Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
May. 31, 2015 | Jul. 15, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | XZERES Corp. | |
Entity Central Index Key | 1,084,597 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Document Type | 10-Q | |
Document Period End Date | May 31, 2015 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,016 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 72,768,897 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Current Assets | ||
Cash and cash equivalents | $ 364,563 | $ 880,446 |
Accounts and notes receivable, net - current portion | 722,367 | 921,367 |
Inventories | 3,029,735 | 2,490,752 |
Inventory deposits | 872,934 | 1,003,358 |
Prepaid expenses | 241,634 | 218,639 |
Total Current Assets | 5,231,233 | 5,514,562 |
Property and Equipment, net | 175,892 | 190,051 |
Other Assets | ||
Accounts and notes receivable - net of current portion | 149,622 | 154,139 |
Intellectual property, net | 1,210,207 | 1,232,211 |
Deposits | 45,554 | 45,554 |
Total Other Assets | 1,405,383 | 1,431,904 |
TOTAL ASSETS | 6,812,508 | 7,136,517 |
Current Liabilities | ||
Accounts payable | 1,506,162 | 1,535,175 |
Accrued expenses | 470,444 | 726,892 |
Customer deposits | 299,450 | 79,134 |
Warranty reserve | 421,433 | 440,218 |
VAT & sales tax payable | 24,286 | $ 8,527 |
Notes payable - related parties - current portion | 500,000 | |
Notes payable - current portion | 14,286,660 | $ 14,821,428 |
Total Current Liabilities | 17,508,435 | 17,611,374 |
Long-term Liabilities | ||
Notes payable - related parties | 734,368 | 734,368 |
Total Long-term Liabilities | 734,368 | 734,368 |
TOTAL LIABILITIES | 18,242,803 | 18,345,743 |
Stockholder's Equity (Deficit) | ||
Common stock, par $0.001, 100,000,000 shares authorized, 72,768,897 and 62,707,197 shares issued and outstanding, respectively | 72,768 | 62,709 |
Stock warrants | 5,381,245 | 5,390,489 |
Additional paid in capital | 26,963,069 | 25,412,151 |
Accumulated other comprehensive income (loss) | (1,393) | (1,396) |
Accumulated deficit | (43,845,984) | (42,073,178) |
Total Stockholders' Equity (Deficit) | (11,430,295) | (11,209,225) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 6,812,508 | $ 7,136,517 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | May. 31, 2015 | Feb. 28, 2015 |
Balance Sheets [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 72,768,897 | 62,707,197 |
Common stock, shares outstanding | 72,768,897 | 62,707,197 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Income Statement [Abstract] | ||
GROSS REVENUES | $ 616,588 | $ 501,948 |
COST OF GOODS SOLD | 416,453 | 603,893 |
GROSS PROFIT | 200,135 | (101,945) |
OPERATING EXPENSES | ||
General and administrative expenses | 1,261,928 | 1,338,841 |
Marketing | 63,518 | 155,261 |
Sales expense | 300,085 | 390,241 |
Engineering/R&D expense | 198,184 | 248,995 |
TOTAL OPERATING EXPENSES | 1,823,715 | 2,133,338 |
LOSS FROM OPERATIONS | (1,623,580) | (2,235,283) |
OTHER INCOME (EXPENSE) | ||
Interest expense | $ (139,378) | (389,945) |
Amortization of debt discount | (427,256) | |
Other income (expense) | $ (9,851) | 985 |
TOTAL OTHER INCOME (EXPENSE) | (149,229) | (816,216) |
LOSS BEFORE PROVISION FOR INCOME TAXES AND OTHER COMPREHENSIVE INCOME (LOSS) | $ (1,772,809) | $ (3,051,499) |
PROVISION FOR INCOME TAXES | ||
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (1,772,809) | $ (3,051,499) |
OTHER COMPREHENSIVE INCOME (LOSS) | ||
Foreign currency adjustment gain (loss) | 3 | (857) |
COMPREHENSIVE INCOME (LOSS) | $ (1,772,806) | $ (3,052,356) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: | ||
BASIC AND DILUTED | 69,051,113 | 43,173,870 |
NET LOSS PER SHARE: | ||
BASIC AND DILUTED | $ (0.03) | $ (0.07) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Cash Flows from Operating Activities: | ||
Net loss for the period | $ (1,772,809) | $ (3,051,499) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | ||
Amortization of debt discount | 427,256 | |
Depreciation and amortization expense | $ 49,033 | 27,017 |
Bad debt expense | (1,039) | (18,475) |
Share-based compensation | 34,460 | $ 54,698 |
Issuance of common shares for services | 17,276 | |
Changes in Assets and Liabilities | ||
Accounts and notes receivable | 204,557 | $ 1,158,171 |
Prepaid expenses | (22,995) | 207,981 |
Inventory and inventory deposits | (408,559) | (62,558) |
Accounts payable | (225,573) | (276,434) |
Accrued expenses | (59,889) | 119,258 |
Customer deposits | 220,317 | 24,603 |
VAT & sales tax payable | 15,759 | (61,982) |
Warranty reserve | (18,786) | 5,280 |
Net Cash Used in Operating Activities | (1,968,248) | (1,446,684) |
Cash Flows from Investing Activities: | ||
Acquisitions of property and equipment | $ (12,870) | (1,170) |
Rent deposit | (10,690) | |
Net Cash Used in Investing Activities | $ (12,870) | (11,860) |
Cash Flows from Financing Activities: | ||
Net increase/(decrease) in notes and loans payable, net of debt discount | (34,768) | $ 1,490,236 |
Proceeds from common stock offering | 1,500,000 | |
Net Cash Provided by Financing Activities | 1,465,232 | $ 1,490,236 |
Foreign Currency Effect on Cash | 3 | (857) |
Net Increase/(Decrease) in Cash and Cash Equivalents | (515,883) | 30,835 |
Cash and Cash Equivalents - Beginning | 880,446 | 43,495 |
Cash and Cash Equivalents - Ending | 364,563 | 74,330 |
Supplemental Cash Flow Information: | ||
Cash paid for interest | $ 139,378 | $ 269,727 |
Cash paid for income taxes |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
May. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business XZERES Corp. (“XZERES” and the “Company”) is located in Wilsonville, Oregon and was originally incorporated in the state of New Mexico in January of 1984. The Company was engaged in the natural gas and asphalt businesses until 2007, at which time it liquidated its assets and operations and distributed the net proceeds to its shareholders after paying its debts. On October 2, 2008, the Company re-domiciled from New Mexico to Nevada in anticipation of pursuing the wind turbine business. The Company commenced operations in the wind turbine business in the fiscal quarter ended May 31, 2010. The Company formed two subsidiaries during the year ended February 28, 2011. XZERES Energy Services Corp. was incorporated in Nevada in January, 2011 and XZERES Wind Europe Limited was formed in Ireland in October, 2010. The Company formed two additional subsidiaries during the year ended February 28, 2014. XZERES Capital Corp. was incorporated in Nevada in January, 2014 and XZERES Wind Japan Limited was formed in Japan in October, 2013. The Company is in the business of designing, developing, and marketing small wind turbine systems and related equipment for electrical power generation, specifically for use in residential, small business, rural electric utility systems, other rural locations, and other infrastructure applications. The Company employs proprietary technology, including power electronics, alternator design, and blade design to increase performance, reliability, and sound suppression. The Company also works with manufacturers of inverters, lightning protection equipment and towers to integrate their equipment into the Company’s products. Principles of Consolidation The financial statements reflect the consolidated results of XZERES Corp. and its wholly-owned subsidiaries XZERES Energy Services Corp. (a Nevada corporation), XZERES Wind Europe Limited (formed in Ireland), XZERES Capital Corp. (a Nevada corporation), and XZERES Wind Japan Limited (formed in Japan). All material inter-company transactions have been eliminated in the consolidation. Basis of Presentation The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC as of and for the period ended February 28, 2015, as amended. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Accounting Basis The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a February 28 fiscal year end. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, accounts and notes receivable, inventories, inventory deposits, prepaid expenses, notes payable, accounts payable, accrued expenses, customer deposits, taxes payable and warranty reserve. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. Recent Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operation, financial position or cash flows. Revenue Recognition The Company recognizes revenue when products are shipped from the factory and collection is reasonably assured. XZERES sells wind turbines and power efficiency products to dealers and end users directly. Dealers are required to sign an agreement with XZERES that requires the dealer to sell one unit the first year and three units per year, thereafter. Dealers receive dealer pricing, a discount to the suggested retail price of the product. Products sold directly to end users are sold at the retail price. To date, the Company has not offered any other price concessions to its dealers, and has no post shipment obligations other than the warranty it provides. Cash and Cash Equivalents XZERES considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company had cash of $364,563 and $880,446 at May 31, 2015 and February 28, 2015, respectively. Advertising Costs The Company’s policy regarding advertising is to expense advertising when incurred. XZERES incurred advertising expense of $2,134 and $7,024 during the quarters ended May 31, 2015 and 2014, respectively. Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company follows ASC Topic 505-50, formerly EITF 96-18, “ Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services Dividends The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown. Property and Equipment Property and equipment are stated at cost. Depreciation is computed on the straight line method over the estimated useful lives of the assets, which range from three to seven years. Research and Development We incur research and development costs (“R&D”) to develop and improve our products. Our products reach technological feasibility shortly before the products are released and therefore R&D costs are expensed as incurred. Employee related costs associated with product development are included in R&D costs. Intangible Assets In accordance with ASC 350, Goodwill and Other Intangible Assets The Company applies the provisions of ASC Topic 350, requiring that intangible assets that have indefinite lives are not amortized but are subject to an annual impairment test or more frequent test if indicators of impairment exist. Income Taxes Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of the quarter ended May 31, 2015, there have been no interest or penalties incurred on income taxes. Basic Income (Loss) Per Share Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Weighted average common share equivalents totaled 26,407,152at May 31, 2015. Outstanding warrants and options were not included in the computation of diluted earnings per share for the quarter ended May 31, 2015, as their effect would have been anti-dilutive. Reclassifications Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements. |
Accounts and Notes Receivable
Accounts and Notes Receivable | 3 Months Ended |
May. 31, 2015 | |
Accounts and Notes Receivable [Abstract] | |
ACCOUNTS AND NOTES RECEIVABLE | NOTE 2 - ACCOUNTS AND NOTES RECEIVABLE Accounts receivable is generated from sales of wind turbine systems and power efficiency products. At May 31, 2015, accounts receivable were substantially comprised of balances due from end customers and dealers. Notes receivable are generated from sales of wind turbine systems. At May 31, 2015, notes receivable were comprised of balances due from nine end customers. The term of the notes receivable vary from five to seven years at an annual interest rate ranging from 4.5% to 7%. Payments are received on a monthly basis. An allowance for doubtful accounts is provided against accounts and notes receivable for amounts management believes may be uncollectible. The Company determines the adequacy of this allowance by regularly reviewing the composition of its receivable aging and evaluating individual customer receivables, considering the customer’s financial condition, credit history and current economic circumstance. As of May 31, 2015 and February 28, 2015 an allowance for doubtful accounts of $300,072 and $299,033, respectively, has been provided. May 31, February 28, Accounts and notes receivable $ 1,172,061 $ 1,374,539 Less: Allowance for doubtful accounts (300,072 ) (299,033 ) Accounts and notes receivable, net 871,989 1,075,506 Less: Current portion 722,367 921,367 Long-term portion $ 149,622 $ 154,139 |
Prepaid Expenses
Prepaid Expenses | 3 Months Ended |
May. 31, 2015 | |
Prepaid Expenses [Abstract] | |
PREPAID EXPENSES | NOTE 3 – PREPAID EXPENSES Prepaid expenses consisted of the following: May 31, February 28, Software licenses $ 33,335 $ 15,793 Insurance 51,306 11,433 Consulting 156,993 191,413 Total prepaid expenses $ 241,634 $ 218,639 |
Deferred Financing Costs
Deferred Financing Costs | 3 Months Ended |
May. 31, 2015 | |
Deferred Financing Costs [Abstract] | |
DEFERRED FINANCING COSTS | NOTE 4 – DEFERRED FINANCING COSTS We defer certain costs associated with financing activities related to the issuance of equity securities (deferred offering costs) and debt securities (deferred financing costs). These costs consist primarily of legal, banking and other professional fees related to the transactions. Upon successful completion of the offering of equity securities, deferred offering costs are recorded as a reduction of the net proceeds in paid in capital. If the offering is not successful, such costs will be expensed. Deferred financing costs are amortized over the life of the related debt. There were no deferred financing costs at May 31, 2015 and February 28, 2015 |
Inventories
Inventories | 3 Months Ended |
May. 31, 2015 | |
Inventories [Abstract] | |
INVENTORIES | NOTE 5 – INVENTORIES Inventories consist of parts and supplies used in the development, manufacture and installation of wind turbines as well as finished goods. Inventories are stated at the lower of cost, computed using the average cost, or market. Inventory deposits are payments made to vendors as advances against inventory expected to be delivered when completed. Inventory deposits totaled $872,934 and $1,003,358 at May 31, 2015 and February 28, 2015, respectively. Inventories consisted of the following: May 31, February 28, Finished goods $ 1,047,091 $ 981,837 Parts and supplies 1,982,644 1,508,915 Total Inventories $ 3,029,735 $ 2,490,752 |
Property and Equipment
Property and Equipment | 3 Months Ended |
May. 31, 2015 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 6 – PROPERTY AND EQUIPMENT Property and equipment are being depreciated over their estimated useful lives using the straight-line method of depreciation for book purposes. May 31, 2015 February 28, 2015 Furniture $ 54,012 $ 54,012 Computer equipment 184,534 176,724 Shop machinery and equipment 244,335 239,775 Testing Site & Equipment 31,389 31,389 Molds & Tooling 112,186 111,686 Leasehold Improvements 7,270 7,270 Vehicles 10,998 10,998 Subtotal 644,724 631,854 Less: accumulated depreciation (468,832 ) (441,803 ) Property and equipment, net $ 175,892 $ 190,051 Depreciation expense totaled $27,029 and $27,017 for three months ended May 31, 2015 and for the three months ended May 31, 2014, respectively. |
Intellectual Property
Intellectual Property | 3 Months Ended |
May. 31, 2015 | |
Intellectual Property [Abstract] | |
INTELLECTUAL PROPERTY | NOTE 7 – INTELLECTUAL PROPERTY Intellectual property consists of product designs with an infinite life, including the designs for the recently acquired power efficiency products. The Company annually, or more frequently if events or changes indicate that the asset might be impaired, evaluates the fair value of the intellectual property to determine whether events and circumstances warrant a revision to the fair value of these assets. We have elected to begin amortizing the intangibles at a rate of $88,015 per year. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
May. 31, 2015 | |
Accrued Expenses [Abstract] | |
ACCRUED EXPENSES | NOTE 8 – ACCRUED EXPENSES Accrued expenses consisted of the following: May 31, 2015 February 28, 2015 Wages $ 48,687 $ 46,146 Payroll taxes 228,768 313,153 Benefits 3,696 3,696 Inventory received not billed - 196,559 Interest 189,293 167,338 Total accrued expenses $ 470,444 $ 726,892 |
Customer Deposits
Customer Deposits | 3 Months Ended |
May. 31, 2015 | |
Customer Deposits [Abstract] | |
CUSTOMER DEPOSITS | NOTE 9 – CUSTOMER DEPOSITS A customer deposit of 50% of the selling price is sometimes made at the time a wind turbine is ordered. Deposits are reclassified to revenue once the unit is completed and delivered. Customer deposits were $299,450 at May 31, 2015 and $79,134 at February 28, 2015. |
Warranty Reserve
Warranty Reserve | 3 Months Ended |
May. 31, 2015 | |
Warranty Reserve [Abstract] | |
WARRANTY RESERVE | NOTE 10 – WARRANTY RESERVE The Company accrues for estimated future warranty costs by establishing a reserve of 2% of fiscal year wind turbine sales and tower sales. The reserve is reduced over the five year warranty period as follows: Year 1 0.1 % Year 2 0.3 % Year 3 0.4 % Year 4 0.5 % Year 5 0.7 % Total Warranty Reserve as a % of Sales 2.0 % Warranty reserve balances were as follows at May 31, 2015 and February 28, 2015: May 31, February 28, FY 2012 $ 18,068 $ 24,090 FY 2013 47,776 50,112 FY 2014 60,222 60,632 FY 2015 289,863 305,385 FY 2016 5,504 - Reserve balance $ 421,433 $ 440,219 Warranty expense amounted to $81,209 and $40,201 for the three months ended May 31, 2015 and May 31, 2014, respectively. Warranty expense for fiscal 2015 was higher than normal due to a system part where the manufacturing partner did not conform to our specifications. We are expensing the cost of those replacements and have initiated a lawsuit against the supplier to recoup those costs plus the lost business opportunities. During the last fiscal year, we also increased our warranty reserve related to this issue. |
Capital Stock
Capital Stock | 3 Months Ended |
May. 31, 2015 | |
Capital Stock [Abstract] | |
CAPITAL STOCK | NOTE 11 – CAPITAL STOCK Common Stock During the quarter year ending May 31, 2015, the following share-related transactions occurred: ● 10,000,000 common shares were sold to affiliated parties in a private placement at $0.15 per share for net proceeds of $1,500,000. ● 61,700 common shares were issued for consulting services. The shares were valued at $0.28 per share resulting in a value of $17,276, which was expensed in the first quarter. During the fiscal year ending February 28, 2015, the following share-related transactions occurred: ● 719,040 common shares were issued in connection with the conversion of a prior outstanding note payable in the amount of $251,664. ● 4,334,795 common shares were issued in connection with warrants exercised for proceeds of $1,278,579 ● 3,275,489 common shares were sold to unrelated third parties in a private placement at $0.35 per share for net proceeds of $1,146,421. ● 9,820,000 common shares were sold to unrelated third parties in a private placement at $0.25 per share for net proceeds of $2,455,000. ● 1,000,000 common shares were issued in connection with the Preferred stock settlement agreement ● 430,960 common shares were issued in connection with the repurchase of warrants and options During the fiscal year ending February 28, 2014, the following share-related transactions occurred: ● 385,715 common shares valued at $145,237 were issued in payment of accounts payable. ● 542,500 common shares were issued for consulting services to multiple providers. The shares were valued at various market prices ranging between $0.15 and $0.50 per share. The combined value of the shares was $112,375, all of which was expensed during the fiscal year. ● 300,000 common shares were issued valued at $150,000 in connection with prior equity issuance costs that were owed. ● 312,500 common shares were issued valued at $100,000 in connection with an adjustment in pricing from a previous investment. ● 7,627,875 common shares were issued in connection with warrants exercised for proceeds of $2,712,500. ● 5,000,000 common shares were sold to unrelated third parties in a private placement at $0.45 per share for net proceeds of $2,250,000. ● 565,496 common shares were issued in connection with the conversion of the prior outstanding note payable in the amount of $197,923. Total common shares issued and outstanding at May 31, 2015 was 72,768,897. |
Stock Warrants and Options
Stock Warrants and Options | 3 Months Ended |
May. 31, 2015 | |
Stock Warrants and Options [Abstract] | |
STOCK WARRANTS AND OPTIONS | NOTE 12 – STOCK WARRANTS AND OPTIONS Stock Options The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation The Company has adopted a stock option and award plan to attract, retain and motivate its directors, officers, and employees. Options provide the opportunity to acquire a proprietary interest in the Company and to benefit from its growth. Vesting terms and conditions are determined by the Board of Directors at the time of the grant. The current Plan provides for the issuance of up to 2,823,199 common shares for directors, officers, and employees. The Company amended the original plan to increase the available issuance of common shares up to 4,000,000. The amendment will require shareholder ratification at the next annual meeting. The Company did not grant any new options during the quarter ending May 31, 2015. The Company granted 200,000 new qualified options during the fiscal year ending February 28, 2015. During the same period, 310,000 qualified options were canceled due to terminations. The Company estimated the fair value of employee options issued in fiscal 2015 as of the grant dates at $100,300 using the Black-Scholes option pricing model. Compensation expense is being recognized over the vesting periods of the options which range from immediate vesting to vesting over two years. Previously recognized compensation expense is reversed if an employee terminates service prior to exercise and vesting of the option. Key assumptions used by the Company are summarized as follows: Employee Stock Options Stock Price $0.17-$2.20 Exercise Price $.35-$1.25 Expected volatility 73.4% - 98% Expected dividend yield 0.00 % Risk-free rate 2.0-3.37% Vesting period 0-4 years Expected term 7 years Options issued to employees are classified as compensation expense. Stock option expense recognized in net earnings amounted to $34,460 and $54,698 during the quarter ending May 31, 2015 and 2014, respectively. Unrecognized expense of $300,311 remains to be recognized through 2018. A summary of changes in stock options during the quarter ended May 31, 2015 and years ended February 28, 2015 and February 28, 2014 is as follows: Stock Options Weighted Average Exercise Price Expiry Outstanding, February 28, 2013 2,095,000 1.13 Issued 2,375,000 0.368 FY 2020 Exercised 0 0 Expired/Cancelled (1,085,000 ) 1.14 Outstanding, February 29, 2014 3,385,000 $ 1.13 Issued 200,000 0.35 FY 2021 Exercised 0 0 Expired/Cancelled (310,000 ) 0.48 Outstanding, February 28, 2015 3,275,000 $ 0.602 Issued 0 0 Exercised 0 0 Expired/Cancelled 0 0 Outstanding, May 31, 2015 3,275,000 $ 0.602 Because the Company’s stock-based compensation options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the estimate, amounts estimated using the Black-Scholes option pricing model may differ materially from the actual fair value of the Company’s stock-based compensation options. Stock Warrants The Company follows ASC Topic 505-50, formerly EITF 96-18, “ Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services During fiscal year 2015, the Company granted 2,645,000 warrants in connection with an amendment to its previous credit facility, which provided for an increase in the total borrowing limit to $11,033,000. Those warrants were valued at $603,165 and were initially recorded as a debt discount. On August 21, 2014, the original credit facility was fully paid off and as a result, the remaining debt discount was fully expensed during the August 2014 quarter. During fiscal year 2014, the Company granted 8,935,000 warrants in connection with its new credit facility and amendments made to certain existing credit facilities previously outstanding. Those warrants were valued at $757,491 and were recorded as a debt discount. During the November 30, 2014 quarter, the Company granted an additional 2,070,000 warrants in connection with an increase provided in its new credit facility. Those warrants were valued at $519,727 and were also recorded as a debt discount. During the November 30, 2013 quarter, the Company granted an additional 493,393 warrants in connection with a further increase provided in the credit facility. Those warrants were valued at $111,026 and were also recorded as a debt discount. Additionally, 12,128,572 warrants valued at $956,229 were issued to certain consultants. These warrants are amortized over an 18 month period beginning April 1, 2013. On August 21, 2014, the senior credit facility was fully paid off and as a result, the remaining debt discounts associated with that facility were fully expensed during the August 2014 quarter. The remaining, related-party notes and their corresponding debt discount amounts are being amortized over the previously amended term. The unamortized portion of those debt discounts was $0 at February 28, 2015. During fiscal year 2013, the Company granted 2,142,857 warrants in connection with its series A Preferred Stock. A fair value of $345,000 was allocated to the warrants based upon the Black-Scholes pricing model. A total of 695,000 warrants valued at $85,204 were issued in connection with purchase order financing and were recorded as a debt discount. The debt discount is being amortized over the term of the financing and has been fully amortized. During fiscal year 2012, the Company granted 5,207,649 stock warrants valued at $1,841,318 in connection with its common stock private placements. These warrants were accounted for as an equity transaction. Additionally, 1,250,000 warrants valued at $189,875 were issued to an advisor. These warrants were amortized over a 12 month period beginning February 1, 2012. The issuance of new warrants at a reduced exercise price triggered a reset provision on 1,777,225 previously issued warrants resulting in a modification of value of $194,784. A range of stock prices from $0.16 to $1.05 was used in valuing the warrants. The stock price was based on open market trading prices or the per share issuance prices from unrelated third party private placements in the event no active market price was available as occurred in some of the Company’s earlier transactions. Volatility was computed based on the average volatility of similar companies in the wind turbine business. The risk-free interest rate is the Treasury Constant Maturity Rate on the date of grant for a period equivalent to the expected term of the instrument. The expected term is the same as the contractual term for the above valuations. Key assumptions used by the Company are summarized as follows: Warrants Stock Price $0.16-$1.05 Exercise Price $0.35-$1.50 Expected volatility 73.4% - 98% Expected dividend yield 0.00 % Risk-free rate 0.16% - 2.62% Vesting period - Expected term 2-5 years A summary of changes in share purchase warrants during the quarter ended May 31, 2015 and years ended February 28, 2015 and February 28, 2014 is as follows: Number of Warrants Weighted Expiry Date Outstanding, February 29, 2013 11,879,824 $ 0.96 Issued 26,126,965 $ 0.353 Various through 4/4/2017 Exercised (7,627,875 ) $ 0.36 Cancelled/Expired (529,350 ) Outstanding, February 28, 2014 29,849,564 $ 0.59 Issued 2,645,000 $ 0.35 4/16/2018 Exercised (3,653,084 ) $ 0.35 Cancelled/Expired (5,614,328 ) $ 0.63 Outstanding, February 28, 2015 23,227,152 $ 0.53 Issued 0 Exercised 0 Cancelled/Expired (95,000 ) $ 0.80 Outstanding, May 31, 2015 23,132,152 $ 0.53 |
Income Taxes
Income Taxes | 3 Months Ended |
May. 31, 2015 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE 13 – INCOME TAXES For the period ended May 31, 2015, Xzeres has incurred net losses from continuing operations and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is approximately $14,361,543 at May 31, 2015, and will expire beginning in the year 2029. The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows: The provision for Federal income tax consists of the following: May 31, 2015 May 31, 2014 Federal income tax benefit attributable to: Current operations $ 602,800 $ 1,035,000 Less: valuation allowance (602,800 ) (1,035,000 ) Net provision for Federal income taxes $ 0 $ 0 The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows: May 31, February 28, Deferred tax asset attributable to: Net operating loss carryover $ 14,904,643 $ 14,301,843 Less: valuation allowance (14,904,643 ) (14,301,843 ) Net deferred tax asset $ 0 $ 0 Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $43,000,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. |
Commitments
Commitments | 3 Months Ended |
May. 31, 2015 | |
Commitments [Abstract] | |
COMMITMENTS | NOTE 14 – COMMITMENTS Operating Leases The Company leases its office and manufacturing facilities under a lease which expires in July 31, 2017. The lease provides for the payment of taxes and operating costs, such as insurance and maintenance in addition to the base rental payments. The lease is renewable for an additional three year term. Aggregate minimum annual rental payments under the non-cancelable operating lease are as follows: Year ended February 28, 2015 $ 153,977 Year ended February 28, 2016 169,708 Year ended February 28, 2017 174,804 Year ended February 28, 2018 73,550 Sub-Total $ 572,039 Rent expense totaled $124,916 and $75,582 for the three months ending May 31, 2015 and 2014, respectively. |
Notes Payable - Related Parties
Notes Payable - Related Parties | 3 Months Ended |
May. 31, 2015 | |
Notes Payable and Notes Payable - Related Parties [Abstract] | |
NOTES PAYABLE - RELATED PARTIES | NOTE 15 – NOTES PAYABLE – RELATED PARTIES Notes payable – related parties consists of two separate notes: May 31, February 28, Purchase order (PO) financing note payable due within five days of receipt by Company, in whole or in part, portion of funds collected on collateral sales order, or, Company may submit a new collateral sales order with value equal to or in excess of principal outstanding. Interest rate is 1% per month. The note maturity date was originally May 15, 2013. On April 1, 2013, under a new simple note agreement, the maturity date was extended until October 14, 2014 at 10% interest per annum. On August 21, 2014, the note was further amended, extending the maturity date until October 1, 2016. Under the new terms, interest is reduced to 10% per annum, and monthly payments of $4,937 are due May 1, 2013 until October 1, 2016, when all remaining principal and interest was due. On May 10, 2013, the board approved a conversion feature for the note allowing for principal and accrued interest to be converted at any time into common shares at $0.35 per share. On the commitment date, the conversion feature was valued at $0. In addition, the board approved the issuance of a warrant giving the holder the right to purchase 517,500 shares of common stock at a price of $0.35 per share for a period of 3 years. As required by ASC 470-20, the Company valued the warrant and recorded a debt discount to market available at the time of issuance. The discount is amortized over the life of the loan. As of February 28, 2015, $48,772 has been amortized and the balance is shown net of a $0 remaining debt discount. $ 561,824 $ 561,824 Promissory note bearing a 10% annual interest rate. Unsecured. The note maturity date was originally May 1, 2013. On April 1, 2013, under a new simple note agreement, the maturity date was extended until October 14, 2013 at 10% interest. Under the new terms, outstanding accrued interest was added to principal as of the amendment date. On August 21, 2014, the note was further amended, extending the maturity date until October 1, 2016. On May 10, 2013, the board approved a conversion feature for the note allowing for principal and accrued interest to be converted at any time into common shares at $0.35 per share. On the commitment date, the conversion feature was valued at $0. In addition, the board approved the issuance of a warrant giving the holder the right to purchase 667,500 shares of common stock at a price of $0.35 per share for a period of 3 years. As required by ASC 470-20, the Company valued the warrant and recorded a debt discount to market available at the time of issuance. The discount is amortized over the life of the loan. As of February 28, 2015, $49,291 has been amortized and the balance is shown net of a $0 remaining debt discount. 172,544 172,544 On May 27, 2015, Xzeres Corp. (the “Company”) entered into a Demand Convertible Subordinated Secured Promissory Note in the amount of $500,000 together with interest at the rate of eight percent. The Note is secured by subordinated liens on all of our assets. 500,000 Totals 1,234,368 734,368 Less: current maturities 500,000 0 Long-term portion $ 734,368 $ 734,368 |
Notes Payable
Notes Payable | 3 Months Ended |
May. 31, 2015 | |
Notes Payable and Notes Payable - Related Parties [Abstract] | |
NOTES PAYABLE | NOTE 16 – NOTES PAYABLE May 31, February 28, On August 21, 2014, the Company entered into a new term loan with Wells Fargo Bank, which provided $15,000,000 in debt financing. The agreement calls for a Libor +3% annual interest rate on funds outstanding. The loan matures on February 21, 2016 and monthly principal payments of $178,572 start on February 1, 2015. 14,286,660 14,821,428 Totals 14,286,660 14,821,428 Less: current maturities (14,286,660 ) (14,821,428 ) Long-term portion $ 0 $ 0 Future maturities of note and loan debt are as follows at May 31, 2015: FY 2016 $ 14,786,660 Thereafter 734,368 Total $ 15,521,028 The Company incurred total interest expense of $139,378 and $389,945 for period ended May 31, 2015 and 2014, respectively. Interest expense includes finance charges related to vendors in addition to actual note interest. While the Company is current in all interest and principal payments on the senior credit facility, we are currently in default of the minimum EBITDA covenant. The lender has not determined to declare the obligations immediately due and payable, but reserves their right to do so at any time. The lender has also agreed to continue to accept payments per the terms of the loan. |
Going Concern
Going Concern | 3 Months Ended |
May. 31, 2015 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 17 – GOING CONCERN The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained substantial losses since inception, has negative working capital, and is in need of additional capital to grow its operations so that it can become profitable. In view of this matter, the ability of the Company to continue as a going concern is dependent upon growth of revenues and the ability of the Company to raise additional capital. Management believes that its successful ability to raise capital and increases in revenues will provide the opportunity for the Company to continue as a going concern. |
Supplemental Cash Flows
Supplemental Cash Flows | 3 Months Ended |
May. 31, 2015 | |
Supplemental Cash Flows [Abstract] | |
SUPPLEMENTAL CASH FLOWS | NOTE 18 – SUPPLEMENTAL CASH FLOWS Supplemental Non-Cash Investing and Financing Activities: May 31, May 31, Debt discount from fair value of embedded conversion feature $ 0 $ 603,165 Issuance of common shares for convertible debt and accrued interest $ 0 $ 63,000 |
Concentrations
Concentrations | 3 Months Ended |
May. 31, 2015 | |
Concentrations [Abstract] | |
CONCENTRATIONS | NOTE 19 – CONCENTRATIONS Credit risk The Company is also potentially subject to concentrations of credit risk in its accounts receivable. Credit risk with respect to receivables is limited due to the number of companies comprising the Company’s customer base. Although the Company is directly affected by the financial condition of its customers, management does not believe significant credit risks exist at May 31, 2015. Generally, the Company does not require collateral or other securities beyond the equipment sold to support its accounts receivable. Major customers- Major vendors- |
Subsequent Events
Subsequent Events | 3 Months Ended |
May. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 20 – SUBSEQUENT EVENTS On June 9 th th th In accordance with ASC Topic 855-10, the Company |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
May. 31, 2015 | |
Summary of Significant Accounting Policies [Abstract] | |
Nature of Business | Nature of Business XZERES Corp. (“XZERES” and the “Company”) is located in Wilsonville, Oregon and was originally incorporated in the state of New Mexico in January of 1984. The Company was engaged in the natural gas and asphalt businesses until 2007, at which time it liquidated its assets and operations and distributed the net proceeds to its shareholders after paying its debts. On October 2, 2008, the Company re-domiciled from New Mexico to Nevada in anticipation of pursuing the wind turbine business. The Company commenced operations in the wind turbine business in the fiscal quarter ended May 31, 2010. The Company formed two subsidiaries during the year ended February 28, 2011. XZERES Energy Services Corp. was incorporated in Nevada in January, 2011 and XZERES Wind Europe Limited was formed in Ireland in October, 2010. The Company formed two additional subsidiaries during the year ended February 28, 2014. XZERES Capital Corp. was incorporated in Nevada in January, 2014 and XZERES Wind Japan Limited was formed in Japan in October, 2013. The Company is in the business of designing, developing, and marketing small wind turbine systems and related equipment for electrical power generation, specifically for use in residential, small business, rural electric utility systems, other rural locations, and other infrastructure applications. The Company employs proprietary technology, including power electronics, alternator design, and blade design to increase performance, reliability, and sound suppression. The Company also works with manufacturers of inverters, lightning protection equipment and towers to integrate their equipment into the Company’s products. |
Principles of Consolidation | Principles of Consolidation The financial statements reflect the consolidated results of XZERES Corp. and its wholly-owned subsidiaries XZERES Energy Services Corp. (a Nevada corporation), XZERES Wind Europe Limited (formed in Ireland), XZERES Capital Corp. (a Nevada corporation), and XZERES Wind Japan Limited (formed in Japan). All material inter-company transactions have been eliminated in the consolidation. |
Basis of Presentation | Basis of Presentation The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Form 10-K filed with the SEC as of and for the period ended February 28, 2015, as amended. In the opinion of management, all adjustments necessary in order for the financial statements to be not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. |
Accounting Basis | Accounting Basis The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a February 28 fiscal year end. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company’s financial instruments consist of cash and cash equivalents, accounts and notes receivable, inventories, inventory deposits, prepaid expenses, notes payable, accounts payable, accrued expenses, customer deposits, taxes payable and warranty reserve. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operation, financial position or cash flows. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when products are shipped from the factory and collection is reasonably assured. XZERES sells wind turbines and power efficiency products to dealers and end users directly. Dealers are required to sign an agreement with XZERES that requires the dealer to sell one unit the first year and three units per year, thereafter. Dealers receive dealer pricing, a discount to the suggested retail price of the product. Products sold directly to end users are sold at the retail price. To date, the Company has not offered any other price concessions to its dealers, and has no post shipment obligations other than the warranty it provides. |
Cash and Cash Equivalents | Cash and Cash Equivalents XZERES considers all highly liquid investments with maturities of three months or less to be cash equivalents. The Company had cash of $364,563 and $880,446 at May 31, 2015 and February 28, 2015, respectively. |
Advertising Costs | Advertising Costs The Company’s policy regarding advertising is to expense advertising when incurred. XZERES incurred advertising expense of $2,134 and $7,024 during the quarters ended May 31, 2015 and 2014, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The Company follows ASC Topic 505-50, formerly EITF 96-18, “ Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services |
Dividends | Dividends The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed on the straight line method over the estimated useful lives of the assets, which range from three to seven years. |
Research and Development | Research and Development We incur research and development costs (“R&D”) to develop and improve our products. Our products reach technological feasibility shortly before the products are released and therefore R&D costs are expensed as incurred. Employee related costs associated with product development are included in R&D costs. |
Intangible Assets | Intangible Assets In accordance with ASC 350, Goodwill and Other Intangible Assets The Company applies the provisions of ASC Topic 350, requiring that intangible assets that have indefinite lives are not amortized but are subject to an annual impairment test or more frequent test if indicators of impairment exist. |
Income Taxes | Income Taxes Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of the quarter ended May 31, 2015, there have been no interest or penalties incurred on income taxes. |
Basic Income (Loss) Per Share | Basic Income (Loss) Per Share Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Weighted average common share equivalents totaled 26,407,152at May 31, 2015. Outstanding warrants and options were not included in the computation of diluted earnings per share for the quarter ended May 31, 2015, as their effect would have been anti-dilutive. |
Reclassifications | Reclassifications Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements. |
Accounts and Notes Receivable (
Accounts and Notes Receivable (Tables) | 3 Months Ended |
May. 31, 2015 | |
Accounts and Notes Receivable [Abstract] | |
Schedule of allowance for doubtful accounts | May 31, February 28, Accounts and notes receivable $ 1,172,061 $ 1,374,539 Less: Allowance for doubtful accounts (300,072 ) (299,033 ) Accounts and notes receivable, net 871,989 1,075,506 Less: Current portion 722,367 921,367 Long-term portion $ 149,622 $ 154,139 |
Prepaid Expenses (Tables)
Prepaid Expenses (Tables) | 3 Months Ended |
May. 31, 2015 | |
Prepaid Expenses [Abstract] | |
Schedule of Prepaid Expense | May 31, February 28, Software licenses $ 33,335 $ 15,793 Insurance 51,306 11,433 Consulting 156,993 191,413 Total prepaid expenses $ 241,634 $ 218,639 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
May. 31, 2015 | |
Inventories [Abstract] | |
Schedule of inventories | May 31, February 28, Finished goods $ 1,047,091 $ 981,837 Parts and supplies 1,982,644 1,508,915 Total Inventories $ 3,029,735 $ 2,490,752 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
May. 31, 2015 | |
Property and Equipment [Abstract] | |
Schedule of Property, Plant and Equipmen | May 31, 2015 February 28, 2015 Furniture $ 54,012 $ 54,012 Computer equipment 184,534 176,724 Shop machinery and equipment 244,335 239,775 Testing Site & Equipment 31,389 31,389 Molds & Tooling 112,186 111,686 Leasehold Improvements 7,270 7,270 Vehicles 10,998 10,998 Subtotal 644,724 631,854 Less: accumulated depreciation (468,832 ) (441,803 ) Property and equipment, net $ 175,892 $ 190,051 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
May. 31, 2015 | |
Accrued Expenses [Abstract] | |
Schedule of accrued expenses | May 31, 2015 February 28, 2015 Wages $ 48,687 $ 46,146 Payroll taxes 228,768 313,153 Benefits 3,696 3,696 Inventory received not billed - 196,559 Interest 189,293 167,338 Total accrued expenses $ 470,444 $ 726,892 |
Warranty Reserve (Tables)
Warranty Reserve (Tables) | 3 Months Ended |
May. 31, 2015 | |
Warranty Reserve [Abstract] | |
Schedule of estimated future warranty costs | Year 1 0.1 % Year 2 0.3 % Year 3 0.4 % Year 4 0.5 % Year 5 0.7 % Total Warranty Reserve as a % of Sales 2.0 % |
Schedule of warranty reserve activity | May 31, February 28, FY 2012 $ 18,068 $ 24,090 FY 2013 47,776 50,112 FY 2014 60,222 60,632 FY 2015 289,863 305,385 FY 2016 5,504 - Reserve balance $ 421,433 $ 440,219 |
Stock Warrants and Options (Tab
Stock Warrants and Options (Tables) | 3 Months Ended |
May. 31, 2015 | |
Stock Options [Member] | |
Schedule of key assumptions for options/warrant | Employee Stock Options Stock Price $0.17-$2.20 Exercise Price $.35-$1.25 Expected volatility 73.4% - 98% Expected dividend yield 0.00 % Risk-free rate 2.0-3.37% Vesting period 0-4 years Expected term 7 years |
Schedule of changes in stock options/warrants | Stock Options Weighted Average Exercise Price Expiry Outstanding, February 28, 2013 2,095,000 1.13 Issued 2,375,000 0.368 FY 2020 Exercised 0 0 Expired/Cancelled (1,085,000 ) 1.14 Outstanding, February 29, 2014 3,385,000 $ 1.13 Issued 200,000 0.35 FY 2021 Exercised 0 0 Expired/Cancelled (310,000 ) 0.48 Outstanding, February 28, 2015 3,275,000 $ 0.602 Issued 0 0 Exercised 0 0 Expired/Cancelled 0 0 Outstanding, May 31, 2015 3,275,000 $ 0.602 |
Stock Warrants [Member] | |
Schedule of key assumptions for options/warrant | Warrants Stock Price $0.16-$1.05 Exercise Price $0.35-$1.50 Expected volatility 73.4% - 98% Expected dividend yield 0.00 % Risk-free rate 0.16% - 2.62% Vesting period - Expected term 2-5 years |
Schedule of changes in stock options/warrants | Number of Warrants Weighted Expiry Date Outstanding, February 29, 2013 11,879,824 $ 0.96 Issued 26,126,965 $ 0.353 Various through 4/4/2017 Exercised (7,627,875 ) $ 0.36 Cancelled/Expired (529,350 ) Outstanding, February 28, 2014 29,849,564 $ 0.59 Issued 2,645,000 $ 0.35 4/16/2018 Exercised (3,653,084 ) $ 0.35 Cancelled/Expired (5,614,328 ) $ 0.63 Outstanding, February 28, 2015 23,227,152 $ 0.53 Issued 0 Exercised 0 Cancelled/Expired (95,000 ) $ 0.80 Outstanding, May 31, 2015 23,132,152 $ 0.53 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
May. 31, 2015 | |
Income Taxes [Abstract] | |
Schedule of federal income tax | May 31, 2015 May 31, 2014 Federal income tax benefit attributable to: Current operations $ 602,800 $ 1,035,000 Less: valuation allowance (602,800 ) (1,035,000 ) Net provision for Federal income taxes $ 0 $ 0 |
Schedule of net deferred tax amount | May 31, February 28, Deferred tax asset attributable to: Net operating loss carryover $ 14,904,643 $ 14,301,843 Less: valuation allowance (14,904,643 ) (14,301,843 ) Net deferred tax asset $ 0 $ 0 |
Commitments (Tables)
Commitments (Tables) | 3 Months Ended |
May. 31, 2015 | |
Commitments [Abstract] | |
Shedule of non-cancelable operating lease aggregate minimum rental payments | Year ended February 28, 2015 $ 153,977 Year ended February 28, 2016 169,708 Year ended February 28, 2017 174,804 Year ended February 28, 2018 73,550 Sub-Total $ 572,039 |
Notes Payable - Related Parti36
Notes Payable - Related Parties (Tables) | 3 Months Ended |
May. 31, 2015 | |
Notes Payable and Notes Payable - Related Parties [Abstract] | |
Schedule of notes payable related parties | May 31, February 28, Purchase order (PO) financing note payable due within five days of receipt by Company, in whole or in part, portion of funds collected on collateral sales order, or, Company may submit a new collateral sales order with value equal to or in excess of principal outstanding. Interest rate is 1% per month. The note maturity date was originally May 15, 2013. On April 1, 2013, under a new simple note agreement, the maturity date was extended until October 14, 2014 at 10% interest per annum. On August 21, 2014, the note was further amended, extending the maturity date until October 1, 2016. Under the new terms, interest is reduced to 10% per annum, and monthly payments of $4,937 are due May 1, 2013 until October 1, 2016, when all remaining principal and interest was due. On May 10, 2013, the board approved a conversion feature for the note allowing for principal and accrued interest to be converted at any time into common shares at $0.35 per share. On the commitment date, the conversion feature was valued at $0. In addition, the board approved the issuance of a warrant giving the holder the right to purchase 517,500 shares of common stock at a price of $0.35 per share for a period of 3 years. As required by ASC 470-20, the Company valued the warrant and recorded a debt discount to market available at the time of issuance. The discount is amortized over the life of the loan. As of February 28, 2015, $48,772 has been amortized and the balance is shown net of a $0 remaining debt discount. $ 561,824 $ 561,824 Promissory note bearing a 10% annual interest rate. Unsecured. The note maturity date was originally May 1, 2013. On April 1, 2013, under a new simple note agreement, the maturity date was extended until October 14, 2013 at 10% interest. Under the new terms, outstanding accrued interest was added to principal as of the amendment date. On August 21, 2014, the note was further amended, extending the maturity date until October 1, 2016. On May 10, 2013, the board approved a conversion feature for the note allowing for principal and accrued interest to be converted at any time into common shares at $0.35 per share. On the commitment date, the conversion feature was valued at $0. In addition, the board approved the issuance of a warrant giving the holder the right to purchase 667,500 shares of common stock at a price of $0.35 per share for a period of 3 years. As required by ASC 470-20, the Company valued the warrant and recorded a debt discount to market available at the time of issuance. The discount is amortized over the life of the loan. As of February 28, 2015, $49,291 has been amortized and the balance is shown net of a $0 remaining debt discount. 172,544 172,544 On May 27, 2015, Xzeres Corp. (the “Company”) entered into a Demand Convertible Subordinated Secured Promissory Note in the amount of $500,000 together with interest at the rate of eight percent. The Note is secured by subordinated liens on all of our assets. 500,000 Totals 1,234,368 734,368 Less: current maturities 500,000 0 Long-term portion $ 734,368 $ 734,368 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
May. 31, 2015 | |
Notes Payable and Notes Payable - Related Parties [Abstract] | |
Schedule of notes payable | May 31, February 28, On August 21, 2014, the Company entered into a new term loan with Wells Fargo Bank, which provided $15,000,000 in debt financing. The agreement calls for a Libor +3% annual interest rate on funds outstanding. The loan matures on February 21, 2016 and monthly principal payments of $178,572 start on February 1, 2015. 14,286,660 14,821,428 Totals 14,286,660 14,821,428 Less: current maturities (14,286,660 ) (14,821,428 ) Long-term portion $ 0 $ 0 |
Schedule of future maturities | FY 2016 $ 14,786,660 Thereafter 734,368 Total $ 15,521,028 |
Supplemental Cash Flows (Tables
Supplemental Cash Flows (Tables) | 3 Months Ended |
May. 31, 2015 | |
Supplemental Cash Flows [Abstract] | |
Schedule of non-cash investing financing activities | Supplemental Non-Cash Investing and Financing Activities: May 31, May 31, Debt discount from fair value of embedded conversion feature $ 0 $ 603,165 Issuance of common shares for convertible debt and accrued interest $ 0 $ 63,000 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | |
Summary of Significant Accounting Policies (Textual) | ||||
Cash and cash equivalents | $ 364,563 | $ 74,330 | $ 880,446 | $ 43,495 |
Advertising expense | $ 2,134 | $ 7,024 | ||
Weighted average common share equivalents | 26,407,152 | |||
Maximum [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Estimated useful lives | 7 years | |||
Minimum [Member] | ||||
Summary of Significant Accounting Policies (Textual) | ||||
Estimated useful lives | 3 years |
Accounts and Notes Receivable40
Accounts and Notes Receivable (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Accounts and Notes Receivable [Abstract] | ||
Accounts and notes receivable | $ 1,172,061 | $ 1,374,539 |
Less: Allowance for doubtful accounts | (300,072) | (299,033) |
Accounts and notes receivable, net | 871,989 | 1,075,506 |
Less: Current portion | 722,367 | 921,367 |
Long-term portion | $ 149,622 | $ 154,139 |
Accounts and Notes Receivable41
Accounts and Notes Receivable (Details Textual) - USD ($) | 3 Months Ended | |
May. 31, 2015 | Feb. 28, 2015 | |
Accounts And Notes Receivable (Textual) | ||
Allowance for doubtful accounts | $ 300,072 | $ 299,033 |
Minimum [Member] | ||
Accounts And Notes Receivable (Textual) | ||
Term of notes receivable | 5 years | |
Percentage of notes receivable annual interest rate | 4.50% | |
Maximum [Member] | ||
Accounts And Notes Receivable (Textual) | ||
Term of notes receivable | 7 years | |
Percentage of notes receivable annual interest rate | 7.00% |
Prepaid Expenses (Details)
Prepaid Expenses (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Prepaid Expenses [Abstract] | ||
Software licenses | $ 33,335 | $ 15,793 |
Insurance | 51,306 | 11,433 |
Consulting | 156,993 | 191,413 |
Total prepaid expenses | $ 241,634 | $ 218,639 |
Inventories (Details)
Inventories (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Inventories [Abstract] | ||
Finished goods | $ 1,047,091 | $ 981,837 |
Parts and supplies | 1,982,644 | 1,508,915 |
Total Inventories | $ 3,029,735 | $ 2,490,752 |
Inventories (Details Textual)
Inventories (Details Textual) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Inventories (Textual) | ||
Inventory deposits | $ 872,934 | $ 1,003,358 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 644,724 | $ 631,854 |
Less: accumulated depreciation | (468,832) | (441,803) |
Property and equipment, net | 175,892 | 190,051 |
Furniture [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 54,012 | 54,012 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 184,534 | 176,724 |
Shop machinery and equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 244,335 | 239,775 |
Testing Site & Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 31,389 | 31,389 |
Molds & Tooling [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 112,186 | 111,686 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 7,270 | 7,270 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 10,998 | $ 10,998 |
Property and Equipment (Detai46
Property and Equipment (Details Textual) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Property and Equipment (Textual) | ||
Depreciation expense | $ 27,029 | $ 27,017 |
Intellectual Property (Details)
Intellectual Property (Details) | 3 Months Ended |
May. 31, 2015USD ($) | |
Intellectual Property (Textual) | |
Amortizing intangibles | $ 88,015 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Accrued Expenses [Abstract] | ||
Wages | $ 48,687 | $ 46,146 |
Payroll taxes | 228,768 | 313,153 |
Benefits | $ 3,696 | 3,696 |
Inventory received not billed | 196,559 | |
Interest | $ 189,293 | 167,338 |
Total accrued expenses | $ 470,444 | $ 726,892 |
Customer Deposits (Details)
Customer Deposits (Details) - USD ($) | 3 Months Ended | |
May. 31, 2015 | Feb. 28, 2015 | |
Customer Deposits (Textual) | ||
Percentage of selling price on customer deposit | 50.00% | |
Customer deposits | $ 299,450 | $ 79,134 |
Warranty Reserve (Details)
Warranty Reserve (Details) | 3 Months Ended |
May. 31, 2015 | |
Product Warranty Liability [Line Items] | |
Total Warranty Reserve as a % of Sales | 2.00% |
Year 1 [Member] | |
Product Warranty Liability [Line Items] | |
Total Warranty Reserve as a % of Sales | 0.10% |
Year 2 [Member] | |
Product Warranty Liability [Line Items] | |
Total Warranty Reserve as a % of Sales | 0.30% |
Year 3 [Member] | |
Product Warranty Liability [Line Items] | |
Total Warranty Reserve as a % of Sales | 0.40% |
Year 4 [Member] | |
Product Warranty Liability [Line Items] | |
Total Warranty Reserve as a % of Sales | 0.50% |
Year 5 [Member] | |
Product Warranty Liability [Line Items] | |
Total Warranty Reserve as a % of Sales | 0.70% |
Warranty Reserve (Details 1)
Warranty Reserve (Details 1) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Product Warranty Liability [Line Items] | ||
Reserve balance | $ 421,433 | $ 440,218 |
FY 2012 [Member] | ||
Product Warranty Liability [Line Items] | ||
Reserve balance | 18,068 | 24,090 |
FY 2013 [Member] | ||
Product Warranty Liability [Line Items] | ||
Reserve balance | 47,776 | 50,112 |
FY 2014 [Member] | ||
Product Warranty Liability [Line Items] | ||
Reserve balance | 60,222 | 60,632 |
FY 2015 [Member] | ||
Product Warranty Liability [Line Items] | ||
Reserve balance | 289,863 | $ 305,385 |
FY 2016 [Member] | ||
Product Warranty Liability [Line Items] | ||
Reserve balance | $ 5,504 |
Warranty Reserve (Details Textu
Warranty Reserve (Details Textual) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Warranty Reserve (Textual) | ||
Warranty expense | $ 81,209 | $ 40,201 |
Percentage of warranty reserve | 2.00% |
Capital Stock (Details)
Capital Stock (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
May. 31, 2015 | Feb. 28, 2015 | Feb. 28, 2014 | |
Capital Stock (Details Textual) [Abstract] | |||
Common shares issued in connection with Preferred stock settlement agreement | 1,000,000 | ||
Common stock, shares issued | 72,768,897 | 62,707,197 | |
Common stock, shares outstanding | 72,768,897 | 62,707,197 | |
Common Stock [Member] | |||
Capital Stock (Details Textual) [Abstract] | |||
Shares issued for consulting services | $ 17,276 | $ 112,375 | |
Shares issued for consulting services, shares | 61,700 | 542,500 | |
Share price | $ 0.28 | ||
Conversion of stock issued amount | $ 251,664 | $ 197,923 | |
Conversion of stock issued shares | 719,040 | 565,496 | |
Common stock issued warrants exercised | $ 1,278,579 | $ 2,712,500 | |
Common stock issued warrants exercised, shares | 4,334,795 | 7,627,875 | |
Common shares issued in connection with repurchase of warrants and options | 430,960 | ||
Common stock shares issued for accounts payable | $ 145,237 | ||
Common stock shares issued for accounts payable, shares | 385,715 | ||
Equity issuance costs | $ 150,000 | ||
Equity issuance cost, shares | 300,000 | ||
Common stock shares issued an adjustment value | $ 100,000 | ||
Common stock shares issued an adjustment, shares | 312,500 | ||
Minimum [Member] | Common Stock [Member] | |||
Capital Stock (Details Textual) [Abstract] | |||
Share price | $ 0.15 | ||
Maximum [Member] | Common Stock [Member] | |||
Capital Stock (Details Textual) [Abstract] | |||
Share price | $ 0.50 | ||
Private Placement [Member] | Affiliated Entity [Member] | Common Stock [Member] | |||
Capital Stock (Details Textual) [Abstract] | |||
Common stock sold | $ 1,500,000 | ||
Common stock sold to affiliated party, Shares | 10,000,000 | ||
Sale price per share | $ 0.15 | ||
Private Placement [Member] | Unrelated Third Parties [Member] | Common Stock [Member] | |||
Capital Stock (Details Textual) [Abstract] | |||
Common stock sold | $ 1,146,421 | $ 2,250,000 | |
Common stock sold to affiliated party, Shares | 3,275,489 | 5,000,000 | |
Sale price per share | $ 0.35 | $ 0.45 | |
Private Placement [Member] | Unrelated Third Parties 2 [Member] | Common Stock [Member] | |||
Capital Stock (Details Textual) [Abstract] | |||
Common stock sold | $ 2,455,000 | ||
Common stock sold to affiliated party, Shares | 9,820,000 | ||
Sale price per share | $ 0.25 |
Stock Warrants and Options (Det
Stock Warrants and Options (Details) - May. 31, 2015 - $ / shares | Total |
Stock Options [Member] | |
Expected dividend yield | 0.00% |
Expected term | 7 years |
Stock Options [Member] | Minimum [Member] | |
Stock Price | $ 0.17 |
Exercise Price | $ 0.35 |
Expected volatility | 73.40% |
Risk-free rate | 2.00% |
Vesting period | |
Stock Options [Member] | Maximum [Member] | |
Stock Price | $ 2.20 |
Exercise Price | $ 1.25 |
Expected volatility | 98.00% |
Risk-free rate | 3.37% |
Vesting period | 4 years |
Warrants [Member] | |
Expected dividend yield | 0.00% |
Warrants [Member] | Minimum [Member] | |
Stock Price | $ 0.16 |
Exercise Price | $ 0.35 |
Expected volatility | 73.40% |
Risk-free rate | 0.16% |
Expected term | 2 years |
Warrants [Member] | Maximum [Member] | |
Stock Price | $ 1.05 |
Exercise Price | $ 1.50 |
Expected volatility | 98.00% |
Risk-free rate | 2.62% |
Expected term | 5 years |
Stock Warrants and Options (D55
Stock Warrants and Options (Details 1) - $ / shares | 3 Months Ended | 12 Months Ended | |
May. 31, 2015 | Feb. 28, 2015 | Feb. 28, 2014 | |
Stock Options [Member] | |||
Outstanding balances | 3,275,000 | 3,385,000 | 2,095,000 |
Issued | 0 | 200,000 | 2,375,000 |
Exercised | 0 | 0 | 0 |
Expired/Cancelled | 0 | (310,000) | (1,085,000) |
Outstanding balances | 3,275,000 | 3,275,000 | 3,385,000 |
Outstanding balances, Weighted Average Exercise Price | $ 0.602 | $ 1.13 | $ 1.13 |
Weighted Average Exercise Price, Issued | 0 | 0.35 | 0.368 |
Weighted Average Exercise Price, Exercised | 0 | 0 | 0 |
Weighted Average Exercise Price, Expired/Cancelled | 0 | 0.48 | 1.14 |
Outstanding balances, Weighted Average Exercise Price | $ 0.602 | $ 0.602 | $ 1.13 |
Expiry Date | FY 2,021 | FY 2,020 | |
Warrants [Member] | |||
Outstanding balances | 23,227,152 | 29,849,564 | 11,879,824 |
Issued | 0 | 2,645,000 | 26,126,965 |
Exercised | 0 | (3,653,084) | (7,627,875) |
Expired/Cancelled | (95,000) | (5,614,328) | (529,350) |
Outstanding balances | 23,132,152 | 23,227,152 | 29,849,564 |
Outstanding balances, Weighted Average Exercise Price | $ 0.53 | $ 0.59 | $ 0.96 |
Weighted Average Exercise Price, Issued | 0.35 | 0.353 | |
Weighted Average Exercise Price, Exercised | 0.35 | $ 0.36 | |
Weighted Average Exercise Price, Expired/Cancelled | $ 0.80 | 0.63 | |
Outstanding balances, Weighted Average Exercise Price | $ 0.53 | $ 0.53 | $ 0.59 |
Expiry Date | 4/16/2018 | Various through 4/4/2017 |
Stock Warrants and Options (D56
Stock Warrants and Options (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Nov. 30, 2014 | Nov. 30, 2013 | May. 31, 2015 | May. 31, 2014 | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2013 | Feb. 29, 2012 | |
Stock Options and Warrants (Textual) | ||||||||
Common shares,issuance | 4,000,000 | |||||||
Stock warrants granted | 5,207,649 | |||||||
Debt discount | $ 427,256 | |||||||
Stock warrants issued, value | $ 1,841,318 | |||||||
Vesting period description | Compensation expense is being recognized over the vesting periods of the options which range from immediate vesting to vesting over two years. | |||||||
Director [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Common shares,issuance | 2,823,199 | |||||||
Officer [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Common shares,issuance | 2,823,199 | |||||||
Employees [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Common shares,issuance | 2,823,199 | |||||||
Stock Options [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Shares granted | 0 | 200,000 | 2,375,000 | |||||
Shares canceled in period | 0 | (310,000) | (1,085,000) | |||||
Employee stock option expense recognized | $ 34,460 | $ 54,698 | ||||||
Employee compensation not yet recognized, stock options | $ 300,311 | |||||||
Fair value of warrants | $ 100,300 | |||||||
Stock Options [Member] | Maximum [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Stock Price | $ 2.20 | |||||||
Stock Options [Member] | Minimum [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Stock Price | $ 0.17 | |||||||
Warrants [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Shares granted | 0 | 2,645,000 | 26,126,965 | |||||
Shares canceled in period | (95,000) | (5,614,328) | (529,350) | |||||
Stock warrants granted | 2,070,000 | 493,393 | 8,935,000 | |||||
Total borrowing limit | $ 11,033,000 | |||||||
Debt discount | $ 519,727 | $ 111,026 | $ 603,165 | $ 757,491 | ||||
Unamortized portion of debt discounts | $ 0 | |||||||
Warrants amortized, description | These warrants are amortized over an 18 month period beginning April 1, 2013. | These warrants were amortized over a 12 month period beginning February 1, 2012. | ||||||
Stock warrants issued, share | 12,128,572 | 1,777,225 | 1,250,000 | |||||
Stock warrants issued, value | $ 956,229 | $ 194,784 | $ 189,875 | |||||
Warrants [Member] | Series A Preferred Stock [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Stock warrants granted | 2,142,857 | |||||||
Stock warrants issued, share | 695,000 | |||||||
Stock warrants issued, value | $ 85,204 | |||||||
Fair value of warrants | $ 345,000 | |||||||
Warrants [Member] | Maximum [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Stock Price | $ 1.05 | |||||||
Warrants [Member] | Minimum [Member] | ||||||||
Stock Options and Warrants (Textual) | ||||||||
Stock Price | $ 0.16 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Federal income tax benefit attributable to: | ||
Current operations | $ 602,800 | $ 1,035,000 |
Less: valuation allowance | (602,800) | (1,035,000) |
Net provision for Federal income taxes | $ 0 | $ 0 |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Deferred tax asset attributable to: | ||
Net operating loss carryover | $ 14,904,643 | $ 14,301,843 |
Less: valuation allowance | (14,904,643) | (14,301,843) |
Net deferred tax asset | $ 0 | $ 0 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - May. 31, 2015 - USD ($) | Total |
Income Taxes (Textual) | |
Cumulative net operating loss carry-forward | $ 14,361,543 |
Operating loss carry-forwards, expiration date | Feb. 28, 2029 |
Percentage of cumulative tax effect | 34.00% |
Net of operating loss carry-forwards | $ 43,000,000 |
Commitments (Details)
Commitments (Details) | May. 31, 2015USD ($) |
Commitments [Abstract] | |
Year ended February 28, 2015 | $ 153,977 |
Year ended February 28, 2016 | 169,708 |
Year ended February 28, 2017 | 174,804 |
Year ended February 28, 2018 | 73,550 |
Sub-Total | $ 572,039 |
Commitments (Details Textual)
Commitments (Details Textual) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Commitments [Abstract] | ||
Operating lease rent expense | $ 124,916 | $ 75,582 |
Lease expiration date | Jul. 31, 2017 |
Notes Payable - Related Parti62
Notes Payable - Related Parties (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Debt Instrument [Line Items] | ||
Totals | $ 1,234,368 | $ 734,368 |
Less: current maturities | 500,000 | |
Long-term portion | 734,368 | $ 734,368 |
Purchase order (PO) financing note [Member] | ||
Debt Instrument [Line Items] | ||
Totals | 561,824 | 561,824 |
Unsecured promissory note [Member] | ||
Debt Instrument [Line Items] | ||
Totals | 172,544 | $ 172,544 |
Secured Promissory Note [Member] | ||
Debt Instrument [Line Items] | ||
Totals | $ 500,000 |
Notes Payable - Related Parti63
Notes Payable - Related Parties (Detail Textual) - USD ($) | May. 10, 2013 | May. 31, 2015 | May. 31, 2014 | Feb. 28, 2015 | May. 27, 2015 |
Debt Instrument [Line Items] | |||||
Amortization of debt discount | $ 427,256 | ||||
Purchase order (PO) financing note [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate per month | 1.00% | ||||
Maturity date | May 15, 2013 | ||||
Amended maturity date | Oct. 14, 2014 | ||||
Annual interest rate | 10.00% | ||||
Maturity date description | On August 21, 2014, the note was further amended, extending the maturity date until October 1, 2016. | ||||
Reduction in interest rate | 10.00% | ||||
Monthly payments | $ 4,937 | ||||
Conversion feature, price per share | $ 0.35 | ||||
Conversion feature, value | $ 0 | ||||
Warrants to purchase share of common stock | 517,500 | ||||
Exercise price of warrants | $ 0.35 | ||||
Term of warrant | 3 years | ||||
Amortization of debt discount | $ 48,772 | ||||
Debt discount | 0 | ||||
Unsecured promissory note [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate per month | 10.00% | ||||
Maturity date | May 1, 2013 | ||||
Amended maturity date | Oct. 14, 2013 | ||||
Annual interest rate | 10.00% | ||||
Maturity date description | On August 21, 2014, the note was further amended, extending the maturity date until October 1, 2016. | ||||
Conversion feature, price per share | $ 0.35 | ||||
Conversion feature, value | $ 0 | ||||
Warrants to purchase share of common stock | 667,500 | ||||
Exercise price of warrants | $ 0.35 | ||||
Term of warrant | 3 years | ||||
Amortization of debt discount | 49,291 | ||||
Debt discount | $ 0 | ||||
Secured Promissory Note [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate per month | 8.00% | ||||
Secured Promissory Note | $ 500,000 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | May. 31, 2015 | Feb. 28, 2015 |
Short-term Debt [Line Items] | ||
Notes payable | $ 14,286,660 | $ 14,821,428 |
Less: current maturities | (14,286,660) | (14,821,428) |
Long-term portion | 0 | 0 |
Notes Payable [Member] | ||
Short-term Debt [Line Items] | ||
Notes payable | $ 14,286,660 | $ 14,821,428 |
Notes Payable (Details 1)
Notes Payable (Details 1) | May. 31, 2015USD ($) |
Notes Payable and Notes Payable - Related Parties [Abstract] | |
FY 2,016 | $ 14,786,660 |
Thereafter | 734,368 |
Total | $ 15,521,028 |
Notes Payable (Details Textual)
Notes Payable (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | |
Aug. 21, 2014 | May. 31, 2015 | May. 31, 2014 | |
Notes Payable (Textual) | |||
Total interest expense | $ 139,378 | $ 389,945 | |
Notes payable to Bank [Member] | |||
Notes Payable (Textual) | |||
Term Loan with Wells Fargo Bank | $ 15,000,000 | ||
Interest rate description | The agreement calls for a Libor +3% annual interest rate on funds outstanding. | ||
Debt instrument, maturity date | Feb. 21, 2016 | ||
Monthly principal payments | $ 178,572 |
Supplemental Cash Flows (Detail
Supplemental Cash Flows (Details) - USD ($) | 3 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Supplemental Non-Cash Investing and Financing Activities: | ||
Debt discount from fair value of embedded conversion feature | $ 0 | $ 603,165 |
Issuance of common shares for convertible debt and accrued interest | $ 0 | $ 63,000 |
Concentrations (Details)
Concentrations (Details) | 3 Months Ended | |
May. 31, 2015USD ($)CustomerVendor | May. 31, 2014USD ($) | |
Concentrations (Textual) | ||
FDIC insurance policy | $ 250,000 | |
Sales | $ 616,588 | $ 501,948 |
Major customers [Member] | Sales [Member] | ||
Concentrations (Textual) | ||
Concentration risk, Percentage | 49.80% | |
Sales | $ 306,914 | |
Number of customer | Customer | 1 | |
Major customers [Member] | Accounts Receivable [Member] | ||
Concentrations (Textual) | ||
Concentration risk, Percentage | 5.00% | |
Number of customer | Customer | 5 | |
Major vendors [Member] | Payable [Member] | ||
Concentrations (Textual) | ||
Concentration risk, Percentage | 5.00% | |
Number of vendor | Vendor | 4 | |
Major vendors [Member] | Purchases [Member] | ||
Concentrations (Textual) | ||
Concentration risk, Percentage | 10.30% | |
Cost of sales | $ 42,746 | |
Number of vendor | Vendor | 1 |
Subsequent Events (Details)
Subsequent Events (Details) - Jun. 09, 2015 - Subsequent Event [Member] - Series B Preferred Stock [Member] - USD ($) | Total |
Subsequent Events (Textual) | |
Sales of preferred series B shares | $ 6,000,000 |
Promissory note converted to preferred offering | $ 500,000 |
Subsequent event, description | The preferred shares are not convertible into common stock and provide for a 10% annual coupon, payable in cash or stock. |