Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Feb. 26, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | Medtainer, Inc. | |
Entity Central Index Key | 0001096950 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Shell Company | false | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Interactive Data Current | No | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 56,700,979 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
CURRENT ASSETS: | ||
Cash | $ 53,108 | $ 17,374 |
Accounts receivable | 48,587 | 67,874 |
Inventories | 181,860 | 172,884 |
Prepaid expenses | 2,049 | |
TOTAL CURRENT ASSETS | 285,604 | 258,132 |
Property and equipment, net of accumulated depreciation of $105,387 and $90,140, respectively | 48,356 | 62,434 |
Intangible assets, net of accumulated amortization of $85,920 and $45,514 | 1,446,080 | 1,486,486 |
Goodwill | 1,020,314 | 1,020,314 |
Security deposits | 7,699 | 7,699 |
TOTAL ASSETS | 2,808,053 | 2,835,065 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 247,634 | 189,217 |
Accrued interest payable | 143,639 | 124,633 |
Payroll liabilities payable | 119,562 | 111,128 |
Customer deposits payable | 96,002 | 51,496 |
Convertible notes payable | 81,172 | 81,172 |
Notes payable | 373,959 | 373,959 |
Loan payable - shareholder | 517,322 | 385,660 |
Capital lease payable | 9,522 | |
TOTAL CURRENT LIABILITIES | 1,579,290 | 1,326,787 |
SHAREHOLDERS' DEFICIENCY | ||
Preferred stock, without par value, issuable in series, 10,000,000 shares authorized: none issued | ||
Common stock, $0.00001 par value, 100,000,000 shares authorized: 56,700,979 issued and outstanding shares at June 30, 2019, and 55,499,106 issued and outstanding shares outstanding at December 31, 2018 | 567 | 555 |
Additional paid in capital | 5,604,304 | 5,034,636 |
Accumulated deficit | (4,376,108) | (3,526,913) |
TOTAL STOCKHOLDERS' DEFICIENCY | 1,228,763 | 1,508,278 |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY | $ 2,808,053 | $ 2,835,065 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Office Equipment Net Depreciation | $ 105,387 | $ 90,140 |
Intangible Assets Net Accumulated Amortization | $ 85,920 | $ 45,514 |
Preferred Stock Par Value | $ 0 | $ 0 |
Preferred Stock Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock Shares Issued | 0 | 0 |
Preferred Stock Shares Outstanding | 0 | 0 |
Common Stock Par Value | $ 0.00001 | $ 0.00001 |
Common Stock Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock Shares Issued | 56,700,979 | 55,499,106 |
Common Stock Shares Outstanding | 56,700,979 | 55,499,106 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 431,627 | $ 552,147 | $ 1,036,064 | $ 1,196,498 |
Cost of goods sold | 208,325 | 245,952 | 471,484 | 502,038 |
Gross profit | 223,302 | 306,195 | 564,580 | 694,460 |
Operating expenses: | ||||
Advertising and marketing | 11,962 | 20,259 | 27,634 | 32,802 |
Depreciation and amortization expense | 27,824 | 17,677 | 55,647 | 22,677 |
Professional fees | 61,655 | 17,975 | 80,484 | 27,476 |
Share Based Compernsation | 149,038 | 569,680 | ||
Payroll expenses | 305,652 | 304,738 | 599,009 | 604,610 |
General and administrative | 35,207 | 40,458 | 61,836 | 82,245 |
Total operating expenses (income) | 591,338 | 401,107 | 1,394,290 | 769,810 |
Operating loss | (368,036) | (94,912) | (829,710) | (75,350) |
Non-operating income (expense): | ||||
Interest expense | (9,601) | (10,389) | (19,485) | (19,943) |
(Loss) Gain on derivative liability | (849) | 2,131 | ||
Non-operating income (expense) | (9,601) | (11,238) | (19,485) | (17,812) |
Loss before income taxes | (377,637) | (106,150) | (849,195) | (93,162) |
Income tax provision benefit | ||||
Net loss | $ (377,637) | $ (106,150) | $ (849,195) | $ (93,162) |
Basic and diluted loss per common share | $ (0.01) | $ 0 | $ (0.02) | $ 0 |
Diluted loss per share | $ (0.01) | $ 0 | $ (0.01) | $ 0 |
Basic weighted average common shares outstanding | 56,402,635 | 53,138,307 | 56,328,048 | 52,906,043 |
Diluted weighted average common shares outstanding | 57,000,978 | 53,138,307 | 57,000,150 | 52,906,043 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (849,195) | $ (93,162) |
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||
Depreciation expense | 15,243 | 10,000 |
Share-based Compensation | 569,680 | |
Amortization expense | 40,404 | 12,677 |
Gain on change in fair value of derivative liability | (2,131) | |
Decrease (Increase) in operating assets: | ||
Accounts receivable | 19,287 | (29,946) |
Inventories | (8,974) | 13,196 |
Prepaid Expenses | (2,049) | |
Accounts payable and accrued expenses | 58,417 | 28,397 |
Accrued interest payable | 19,006 | 16,000 |
Payroll liabilities payable | 8,434 | (25,190) |
Customer deposits payable | 44,506 | |
NET CASH USED IN OPERATING ACTIVITIES | (85,241) | (70,159) |
INVESTING ACTIVITIES: | ||
Payment of security deposits | (1,071) | |
Acqusition of property and equipment | (1,165) | (12,420) |
NET CASH USED IN INVESTING ACTIVITIES | (1,165) | (13,491) |
FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock | 120,000 | |
Repayment of notes payable | (100,000) | |
Principal payments on capital lease obligations | (9,522) | (20,058) |
Proceeds from stockholder loan | 386,265 | 94,000 |
Repayment of stockholder loan | (254,603) | (20,000) |
NET CASH PROVIDED USED IN FINANCING ACTIVITIES | 122,140 | 73,942 |
INCREASE (DECREASE) IN CASH | 35,734 | (9,708) |
CASH - BEGINNING OF YEAR | 17,374 | 22,656 |
CASH - END OF YEAR | 53,108 | 12,948 |
Non-cash financing activities | ||
Common stock issued for acquisition of intangible assets | $ 2,552,314 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2017 | 52,495,113 | |||
Beginning Balance, Value at Dec. 31, 2017 | $ 525 | $ 1,536,002 | $ (2,252,653) | $ (716,126) |
Issuance of common stock in private placement, Shares | 120,000 | |||
Issuance of common stock in private placement, Value | $ 1 | 119,999 | 120,000 | |
Net loss | 12,988 | 12,988 | ||
Ending Balance, Shares at Mar. 31, 2018 | 52,615,113 | |||
Ending Balance, Value at Mar. 31, 2018 | $ 526 | 1,656,001 | (2,239,665) | (583,138) |
Beginning Balance, Shares at Dec. 31, 2017 | 52,495,113 | |||
Beginning Balance, Value at Dec. 31, 2017 | $ 525 | 1,536,002 | (2,252,653) | (716,126) |
Net loss | (93,162) | |||
Ending Balance, Shares at Jun. 30, 2018 | 55,246,365 | |||
Ending Balance, Value at Jun. 30, 2018 | $ 552 | 4,208,289 | (2,345,815) | 1,863,026 |
Beginning Balance, Shares at Mar. 31, 2018 | 52,615,113 | |||
Beginning Balance, Value at Mar. 31, 2018 | $ 526 | 1,656,001 | (2,239,665) | (583,138) |
Common Stock issued upon acquisition of Intangible Assets, Shares | 2,631,252 | |||
Common Stock issued upon acquisition of Intangible Assets, Value | $ 26 | 2,552,288 | 2,552,314 | |
Net loss | (106,150) | (106,150) | ||
Ending Balance, Shares at Jun. 30, 2018 | 55,246,365 | |||
Ending Balance, Value at Jun. 30, 2018 | $ 552 | 4,208,289 | (2,345,815) | 1,863,026 |
Beginning Balance, Shares at Dec. 31, 2018 | 55,499,106 | |||
Beginning Balance, Value at Dec. 31, 2018 | $ 555 | 5,034,636 | (3,526,913) | 1,508,278 |
Common stock issued in reverse split, Shares | 1,873 | |||
Stock-based compensation, Shares | 900,000 | |||
Stock-based compensation, Value | $ 9 | 420,633 | 420,642 | |
Net loss | (471,558) | (471,558) | ||
Ending Balance, Shares at Mar. 31, 2019 | 56,400,979 | |||
Ending Balance, Value at Mar. 31, 2019 | $ 564 | 5,455,269 | (3,998,471) | 1,457,362 |
Beginning Balance, Shares at Dec. 31, 2018 | 55,499,106 | |||
Beginning Balance, Value at Dec. 31, 2018 | $ 555 | 5,034,636 | (3,526,913) | 1,508,278 |
Net loss | (849,195) | |||
Ending Balance, Shares at Jun. 30, 2019 | 56,700,979 | |||
Ending Balance, Value at Jun. 30, 2019 | $ 567 | 5,604,304 | (4,376,108) | 1,228,763 |
Beginning Balance, Shares at Mar. 31, 2019 | 56,400,979 | |||
Beginning Balance, Value at Mar. 31, 2019 | $ 564 | 5,455,269 | (3,998,471) | 1,457,362 |
Stock-based compensation, Shares | 300,000 | |||
Stock-based compensation, Value | $ 3 | 149,035 | 149,038 | |
Net loss | (377,637) | (377,637) | ||
Ending Balance, Shares at Jun. 30, 2019 | 56,700,979 | |||
Ending Balance, Value at Jun. 30, 2019 | $ 567 | $ 5,604,304 | $ (4,376,108) | $ 1,228,763 |
Business
Business | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Note 1: BUSINESS Medtainer, Inc. (the “Company”) is in the business of designing, manufacturing, branding and selling proprietary plastic medical grade containers that can store pharmaceuticals, herbs, teas and other solids or liquids and can grind solids and shred herbs, the business of private labeling and branding for purchasers of containers and other products, and the sale of other products. Prior to January 1, 2019, it conducted these businesses through wholly owned subsidiaries; from and after that date, it has conducted them itself. The Company changed its corporate name from Acology, Inc. to Medtainer, Inc. on August 28, 2018. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2: SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principals of Consolidation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2019, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on December 20, 2019. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. It is possible that these external conditions could have an effect on the Company’s estimates that could cause actual results to differ materially from its estimates. The Company re-evaluates all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related reserves, valuations and purchase price allocations related to business combinations, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization periods, accrued expenses, share-based compensation, and recoverability of the Company’s net deferred tax assets and any related valuation allowance. Financial Statement Reclassification Certain account balances from prior periods have been reclassified in these unaudited consolidated financial statements so as to conform to current period classifications. For the three-month period ending June 30, 2018, the Company reclassified $40,400 of operating expenses to cost of goods sold. For the six-month period ending June 30, 2018, the Company reclassified $77,185 of operating expenses to cost of goods sold. This reclassification was made to more accurately restate the prior period to properly reflect the absorption calculations used in the current period. Cash The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. Accounts Receivable Included in “Accounts receivable” on the consolidated balance sheets are amounts primarily related to customers. The Company estimates losses on receivables based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written off when it is probable that all contractual payments due will not be collected in accordance with the terms of the related agreement. Based on experience and the judgment of management, the allowance for doubtful accounts was $0 as of June 30, 2019, and December 31, 2018. Inventories Inventories, which consist of products held for resale, are stated at the lower of cost, determined using the first-in first-out, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s statements of operations. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. For furniture and fixtures the useful life is 5 years, Leasehold Improvements are depreciated over the 2-year lease term or the estimated useful life, whichever is shorter. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. Goodwill and Intangible Assets Goodwill and intangible assets that have indefinite useful lives are not amortized but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company records intangible assets at fair value, estimated using a discounted cash flow approach. The Company amortizes its intangible assets that have finite lives using either the straight-line method or base on estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization is recorded over the estimated useful lives ranging from 14 to 20 years. The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that would indicate impairment and trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator. If the carrying value of an asset exceeds its undiscounted cash flows, the Company will write-down the carrying value of the intangible assets to its fair value in the period identified. The Company generally calculates fair value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. Consistent with prior years, the Company conducted its annual impairment test of goodwill during the fourth quarter of the year ended December 31, 2018. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment base on an evaluation of the fair value of the Company as a whole. The estimate of fair value requires significant judgement. Any loss resulting from an impairment test would be reflected in operating income in the Company’s consolidated statements of income. The annual impairment testing process is subjective and requires judgment at many points throughout the analysis. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded. In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment The Company evaluates intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test of recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter or each fiscal year or more often if circumstances indicate that goodwill may not be recoverable. There was no impairment of intangible assets, long-lived assets or goodwill during the three and six months ended June 30, 2019. Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt- and equity-linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 20 l4-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The new revenue standards became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. The adoption of the new revenue standards did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption. Under the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, or when they are shipped to that customer, in an amount that reflects the consideration which it expects to receive in exchange for them. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies its performance obligation. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment or delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial. The following table summarizes revenue from contracts with customers for the six months ended June 30, 2019, and June 30, 2018: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Product revenue $ 383,873 $ 514,896 $ 1,000,085 $ 1,145,063 Service revenue 47,754 37,251 35,979 51,435 Total revenue $ 431,627 $ 552,147 1,036,064 $ 1,196,498 Share-Based Payments In June 2018, FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Equity—Equity-Based Payments to Non-Employees. Fair Value Measurements The Company has adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – Inputs that are unobservable (for example cash flow modeling inputs based on assumptions) During the year ended December 31, 2018, the Company accounted for a derivative liability in connection with the conversion feature of convertible debt, classified as a Level 3 liability, as the only financial liability measured at fair value on a recurring basis. As of December 31, 2018, and during the three and six months ended June 30, 2019, the Company had no derivative liability. Advertising Advertising and marketing expenses are charged to operations as incurred. Income Taxes The Company use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts. Also, the Company has not experienced losses on accounts receivable and management believes that the Company is not exposed to significant risks with respect to them. Recent Accounting Pronouncements In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), The Company does not believe there are any other recently issued, but not yet effective, accounting standards that would have a significant impact on the Company’s financial position or results of operations. |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 3: GOING CONCERN The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At June 30, 2019, the Company had a working capital deficit of $1,293,686. In addition, the Company has generated operating losses since inception and has notes payable that are currently in default. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the successful execution of its operating plan which includes increasing sales of existing products while introducing additional products and services, controlling operation expenses, negotiating extensions of existing loans and raising either debt or equity financing. There is no assurance that the Company will be able to increase sales or to obtain or extend financing on terms acceptable to us or at all or successfully execute any of the other measures set forth in the previous sentence. |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Intangible Assets | |
Intangible Assets | Note 4: INTANGIBLE ASSETS Intangible assets that are subject to amortization are reviewed for potential impairment whenever events or circumstances indicate that carrying amounts may not be recoverable. Assets not subject to amortization are tested for impairment at least annually. The Company has intangible assets subject to amortization as described in the next paragraph. These costs were included in intangible assets on the balance sheet and amortized as indicated in the next paragraph. The Company will periodically review these and other intangible assets for impairment that it may acquire whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company will recognize an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset, to be measured as the difference between the asset’s estimated fair value and its book value. On June 8, 2018, the Company acquired certain patents and patent applications, a trademark and an internet domain related to “Medtainer ® Estimated Asset Valuation at December 31, 2018: Weighted Average Gross Carrying Accumulated Description Estimated Useful Life Value Amortization Net Amount Certain U.S. patents 15 years $ 435,000 $ (16,060 ) $ 418,940 Certain U.S. patents 15 years 435,000 (15,455 ) 419,545 Certain Canadian patents 20 years 260,000 (7,286 ) 252,714 Certain European patents 14 years 30,000 (1,175 ) 28,825 Molds 15 years 150,000 (5,538 ) 144,462 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (45,514 ) $ 1,486,486 Goodwill $ 1,020,314 $ — $ 1,020,314 Estimated Asset Valuation at June 30, 2019: Weighted Average Gross Carrying Accumulated Description Estimated Useful Life Value Amortization Net Amount Certain U.S. patents 15 years $ 435,000 $ (30,317 ) $ 404,683 Certain U.S. patents 15 years 435,000 (29,175 ) 405,825 Certain Canadian patents 20 years 260,000 (13,755 ) 246,245 Certain European patents 14 years 30,000 (2,219 ) 27,781 Molds 15 years 150,000 (10,454 ) 139,546 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (85,920 ) $ 1,446,080 Goodwill $ 1,020,314 $ — $ 1,020,314 |
Convertible Notes payable
Convertible Notes payable | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Convertible Notes payable | Note 5: CONVERTIBLE NOTES PAYABLE AND PROMISSORY NOTES PAYABLE As of June 30, 2019, and December 31, 2018, the Company had the following convertible notes and promissory notes outstanding: June 30, 2019 December 31, 2018 Accrued Accrued Principal Interest Principal Interest Convertible Notes Payable (a) July 2014 $75,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default $ 66,172 $ 20,403 $ 66,172 $ 17,095 July 2014 $15,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in 8,375 7,625 default 15,000 15,000 Total Convertible Notes Payable $ 81,172 $ 81,172 Promissory Notes Payable November 2014 $300,000 Note, 10% interest, due February 2019, currently in default (b) $ 298,959 39,861 $ 298,959 24,913 August 2015 $75,000 Note, with a one-time interest 75,000 75,000 charge of $75,000, currently in default (c) 75,000 75,000 Total Promissory Notes Payable $ 373,959 $ 373,959 Total Accrued Interest Payable $ 143,639 $ 124,633 a. The Company entered into promissory note conversion agreements in the aggregate amount of $90,000. Payments of $8,828 have been made on these notes as of June 30, 2019. These notes are convertible into shares of the Company’s common stock at a conversion price of $5.00 per share. The loans under these agreements are non-interest-bearing and have no stated maturity date; however, the Company is accruing interest at a 10% annual rate. b. On November 3, 2014, the Company made a promissory note in the principal amount of $300,000 in favor of an unrelated person (the “Old Note”). On February 22, 2018, the Company repaid $100,000 on the principal of the Old Note and made a new promissory note, dated February 22, 2018, in the principal amount of $298,959 in favor of said party (the “New Note”) in satisfaction of the Old Note, which principal amount comprised the unpaid principal amount of $200,000 due on the Old Note after the repayment, and $98,958.90 of accrued interest on the Old Note. At June 30, 2019, accrued interest on this note was $39,861. The outstanding balance of this note was $298,959 at June 30, 2019, and December 31, 2018. The New Note was due on February 22, 2019. This note is in default and the Company is negotiating an extension. c. On August 15, 2015, the Company made a promissory note in the amount of $150,000 in favor of an unrelated party. The note bears interest at 0.48% per annum, provided that the note is paid on or before maturity date, or 2 percentage points over the Wall Street Journal Prime Rate, if it is not repaid on or before the maturity date. This note matured on August 11, 2016. Upon an event of default, as defined in the note, interest shall be compounded daily. The Company is currently negotiating an extension of the maturity date for the balance. During the year ended December 13, 2017, the holder of this note agreed to exchange $75,000 of principal and $663 of interest accrued on this note for 500,000 shares of common stock. This exchange was accounted for as an extinguishment of debt resulting in a loss of $683,337. In connection with this exchange, the Company agreed to pay the holder a fee of $75,000 in consideration of his waiving the default under the promissory note, as additional consideration for his agreeing to the exchange and as compensation for his foregoing the interest that would have accrued on the promissory note at the default rate but for the waiver. At June 30, 2019, and December 31, 2018, the note had a balance of $75,000 in addition to the $75,000 fee included in accrued interest. |
Stockholders Equity
Stockholders Equity | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Stockholders Equity | Note 6: STOCKHOLDERS’ EQUITY On February 12, 2018, the Company issued 120,000 shares of common stock to an unrelated third party in consideration of $120,000. On June 8, 2018, the Company issued 2,631,252 shares of common stock, valued at $2,552,314, for the purchase of a patent, patent applications, a trademark and an internet domain. For information regarding the valuation of these assets, see Note 4. On September 25, 2018, the Company issued 57,741 shares of common stock upon conversion of three convertible promissory notes. On March 22, 2019, the Company implemented a reverse split of its common stock on the basis of one new share of common stock for each 100 shares of common stock then outstanding. Also, on that date, the Company reduced the number of shares of its authorized common stock from 6,000,000,000 to 100,000,000. The number of authorized shares of preferred stock remained 10,000,000. The effects of this split have been retroactively applied to all periods presented. During the six months ended June 30, 2019, the Company recognized the issuance of 1,200,000 shares of common stock to employees and consultants, valued at $569,680 for financial reporting purposes under GAAP, as allowed by the Company’s 2018 Incentive Award Plan. These shares are fully vested for financial reporting purposes under GAAP but have not yet been issued. (See Note 7: Share-Based Compensation). |
Share Based Compensation
Share Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Compensation Related Costs [Abstract] | |
Share Based Compensation | Note 7: SHARE-BASED COMPENSATION The Company’s 2018 Incentive Award Plan (the “2018 Plan”) became effective on December 1, 2018, under which the Company may issue up to 2,000,000 shares of common stock, which the Company reserved, as incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other forms of compensation to employees, directors and consultants. In addition, the 2018 Plan provides for the grant of performance cash awards to employees, directors and consultants. All these shares were reserved on that date. On December 1, 2018, 1,350,000 shares of common stock were awarded to employees in the form of restricted shares and 335,000 shares of common stock were awarded to consultants as compensation. The fair value of these shares on the grant date was $0.01 per share. As of December 31, 2018, 185,000 shares awarded to consultants were vested and none of the shares awarded to employees were vested. During the six months ended June 30, 2019 150,000 shares awarded to consultants were vested and 1,050,000 shares awarded to employees were vested. As of June 30, 2019, all shares awarded per the 2018 Plan to consultants were vested for financial reporting purposes under GAAP and 1,050,000 of the 1,350,000 shares awarded to employees were vested for financial reporting purposes under GAAP. The Company made no awards in any other form during the six months ending June 30, 2019, and June 30, 2018. The Company expensed $569,680 and $0 for share-based compensation in the six months ended June 30, 2019, and June 30, 2018, for its employees and nonemployees in the accompanying consolidated statements of operations. The following table summarizes vesting for financial reporting purposes under GAAP of the common stock shares issued per the 2018 Plan: Employees Consultants Dates common stock shares were vested: December 31, 2018 - 185,000 January 1, 2019 750,000 - March 31, 2019 - 150,000 June 30, 2019 300,000 - Total common stock shares vested at June 30, 2019 1,050,000 335,000 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 8: INCOME TAXES The Company has approximately $2,651,000 net operating loss carryforwards (“NOLs”) that are available to reduce future taxable income as of December 31, 2018, which begin to expire in 2034. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all the deferred tax assets for every period because it is more likely than not that all the deferred tax assets will not be realized. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. The Company has estimated its provision for income taxes in accordance with the 2017 Tax Act and the guidance available and has kept the full valuation allowance. As a result, the Company recorded no income tax expense during the six months ended June 30, 2019. |
Capital Leases
Capital Leases | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Capital Leases | Note 9: CAPITAL LEASES During each of the years ended at December 31, 2017, and December 31, 2016, the Company entered a capitalized equipment lease. Each of these leases was payable in 24 monthly installments of $2,000, including interest at the rate of 19.87% per annum. The lessor under these leases was a related party. The Company made its final payments for these leases during June 2018 and May 2019, respectively. |
Related-Party Transactions
Related-Party Transactions | 6 Months Ended |
Jun. 30, 2019 | |
Notes to Financial Statements | |
Related-Party Transactions | Note 10: RELATED-PARTY TRANSACTIONS Loans The Company has received loans from its officers and directors from time to time since 2014. During the six months ended June 30, 2019, the Company has received loans of $386,265 from its officers and directors. During the six months ended June 30, 2019, the Company repaid $254,603 of the loans back to the officers and directors. The balance of these loans at June 30, 2019, and December 31, 2018, was $517,322 and $385,660, respectively. All these loans are non-interest-bearing and have no set maturity date. The Company expects to repay these loans when cash flows become available. Contracts The Company makes capital lease payments for equipment, building lease payments, and products for resale from an entity owned by a related party, who is also one of its executive officers. Payments made to the related party for the six months ended June 30, 2019, and June 30, 2018, are as follows: Six Months Ended June 30, 2019 June 30, 2018 Capital lease payments $ 10,000 $ 24,000 Building lease payments 51,843 — Purchase of products for resale 52,089 31,337 Total paid to related party $ 113,932 $ 55,337 |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 11: CONCENTRATIONS For the six months ended June 30, 2019, and June 30, 2018, one of the Company’s customers accounted for approximately 12% and 11%, respectively, of total sales. For the three months ended June 30, 2019, and 2018, one of the Company’s customers accounted for approximately 4% and 7%, respectively, of total sales For the six months ended June 30, 2019, the Company purchased approximately 43% and 28% of its products for cost of goods sold from two distributors. For the six months ended June 30, 2018, the Company purchased approximately 40% and 11% of its products for cost of goods sold from two distributors. For the three months ended June 30, 2019, the Company purchased approximately 49% and 27% of its products for cost of goods sold from two distributors. For the three months ended June 30, 2018, the Company purchased approximately 37% and 34% of its products for cost of goods sold from two distributors. As of June 30, 2019, one of the Company's customers accounted for 29% of its accounts receivable balance, and another accounted for 21% of its accounts receivable balance. As of December 31, 2018, one of the Company's customers accounted for 35% of its accounts receivable balance, another accounted for 23% of its accounts receivable balance, and another accounted for 20% of the accounts receivable balance. |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 12: COMMITMENTS The Company was committed under an operating lease for its premises, under which it made monthly payments of $7,500, plus 100% of operating expenses, until the lease expired June 30, 2018. On September 1, 2018, the Company entered a new operating lease with an entity owned by a related party (see Note 10) calling for monthly payments of $8,641, plus 100% of operating expenses, for a term expiring on August 31, 2019. On September 1, 2019, the lease of the Company’s premises was amended such that it expires on August 31, 2020, and the rent thereunder was increased to $8,967 per month. In conjunction with the Asset Purchase Agreement described in Note 4, the Company agreed to purchase a minimum of 30,000 units of product per month. The minimum purchase quantity will increase by 1% every anniversary of its effective date. The purchase price for units is subject to periodic adjustment for changes in the consumer price index. The agreement expires on April 30, 2031; however, it can be terminated with a one-time $400,000 payment. |
Subsequent events
Subsequent events | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 13: SUBSEQUENT EVENTS Management evaluated all other subsequent events when these financial statements were issued and has determined that none of them requires this disclosure herein. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principals of Consolidation | Basis of Presentation and Principals of Consolidation The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (the “SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2019, and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2019, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on December 20, 2019. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of the Company’s estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. It is possible that these external conditions could have an effect on the Company’s estimates that could cause actual results to differ materially from its estimates. The Company re-evaluates all its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related reserves, valuations and purchase price allocations related to business combinations, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization periods, accrued expenses, share-based compensation, and recoverability of the Company’s net deferred tax assets and any related valuation allowance. |
Financial Statement Reclassification | Financial Statement Reclassification Certain account balances from prior periods have been reclassified in these unaudited consolidated financial statements so as to conform to current period classifications. For the three-month period ending June 30, 2018, the Company reclassified $40,400 of operating expenses to cost of goods sold. For the six-month period ending June 30, 2018, the Company reclassified $77,185 of operating expenses to cost of goods sold. This reclassification was made to more accurately restate the prior period to properly reflect the absorption calculations used in the current period. |
Cash | Cash The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. |
Accounts Receivable | Accounts Receivable Included in “Accounts receivable” on the consolidated balance sheets are amounts primarily related to customers. The Company estimates losses on receivables based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written off when it is probable that all contractual payments due will not be collected in accordance with the terms of the related agreement. Based on experience and the judgment of management, the allowance for doubtful accounts was $0 as of June 30, 2019, and December 31, 2018. |
Inventories | Inventories Inventories, which consist of products held for resale, are stated at the lower of cost, determined using the first-in first-out, and net realizable value. Net realizable value is the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s statements of operations. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. For furniture and fixtures the useful life is 5 years, Leasehold Improvements are depreciated over the 2-year lease term or the estimated useful life, whichever is shorter. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill and intangible assets that have indefinite useful lives are not amortized but are evaluated for impairment annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Company records intangible assets at fair value, estimated using a discounted cash flow approach. The Company amortizes its intangible assets that have finite lives using either the straight-line method or base on estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization is recorded over the estimated useful lives ranging from 14 to 20 years. The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that would indicate impairment and trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator. If the carrying value of an asset exceeds its undiscounted cash flows, the Company will write-down the carrying value of the intangible assets to its fair value in the period identified. The Company generally calculates fair value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. Consistent with prior years, the Company conducted its annual impairment test of goodwill during the fourth quarter of the year ended December 31, 2018. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment base on an evaluation of the fair value of the Company as a whole. The estimate of fair value requires significant judgement. Any loss resulting from an impairment test would be reflected in operating income in the Company’s consolidated statements of income. The annual impairment testing process is subjective and requires judgment at many points throughout the analysis. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded. In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment The Company evaluates intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test of recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value. The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter or each fiscal year or more often if circumstances indicate that goodwill may not be recoverable. There was no impairment of intangible assets, long-lived assets or goodwill during the three and six months ended June 30, 2019. |
Convertible Instruments | Convertible Instruments The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities. GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption. The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt- and equity-linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities. |
Revenue Recognition | Revenue Recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 20 l4-09, Revenue from Contracts with Customers (Topic 606) Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The new revenue standards became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. The adoption of the new revenue standards did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption. Under the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, or when they are shipped to that customer, in an amount that reflects the consideration which it expects to receive in exchange for them. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies its performance obligation. Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment or delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial. The following table summarizes revenue from contracts with customers for the six months ended June 30, 2019, and June 30, 2018: Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Product revenue $ 383,873 $ 514,896 $ 1,000,085 $ 1,145,063 Service revenue 47,754 37,251 35,979 51,435 Total revenue $ 431,627 $ 552,147 1,036,064 $ 1,196,498 |
Share-Based Payments | Share-Based Payments In June 2018, FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, Equity—Equity-Based Payments to Non-Employees. |
Fair Value Measurements | Fair Value Measurements The Company has adopted the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk. ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 – Inputs that are unobservable (for example cash flow modeling inputs based on assumptions) During the year ended December 31, 2018, the Company accounted for a derivative liability in connection with the conversion feature of convertible debt, classified as a Level 3 liability, as the only financial liability measured at fair value on a recurring basis. As of December 31, 2018, and during the three and six months ended June 30, 2019, the Company had no derivative liability. |
Advertising | Advertising Advertising and marketing expenses are charged to operations as incurred. |
Income Taxes | Income Taxes The Company use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant risks on such accounts. Also, the Company has not experienced losses on accounts receivable and management believes that the Company is not exposed to significant risks with respect to them. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), The Company does not believe there are any other recently issued, but not yet effective, accounting standards that would have a significant impact on the Company’s financial position or results of operations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary Of Significant Accounting Policies Tables | |
Schedule of revenues | Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Product revenue $ 383,873 $ 514,896 $ 1,000,085 $ 1,145,063 Service revenue 47,754 37,251 35,979 51,435 Total revenue $ 431,627 $ 552,147 1,036,064 $ 1,196,498 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Estimated Asset Valuation at December 31, 2018: Weighted Average Gross Carrying Accumulated Description Estimated Useful Life Value Amortization Net Amount Certain U.S. patents 15 years $ 435,000 $ (16,060 ) $ 418,940 Certain U.S. patents 15 years 435,000 (15,455 ) 419,545 Certain Canadian patents 20 years 260,000 (7,286 ) 252,714 Certain European patents 14 years 30,000 (1,175 ) 28,825 Molds 15 years 150,000 (5,538 ) 144,462 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (45,514 ) $ 1,486,486 Goodwill $ 1,020,314 $ — $ 1,020,314 Estimated Asset Valuation at June 30, 2019: Weighted Average Gross Carrying Accumulated Description Estimated Useful Life Value Amortization Net Amount Certain U.S. patents 15 years $ 435,000 $ (30,317 ) $ 404,683 Certain U.S. patents 15 years 435,000 (29,175 ) 405,825 Certain Canadian patents 20 years 260,000 (13,755 ) 246,245 Certain European patents 14 years 30,000 (2,219 ) 27,781 Molds 15 years 150,000 (10,454 ) 139,546 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (85,920 ) $ 1,446,080 Goodwill $ 1,020,314 $ — $ 1,020,314 |
Convertible Notes payable and P
Convertible Notes payable and Promissory Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Convertible Notes Payable And Promissory Notes Payable | |
Schedule of convertible notes payable and promissory notes payable | As of June 30, 2019, and December 31, 2018, the Company had the following convertible notes and promissory notes outstanding: June 30, 2019 December 31, 2018 Accrued Accrued Principal Interest Principal Interest Convertible Notes Payable (a) July 2014 $75,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default $ 66,172 $ 20,403 $ 66,172 $ 17,095 July 2014 $15,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in 8,375 7,625 default 15,000 15,000 Total Convertible Notes Payable $ 81,172 $ 81,172 Promissory Notes Payable November 2014 $300,000 Note, 10% interest, due February 2019, currently in default (b) $ 298,959 39,861 $ 298,959 24,913 August 2015 $75,000 Note, with a one-time interest 75,000 75,000 charge of $75,000, currently in default (c) 75,000 75,000 Total Promissory Notes Payable $ 373,959 $ 373,959 Total Accrued Interest Payable $ 143,639 $ 124,633 |
Share Based Compensation (Table
Share Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share Based Compensation Tables Abstract | |
Schedule of share based compensation | Employees Consultants Dates common stock shares were vested: December 31, 2018 - 185,000 January 1, 2019 750,000 - March 31, 2019 - 150,000 June 30, 2019 300,000 - Total common stock shares vested at June 30, 2019 1,050,000 335,000 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Related-party Transactions | |
Schedule of related party transactions | Payments made to the related party for the six months ended June 30, 2019, and June 30, 2018, are as follows: Six Months Ended June 30, 2019 June 30, 2018 Capital lease payments $ 10,000 $ 24,000 Building lease payments 51,843 — Purchase of products for resale 52,089 31,337 Total paid to related party $ 113,932 $ 55,337 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Summary Of Significant Accounting Policies - Revenues | ||||
Products | $ 383,873 | $ 490,394 | $ 1,000,085 | $ 1,145,063 |
Printing services | 47,754 | 61,753 | 35,979 | 51,435 |
Total revenue | $ 431,627 | $ 552,147 | $ 1,036,064 | $ 1,198,498 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | Jun. 30, 2019USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Working Capital Deficit | $ 1,293,686 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019 | Dec. 31, 2018 | |
Net Amount | $ 1,446,080 | $ 1,486,486 |
Certain US Patents 1 | ||
Weighted Average Estimated Useful Life | 15 years | 15 years |
Gross Carrying Value | $ 435,000 | $ 435,000 |
Accumulated Amortization | (30,317) | (16,060) |
Net Amount | $ 404,683 | $ 418,940 |
Certain US Patents 2 | ||
Weighted Average Estimated Useful Life | 15 years | 15 years |
Gross Carrying Value | $ 435,000 | $ 435,000 |
Accumulated Amortization | (29,175) | (15,455) |
Net Amount | $ 405,825 | $ 419,545 |
Certain Canadian Patents | ||
Weighted Average Estimated Useful Life | 20 years | 20 years |
Gross Carrying Value | $ 260,000 | $ 260,000 |
Accumulated Amortization | (13,755) | (7,286) |
Net Amount | $ 246,245 | $ 252,714 |
Certain European Patents | ||
Weighted Average Estimated Useful Life | 14 years | 14 years |
Gross Carrying Value | $ 30,000 | $ 30,000 |
Accumulated Amortization | (2,219) | (1,175) |
Net Amount | $ 27,781 | $ 28,825 |
Molds | ||
Weighted Average Estimated Useful Life | 15 years | 15 years |
Gross Carrying Value | $ 150,000 | $ 150,000 |
Accumulated Amortization | (10,454) | (5,538) |
Net Amount | 139,546 | 144,462 |
Trademark | ||
Gross Carrying Value | 220,000 | 220,000 |
Accumulated Amortization | ||
Net Amount | 220,000 | 220,000 |
Domain Name | ||
Gross Carrying Value | 2,000 | 2,000 |
Accumulated Amortization | ||
Net Amount | 2,000 | 2,000 |
Intangible Totals | ||
Gross Carrying Value | 1,532,000 | 1,532,000 |
Accumulated Amortization | (85,920) | (45,514) |
Net Amount | 1,446,080 | 1,486,486 |
Goodwill | ||
Gross Carrying Value | 1,020,314 | 1,020,314 |
Accumulated Amortization | ||
Net Amount | $ 1,020,314 | $ 1,020,314 |
Convertible Notes payable and_2
Convertible Notes payable and Promissory Notes Payable (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
July 2014 $75,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default | ||
Principal | $ 66,172 | $ 66,172 |
Accrued Interest | 20,403 | 17,095 |
July 2014 $15,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default | ||
Principal | 15,000 | 15,000 |
Accrued Interest | 8,375 | 7,625 |
Total Convertible Notes Payable | ||
Principal | 81,172 | 81,172 |
November 2014 $300,000 Note, 10% interest, due February 2019, currently in default (b) | ||
Principal | 298,959 | 298,959 |
Accrued Interest | 39,861 | 24,913 |
August 2015 $75,000 Note, with a one-time interest charge of $75,000, currently in default (c) | ||
Principal | 75,000 | 75,000 |
Accrued Interest | 75,000 | 75,000 |
TotalPromissoryNotesPayable | ||
Principal | $ 373,959 | $ 373,959 |
Share Based Compensation (Detai
Share Based Compensation (Details) | 6 Months Ended |
Jun. 30, 2018USD ($) | |
December 31, 2018 | |
Employees | |
Consultants | 185,000 |
January 1, 2019 | |
Employees | 750,000 |
Consultants | |
March 31, 2019 | |
Employees | |
Consultants | 150,000 |
June 30, 2019 | |
Employees | 300,000 |
Consultants | |
Total common stock shares vested at June 30, 2019 | |
Employees | 1,050,000 |
Consultants | $ 335,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Relatedparty Transactions Details Abstract | ||
Capital lease payments | $ 10,000 | $ 24,000 |
Building lease payments | 51,843 | |
Purchase of products for resale | 52,089 | 31,337 |
Total paid to related party | $ 113,932 | $ 55,337 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | ||||
Concentration risk percentage | 4.00% | 7.00% | 12.00% | 11.00% |