Ourpets (OPCO) 10-Q 16 Nov 15 2015 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Oct. 16, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Entity Registrant Name	OURPETS CO
Entity Central Index Key	1,094,139
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q3
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		17,562,239

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 101,775	$ 192,448
Accounts receivable - trade, less allowance for doubtful accounts of $37,824 and $39,539	4,048,759	3,116,448
Inventories net of reserve	7,802,675	6,894,115
Prepaid expenses	467,126	478,593
Total current assets	12,420,335	10,681,604
PROPERTY AND EQUIPMENT
Computers and office equipment	1,020,239	883,163
Warehouse equipment	585,815	567,816
Leasehold improvements	289,217	276,952
Tooling	4,207,203	3,885,401
Construction in progress	222,573	157,031
Total	6,325,047	5,770,363
Less accumulated depreciation	4,457,795	4,000,815
Net property and equipment	1,867,252	1,769,548
OTHER ASSETS
Amortizable Intangible Assets, less amortization of $476,677 and $417,349	361,259	384,063
Intangible Assets	461,000	461,000
Goodwill	67,511	67,511
Deposits and other assets	18,003	18,003
Total other assets	907,773	930,577
Total assets	15,195,360	13,381,729
CURRENT LIABILITIES
Current maturities of long-term debt	311,470	601,632
Accounts payable - trade	1,244,885	1,489,982
Other accrued expenses	656,652	565,491
Total current liabilities	2,213,007	2,657,105
LONG-TERM LIABILITIES
Long-term debt - less current portion above	938,894	119,780
Revolving Line of Credit	3,473,032	2,862,032
Deferred Income Taxes	204,947	281,651
Total long term liabilities	4,616,873	3,263,463
Total liabilities	6,829,880	5,920,568
STOCKHOLDERS' EQUITY
COMMON STOCK, No par value; 50,000,000 shares authorized, 17,562,239 and 17,553,007 shares issued and outstanding at September 30, 2015 and December 31, 2014 respectively	5,031,766	5,031,766
PAID-IN CAPITAL	71,307	53,307
ACCUMULATED EARNINGS	1,817,245	930,926
Total stockholders' equity	8,365,480	7,461,161
Total liabilities and stockholders' equity	15,195,360	13,381,729
Convertible Preferred Stock [Member]
STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK	579,850	579,850
Series 2009 Preferred Stock [Member]
STOCKHOLDERS' EQUITY
CONVERTIBLE PREFERRED STOCK	865,312	865,312
Total stockholders' equity	$ 865,312	$ 865,312

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Class of Stock [Line Items]
Accounts receivable - trade, allowance for doubtful accounts	$ 37,824	$ 39,539
Amortization	$ 476,677	$ 417,349
COMMON STOCK, par value per share	$ 0	$ 0
COMMON STOCK, shares authorized	50,000,000	50,000,000
COMMON STOCK, shares issued	17,562,239	17,553,007
COMMON STOCK, shares outstanding	17,562,239	17,553,007
Convertible Preferred Stock [Member]
Class of Stock [Line Items]
CONVERTIBLE PREFERRED STOCK, par or stated value per share	$ 0	$ 0
CONVERTIBLE PREFERRED STOCK, convertible into Common stock for each preferred stock rate	10	10
CONVERTIBLE PREFERRED STOCK, shares authorized	4,825,000	4,825,000
CONVERTIBLE PREFERRED STOCK, shares issued	63,500	63,500
CONVERTIBLE PREFERRED STOCK, shares outstanding	63,500	63,500
Series 2009 Preferred Stock [Member]
Class of Stock [Line Items]
CONVERTIBLE PREFERRED STOCK, par or stated value per share	$ 0	$ 0
CONVERTIBLE PREFERRED STOCK, convertible into Common stock for each preferred stock rate	10	10
CONVERTIBLE PREFERRED STOCK, shares authorized	175,000	175,000
CONVERTIBLE PREFERRED STOCK, shares issued	123,616	123,616
CONVERTIBLE PREFERRED STOCK, shares outstanding	123,616	123,616

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net revenue	$ 5,986,645	$ 5,601,011	$ 17,170,795	$ 16,175,692
Cost of goods sold	3,974,468	3,960,260	11,746,204	11,462,593
Gross profit on sales	2,012,177	1,640,751	5,424,591	4,713,099
Selling, general and administrative expenses	1,363,154	1,487,983	3,996,794	4,126,635
Income from operations	649,023	152,768	1,427,797	586,464
Other income	(14,582)	(6,051)	(40,582)	(77,713)
Interest expense	35,919	31,153	85,221	97,519
Income before income taxes	627,686	127,666	1,383,158	566,658
Income tax expense	217,236	49,915	496,839	206,723
Net income	$ 410,450	$ 77,751	$ 886,319	$ 359,935
Basic and Diluted Earnings Per Common Share After Dividend Requirements For Preferred Stock:
Net Income	$ 0.02	$ 0	$ 0.04	$ 0.02
Weighted average number of common shares outstanding used to calculate basic earnings per share	17,562,239	17,056,910	17,558,085	16,884,581
Weighted average number of common and equivalent shares outstanding used to calculate diluted earnings per share	19,824,793	18,037,565	19,220,115	18,160,977

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($)	Total	Series 2009 Preferred Stock [Member]	Preferred Stock [Member]	Common Stock [Member]	Paid-In Capital [Member]	Accumulated Earnings (Deficit) [Member]
Balance at Dec. 31, 2014	$ 7,461,161	$ 865,312	$ 579,850	$ 5,031,766	$ 53,307	$ 930,926
Balance, shares at Dec. 31, 2014		123,616	63,500	17,553,007
Common Stock issued upon exercise of stock options
Common Stock issued upon exercise of stock options, shares				9,232
Net income	$ 886,319					$ 886,319
Stock-Based compensation expense	18,000				$ 18,000
Balance at Sep. 30, 2015	$ 8,365,480	$ 865,312	$ 579,850	$ 5,031,766	$ 71,307	$ 1,817,245
Balance, shares at Sep. 30, 2015		123,616	63,500	17,562,239

CONDENSED CONSOLIDATED STATEME6

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 886,319	$ 359,935
Adjustments to reconcile net income to net cash used in operating activities:
Loss on Disposal of Fixed Assets	20,656	12,323
Depreciation expense	456,981	430,988
Amortization expense	59,328	58,491
Stock option expense	18,000	9,000
(Increase) decrease in assets:
Accounts receivable - trade	(932,311)	(417,090)
Inventories	(908,560)	(1,848,425)
Prepaid expenses	11,467	33,901
Amortizable Intangible Asset Additions	(36,524)	(67,154)
Increase (decrease) in liabilities:
Accounts payable - trade	(245,097)	933,303
Accrued expenses	91,161	(415,195)
Deferred tax liabilities	(76,704)	(58,234)
Net cash used in operating activities	(655,284)	(968,157)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(490,341)	(398,816)
Net cash used in investing activities	(490,341)	$ (398,816)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal borrowings of long-term debt	1,000,000
Principal payments on long-term debt	(556,048)	$ (335,289)
Borrowings on bank line of credit	$ 611,000	1,649,000
Issuances of Common Stock		72,500
Net cash provided by financing activities	$ 1,054,952	1,386,211
Net increase (decrease) in cash	(90,673)	19,238
CASH AT BEGINNING OF PERIOD	192,448	57,975
CASH AT END OF PERIOD	101,775	77,213
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid	126,552	81,856
Income taxes paid	472,150	425,466
SUPPLEMENTAL DISCLOSURE OF NON CASH TRANSACTIONS
Non cash exercise of stock options/ warrants	6,933	$ 539,128
Tooling Obtained through Asset Purchase	$ 85,000

ORGANIZATION AND NATURE OF OPER

ORGANIZATION AND NATURE OF OPERATIONS	9 Months Ended
	Sep. 30, 2015
ORGANIZATION AND NATURE OF OPERATIONS [Abstract]
ORGANIZATION AND NATURE OF OPERATIONS	ORGANIZATION AND NATURE OF OPERATIONS The management of OurPet's Company originally founded Napro, Inc. (“Napro”), an Ohio corporation, in 1985 as an enterprise for launching new ventures and acquiring companies in various lines of business. In February 1996, Napro formed a wholly-owned Ohio subsidiary, Virtu Company (“Virtu”), to market proprietary products to the retail pet business under the OurPet's label. Napro then changed its name to OurPet's Company effective March 19, 1998.

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2015
BASIS OF PRESENTATION [Abstract]
BASIS OF PRESENTATION	BASIS OF PRESENTATION OurPet's Company (“OurPet's” or the “Company”) follows accounting standards set by the Financial Accounting Standards Board (“FASB”). FASB sets generally accepted accounting principles to ensure the consistent reporting of the financial condition, results of operations, and cash flows. The accompanying unaudited condensed consolidated financial statements for the nine month periods ended September 30, 2015, and September 30, 2014, have been prepared in accordance with such generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q, including the requirements of Article 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles for complete financial statements. They include the accounts of OurPet's and its wholly owned subsidiaries (collectively, the “Company”), Virtu and SMP Company, Incorporated. The December 31, 2014, Condensed Consolidated Balance Sheet information contained in this Form 10-Q was derived from the 2014 audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America for an annual report. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the interim periods presented have been included. All intercompany transactions have been eliminated. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the fiscal year ended December 31, 2014, that are included in the Company's Form 10-K filed with the Securities and Exchange Commission on March 31, 2015. Operating results for the nine months ended September 30, 2015, are not necessarily indicative of the results that may be expected for future fiscal periods.

USE OF ESTIMATES

USE OF ESTIMATES	9 Months Ended
	Sep. 30, 2015
USE OF ESTIMATES [Abstract]
USE OF ESTIMATES	USE OF ESTIMATES The preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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 these estimates.

INVENTORIES

INVENTORIES	9 Months Ended
	Sep. 30, 2015
INVENTORIES [Abstract]
INVENTORIES	INVENTORIES Inventories are carried at the lower of cost, first-in, first-out method, or market. All inventories are pledged as collateral for bank loans. Inventories at September 30, 2015, and September 30, 2014, consisted of: 2015 2014 Finished goods $ 6,458,338 $ 6,271,740 Components, packaging and work in process 1,560,803 1,589,031 Inventory reserve (216,466 ) (135,622 ) Total $ 7,802,675 $ 7,725,149 During the nine months ended September 30, 2015, the Company recorded additional inventory reserve charges of $ 171,340 Changes to the inventory reserve during 2015 and 2014 are shown below: 2015 2014 Beginning balance $ 159,076 $ 134,989 Increases to reserve 171,340 107,460 Write offs against reserve (113,950 ) (106,827 ) Ending balance $ 216,466 $ 135,622 During 2015 and 2014, monthly accruals were and continue to be made to account for obsolete and excess inventory. Quarterly reviews are also performed to determine if additional end of quarter adjustments are needed. It was determined that no additional adjustment was needed for the end of the third quarter of 2015. The Company will continue its policy of regularly reviewing inventory quantities on hand based on related service levels and functionality. Carrying cost will be reduced to net realizable value for inventories in which their cost exceeds their utility due to changes in marketing and sales strategies, obsolescence, changes in price levels, or other causes. Furthermore, if future demand or market conditions for the Company's products are less favorable than forecasted or if unforeseen technological changes negatively impact the utility of certain products or component inventory, the Company may be required to record additional inventory reserves, which would negatively affect its results of operations in the period when the inventory reserve adjustments are recorded. Once established, write downs of inventories are considered permanent adjustments to the cost basis of the obsolete or excess inventories.

ACCOUNTS RECEIVABLE

ACCOUNTS RECEIVABLE	9 Months Ended
	Sep. 30, 2015
ACCOUNTS RECEIVABLE [Abstract]
ACCOUNTS RECEIVABLE	ACCOUNTS RECEIVABLE Accounts receivable have been adjusted for all known uncollectible accounts. An allowance for possible bad debts was established on September 30, 2015, and December 31, 2014, in the amounts of $ 37,824 39,539

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2015
RELATED PARTY TRANSACTIONS [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS We lease a 64,000-square-foot production, warehouse, and office facility in Fairport Harbor, Ohio, and a 26,000 We first entered into a 10 36,000 27,250 29,013 30,827 32,587 34,347 29,013 10 We entered into a second lease with Senk Properties for our facility in Mentor, Ohio, on December 30, 2011. Payments for this lease started on January 1, 2012, and are due on the first day of each month. The monthly rental rate schedule is: $ 8,542 9,083 9,732 10,056 10,597 10,813 9,083 10 Lease expenses resulting from the foregoing agreements were $ 362,843 On January 15, 2007, and November 25, 2008, the Company entered into agreements with Nottingham-Spirk Design Associates, Inc. (“NSDA”). One of the principals of NSDA is John W. Spirk, Jr., a member of the Company's board of directors and a shareholder. Also, NSDA indirectly owns shares of the Company through its ownership in Pet Zone Products, Ltd., a significant shareholder of the Company. The agreements address the invoicing and payment of NSDA's fees and expenses related to the development of certain products on behalf of the Company. The Company has been invoiced $ 781,061 470,496 50,000 50,454 260,565 8,050 On November 8, 2012, the Company received $350,000 in funds and issued $ 350,000 50,000 100,000 three 3 6.25 November 8, 2015 350,000 .50 352,670 .4962

REVENUE RECOGNITION

REVENUE RECOGNITION	9 Months Ended
	Sep. 30, 2015
REVENUE RECOGNITION [Abstract]
REVENUE RECOGNITION	REVENUE RECOGNITION With respect to revenue from product sales, revenue is recognized only upon shipment of products to customers. The Company derives its revenues from the sale of proprietary pet products under the OurPet's®, PetZone®, SmartScoop®, EcoPure Naturals®, Play-N-Squeak®, Durapet®, Flappy®, Go! Cat! Go!®, Eat®, Smarter Toys®, Clipnosis®, Cosmic Pet™, and Festiva® brand names. Net revenue is comprised of gross sales less discounts given to distributors, returns and allowances. For the three months ended September 30, 2015, 34.3 two 1,362,539 22.8 689,692 11.5 For the three months ended September 30, 2014, 24.6 one 1,379,427 For the nine months ended September 30, 2015, 25.4 one $ 4,362,458 For the nine months ended September 30, 2014, 26.3 one 4,256,167

STOCK OPTIONS

STOCK OPTIONS	9 Months Ended
	Sep. 30, 2015
STOCK OPTIONS [Abstract]
STOCK OPTIONS	STOCK OPTIONS “Share-Based Payment” standards require the grant-date value of all share-based payment awards that are expected to vest, including employee share options, to be recognized as employee compensation expense over the requisite service period. The Company adopted the modified prospective transition method on January 1, 2006. Under this transition method, the Company (1) did not restate any prior periods and (2) is recognizing compensation expense for all share-based payment awards that were outstanding, but not yet vested, as of January 1, 2006, based upon the same estimated grant-date fair values and service periods used to prepare the pro-forma disclosures. The amount of compensation expense recognized in 2015 and 2014 as a result of stock options was $ 18,000 9,000 On February 13, 2012, the board of directors, by unanimous written consent, approved a second amendment to the 2008 Stock Option Plan (the “Plan”) whereby the maximum number of shares reserved and available for issuance under the plan was increased by 750,000 1,000,000 1,750,000

NET INCOME PER COMMON SHARE

NET INCOME PER COMMON SHARE	9 Months Ended
	Sep. 30, 2015
NET INCOME PER COMMON SHARE [Abstract]
NET INCOME PER COMMON SHARE	NET INCOME PER COMMON SHARE Basic and diluted net income per common share is based on the net income attributable to common stockholders after preferred stock dividend requirements for the period, divided by the weighted average number of common and equivalent dilutive shares outstanding during the period. Potential common shares whose effect would be anti-dilutive have not been included. As of September 30, 2015, common shares that are or could be potentially dilutive include 573,360 0.41 1.27 950,672 0.42 0.98 635,000 1.00 1,236,160 0.70 623,708 0.41 1.27 1,125,965 0.42 0.98 635,000 1.00 1,236,160 .70

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2015
INCOME TAXES [Abstract]
INCOME TAXES	INCOME TAXES During the first nine months of 2015, the Company reduced its deferred tax liabilities by approximately $ 77,000 281,651 204,947 542,744 31,926 During the first nine months of 2014, the Company reduced its deferred tax liabilities by $ 58,234 245,775 187,541 332,207 19,542 The Company follows provisions of uncertain tax positions as addressed in FASB Accounting Standards Codification 740-10-65-1. Based on management's evaluation, the Company has no position at September 30, 2015, or December 31, 2014, for which there is uncertainty about deductibility. The Company is no longer subject to U.S. Federal and state income tax examinations by taxing authorities for years before December 31, 2012.

FAIR VALUE OF FINANCIAL INSTRUM

FAIR VALUE OF FINANCIAL INSTRUMENTS	9 Months Ended
	Sep. 30, 2015
FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]
FAIR VALUE OF FINANCIAL INSTRUMENTS	FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value estimates discussed herein are based on certain market assumptions and pertinent information available to management as of December 31, 2014, and September 30, 2015. A fair value hierarchy that prioritizes the inputs used to measure fair value and requires fair value measurements to be categorized based on the observability of those inputs has been established by the applicable accounting guidance. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). The respective carrying value of certain balance sheet financial instruments approximate their fair values and are classified within level 1 of the fair value hierarchy. These financial instruments include cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses. The fair value of the Company's long-term debt is estimated based upon the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The carrying value approximates the fair value of the debt.

PROFESSIONAL EMPLOYER ORGANIZAT

PROFESSIONAL EMPLOYER ORGANIZATION	9 Months Ended
	Sep. 30, 2015
PROFESSIONAL EMPLOYER ORGANIZATION [Abstract]
PROFESSIONAL EMPLOYER ORGANIZATION	PROFESSIONAL EMPLOYER ORGANIZATION In early January 2014, the Company contracted with a Professional Employer Organization (“PEO”) which co-employs the Company's employees. The PEO and the Company share and allocate responsibilities and liabilities. The PEO assumes much of the responsibility and liability for the business of employment such as risk management, human resources (“HR”) management, benefits administration, workers compensation, payroll and payroll tax compliance. The Company retains the responsibility for the hiring, firing and managing its employees and operations. The purpose of the Company's contracting with a PEO was to strengthen the Company's HR functions and provide its employees with a wider range of benefits at more affordable prices. The contractual arrangement can be terminated with a 30

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2015
SUBSEQUENT EVENTS [Abstract]
SUBSEQUENT EVENTS	SUBSEQUENT EVENTS The Company has performed an evaluation of subsequent events and noted none to report

RECENT ACCOUNTING PRONOUNCEMENT

RECENT ACCOUNTING PRONOUNCEMENTS	9 Months Ended
	Sep. 30, 2015
RECENT ACCOUNTING PRONOUNCEMENTS [Abstract]
RECENT ACCOUNTING PRONOUNCEMENTS	RECENT ACCOUNTING PRONOUNCEMENTS In June 2014, the FASB issued an Accounting Standards Update (“ASU”) related to stock compensation. The new standard requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The amendments in this ASU will be effective for us beginning the first interim period during 2016 and can be applied either prospectively or retrospectively to all awards outstanding as of the beginning of the earliest annual period presented as an adjustment to opening retained earnings. Early adoption is permitted. We are evaluating the impact of adoption of this ASU on our financial condition, results of operations and cash flows. In May 2014, the FASB issued an accounting standards update with new guidance on recognizing revenue from contracts with customers. The standards update outlines a single comprehensive model for entities to utilize to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that will be received in exchange for the goods and services. Additional disclosures will also be required to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The standards update is effective for fiscal years beginning after December 15, 2017, which has been delayed from the original effective date of December 15, 2016. Early adoption is permitted as of the original effective date. We are currently evaluating the impact of adopting this standards update on our consolidated financial statements and we have not yet selected a transition method. In August 2014, the FASB issued ASU No. 2014-15, “Disclosures of Uncertainties About an Entity's Ability to Continue as a Going Concern.” The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company does not expect that this guidance will have a material impact on its financial position, results of operations or cash flows. In January 2015, the FASB issued ASU No. 2015-01, Income Statement - Extraordinary and Unusual Items. ASU 2015-01 will eliminate from U.S. GAAP the concept of extraordinary items and will no longer require an entity to separately classify, present, and disclose extraordinary events and transactions. ASU 2015-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015, and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not believe the adoption of this guidance will have a material impact on its consolidated financial statements or related footnote disclosures. In February 2015, the FASB issued ASU 2015-02, “Consolidation: Amendments to the Consolidation Analysis.” This standard update is intended to improve targeted areas of consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. This ASU simplifies consolidation accounting by reducing the number of consolidation models and improves current U.S. GAAP by (1) placing more emphasis on risk of loss when determining a controlling financial interest; (2) reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity; and (3) changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or variable interest entities. The amendments in this ASU are effective for reporting periods beginning after December 15, 2015, with early adoption permitted. Entities can transition to the standard either retrospectively or as a cumulative effect adjustment as of the date of adoption. The adoption of ASU 2015-02 is not expected to have an impact on our consolidated financial statements. In April 2015, a new accounting standard was issued that amends the presentation for debt issuance costs. Upon adoption, such costs shall be presented on our consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability and not as a deferred charge presented in Other Assets on our consolidated balance sheets. This new standard will be effective for interim and annual periods beginning on January 1, 2016, and is required to be retrospectively adopted. Adoption of this new standard is not expected to have a material impact on our consolidated balance sheets or related disclosures. In April 2015, the FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement.” The guidance provides clarification on whether a cloud computing arrangement includes a software license. If a software license is included, the customer should account for the license consistent with its accounting of other software licenses. If a software license is not included, the arrangement should be accounted for as a service contract. The update is effective for reporting periods beginning after December 15, 2015, and for interim periods within those fiscal years, with early adoption permitted. Entities have the option of applying either a full retrospective approach to all periods presented or a prospective approach to all arrangements entered into or materially modified after the effective date. We are currently evaluating the effect that this pronouncement will have on our consolidated financial statements and related disclosures.

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2015
INVENTORIES [Abstract]
Schedule of Inventories	2015 2014 Finished goods $ 6,458,338 $ 6,271,740 Components, packaging and work in process 1,560,803 1,589,031 Inventory reserve (216,466 ) (135,622 ) Total $ 7,802,675 $ 7,725,149
Schedule of Changes to Inventory Reserves	2015 2014 Beginning balance $ 159,076 $ 134,989 Increases to reserve 171,340 107,460 Write offs against reserve (113,950 ) (106,827 ) Ending balance $ 216,466 $ 135,622

INVENTORIES (Schedule of Invent

INVENTORIES (Schedule of Inventories) (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
INVENTORIES [Abstract]
Finished goods	$ 6,458,338		$ 6,271,740
Components, packaging and work in process	1,560,803		1,589,031
Inventory reserve	(216,466)	$ (159,076)	(135,622)	$ (134,989)
Total	$ 7,802,675	$ 6,894,115	$ 7,725,149

INVENTORIES (Schedule of Change

INVENTORIES (Schedule of Changes to Inventory Reserve) (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
INVENTORIES [Abstract]
Beginning balance	$ 159,076	$ 134,989
Increases to reserve	171,340	107,460
Write offs against reserve	(113,950)	(106,827)
Ending balance	$ 216,466	$ 135,622

ACCOUNTS RECEIVABLE (Details)

ACCOUNTS RECEIVABLE (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
ACCOUNTS RECEIVABLE [Abstract]
Accounts receivable - trade, allowance for doubtful accounts	$ 37,824	$ 39,539

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details)	9 Months Ended	34 Months Ended
	Sep. 30, 2015USD ($)ft²$ / sharesshares	Aug. 31, 2015USD ($)$ / sharesshares
Related Party Transaction [Line Items]
Lease expense	$ 362,843
SENK Properties, First Lease Agreement [Member]
Related Party Transaction [Line Items]
Current monthly rental	$ 29,013
Lease term	10 years 6 months
Leased property | ft²	36,000
Lease extension period	10 years
SENK Properties, First Lease Agreement [Member] | Year 1 [Member]
Related Party Transaction [Line Items]
Current monthly rental	$ 27,250
SENK Properties, First Lease Agreement [Member] | Year 2 [Member]
Related Party Transaction [Line Items]
Current monthly rental	27,250
SENK Properties, First Lease Agreement [Member] | Year 3 [Member]
Related Party Transaction [Line Items]
Current monthly rental	29,013
SENK Properties, First Lease Agreement [Member] | Year 4 [Member]
Related Party Transaction [Line Items]
Current monthly rental	29,013
SENK Properties, First Lease Agreement [Member] | Year 5 [Member]
Related Party Transaction [Line Items]
Current monthly rental	30,827
SENK Properties, First Lease Agreement [Member] | Year 6 [Member]
Related Party Transaction [Line Items]
Current monthly rental	30,827
SENK Properties, First Lease Agreement [Member] | Year 7 [Member]
Related Party Transaction [Line Items]
Current monthly rental	30,827
SENK Properties, First Lease Agreement [Member] | Year 8 [Member]
Related Party Transaction [Line Items]
Current monthly rental	32,587
SENK Properties, First Lease Agreement [Member] | Year 9 [Member]
Related Party Transaction [Line Items]
Current monthly rental	32,587
SENK Properties, First Lease Agreement [Member] | Thereafter [Member]
Related Party Transaction [Line Items]
Current monthly rental	34,347
SENK Properties, Second Lease Agreement [Member]
Related Party Transaction [Line Items]
Current monthly rental	$ 9,083
Leased property | ft²	26,000
Lease extension period	10 years
Lease agreement date	Dec. 30, 2011
SENK Properties, Second Lease Agreement [Member] | Year 1 [Member]
Related Party Transaction [Line Items]
Current monthly rental	$ 8,542
SENK Properties, Second Lease Agreement [Member] | Year 2 [Member]
Related Party Transaction [Line Items]
Current monthly rental	8,542
SENK Properties, Second Lease Agreement [Member] | Year 3 [Member]
Related Party Transaction [Line Items]
Current monthly rental	9,083
SENK Properties, Second Lease Agreement [Member] | Year 4 [Member]
Related Party Transaction [Line Items]
Current monthly rental	9,083
SENK Properties, Second Lease Agreement [Member] | Year 5 [Member]
Related Party Transaction [Line Items]
Current monthly rental	9,732
SENK Properties, Second Lease Agreement [Member] | Year 6 [Member]
Related Party Transaction [Line Items]
Current monthly rental	9,732
SENK Properties, Second Lease Agreement [Member] | Year 7 [Member]
Related Party Transaction [Line Items]
Current monthly rental	10,056
SENK Properties, Second Lease Agreement [Member] | Year 8 [Member]
Related Party Transaction [Line Items]
Current monthly rental	10,597
SENK Properties, Second Lease Agreement [Member] | Year 9 [Member]
Related Party Transaction [Line Items]
Current monthly rental	10,597
SENK Properties, Second Lease Agreement [Member] | Year 10 [Member]
Related Party Transaction [Line Items]
Current monthly rental	10,813
NSDA [Member]
Related Party Transaction [Line Items]
Amount of transaction	781,061
Payments to supplier	470,496
Value of stock issued	$ 50,000
Shares issued for services | shares	50,454
Accrued balance to related party	$ 260,565
Fees accrued	$ 8,050
Notes payable [Member]
Related Party Transaction [Line Items]
Subordinated notes		$ 350,000
Term		3 years
Spread over prime		3.00%
Notes, stated interest rate		6.25%
Notes maturity date		Nov. 8, 2015
Warrants issued | shares	352,670	350,000
Exercise Price | $ / shares	$ 0.4962	$ 0.50
Notes payable [Member] | SENK Properties, First Lease Agreement [Member]
Related Party Transaction [Line Items]
Subordinated notes		$ 50,000
Notes payable [Member] | Pet Zone Products, Ltd. [Member]
Related Party Transaction [Line Items]
Subordinated notes		$ 100,000

REVENUE RECOGNITION (Details)

REVENUE RECOGNITION (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015USD ($)Customers	Sep. 30, 2014USD ($)Customers	Sep. 30, 2015USD ($)Customers	Sep. 30, 2014USD ($)Customers
Revenue from External Customer [Line Items]
Number of major customers | Customers	2	1	1	1
Major Customer One [Member]
Revenue from External Customer [Line Items]
Revenue	$ 1,362,539	$ 1,379,427	$ 4,362,458	$ 4,256,167
Major Customer One [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Revenue from External Customer [Line Items]
Percentage of revenue from major customer	22.80%	24.60%	25.40%	26.30%
Major Customer Two [Member]
Revenue from External Customer [Line Items]
Revenue	$ 689,692
Major Customer Two [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Revenue from External Customer [Line Items]
Percentage of revenue from major customer	11.50%
Two Major Customer [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Revenue from External Customer [Line Items]
Percentage of revenue from major customer	34.30%

STOCK OPTIONS (Details)

STOCK OPTIONS (Details) - USD ($)	Feb. 13, 2012	Sep. 30, 2015	Sep. 30, 2014	May. 25, 2012	Dec. 31, 2011
STOCK OPTIONS [Abstract]
Stock option compensation expense		$ 18,000	$ 9,000
Additional Number of shares reserved and available for issuance under stock option plan	750,000
Number of shares reserved and available for issuance under stock option plan				1,750,000	1,000,000

NET INCOME PER COMMON SHARE (De

NET INCOME PER COMMON SHARE (Details) - $ / shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive stock options	573,360	623,708
Potentially dilutive options, minimum exercise price	$ 0.41	$ 0.41
Potentially dilutive options, maximum exercise price	$ 1.27	$ 1.27
Warrant [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive stock options	950,672	1,125,965
Potentially dilutive options, minimum exercise price	$ 0.42	$ 0.42
Potentially dilutive options, maximum exercise price	$ 0.98	$ 0.98
Original Series of Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in computation of diluted earning per share	635,000	635,000
Preferred stock, conversion rate	$ 1	$ 1
Second Series 2009 Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potentially dilutive shares not included in computation of diluted earning per share	1,236,160	1,236,160
Preferred stock, conversion rate	$ 0.70	$ 0.70

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Operating Loss Carryforwards [Line Items]
Decrease in deferred tax liabilities	$ 76,704	$ 58,234
Deferred tax liabilities	204,947	187,541	$ 281,651	$ 245,775
Federal income tax expense payable	542,744	332,207
Local income tax expense payable	$ 31,926	$ 19,542

PROFESSIONAL EMPLOYER ORGANIZ30

PROFESSIONAL EMPLOYER ORGANIZATION (Details)	9 Months Ended
	Sep. 30, 2015
PROFESSIONAL EMPLOYER ORGANIZATION [Abstract]
Notice Period to Terminate Contractual Arrangement	30 days