600,629 |
Increase (Decrease) deferred revenue | 109,242 | 55,628 |
Cash provided by operating activities | 1,042,425 | 1,775,226 |
Investing activities | ||
Long term deposits | 7,980 | (15,925) |
Investment | 25,000 | (87,500) |
Proceed from insurance | 3,366,889 | |
Net purchase of property, equipment and leaseholds | (426,480) | (114,270) |
Cash used in investing activities | 2,973,389 | (217,695) |
Financing activities | ||
Draw from short term line of credit | 50,000 | |
Loan repayment | (201,193) | (201,193) |
Repurchase of common stock | (1,575,000) | |
Proceeds of issuance of common stock | 156,020 | 32,600 |
Cash used in financing activities | (45,173) | (1,693,593) |
Effect of exchange rate changes on cash | 471,431 | 107,390 |
Inflow (outflow) of cash | 4,442,072 | (28,672) |
Cash and cash equivalents, beginning | 2,470,066 | 2,498,738 |
Cash and cash equivalents, ending | 6,912,138 | 2,470,066 |
Supplemental disclosure of cash flow information: | ||
Income taxes paid | 833,766 | 452,654 |
Interest paid | $ 43,003 | $ 41,699 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) | Common Stock [Member] | Capital in Excess of Par Value [Member] | Accumulated Earnings (Deficiency) [Member] | Other Comprehensive Income (Loss) [Member] | Total |
Beginning Balance at Dec. 31, 2015 | $ 13,178 | $ 16,317,225 | $ (3,096,454) | $ (1,205,798) | $ 12,028,151 |
Beginning Balance, shares at Dec. 31, 2015 | 13,177,991 | ||||
Translation adjustment | 118,590 | 118,590 | |||
Net income | 1,793,334 | 1,793,334 | |||
Comprehensive income | 1,911,924 | ||||
Common stock cancelled | $ (1,750) | (1,573,250) | (1,575,000) | ||
Common stock cancelled, shares | (1,750,000) | ||||
Common stock issued | $ 30 | 32,570 | 32,600 | ||
Common Stock Issued, shares | 30,000 | ||||
Stock-based compensation | 66,318 | 66,318 | |||
Ending Balance at Dec. 31, 2016 | $ 11,458 | 14,842,863 | (1,303,120) | (1,087,208) | 12,463,993 |
Ending Balance, shares at Dec. 31, 2016 | 11,457,991 | ||||
Translation adjustment | 431,115 | 431,115 | |||
Net income | 1,754,741 | 1,754,741 | |||
Comprehensive income | 2,185,856 | ||||
Common stock issued | $ 140 | 155,880 | 156,020 | ||
Common Stock Issued, shares | 140,000 | ||||
Stock-based compensation | 116,092 | 116,092 | |||
Ending Balance at Dec. 31, 2017 | $ 11,598 | $ 15,114,835 | $ 451,621 | $ (656,093) | $ 14,921,961 |
Ending Balance, shares at Dec. 31, 2017 | 11,597,991 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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, FS Biomass Inc., NCS Deferred Corp., Conserve H2O Ltd. and Natural Chem SEZC Ltd. 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. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
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: completed goods, work in progress and raw materials and supplies. In all classes, inventories are stated at the lower of cost and net realizable value for 2017 and at the lower of cost or market for 2016. 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 Company’s manufacturing and processing facilities. (c) Allowance for Doubtful Accounts The Company provides an allowance for doubtful accounts when management estimates collectability 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, Leaseholds and Intangible Assets. 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 Trailer 30% Declining balance Patents Straight-line over 17 years Technology Straight-line over 10 years 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 their carrying amounts 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, equipment and leaseholds, 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 asset’s 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 Company’s 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 Company’s financial statements from the subsidiary’s functional currency, Canadian Dollars, into the reporting currency, U.S. Dollars, are excluded from the determination of income (loss) and are disclosed as other comprehensive income in the consolidated statements of income and comprehensive income. Foreign exchange gains and losses relating to transactions not denominated in the applicable local currency are included in operating income (loss) 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 Company’s inception, product returns have been insignificant; therefore, no provision has been established for estimated product returns. Deferred revenues consist of products sold to distributors with payment terms greater than the Company’s 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 has been met, and payments become due or cash is received from these distributors. (h) Stock Issued in Exchange for Services The Company’s common stock issued in exchange for services is valued at estimated fair market value based upon trading prices of the Company’s 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 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 Company’s 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, 2017 and 2016. (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, equipment and leaseholds, and the valuation of inventory. (m) Financial Instruments The fair market value of the Company’s 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. (n) Fair Value of Financial Instruments 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 the 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” under the liability method, it is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2017, 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 Company’s effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Company’s tax positions are recorded as interest expense in the consolidated statements of income and comprehensive income. (q) Risk Management. The Company’s credit risk is primarily attributable to its accounts receivable. The amounts presented in the accompanying consolidated balance sheets are net of allowances for doubtful accounts, estimated by the Company’s management based on prior experience and the current economic environment. The Company is exposed to credit-related losses in the event of non-payment by customers. Credit exposure is minimized by dealing with only credit worthy counterparties. Accounts receivable for the Company’s two primary customers totaled $1,247,374 (65%) at December 31, 2017 (December 31, 2016 - $2,032,646 or 67%). 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 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. 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 and accrued liabilities. The Company has not hedged its exposure to currency fluctuations. (r) Equity Method Investment The Company accounts for investments using the equity method of accounting if the investment provides the Company the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee’s board of directors, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investment is recorded at cost in the consolidated balance sheets under other assets and adjusted for dividends received and the Company’s share of the investee’s earnings or losses together with other-than-temporary impairments which are recorded through interest and other loss, net in the consolidated statements of income and comprehensive income. (s) Adoption of new accounting principles In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The standard will require inventory to be measured at the lower of cost or net realizable value. The guidance will not apply to inventories for which cost is determined using the last-in, first-out method or the retail inventory method. The standard is effective for annual and interim reporting periods beginning after December 15, 2016. Adoption of this standard had no material effect on our consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This standard was issued as part of the FASB’s Simplification Initiative that involve several aspects of the accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. Some of the areas for simplification apply only to nonpublic entities. For public business entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The method of adoption is dependent on the specific aspect of accounting addressed in this new guidance. Early adoption is permitted in any interim or annual period. Adoption of this standard had no material effect on our consolidated financial statements. (t) Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases. The standard will require lessees to recognize most leases on their balance sheet and makes selected changes to lessor accounting. The standard is effective for annual and interim reporting periods beginning after December 15, 2018. A modified retrospective transition approach is required, with certain practical expedients available. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which has been updated through several revisions and clarifications since its original issuance. The standard will require revenue recognized to represent the transfer of promised goods or services to customers at an amount that reflects the consideration which a company expects to receive in exchange for those goods or services. The standard also requires new, expanded disclosures regarding revenue recognition. The standard will be effective January 1, 2018 with early adoption permissible beginning January 1, 2017. We do not expect this to have a material impact on our consolidated financial statements. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Accounts Receivable | 3. Accounts Receivable 2017 2016 Accounts receivable $ 2,145,803 $ 3,044,652 Allowances for doubtful accounts (40,332 ) (36,499 ) $ 2,105,471 $ 3,008,153 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories 2017 2016 Completed goods $ 2,530,914 $ 1,646,465 Work in progress 183,944 2,572 Raw materials and supplies 1,971,994 2,137,056 $ 4,686,852 $ 3,786,093 In February 2017, the Company lost $367,331CAD ($277,482USD) in inventory in a fire at the Taber, AB location. Insurance was in place. See Note 5. |
Property, Equipment and Leaseho
Property, Equipment and Leaseholds | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property, Equipment and Leaseholds | 5. Property, Equipment and Leaseholds 2017 Accumulated 2017 Cost Depreciation Net Buildings and improvements $ 3,400,792 $ 2,409,179 $ 991,613 Computer hardware 40,904 39,398 1,506 Furniture and fixtures 17,673 11,156 6,517 Office equipment 1,480 148 1,332 Manufacturing equipment 2,590,158 2,104,137 486,021 Trailer 9,562 1,434 8,128 Boat 34,400 14,586 19,814 Leasehold improvements 85,432 32,506 52,926 Technology 101,748 101,748 — Land 370,652 — 370,652 $ 6,652,801 $ 4,714,292 $ 1,938,509 2016 Accumulated 2016 Cost Depreciation Net Buildings and improvements $ 4,762,094 $ 2,967,370 $ 1,794,724 Computer hardware 89,480 85,784 3,696 Furniture and fixtures 32,439 23,142 9,297 Office equipment 17,745 16,788 957 Manufacturing equipment 5,236,404 4,102,635 1,133,769 Trailer 12,859 12,250 609 Boat 34,400 9,632 24,768 Leasehold improvements 85,432 15,419 70,013 Technology 101,748 101,748 — Land 356,111 — 356,111 $ 10,728,712 $ 7,334,768 $ 3,393,944 Amount of depreciation expense for 2017: $270,178 (2016: $524,463) and is included in cost of sales in the consolidated statements of income and comprehensive income. In February 2017, the Company lost a net carrying value total of $2,196,722CAD ($1,659,404USD) in building and manufacturing equipment in a fire at the Taber, AB location. Insurance was in place. During the year ended December 31, 2017, the Company was approved for interim insurance proceeds of $5,570,000CAD ($4,207,578USD). |
Patents
Patents | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Patents | 6. Patents 2017 Cost Accumulated Amortization 2017 Net Patents $ 212,426 $ 132,974 $ 79,452 2016 Cost Accumulated Amortization 2016 Net Patents $ 197,448 $ 101,558 $ 95,890 Increase in 2017 cost was due to currency conversion. 2017 cost in Canadian dollars - $265,102 (2016 - $265,102 in Canadian dollars). Amount of amortization for 2017: $16,438 (2016: $15,616) and is included in cost of sales in the consolidated statements of income and comprehensive income (loss). Estimated amortization expense over the next five years is as follows: 2018 $ 16,438 2019 16,438 2020 16,438 2021 16,438 2022 16,438 |
Long Term Deposits
Long Term Deposits | 12 Months Ended |
Dec. 31, 2017 | |
Long Term Deposits | |
Long Term Deposits | 7. Long Term Deposits The Company has security deposits that are long term in nature which consist of damage deposits held by landlords and security deposits held by various vendors. 2017 2016 Long term deposits $ 18,531 $ 26,163 |
Equity Method Investment
Equity Method Investment | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | 8. Equity Method Investment The Company has a 42% ownership interest in ENP Peru Investments LLC (“ENP Peru”), which the Company acquired in fiscal 2016. ENP Peru is located in Illinois and leases warehouse space. The Company accounts for this investment using the equity method of accounting. A summary of the Company’s investment is as follows: January 1, 2016 Balance - Capital contributions $ 150,066 Return of equity (12,500 ) Loss in equity method investment (15,086 ) December 31, 2016 Balance $ 122,480 Return of equity (25,000 ) Loss on equity method investment (84,066 ) December 31, 2017 Balance 13,414 |
Short-Term Line of Credit
Short-Term Line of Credit | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Short-Term Line of Credit | 9. Short-Term Line of Credit In May 2017, the Company signed a new agreement with Harris Bank (“the 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 5%. (2016 – 4%) and is up for renewal on June 30, 2018. 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 Bank’s 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, 2017, 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, 2017 were $250,000 (December 31, 2016 - $250,000). |
Long Term Debt
Long Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long Term Debt | 10. Long Term Debt In September 2014, NanoChem Solutions Inc. signed a $1,005,967 promissory note with Harris Bank with a rate of prime plus 0.5% (2017 – 5%) to be repaid over 5 years with equal monthly installments plus interest. This money was used to retire the previously issued and outstanding debt obligations. The balance owing at December 31, 2017 was $352,089 (December 31, 2016 - $553,282). The final payment will be made in September 2019. The Company has committed to the following repayments: 2018 $ 201,193 2019 $ 150,896 As of December 31, 2017, Company was in compliance with all loan covenants. December 31, 2017 December 31, 2016 Continuity Balance, beginning of year $ 553,282 $ 754,475 Less: Payments on loan 201,193 201,193 Balance, end of year $ 352,089 $ 553,282 Less: current portion (201,193 ) (201,193 ) Long term balance $ 150,896 $ 352,089 |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 11. Income Tax The provision for income tax expense (benefit) is comprised of the following: 2017 2016 Current tax, federal $ 547,486 $ 787,539 Current tax, state 132,833 194,594 Current tax, foreign - - Current tax, total 680,319 982,133 Deferred income tax, federal (11,069 ) 41,343 Deferred income tax, state (2,686 ) 10,215 Deferred income tax, foreign 385,639 252,235 Deferred income tax, total 371,884 303,793 Total $ 1,052,203 $ 3,191,056 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. 2017 2016 Income (loss) before tax, net of tax from gain on involuntary disposition 3,420,556 3,079,260 Tax from gain on involuntary disposition (613,611 ) - Income (loss) before taxes 2,806,945 3,079,260 US statutory tax rates 39.69 % 39.12 % Expected income tax (recovery) 1,114,147 1,207,840 Non-deductible items 520,665 (139,975 ) Change in estimates (91,632 ) 228,495 Change in enacted tax rate 189,626 4,437 Option expired during the year 21,640 8,418 Foreign tax rate difference (662,381 ) (46,498 ) Change in valuation allowance (39,863 ) 22,878 Total income taxes (recovery) 1,052,203 1,285,595 Current income tax expenses (recovery) 680,318 982,133 Deferred tax expenses (recovery) 371,884 303,792 Total income taxes (recovery) 1,052,203 1,285,925 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, 2017 and 2016 are comprised of the following: Canada 2017 2016 Non capital loss carryforwards 1,378,242 830,476 Patents 69,597 45,351 Fixed assets - 848,843 Financial instruments - - 1,447,839 1,724,670 Valuation Allowance - - Net Deferred tax asset (liability) 1,447,839 1,724,670 USA 2017 2016 Fixed Assets 351,746 322,634 Stock-Based Compensation 154,023 209,242 505,768 531,876 Deferred tax asset not recognized 189,684 229,547 Net Deferred tax asset 316,084 302,329 The Company has non-operating loss carryforwards of approximately $5,097,682 (2016 - $3,075,838) 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 2029 710,778 2030 862,371 2031 992,967 2032 649,299 2033 77,587 2037 1,804,680 Total 5,097,682 As at December 31, 2017, 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, 2017 and 2016, the Company’s 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. |
Income Per Share
Income Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Income Per Share | 12. Income Per Share We present both basic and diluted income per share on the face of our consolidated statements of income. Basic and diluted income per share are calculated as follows: 2017 2016 Net income (loss) $ 1,754,741 $ 1,793,334 Weighted average common shares outstanding: Basic 11,485,580 11,464,270 Diluted 11,725,482 11,635,136 Net income (loss) per common share: Basic $ 0.15 $ 0.16 Diluted $ 0.15 $ 0.15 Certain stock options whose terms and conditions are described in Note 13, “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. 2017 2016 Anti-dilutive options nil 72,000 There were no preferred shares issued and outstanding during the years ended December 31, 2017 or 2016. |
Stock Options
Stock Options | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options | 13. 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 Company’s 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 Company’s stock option activity for the years ended December 31, 2017 and 2016: Number of shares Exercise price per share Weighted average exercise price Balance, December 31, 2015 1,190,000 $0.75 - $2.45 $ 1.34 Granted 168,000 $1.42 $ 1.42 Cancelled or expired (515,000 ) $0.75 – 2.45 $ 1.61 Exercised (30,000 ) $1.00 – 1.21 $ 1.09 Balance, December 31, 2016 813,000 $0.75 – 2.22 $ 1.19 Granted 154,000 $1.70 $ 1.70 Cancelled or expired (114,000 ) $1.00 - 2.22 $ 1.75 Exercised (140,000 ) $0.75 – 1.21 $ 1.11 Balance, December 31, 2017 713,000 $0.75 – 1.70 $ 1.21 Exercisable, December 31, 2017 559,000 $0.75 – 1.41 $ 1.08 The weighted-average remaining contractual life of outstanding options is 2.8 years. The fair value of each option grant is calculated using the following weighted average assumptions: 2017 2016 Expected life – years 3.0 3.0 Interest rate 2.23 % 1.37 % Volatility 73.09 % 75.64 % Dividend yield — % — % Weighted average fair value of options granted $ 0.8344 $ 0.7073 During the year ended December 31, 2017, the Company granted 40,000 (2016 – 40,000) stock options to consultants and has applied ASC 718 using the Black-Scholes option-pricing model, which resulted in additional expenses of $6,675 (2016 - $5,658). Options granted in other years resulted in additional expenses of $22,634 (2016 – $11,879). During the year ended December 31, 2017, employees were granted 114,000 (2016 – 128,000) stock options, which resulted in additional expenses of $19,024 (2016 – $17,824). Options granted in other years resulted in additional expenses in the amount of $67,759 for employees during the year ended December 31, 2017 (2016 - $30,957). There were 110,000 employee and 30,000 consultant stock options exercised during the year ended December 31, 2017 (2016 – 30,000 employee; nil consultant). As of December 31, 2017, there was approximately $102,798 of compensation expense related to non-vested awards. This expense is expected to be recognized over a weighted average period of 1 year. The aggregate intrinsic value of vested options outstanding at December 31, 2017 is $413,410 (2016 – nil). |
Capital Stock
Capital Stock | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Capital Stock | 14. Capital Stock . During the year ended December 31, 2017, the Company issued 110,000 shares upon the exercise of employee stock options and 30,000 shares upon the exercise of consultant stock options On January 6, 2016, the Company repurchased 1,750,000 shares of its common stock at $0.90 per share for a total purchase price of $1,575,000. The shares were returned to treasury. The Company issued 30,000 shares upon the exercise of employee stock options during the year ended December 31, 2016. |
Segmented, Significant Customer
Segmented, Significant Customer Information and Economic Dependency | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segmented, Significant Customer Information and Economic Dependency | 15. 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 (“BCPA’s”), also known as TPA’s, 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 Company’s 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, 2017: EWCP BCPA Consolidated Sales $ 641,675 $ 14,852,650 $ 15,494,325 Interest expense 54 44,071 44,125 Depreciation 62,376 219,108 281,484 Income tax expense - 680,319 680,319 Segment profit 2,021,289 (266,548) 1,754,741 Segment assets 580,304 1,437,657 2,017,961 Expenditures for segment assets 287,853 138,628 426,480 Year ended December 31, 2016: EWCP BCPA Consolidated Sales $ 785,660 $ 15,460,354 $ 16,246,014 Interest expense 59 41,640 41,699 Depreciation 325,696 214,383 540,079 Income tax expense - 982,133 982,133 Segment profit (loss) (417,770 ) 2,211,104 1,793,334 Segment assets 1,966,564 1,523,270 3,489,834 Expenditures for segment assets 6,352 107,918 114,270 Sales by territory are shown below: 2017 2016 Canada $ 362,362 $ 453,480 United States and abroad 15,131,963 15,792,534 Total $ 15,494,325 $ 16,246,014 The Company’s long-lived assets (property, equipment, leaseholds and patents) are located in Canada and the United States as follows: 2017 2016 Canada $ 580,304 $ 1,966,564 United States 1,437,657 1,523,270 Total $ 2,017,961 $ 3,489,834 Three customers accounted for $8,453,163 (55%) of sales made in 2017 (2016 - $10,148,042 or 62%). |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 16. Commitments . The Company is committed to minimum rental payments for property and premises aggregating approximately $735,670 over the term of two leases, the last expiring on October 31, 2021. Commitments for rent in the next four years are as follows: 2018 $ 201,840 2019 $ 205,580 2020 $ 209,400 2021 $ 118,850 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 17. Subsequent Events. In January 2018, the Company issued 23,000 shares on the exercise of employee stock options and 10,000 shares on the exercise of consultant stock options. |
Significant Accounting Polici24
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | (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. |
Inventories and Cost of Sales | (b) Inventories and Cost of Sales The Company has three major classes of inventory: completed goods, work in progress and raw materials and supplies. In all classes, inventories are stated at the lower of cost and net realizable value for 2017 and at the lower of cost or market for 2016. 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 Company’s manufacturing and processing facilities. |
Allowance for Doubtful Accounts | (c) Allowance for Doubtful Accounts The Company provides an allowance for doubtful accounts when management estimates collectability 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, Leaseholds and Intangible Assets | (d) Property, Equipment, Leaseholds and Intangible Assets. 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 Trailer 30% Declining balance Patents Straight-line over 17 years Technology Straight-line over 10 years 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 their carrying amounts may not be recoverable. No write-downs have been necessary to date. |
Impairment of Long-Lived Assets | (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, equipment and leaseholds, 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 asset’s 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 | (f) Foreign Currency The functional currency of three of the Company’s 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 Company’s financial statements from the subsidiary’s functional currency, Canadian Dollars, into the reporting currency, U.S. Dollars, are excluded from the determination of income (loss) and are disclosed as other comprehensive income in the consolidated statements of income and comprehensive income. Foreign exchange gains and losses relating to transactions not denominated in the applicable local currency are included in operating income (loss) if realized during the year and in comprehensive income (loss) if they remain unrealized at the end of the year. |
Revenue Recognition | (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 Company’s inception, product returns have been insignificant; therefore, no provision has been established for estimated product returns. Deferred revenues consist of products sold to distributors with payment terms greater than the Company’s 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 has been met, and payments become due or cash is received from these distributors. |
Stock Issued in Exchange for Services | (h) Stock Issued in Exchange for Services The Company’s common stock issued in exchange for services is valued at estimated fair market value based upon trading prices of the Company’s 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 | (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 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 | (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 Company’s other comprehensive income is primarily comprised of unrealized foreign exchange gains and losses. |
Income Per Share | (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, 2017 and 2016. |
Use of Estimates | (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, equipment and leaseholds, and the valuation of inventory. |
Financial Instruments | (m) Financial Instruments The fair market value of the Company’s 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. |
Fair Value of Financial Instruments | (n) Fair Value of Financial Instruments 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 the 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 | (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. |
Income Taxes | (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” under the liability method, it is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2017, 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 Company’s effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Company’s tax positions are recorded as interest expense in the consolidated statements of income and comprehensive income. |
Risk Management | (q) Risk Management. The Company’s credit risk is primarily attributable to its accounts receivable. The amounts presented in the accompanying consolidated balance sheets are net of allowances for doubtful accounts, estimated by the Company’s management based on prior experience and the current economic environment. The Company is exposed to credit-related losses in the event of non-payment by customers. Credit exposure is minimized by dealing with only credit worthy counterparties. Accounts receivable for the Company’s two primary customers totaled $1,247,374 (65%) at December 31, 2017 (December 31, 2016 - $2,032,646 or 67%). 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 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. 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 and accrued liabilities. The Company has not hedged its exposure to currency fluctuations. |
Equity Method Investment | (r) Equity Method Investment The Company accounts for investments using the equity method of accounting if the investment provides the Company the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors, such as representation on the investee’s board of directors, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investment is recorded at cost in the consolidated balance sheets under other assets and adjusted for dividends received and the Company’s share of the investee’s earnings or losses together with other-than-temporary impairments which are recorded through interest and other loss, net in the consolidated statements of income and comprehensive income. |
Adoption of New Accounting Principles | (s) Adoption of new accounting principles In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The standard will require inventory to be measured at the lower of cost or net realizable value. The guidance will not apply to inventories for which cost is determined using the last-in, first-out method or the retail inventory method. The standard is effective for annual and interim reporting periods beginning after December 15, 2016. Adoption of this standard had no material effect on our consolidated financial statements. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). This standard was issued as part of the FASB’s Simplification Initiative that involve several aspects of the accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. Some of the areas for simplification apply only to nonpublic entities. For public business entities, ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The method of adoption is dependent on the specific aspect of accounting addressed in this new guidance. Early adoption is permitted in any interim or annual period. Adoption of this standard had no material effect on our consolidated financial statements. |
Accounting Pronouncements Not Yet Adopted | (t) Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases. The standard will require lessees to recognize most leases on their balance sheet and makes selected changes to lessor accounting. The standard is effective for annual and interim reporting periods beginning after December 15, 2018. A modified retrospective transition approach is required, with certain practical expedients available. We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which has been updated through several revisions and clarifications since its original issuance. The standard will require revenue recognized to represent the transfer of promised goods or services to customers at an amount that reflects the consideration which a company expects to receive in exchange for those goods or services. The standard also requires new, expanded disclosures regarding revenue recognition. The standard will be effective January 1, 2018 with early adoption permissible beginning January 1, 2017. We do not expect this to have a material impact on our consolidated financial statements. |
Significant Accounting Polici25
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Schedule of 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 Trailer 30% Declining balance Patents Straight-line over 17 years Technology Straight-line over 10 years Leasehold improvements Straight-line over lease term |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | 2017 2016 Accounts receivable $ 2,145,803 $ 3,044,652 Allowances for doubtful accounts (40,332 ) (36,499 ) $ 2,105,471 $ 3,008,153 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | 2017 2016 Completed goods $ 2,530,914 $ 1,646,465 Work in progress 183,944 2,572 Raw materials and supplies 1,971,994 2,137,056 $ 4,686,852 $ 3,786,093 |
Property, Equipment and Lease28
Property, Equipment and Leaseholds (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Equipment and Leaseholds | 2017 Accumulated 2017 Cost Depreciation Net Buildings and improvements $ 3,400,792 $ 2,409,179 $ 991,613 Computer hardware 40,904 39,398 1,506 Furniture and fixtures 17,673 11,156 6,517 Office equipment 1,480 148 1,332 Manufacturing equipment 2,590,158 2,104,137 486,021 Trailer 9,562 1,434 8,128 Boat 34,400 14,586 19,814 Leasehold improvements 85,432 32,506 52,926 Technology 101,748 101,748 — Land 370,652 — 370,652 $ 6,652,801 $ 4,714,292 $ 1,938,509 2016 Accumulated 2016 Cost Depreciation Net Buildings and improvements $ 4,762,094 $ 2,967,370 $ 1,794,724 Computer hardware 89,480 85,784 3,696 Furniture and fixtures 32,439 23,142 9,297 Office equipment 17,745 16,788 957 Manufacturing equipment 5,236,404 4,102,635 1,133,769 Trailer 12,859 12,250 609 Boat 34,400 9,632 24,768 Leasehold improvements 85,432 15,419 70,013 Technology 101,748 101,748 — Land 356,111 — 356,111 $ 10,728,712 $ 7,334,768 $ 3,393,944 |
Patents (Tables)
Patents (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Patents | 2017 Cost Accumulated Amortization 2017 Net Patents $ 212,426 $ 132,974 $ 79,452 2016 Cost Accumulated Amortization 2016 Net Patents $ 197,448 $ 101,558 $ 95,890 |
Schedule of Estimated Amortization Expense | Estimated amortization expense over the next five years is as follows: 2018 $ 16,438 2019 16,438 2020 16,438 2021 16,438 2022 16,438 |
Long Term Deposits (Tables)
Long Term Deposits (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Long Term Deposits | |
Schedule of Long Term Deposits | The Company has security deposits that are long term in nature which consist of damage deposits held by landlords and security deposits held by various vendors. 2017 2016 Long term deposits $ 18,531 $ 26,163 |
Equity Method Investment (Table
Equity Method Investment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Schedule of Equity Method Investment | A summary of the Company’s investment is as follows: January 1, 2016 Balance - Capital contributions $ 150,066 Return of equity (12,500 ) Loss in equity method investment (15,086 ) December 31, 2016 Balance $ 122,480 Return of equity (25,000 ) Loss on equity method investment (84,066 ) December 31, 2017 Balance 13,414 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Interest Loan Repayment | The Company has committed to the following repayments: 2018 $ 201,193 2019 $ 150,896 |
Schedule of Outstanding Balance Loan | As of December 31, 2017, Company was in compliance with all loan covenants. December 31, 2017 December 31, 2016 Continuity Balance, beginning of year $ 553,282 $ 754,475 Less: Payments on loan 201,193 201,193 Balance, end of year $ 352,089 $ 553,282 Less: current portion (201,193 ) (201,193 ) Long term balance $ 150,896 $ 352,089 |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (benefit) | The provision for income tax expense (benefit) is comprised of the following: 2017 2016 Current tax, federal $ 547,486 $ 787,539 Current tax, state 132,833 194,594 Current tax, foreign - - Current tax, total 680,319 982,133 Deferred income tax, federal (11,069 ) 41,343 Deferred income tax, state (2,686 ) 10,215 Deferred income tax, foreign 385,639 252,235 Deferred income tax, total 371,884 303,793 Total $ 1,052,203 $ 3,191,056 |
Schedule of Reconciliation of Income Taxes | 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. 2017 2016 Income (loss) before tax, net of tax from gain on involuntary disposition 3,420,556 3,079,260 Tax from gain on involuntary disposition (613,611 ) - Income (loss) before taxes 2,806,945 3,079,260 US statutory tax rates 39.69 % 39.12 % Expected income tax (recovery) 1,114,147 1,207,840 Non-deductible items 520,665 (139,975 ) Change in estimates (91,632 ) 228,495 Change in enacted tax rate 189,626 4,437 Option expired during the year 21,640 8,418 Foreign tax rate difference (662,381 ) (46,498 ) Change in valuation allowance (39,863 ) 22,878 Total income taxes (recovery) 1,052,203 1,285,595 Current income tax expenses (recovery) 680,318 982,133 Deferred tax expenses (recovery) 371,884 303,792 Total income taxes (recovery) 1,052,203 1,285,925 |
Schedule of Deferred Tax Assets (Liabilities) | 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, 2017 and 2016 are comprised of the following: Canada 2017 2016 Non capital loss carryforwards 1,378,242 830,476 Patents 69,597 45,351 Fixed assets - 848,843 Financial instruments - - 1,447,839 1,724,670 Valuation Allowance - - Net Deferred tax asset (liability) 1,447,839 1,724,670 USA 2017 2016 Fixed Assets 351,746 322,634 Stock-Based Compensation 154,023 209,242 505,768 531,876 Deferred tax asset not recognized 189,684 229,547 Net Deferred tax asset 316,084 302,329 |
Schedule of Non Operating Loss Carryforwards | Expiry Loss 2029 710,778 2030 862,371 2031 992,967 2032 649,299 2033 77,587 2037 1,804,680 Total 5,097,682 |
Income Per Share (Tables)
Income Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Loss Per Share | Basic and diluted income per share are calculated as follows: 2017 2016 Net income (loss) $ 1,754,741 $ 1,793,334 Weighted average common shares outstanding: Basic 11,485,580 11,464,270 Diluted 11,725,482 11,635,136 Net income (loss) per common share: Basic $ 0.15 $ 0.16 Diluted $ 0.15 $ 0.15 |
Schedule of Anti-dilutive Options | Those anti-dilutive options are as follows. 2017 2016 Anti-dilutive options nil 72,000 |
Stock Options (Tables)
Stock Options (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes the Company’s stock option activity for the years ended December 31, 2017 and 2016: Number of shares Exercise price per share Weighted average exercise price Balance, December 31, 2015 1,190,000 $0.75 - $2.45 $ 1.34 Granted 168,000 $1.42 $ 1.42 Cancelled or expired (515,000 ) $0.75 – 2.45 $ 1.61 Exercised (30,000 ) $1.00 – 1.21 $ 1.09 Balance, December 31, 2016 813,000 $0.75 – 2.22 $ 1.19 Granted 154,000 $1.70 $ 1.70 Cancelled or expired (114,000 ) $1.00 - 2.22 $ 1.75 Exercised (140,000 ) $0.75 – 1.21 $ 1.11 Balance, December 31, 2017 713,000 $0.75 – 1.70 $ 1.21 Exercisable, December 31, 2017 559,000 $0.75 – 1.41 $ 1.08 |
Schedule of Stock Option Fair Value Assumptions | The fair value of each option grant is calculated using the following weighted average assumptions: 2017 2016 Expected life – years 3.0 3.0 Interest rate 2.23 % 1.37 % Volatility 73.09 % 75.64 % Dividend yield — % — % Weighted average fair value of options granted $ 0.8344 $ 0.7073 |
Segmented, Significant Custom36
Segmented, Significant Customer Information and Economic Dependency (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Reportable Segments | Year ended December 31, 2017: EWCP BCPA Consolidated Sales $ 641,675 $ 14,852,650 $ 15,494,325 Interest expense 54 44,071 44,125 Depreciation 62,376 219,108 281,484 Income tax expense - 680,319 680,319 Segment profit 2,021,289 (266,548) 1,754,741 Segment assets 580,304 1,437,657 2,017,961 Expenditures for segment assets 287,853 138,628 426,480 Year ended December 31, 2016: EWCP BCPA Consolidated Sales $ 785,660 $ 15,460,354 $ 16,246,014 Interest expense 59 41,640 41,699 Depreciation 325,696 214,383 540,079 Income tax expense - 982,133 982,133 Segment profit (loss) (417,770 ) 2,211,104 1,793,334 Segment assets 1,966,564 1,523,270 3,489,834 Expenditures for segment assets 6,352 107,918 114,270 |
Schedule of Revenue Generated in United States and Canada | Sales by territory are shown below: 2017 2016 Canada $ 362,362 $ 453,480 United States and abroad 15,131,963 15,792,534 Total $ 15,494,325 $ 16,246,014 |
Schedule of Long-lived Assets are Located in Canada and the United States | The Company’s long-lived assets (property, equipment, leaseholds and patents) are located in Canada and the United States as follows: 2017 2016 Canada $ 580,304 $ 1,966,564 United States 1,437,657 1,523,270 Total $ 2,017,961 $ 3,489,834 |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments | Commitments for rent in the next four years are as follows: 2018 $ 201,840 2019 $ 205,580 2020 $ 209,400 2021 $ 118,850 |
Significant Accounting Polici38
Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Two Primary Customers [Member] | ||
Accounts receivable | $ 1,247,374 | |
Three Primary Customers [Member] | ||
Accounts receivable | $ 2,032,646 | |
Concentration risk, percentage | 65.00% | 67.00% |
Significant Accounting Polici39
Significant Accounting Policies - Schedule of Method of Depreciation (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Computer Hardware [Member] | |
Depreciation method used and annual rate | 30% Declining balance |
Furniture and Fixtures [Member] | |
Depreciation method used and annual rate | 20% Declining balance |
Manufacturing Equipment [Member] | |
Depreciation method used and annual rate | 20% Declining balance |
Office Equipment [Member] | |
Depreciation method used and annual rate | 20% Declining balance |
Boat [Member] | |
Depreciation method used and annual rate | 20% Declining balance |
Building and Improvements [Member] | |
Depreciation method used and annual rate | 10% Declining balance |
Trailer [Member] | |
Depreciation method used and annual rate | 30% Declining balance |
Patents [Member] | |
Depreciation method used and annual rate | Straight-line over 17 years |
Technology [Member] | |
Depreciation method used and annual rate | Straight-line over 10 years |
Leasehold Improvements [Member] | |
Depreciation method used and annual rate | Straight-line over lease term |
Accounts Receivable - Schedule
Accounts Receivable - Schedule of Accounts Receivable (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Accounts receivable | $ 2,145,803 | $ 3,044,652 |
Allowances for doubtful accounts | (40,332) | (36,499) |
Accounts receivable net | $ 2,105,471 | $ 3,008,153 |
Inventories (Details Narrative)
Inventories (Details Narrative) | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2017USD ($) | Feb. 28, 2017CAD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Inventory damage value | $ 277,482 | $ (51,346) | ||
CAD [Member] | ||||
Inventory damage value | $ 367,331 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Completed goods | $ 2,530,914 | $ 1,646,465 |
Works in progress | 183,944 | 2,572 |
Raw materials and supplies | 1,971,994 | 2,137,056 |
Total inventory | $ 4,686,852 | $ 3,786,093 |
Property, Equipment and Lease43
Property, Equipment and Leaseholds (Details Narrative) | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2017USD ($) | Feb. 28, 2017CAD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2017CAD ($) | Dec. 31, 2016USD ($) | |
Depreciation expense | $ 270,178 | $ 524,463 | |||
Recoverable property, plant and equipment damage | $ 1,659,404 | ||||
Proceeds from interim insurance | $ 4,207,578 | ||||
CAD [Member] | |||||
Recoverable property, plant and equipment damage | $ 2,196,722 | ||||
Proceeds from interim insurance | $ 5,570,000 |
Property, Equipment and Lease44
Property, Equipment and Leaseholds - Schedule of Property, Equipment and Leaseholds (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Cost | $ 6,652,801 | $ 10,728,712 |
Accumulated Depreciation | 4,714,292 | 7,334,768 |
Net | 1,938,509 | 3,393,944 |
Buildings and Improvements [Member] | ||
Cost | 3,400,792 | 4,762,094 |
Accumulated Depreciation | 2,409,179 | 2,967,370 |
Net | 991,613 | 1,794,724 |
Computer Hardware [Member] | ||
Cost | 40,904 | 89,480 |
Accumulated Depreciation | 39,398 | 85,784 |
Net | 1,506 | 3,696 |
Furniture and Fixtures [Member] | ||
Cost | 17,673 | 32,439 |
Accumulated Depreciation | 11,156 | 23,142 |
Net | 6,517 | 9,297 |
Office Equipment [Member] | ||
Cost | 1,480 | 17,745 |
Accumulated Depreciation | 148 | 16,788 |
Net | 1,332 | 957 |
Manufacturing Equipment [Member] | ||
Cost | 2,590,158 | 5,236,404 |
Accumulated Depreciation | 2,104,137 | 4,102,635 |
Net | 486,021 | 1,133,769 |
Trailer [Member] | ||
Cost | 9,562 | 12,859 |
Accumulated Depreciation | 1,434 | 12,250 |
Net | 8,128 | 609 |
Boat [Member] | ||
Cost | 34,400 | 34,400 |
Accumulated Depreciation | 14,586 | 9,632 |
Net | 19,814 | 24,768 |
Leasehold Improvements [Member] | ||
Cost | 85,432 | 85,432 |
Accumulated Depreciation | 32,506 | 15,419 |
Net | 52,926 | 70,013 |
Technology [Member] | ||
Cost | 101,748 | 101,748 |
Accumulated Depreciation | 101,748 | 101,748 |
Net | ||
Land [Member] | ||
Cost | 370,652 | 356,111 |
Accumulated Depreciation | ||
Net | $ 370,652 | $ 356,111 |
Patents (Details Narrative)
Patents (Details Narrative) | 12 Months Ended | |||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2017CAD ($) | Dec. 31, 2016CAD ($) | |
Amortization | $ 16,438 | $ 15,616 | ||
CAD [Member] | ||||
Currency conversion cost | $ 265,102 | $ 265,102 |
Patents - Schedule of Patents (
Patents - Schedule of Patents (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Patents, Cost | $ 212,426 | $ 197,448 |
Accumulated Amortization | 132,974 | 101,558 |
Patents, net | $ 79,452 | $ 95,890 |
Patents - Schedule of Estimated
Patents - Schedule of Estimated Amortization Expense (Details) | Dec. 31, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,018 | $ 16,438 |
2,019 | 16,438 |
2,020 | 16,438 |
2,021 | 16,438 |
2,022 | $ 16,438 |
Long Term Deposits - Schedule o
Long Term Deposits - Schedule of Long Term Deposits (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Long Term Deposits | ||
Long term deposits | $ 18,531 | $ 26,163 |
Equity Method Investment (Detai
Equity Method Investment (Details Narrative) | Dec. 31, 2017 |
ENP Peru Investments LLC [Member] | |
Ownership interest | 42.00% |
Equity Method Investment - Sche
Equity Method Investment - Schedule of Equity Method Investment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Balance, Beginning | $ 122,480 | |
Capital contributions | 150,066 | |
Return of equity | (25,000) | (12,500) |
Loss on equity method investment | (84,066) | (15,086) |
Balance, Ending | $ 13,414 | $ 122,480 |
Short-Term Line of Credit (Deta
Short-Term Line of Credit (Details Narrative) - USD ($) | 1 Months Ended | ||
May 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Aggregate amount of revolving line of credit | $ 250,000 | $ 250,000 | |
Annual interest rate of loan | 5.00% | ||
New Agreement [Member] | Harris Bank [Member] | |||
Aggregate amount of revolving line of credit | $ 3,000,000 | ||
Eligible percentage of domestic accounts receivable | 75.00% | ||
Percentage of foreign accounts receivable of inventory | 40.00% | ||
Annual interest rate of loan | 5.00% | 4.00% |
Long Term Debt (Details Narrati
Long Term Debt (Details Narrative) - USD ($) | 1 Months Ended | |||
Sep. 30, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Promissory note | $ 352,089 | $ 553,282 | $ 754,475 | |
Debt instrument, interest rate, stated percentage | 5.00% | |||
Balance owing | $ 352,089 | $ 553,282 | ||
NanoChem Solutions Inc [Member] | ||||
Promissory note | $ 1,005,967 | |||
Debt instrument, term | 5 years | |||
Debt maturity description | The final payment will be made in September 2019. | |||
NanoChem Solutions Inc [Member] | Prime Rate [Member] | ||||
Debt instrument, interest rate, stated percentage | 0.50% |
Long Term Debt - Schedule of In
Long Term Debt - Schedule of Interest Loan Repayment (Details) | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,018 | $ 201,193 |
2,019 | $ 150,896 |
Long Term Debt - Schedule of Ou
Long Term Debt - Schedule of Outstanding Balance Loan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Debt Disclosure [Abstract] | ||
Balance, beginning of year | $ 553,282 | $ 754,475 |
Less: Payments on loan | 201,193 | 201,193 |
Balance, end of year | 352,089 | 553,282 |
Less: current portion | (201,193) | (201,193) |
Long term balance | $ 150,896 | $ 352,089 |
Income Tax (Details Narrative)
Income Tax (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 5,097,682 | $ 3,075,838 |
Income Tax - Schedule of Compon
Income Tax - Schedule of Components of Income Tax Expense (benefit) (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Current tax, federal | $ 547,486 | $ 787,539 |
Current tax, state | 132,833 | 194,594 |
Current tax, foreign | ||
Current tax, total | 680,319 | 982,133 |
Deferred income tax, federal | (11,069) | 41,343 |
Deferred income tax, state | (2,686) | 10,215 |
Deferred income tax, foreign | 385,639 | 252,235 |
Deferred income tax, total | 985,495 | 303,793 |
Total | $ 833,766 | $ 452,654 |
Income Tax - Schedule of Reconc
Income Tax - Schedule of Reconciliation of Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Income (loss) before tax, net of tax from gain on involuntary disposition | $ 3,420,556 | $ 3,079,260 |
Tax from gain on involuntary disposition | (613,611) | |
Income (loss) before taxes | $ 2,806,945 | $ 3,079,260 |
US statutory tax rates | 39.69% | 39.12% |
Expected income tax (recovery) | $ 1,114,147 | $ 1,207,840 |
Non-deductible items | 520,665 | (139,975) |
Change in estimates | (91,632) | 228,495 |
Change in enacted tax rate | 189,626 | 4,437 |
Option expired during the year | 21,640 | 8,418 |
Foreign tax rate difference | (662,381) | (46,498) |
Change in valuation allowance | (39,863) | 22,878 |
Total income taxes (recovery) | 1,052,203 | 1,285,595 |
Current income tax expenses (recovery) | 680,319 | 982,133 |
Deferred tax expenses (recovery) | 371,884 | 303,792 |
Total income taxes (recovery) | $ 1,052,203 | $ 1,285,925 |
Income Tax - Schedule of Deferr
Income Tax - Schedule of Deferred Tax Assets (Liabilities) (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
USA [Member] | ||
Fixed Assets | $ 351,746 | $ 322,634 |
Stock-Based Compensation | 154,023 | 209,242 |
Deferred tax asset | 505,768 | 531,876 |
Deferred tax asset not recognized | 189,684 | 229,547 |
Net Deferred tax asset | 316,084 | 302,329 |
Canada [Member] | ||
Non capital loss carryforwards | 1,378,242 | 830,476 |
Patents | 69,597 | 45,351 |
Fixed Assets | 848,843 | |
Financial instruments | ||
Deferred tax asset (liability) | 1,447,839 | 1,724,670 |
Valuation Allowance | ||
Net Deferred tax asset (liability) | $ 1,447,839 | $ 1,724,670 |
Income Tax - Schedule of Non Op
Income Tax - Schedule of Non Operating Loss Carryforwards (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
2,029 | $ 710,778 | |
2,030 | 862,371 | |
2,031 | 992,967 | |
2,032 | 649,299 | |
2,033 | 77,587 | |
2,037 | 1,804,680 | |
Total | $ 5,097,682 | $ 3,075,838 |
Income Per Share - Schedule of
Income Per Share - Schedule of Basic and Diluted Loss Per Share (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net income (loss) | $ 1,754,741 | $ 1,793,334 |
Weighted average common shares outstanding: Basic | 11,485,580 | 11,464,270 |
Weighted average common shares outstanding: Diluted | 11,725,482 | 11,635,136 |
Net income (loss) per common share: Basic | $ 0.15 | $ 0.16 |
Net income (loss) per common share: Diluted | $ 0.15 | $ 0.15 |
Income Per Share - Schedule o61
Income Per Share - Schedule of Anti-dilutive Options (Details) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive options | 72,000 |
Stock Options (Details Narrativ
Stock Options (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Options granted percentage | 100.00% | |
Options maximum granted term | 5 years | |
Weighted-average remaining contractual life of outstanding options | 2 years 9 months 18 days | |
Stock granted expenses | $ 116,092 | $ 66,318 |
Stock options exercised | 140,000 | 30,000 |
Compensation expense related to non-vested awards | $ 102,798 | |
Compensation expense related to non-vested awards, weighted average period | 1 year | |
Aggregate intrinsic value of vested options outstanding | $ 413,410 | |
Consultants [Member] | ||
Stock granted expenses | 40,000 | 40,000 |
Additional expenses due to options granted | 6,675 | 5,658 |
Options granted resulted in additional expenses | $ 22,634 | $ 11,879 |
Stock options exercised | 30,000 | |
Employees [Member] | ||
Stock granted expenses | $ 114,000 | $ 128,000 |
Additional expenses due to options granted | 19,024 | 17,824 |
Options granted resulted in additional expenses | $ 67,759 | $ 30,957 |
Stock options exercised | 110,000 | 30,000 |
Stock Options - Schedule of Sto
Stock Options - Schedule of Stock Option Activity (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Number of shares, Beginning Balance | 813,000 | 1,190,000 |
Number of shares, Granted | 154,000 | 168,000 |
Number of shares, Cancelled or expired | (114,000) | (515,000) |
Number of shares, Exercised | (140,000) | (30,000) |
Number of shares, Ending balance | 713,000 | 813,000 |
Number of shares, Exercisable, Ending balance | 559,000 | |
Exercise price per share, Granted | $ 1.70 | $ 1.42 |
Weighted average exercise price, Beginning Balance | 1.19 | 1.34 |
Weighted average exercise price, Granted | 1.70 | 1.42 |
Weighted average exercise price, Cancelled or expired | 1.75 | 1.61 |
Weighted average exercise price, Exercised | 1.11 | 1.09 |
Weighted average exercise price, Ending Balance | 1.21 | 1.19 |
Weighted average exercise price, Exercisable Ending balance | 1.08 | |
Minimum [Member] | ||
Exercise price per share, Beginning Balance | 0.75 | 0.75 |
Exercise price per share, Cancelled or expired | 1 | 0.75 |
Exercise price per share, Exercised | 0.75 | 1 |
Exercise price per share, Balance | 0.75 | 0.75 |
Exercise price per share, Exercisable, Ending balance | 0.75 | |
Maximum [Member] | ||
Exercise price per share, Beginning Balance | 2.22 | 2.45 |
Exercise price per share, Cancelled or expired | 2.22 | 2.45 |
Exercise price per share, Exercised | 1.21 | 1.21 |
Exercise price per share, Balance | 1.70 | $ 2.22 |
Exercise price per share, Exercisable, Ending balance | $ 1.41 |
Stock Options - Schedule of S64
Stock Options - Schedule of Stock Option Fair Value Assumptions (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected life - years | 3 years | 3 years |
Interest rate | 2.23% | 1.37% |
Volatility | 73.09% | 75.64% |
Dividend yield | 0.00% | 0.00% |
Weighted average fair value of options granted | $ 0.8344 | $ 0.7073 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | Jan. 06, 2016 | Dec. 31, 2017 | Dec. 31, 2016 |
Stock options exercised | 140,000 | 30,000 | |
Repurchased shares | 1,750,000 | ||
Common stock per share | $ 0.90 | ||
Total purchase price for shares | $ 1,575,000 | $ (1,575,000) | |
Employee [Member] | |||
Stock options exercised | 110,000 | 30,000 | |
Consultants [Member] | |||
Stock options exercised | 30,000 |
Segmented, Significant Custom66
Segmented, Significant Customer Information and Economic Dependency (Details Narrative) | 12 Months Ended | |
Dec. 31, 2017USD ($)Segments | Dec. 31, 2016USD ($) | |
Number of operating segment | Segments | 2 | |
Sales Revenue, Net [Member] | Three Customers [Member] | ||
Customers accounted sales | $ | $ 8,453,163 | $ 10,148,042 |
Percentage representation in sales | 55.00% | 62.00% |
Segmented, Significant Custom67
Segmented, Significant Customer Information and Economic Dependency - Schedule of Reportable Segments (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Sales | $ 15,494,325 | $ 16,246,014 |
Interest expense | 44,125 | 41,699 |
Depreciation | 281,484 | 540,079 |
Income tax expense | 680,319 | 982,133 |
Segment profit (loss) | 1,754,741 | 1,793,334 |
Segment assets | 2,017,961 | 3,489,834 |
Expenditures for segment assets | 426,480 | 114,270 |
EWCP [Member] | ||
Sales | 641,675 | 785,660 |
Interest expense | 54 | 59 |
Depreciation | 62,376 | 325,696 |
Income tax expense | ||
Segment profit (loss) | 2,021,289 | (417,770) |
Segment assets | 580,304 | 1,966,564 |
Expenditures for segment assets | 287,853 | 6,352 |
BPCA [Member] | ||
Sales | 14,852,650 | 15,460,354 |
Interest expense | 44,071 | 41,640 |
Depreciation | 219,108 | 214,383 |
Income tax expense | 680,319 | 982,133 |
Segment profit (loss) | (266,548) | 2,211,104 |
Segment assets | 1,437,657 | 1,523,270 |
Expenditures for segment assets | $ 138,628 | $ 107,918 |
Segmented, Significant Custom68
Segmented, Significant Customer Information and Economic Dependency - Schedule of Revenue Generated in United States and Canada (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Sales | $ 15,494,325 | $ 16,246,014 |
Canada [Member] | ||
Sales | 362,362 | 453,480 |
United States and Abroad [Member] | ||
Sales | $ 15,131,963 | $ 15,792,534 |
Segmented, Significant Custom69
Segmented, Significant Customer Information and Economic Dependency - Schedule of Long-lived Assets are Located in Canada and the United States (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property, equipment, leasehold and patents | $ 2,017,961 | $ 3,489,834 |
Canada [Member] | ||
Property, equipment, leasehold and patents | 580,304 | 1,966,564 |
United States [Member] | ||
Property, equipment, leasehold and patents | $ 1,437,657 | $ 1,523,270 |
Commitments (Details Narrative)
Commitments (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Minimum rental payments | $ 735,670 |
Lease term | 2 years |
Lease expiry date | Oct. 31, 2021 |
Commitments - Schedule of Futur
Commitments - Schedule of Future Minimum Rental Payments (Details) | Dec. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,018 | $ 201,840 |
2,019 | 205,580 |
2,020 | 209,400 |
2,021 | $ 118,850 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - shares | 1 Months Ended | 12 Months Ended | |
Jan. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options exercised | 140,000 | 30,000 | |
Employee [Member] | |||
Stock options exercised | 110,000 | 30,000 | |
Consultants [Member] | |||
Stock options exercised | 30,000 | ||
Subsequent Event [Member] | Employee [Member] | |||
Stock options exercised | 23,000 | ||
Subsequent Event [Member] | Consultants [Member] | |||
Stock options exercised | 10,000 |