Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 14, 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, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Shell Company | false | |
Small Business | true | |
Emerging Growth Company | true | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 77,085,272 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2020 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
CURRENT ASSETS: | ||
Cash | $ 182,781 | $ 17,982 |
Accounts receivable | 74,577 | 108,836 |
Inventories | 106,790 | 85,215 |
Prepaid expenses | 8,697 | |
TOTAL CURRENT ASSETS | 364,148 | 221,000 |
Property and equipment, net of accumulated depreciation of $128,634 and $118,459, respectively | 25,109 | 35,280 |
Intangible assets, net of accumulated amortization of $166,726 and $126,322 | 1,365,274 | 1,405,678 |
Goodwill | 1,020,314 | 1,020,314 |
Security deposits | 7,699 | 7,699 |
TOTAL ASSETS | 2,782,544 | 2,689,971 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued expenses | 301,367 | 234,635 |
Accrued interest payable | 131,106 | 142,464 |
Payroll liabilities payable | 249,640 | 162,409 |
Customer deposits payable | 80,603 | 97,310 |
Convertible notes payable | 81,172 | 81,172 |
Notes and loan payable | 431,934 | 373,959 |
Loans payables - stockholders | 417,843 | 627,162 |
TOTAL CURRENT LIABILITIES | 1,693,665 | 1,719,111 |
LONG –TERM LIABILITIES: | ||
Paycheck Protection Program loan | 79,715 | |
Loan payable - stockholder | 130,550 | |
TOTAL LONG –TERM LIABILITIES | 210,265 | |
TOTAL LIABILITIES | 1,903,930 | 1,719,111 |
SHAREHOLDERS' EQUITY 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: 77,085,272 issued and outstanding shares at June 30, 2020, and 56,700,979 issued and outstanding shares outstanding at December 31, 2019 | 770 | 567 |
Additional paid In capital | 6,403,529 | 5,905,656 |
Accumulated deficit | (5,525,685) | (4,935,363) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | 878,614 | 970,860 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 2,782,544 | $ 2,689,971 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Office Equipment Net Depreciation | $ 128,634 | $ 118,459 |
Intangible Assets, net of accumulated amortization | $ 166,726 | $ 126,322 |
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 | 77,085,272 | 56,700,979 |
Common Stock Shares Outstanding | 77,085,272 | 56,700,979 |
Statements of Operations
Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Sales | $ 293,040 | $ 431,627 | $ 849,169 | $ 1,036,064 |
Cost of sales | 142,057 | 208,325 | 418,046 | 471,484 |
Gross profit | 150,983 | 223,302 | 431,123 | 564,580 |
Operating expenses: | ||||
Advertising and marketing | (2,022) | 11,962 | 11,327 | 27,634 |
Bad Debt | (32,470) | 32,470 | ||
Depreciation and amortization | 23,847 | 27,824 | 48,521 | 55,647 |
Professional fees | 30,520 | 61,655 | 95,410 | 80,484 |
Share Based Compernsation | 149,039 | 149,038 | 298,076 | 569,680 |
Payroll expenses | 123,748 | 305,652 | 409,046 | 599,009 |
General and administrative expense | 51,057 | 35,207 | 117,588 | 61,836 |
Total operating expenses | 408,659 | 591,338 | 1,012,438 | 1,394,290 |
Loss from operations | (257,676) | (368,036) | (581,315) | (829,710) |
Non-operating income (expense) | ||||
EIDL grant proceeds | 10,000 | 10,000 | ||
Interest expense | (9,254) | (9,601) | (19,007) | (19,485) |
Total non-operarting income (expense) | 746 | (9,601) | (9,007) | (19,485) |
Loss before income taxes | (256,930) | (377,637) | (590,322) | (849,195) |
Income tax provision | ||||
Net loss | $ (256,930) | $ (377,637) | $ (590,322) | $ (849,195) |
Basic loss per common share | $ 0 | $ (0.01) | $ (0.01) | $ (0.02) |
Diluted loss per common share | $ 0 | $ (0.01) | $ (0.01) | $ (0.01) |
Basic weighted average common shares outstanding | 66,237,263 | 56,402,635 | 61,512,194 | 56,328,048 |
Diluted weighted average common shares outstanding | 66,621,424 | 57,000,978 | 61,898,004 | 57,000,150 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (590,322) | $ (849,195) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation expense | 10,171 | 15,243 |
Share-based Compensation | 298,076 | 569,680 |
Amortization expense | 40,404 | 40,404 |
Bad debt | 32,470 | |
Changes in operating assets and liabilities | ||
Accounts receivable | 1,789 | 19,287 |
Inventories | (21,575) | (8,974) |
Prepaid expenses | 8,967 | (2,049) |
Accounts payable and accrued expenses | 66,732 | 58,417 |
Accrued interest payable | (11,358) | 19,006 |
Payroll liabilities payable | 87,231 | 8,434 |
Customer deposits payable | (16,707) | 44,506 |
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES | (94,122) | (85,241) |
INVESTING ACTIVITIES: | ||
Acquisition of property and equipment | (1,165) | |
NET CASH USED IN NVESTING ACTIVITIES | (1,165) | |
FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock | 200,000 | |
Proceeds from Paycheck Protection Program | 137,690 | |
Principal payments on capital lease obligations | (9,522) | |
Proceeds from stockholder loan | 164,978 | 386,265 |
Repayment of stockholder loan | (243,747) | (254,603) |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 258,921 | 122,140 |
INCREASE IN CASH | 164,799 | 35,734 |
CASH - BEGINNING OF YEAR | 17,982 | 17,374 |
CASH - END OF YEAR | $ 182,781 | $ 53,108 |
Shareholders Equity
Shareholders Equity - USD ($) | Common Stock | Paid-In Capital | Accumulated Deficit | Total |
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 | 1,873 | |||
Share Based Compensation, Shares | 900,000 | |||
Share Based Compensation, Amount | $ 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 |
Share Based Compensation, Shares | 300,000 | |||
Share Based Compensation, Amount | $ 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 |
Beginning Balance, Shares at Dec. 31, 2019 | 56,700,979 | |||
Beginning Balance, Value at Dec. 31, 2019 | $ 567 | 5,905,656 | (4,935,363) | 970,860 |
Share Based Compensation, Amount | 149,037 | 149,037 | ||
Net loss | (333,392) | (333,392) | ||
Ending Balance, Shares at Mar. 31, 2020 | 56,700,979 | |||
Ending Balance, Value at Mar. 31, 2020 | $ 567 | 6,054,963 | (5,268,755) | 786,505 |
Beginning Balance, Shares at Dec. 31, 2019 | 56,700,979 | |||
Beginning Balance, Value at Dec. 31, 2019 | $ 567 | 5,905,656 | (4,935,363) | 970,860 |
Net loss | (590,322) | |||
Ending Balance, Shares at Jun. 30, 2020 | 77,085,272 | |||
Ending Balance, Value at Jun. 30, 2020 | $ 770 | 6,403,529 | (5,525,685) | 878,614 |
Beginning Balance, Shares at Mar. 31, 2020 | 56,700,979 | |||
Beginning Balance, Value at Mar. 31, 2020 | $ 567 | 6,054,963 | (5,268,755) | 786,505 |
Issuance of common stock in private placement, Shares | 20,000,000 | |||
Issuance of common stock in private placement, Value | $ 200 | 199,800 | 200,000 | |
Share Based Compensation, Shares | 300,000 | |||
Share Based Compensation, Amount | $ 3 | 149,036 | 149,039 | |
Adjustment for fractional shares issued | 84,293 | |||
Net loss | (256,930) | (256,930) | ||
Ending Balance, Shares at Jun. 30, 2020 | 77,085,272 | |||
Ending Balance, Value at Jun. 30, 2020 | $ 770 | $ 6,403,529 | $ (5,525,685) | $ 878,614 |
Business
Business | 6 Months Ended |
Jun. 30, 2020 | |
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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2 – Summary of Significant Accounting Policies Accounting Principles The accompanying unaudited consolidated 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 GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as at June 30, 2020, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2020, 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, 2019, filed with the SEC on May 28, 2020. Principles of Consolidation The unaudited 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 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 from its estimates. The Company reevaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Significant estimates relied upon in preparing these unaudited 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. 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, 2020, and December 31, 2019. At June 30, 2020, the Company recorded $32,470 in bad debt. At June 30, 2019, the Company did not record an expense for bad debt. 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 methods. 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 determined 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 a 2-year lease term. 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 their carrying value may not be recoverable. The Company records intangible assets at fair value, estimated using a discounted cash flow approach. The Company amortizes intangible assets that have finite lives using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization is recorded over estimated useful lives ranging from 14 to 20 years. The Company reviews intangible assets subject to amortization quarterly to determine whether any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in 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 its carrying value 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 the prior year, the Company conducted its annual impairment test of goodwill during the fourth quarter of the year ended December 31, 2019. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. The estimate of fair value requires significant judgment. Any loss resulting from an impairment test will 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 There was no impairment of intangible assets, long-lived assets or goodwill during the six months ended June 30, 2020. 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, which 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. 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 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 typically occurs 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 quarter ended June 30, 2020, and June 30, 2019: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Product revenue $ 289,062 $ 383,873 $ 831,936 $ 1,000,085 Service revenue 3,978 47,754 17,233 35,979 Total revenue $ 293,040 $ 431,627 $ 849,169 $ 1,036,064 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 their short-term nature. 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) Advertising Advertising and marketing expenses are charged to operations as incurred. Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies 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 financial institutions, 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. Accounting for Leases In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), |
Going Concern
Going Concern | 6 Months Ended |
Jun. 30, 2020 | |
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, 2020, the Company had a working capital deficit of $1,329,517. 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, 2020 | |
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 their 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. Their costs were included in intangible assets on the balance sheet and are amortized as indicated in the next paragraph. On June 8, 2018, the Company acquired certain patents and patent applications, a trademark and an internet domain related to “Medtainer ® Balances at June 30, 2020: Description Weighted Average Gross Carrying Accumulated Net Amount Certain U.S. patents 15 years $ 435,000 $ (58,829 ) $ 376,170 Certain U.S. patents 15 years 435,000 (56,614 ) 378,386 Certain Canadian patents 20 years 260,000 (26,691 ) 233,309 Certain European patents 14 years 30,000 (4,305 ) 25,695 Molds 15 years 150,000 (20,287 ) 129,713 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (166,726 ) $ 1,365,274 Goodwill $ 1,020,314 $ — $ 1,020,314 Balances at December 31, 2019: Description Weighted Average Gross Carrying Accumulated Amortization Net Amount Certain U.S. patents 15 years $ 435,000 $ (44,571 ) $ 390,429 Certain U.S. patents 15 years 435,000 (42,895 ) 392,105 Certain Canadian patents 20 years 260,000 (20,224 ) 239,776 Certain European patents 14 years 30,000 (3,262 ) 26,738 Molds 15 years 150,000 (15,370 ) 134,630 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (126,322 ) $ 1,405,678 Goodwill $ 1,020,314 $ — $ 1,020,314 |
Convertible Notes Payable and P
Convertible Notes Payable and Promissory Notes Payable | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable and Promissory Notes Payable | Note 5 – Convertible Notes Payable and Promissory Notes Payable As of June 30, 2020, and December 31, 2019, the Company had the following notes outstanding: June 30, 2020 December 31, 2019 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 $ 27,020 $ 66,172 $ 23,712 July 2014 $15,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default 15,000 9,875 15,000 9,125 $ 81,172 $ 36,895 $ 81,872 $ 32,837 Notes Payable November 2014 $300,000 Note, 10% interest, due February 2019, currently in default (b) $ 298,959 19,211 $ 298,959 $ 34,627 August 2015 $75,000 Note, with a one-time interest charge of $75,000, currently in default (c) 75,000 75,000 75,000 75,000 $ 373,959 $ 94,211 $ 373,959 $ 109,627 Total $ 455,131 $ 131,106 $ 455,831 $ 142,464 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 March 31, 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% nominal 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 $98,959 of accrued interest on the Old Note. At June 30, 2020, accrued interest on this note was $19,211. The outstanding balance of this note was $298,959 at June 30, 2020, and December 31, 2019. The New Note was due on February 22, 2019. This note is in default and the Company is negotiating an extension. The Company made interest payments in the amount of $20,182 and $30,364 to the noteholder during the 12 months ended December 31, 2019, and the six months ended June 30, 2020, respectively. 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 31, 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, 2020, and December 31, 2019, the note had a balance of $75,000 in addition to the $75,000 fee included in accrued interest. |
Paycheck Protection Loan
Paycheck Protection Loan | 6 Months Ended |
Jun. 30, 2020 | |
Notes to Financial Statements | |
Paycheck Protection Loan | Note 6 – Paycheck Protection Loan In December 2019, an outbreak of a novel strain of coronavirus known as COVID-19 originated in Wuhan, China, and has spread to other countries, including the United States. On March 11, 2020, the World Health Organization declared the outbreak to be a pandemic. A number of jurisdictions in the United States, including the State of California, have declared a state of emergency. Further, the governor of the State of California, where the Company’s headquarters, all of its employees and the manufacturer of its Medtainer ® On May 4, 2020, the Company made a note in favor of Customers Bank in the principal amount of $137,690, of which $57,955 is considered a current liability and is included in the Company’s notes and loan payable balance, pursuant to the terms of the Paycheck Protection Program authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and pursuant to all regulations and guidance promulgated or provided by the Small Business Administration (the “SBA”) and other federal agencies that are now, or may become, applicable to the loan. The loan bears interest at the rate of 1% per annum and has a 2-year term. On June 5, 2020, the CARES Act was amended by the Paycheck Protection Program Flexibility Act of 2020. Under the CARES Act, as so amended, • The loan will be forgiven if its proceeds are used for payroll, mortgage interest, rent, and utilities during the 24-week period beginning on May 4, 2020, although the Company may elect to utilize the 8-week period that was in effect prior to the amendment (such 24- or 8-week period being the “covered period”). The Company has not determined whether it will make this election. The amount of loan forgiveness will be reduced if less than 60% of the funds is expended for payroll over the covered period. • No interest or principal will be required until the date on which the amount of forgiveness determined is remitted to the lender, although interest will continue to accrue over this deferral period. After the deferral period and after taking into account any loan forgiveness applicable to the loan pursuant to the program, as approved by the SBA, any remaining principal and accrued interest will be payable in substantially equal monthly installments over the remaining loan term, in the amount and according to the payment schedule provided by the lender. • Under the amendment to the CARES Act, the Company may apply to the lender to extend the term of the loan to 5 years and expects to do so, but no assurance can be given that the lender will agree to the extension. • The Company may delay the payment of employer payroll taxes until December 31, 2021, with respect to up to 50% of the amounts due and December 31, 2022, with respect to the remaining amounts due up to 50%. |
Stockholders Equity
Stockholders Equity | 6 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders Equity | Note 7 – Stockholders’ Equity 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. All references to common shares have been adjusted for the effects of the reverse split. The number of authorized shares of preferred stock remained 10,000,000. On May 21, 2020, the Company issued 20,000,000 shares of Common Stock to an unrelated party in consideration of $200,000. In the quarter ended June 30, 2020, the Company reconciled the effects of fractional shares to the number of shares held as outstanding by the stock transfer agent and reflected the net difference of 84,293shares in the statement of stockholders’ equity. |
Share Based Compensation
Share Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Compensation Related Costs [Abstract] | |
Share Based Compensation | Note 8 – Share-Based Compensation The Company’s 2018 Incentive Award Plan (the “2018 Plan”) became effective on December 1, 2018. Under the 2018 Plan, the Company was authorized to award up to 2,000,000 shares of common stock 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, 2019, 335,000 shares awarded to consultants were vested and 1,050,000 of the shares awarded to employees were vested. During the quarter ended June 30, 2020, all of the shares awarded to employees were vested. The Company made no awards in any other form during the three and six months ended June 30, 2020, and June 30, 2019. The Company expensed $149,039 and $149,038 for share-based compensation in the three months ended June 30, 2020, and June 30, 2019, for its employees and nonemployees in the accompanying consolidated statements of operations. For the six months ended June 30, 2020, and June 30, 2019, the Company expensed $298,076 and $569,680, respectively. The following table summarizes vesting for financial reporting purposes under GAAP of the Common Stock shares issued under the 2018 Plan: Shares of Common Stock Vesting Dates Employees Consultants December 31, 2018 — 185,000 January 1, 2019 750,000 — March 31, 2019 — 150,000 June 30, 2019 300,000 — June 30, 2020 300,000 — Total vested at June 30, 2020 1,350,000 335,000 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9 – Income Taxes As of December 31, 2019, the Company had approximately $3,248,000 of net operating loss carryforwards (“NOLs”) that are available to reduce future taxable income and begin to expire in 2035. 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 depends 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 quarter ended June 30, 2020. |
Capital Leases
Capital Leases | 6 Months Ended |
Jun. 30, 2020 | |
Notes to Financial Statements | |
Capital Leases | Note 10 – Capital Leases During each of the years ended at December 31, 2017, and December 31, 2016, the Company entered into 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, 2020 | |
Notes to Financial Statements | |
Related-Party Transactions | Note 11 – 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, 2020, the Company received loans of $164,978 from its officers and directors and repaid $243,747. The balances of these loans at June 30, 2020, and December 31, 2019, were $548,393 and $627,162, respectively. At June 30, 2020, the balance of one of these loans was $174,066, which bears interest at the Applicable Federal Rate, and is to be repaid commencing January 1, 2020, in equal monthly payments until its maturity on December 1, 2023. The balance of the other loan is non-interest-bearing and has no fixed maturity date; the Company expects to repay this loan when cash flows become available. Contracts The Company has made 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, 2020, and June 30, 2019, are as follows: Six Months Ended June 30, 2020 June 30, 2019 Capital lease payments $ — $ 10,000 Building lease payments 53,882 51,843 Purchase of products for resale 27,992 52,089 Total paid to related party $ 81,874 $ 113,932 |
Concentrations
Concentrations | 6 Months Ended |
Jun. 30, 2020 | |
Risks and Uncertainties [Abstract] | |
Concentrations | Note 12 – CONCENTRATIONS For the six months ended June 30, 2020, the Company purchased approximately 52% and 25% of its products for cost of goods sold from two distributors. 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 three months ended June 30, 2020, the Company purchased approximately 58% and 33% 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. As of June 30, 2020, three of the Company’s customers accounted for 50%, 14% and 13%, respectively, of its accounts receivable balance. As of December 31, 2019, three of the Company’s customers accounted for 34%, 21% and 18%, respectively, of its accounts receivable balance. |
Commitments
Commitments | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | Note 13 – 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. The Company is currently renegotiating an extension of this lease for another term. 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, 2020 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 14 – SUBSEQUENT EVENTS On July 30, 2020, the Company filed a certificate of amendment with the Secretary of State of the State of Florida, pursuant to which a series of 1,000,000 of its 10,000,000 shares was created, which Series is named Series A Convertible Preferred Stock (“Series A Preferred Stock”). Each share of this Series A Preferred Stock is convertible into 18 shares of common stock, has the dividend and distribution rights and redemption rights of the shares of common stock into which it is convertible, is not redeemable and has voting power equal to the combined voting power of all other of classes and series of the Company’s capital stock. On July 31, 2020 the Company entered into an Employment Agreement with its chief executive officer. Under this agreement, which has a 5-year term beginning August 1, 2020, he will receive an initial salary of $195,000 per year; will be entitled to an annual incentive based on the Company’s performance and other criteria determined by the Board of Directors, not to exceed 20% of the sum of the Company’s net income plus certain non-cash expenses for each year; and will be eligible for long-term compensation and other benefits to the same extent as other senior executives. Under the Employment Agreement, the Company agreed to exchange 18,000,000 of his shares of common stock for 1,000,000 shares of Series A Preferred Stock; upon the consummation of this exchange, these shares, together with his 1,230,000 remaining shares of common stock, will give him voting control of the Company. In the event that his employment is terminated by him for Good Reason or by the Company otherwise than for Cause, he will be entitled to receive 2.99 time his then current salary as severance pay, pro rata annual incentive, vesting of awards under long-term plans and certain heathcare and disability benefits. In the event of his disability, he will be entitled to benefits similar to those described in the previous sentence, but not to severance pay. The Employment Agreement defines “Good Reason” as any of the following events: (i) the Board’s materially and adversely changing his duties, authority or responsibilities, otherwise than as permitted by The Employment Agreement, (ii) the Board’s requiring him to report to any person or body other than the Board, (iii) the Board’s or the Company’s reducing his base salary or incentive opportunities, (iv) the Company’s relocating its principal place of business so as to result in an increase in the Executive’s one-way commute of more than thirty (30) miles, (v) prior to August 1, 2021, the Company’s failure to pay his base salary to the extent that the Company is able to do while meeting its current trade obligations or (vi) on and after August 1, 2021, the Company’s failure to pay his base salary earned on and after that date as and when due. The events described in clauses (i)-(iv) may be cured, but those described in clauses (v) and (vi) may not be cured. The Employment Agreement defines “Cause” as (i) his conviction of or entry of a plea of guilty or nolo contendere to any felony involving moral turpitude, fraud, theft, breach of trust or other similar acts, that has a substantial and adverse effect on his qualifications or ability to perform his duties, (ii) his engaging in conduct constituting willful misconduct, gross negligence or fraud that results in significant economic harm to the Company or (iii) after February 28, 2021, his continued failure substantially to perform his duties, if such failure is not remedied within 45 days after he receives from the Board written notice thereof, specifying in reasonable detail the particulars of such continued failure. Management evaluated all other subsequent events through the date when these financial statements were issued and has determined that none of them requires disclosure herein. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Accounting principles | Accounting Principles The accompanying unaudited consolidated 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 GAAP for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as at June 30, 2020, and the results of operations and cash flows for the periods presented. The results of operations for the three and six months ended June 30, 2020, 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, 2019, filed with the SEC on May 28, 2020. |
Principles of Consolidation | Principles of Consolidation The unaudited 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 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 from its estimates. The Company reevaluates all of its accounting estimates at least quarterly based on these conditions and record adjustments when necessary. Significant estimates relied upon in preparing these unaudited 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. |
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, 2020, and December 31, 2019. At June 30, 2020, the Company recorded $32,470 in bad debt. At June 30, 2019, the Company did not record an expense for bad debt. |
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 methods. 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 determined 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 a 2-year lease term. 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 their carrying value may not be recoverable. The Company records intangible assets at fair value, estimated using a discounted cash flow approach. The Company amortizes intangible assets that have finite lives using either the straight-line method or based on estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization is recorded over estimated useful lives ranging from 14 to 20 years. The Company reviews intangible assets subject to amortization quarterly to determine whether any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in 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 its carrying value 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 the prior year, the Company conducted its annual impairment test of goodwill during the fourth quarter of the year ended December 31, 2019. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole. The estimate of fair value requires significant judgment. Any loss resulting from an impairment test will 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 There was no impairment of intangible assets, long-lived assets or goodwill during the six months ended June 30, 2020. |
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, which 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. |
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 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 typically occurs 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 quarter ended June 30, 2020, and June 30, 2019: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Product revenue $ 289,062 $ 383,873 $ 831,936 $ 1,000,085 Service revenue 3,978 47,754 17,233 35,979 Total revenue $ 293,040 $ 431,627 $ 849,169 $ 1,036,064 |
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 their short-term nature. 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) |
Advertising | Advertising Advertising and marketing expenses are charged to operations as incurred. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. ASC Topic 740.10.30 clarifies 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 financial institutions, 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. |
Accounting for Leases | Accounting for Leases In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Summary Of Significant Accounting Policies Tables | |
Schedule of revenuees | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Product revenue $ 289,062 $ 383,873 $ 831,936 $ 1,000,085 Service revenue 3,978 47,754 17,233 35,979 Total revenue $ 293,040 $ 431,627 $ 849,169 $ 1,036,064 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Balances at June 30, 2020: Description Weighted Average Gross Carrying Accumulated Net Amount Certain U.S. patents 15 years $ 435,000 $ (58,829 ) $ 376,170 Certain U.S. patents 15 years 435,000 (56,614 ) 378,386 Certain Canadian patents 20 years 260,000 (26,691 ) 233,309 Certain European patents 14 years 30,000 (4,305 ) 25,695 Molds 15 years 150,000 (20,287 ) 129,713 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (166,726 ) $ 1,365,274 Goodwill $ 1,020,314 $ — $ 1,020,314 Balances at December 31, 2019: Description Weighted Average Gross Carrying Accumulated Amortization Net Amount Certain U.S. patents 15 years $ 435,000 $ (44,571 ) $ 390,429 Certain U.S. patents 15 years 435,000 (42,895 ) 392,105 Certain Canadian patents 20 years 260,000 (20,224 ) 239,776 Certain European patents 14 years 30,000 (3,262 ) 26,738 Molds 15 years 150,000 (15,370 ) 134,630 Trademark Indefinite life 220,000 — 220,000 Domain name Indefinite life 2,000 — 2,000 Intangible Totals $ 1,532,000 $ (126,322 ) $ 1,405,678 Goodwill $ 1,020,314 $ — $ 1,020,314 |
Convertible Notes Payable and_2
Convertible Notes Payable and Promissory Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Convertible Notes Payable And Promissory Notes Payable | |
Schedule of Convertible Notes Payable and Promissory Notes Payable | June 30, 2020 December 31, 2019 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 $ 27,020 $ 66,172 $ 23,712 July 2014 $15,000 Note convertible into common stock at $5.00 per share, 10% interest, currently in default 15,000 9,875 15,000 9,125 $ 81,172 $ 36,895 $ 81,872 $ 32,837 Notes Payable November 2014 $300,000 Note, 10% interest, due February 2019, currently in default (b) $ 298,959 19,211 $ 298,959 $ 34,627 August 2015 $75,000 Note, with a one-time interest charge of $75,000, currently in default (c) 75,000 75,000 75,000 75,000 $ 373,959 $ 94,211 $ 373,959 $ 109,627 Total $ 455,131 $ 131,106 $ 455,831 $ 142,464 |
Share Based Compensation (Table
Share Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share Based Compensation Tables Abstract | |
Schedule of share based compensation | Shares of Common Stock Vesting Dates Employees Consultants December 31, 2018 — 185,000 January 1, 2019 750,000 — March 31, 2019 — 150,000 June 30, 2019 300,000 — June 30, 2020 300,000 — Total vested at June 30, 2020 1,350,000 335,000 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Related-party Transactions | |
Schedule of related party transactions | Six Months Ended June 30, 2020 June 30, 2019 Capital lease payments $ — $ 10,000 Building lease payments 53,882 51,843 Purchase of products for resale 27,992 52,089 Total paid to related party $ 81,874 $ 113,932 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenues (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Jun. 30, 2020 | Jun. 30, 2019 | |
Summary Of Significant Accounting Policies - Revenues | ||||
Product revenue | $ 289,062 | $ 383,873 | $ 831,936 | $ 1,000,085 |
Service revenue | 3,978 | 47,754 | 17,233 | 35,979 |
Total | $ 293,040 | $ 431,627 | $ 849,169 | $ 1,036,064 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | Jun. 30, 2020USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Working Capital Deficit | $ 308,259 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Net Amount | $ 1,365,274 | $ 1,405,678 | |
Certain US Patents 1 | |||
Weighted Average Estimated Useful Life | 15 years | 15 years | |
Gross Carrying Value | $ 435,000 | $ 435,000 | |
Accumulated Amortization | (58,829) | (44,571) | |
Net Amount | $ 376,170 | $ 390,429 | |
Certain US Patents 2 | |||
Weighted Average Estimated Useful Life | 15 years | 15 years | |
Gross Carrying Value | $ 435,000 | $ 435,000 | |
Accumulated Amortization | (56,614) | (42,895) | |
Net Amount | $ 378,386 | $ 392,105 | |
Certain Canadian Patents | |||
Weighted Average Estimated Useful Life | 20 years | 20 years | |
Gross Carrying Value | $ 260,000 | $ 260,000 | |
Accumulated Amortization | (26,691) | (20,224) | |
Net Amount | $ 233,309 | $ 239,776 | |
Certain European Patents | |||
Weighted Average Estimated Useful Life | 14 years | 14 years | |
Gross Carrying Value | $ 30,000 | $ 30,000 | |
Accumulated Amortization | (4,305) | (3,262) | |
Net Amount | $ 25,695 | $ 26,738 | |
Molds | |||
Weighted Average Estimated Useful Life | 15 years | 15 years | |
Gross Carrying Value | $ 150,000 | $ 2,000 | |
Accumulated Amortization | (20,287) | ||
Net Amount | 129,713 | 2,000 | |
Trademark | |||
Gross Carrying Value | 220,000 | 150,000 | |
Accumulated Amortization | (15,370) | ||
Net Amount | 220,000 | 134,630 | |
Domain Name | |||
Gross Carrying Value | 2,000 | 220,000 | |
Accumulated Amortization | |||
Net Amount | 2,000 | 220,000 | |
Intangible Totals | |||
Gross Carrying Value | 1,532,000 | 1,532,000 | |
Accumulated Amortization | (166,726) | (126,322) | |
Net Amount | 1,365,274 | 1,405,678 | |
Goodwill | |||
Gross Carrying Value | 1,020,314 | 1,020,314 | |
Net Amount | $ 1,020,314 | $ 1,020,314 |
Convertible Notes Payable and_3
Convertible Notes Payable and Promissory Notes Payable (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
July 2014 $75,000 note, convertible into common stock at $5.00 per share, 10% interest, currently in default (a) | ||
Principal | $ 66,172 | $ 66,172 |
Accrued Interest | 27,020 | 23,712 |
July 2014 $15,000 note, convertible into common stock at $5.00 per share, 10% interest, currently in default (a) | ||
Principal | 15,000 | 15,000 |
Accrued Interest | 9,875 | 9,125 |
November 2014 $300,000 note, due February 2019, 10% interest, currently in default (b) | ||
Principal | 298,959 | 298,959 |
Accrued Interest | 19,211 | 34,627 |
August 2015 $75,000 note, with one-time interest charge of $75,000, currently in default (c) | ||
Principal | 75,000 | 75,000 |
Accrued Interest | $ 75,000 | $ 75,000 |
Share Based Compensation (Detai
Share Based Compensation (Details) | 18 Months Ended |
Jun. 30, 2020USD ($) | |
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 | |
June 30, 2020 | |
Employees | 300,000 |
Consultants | |
Total vested at June 30, 2020 | |
Employees | 1,350,000 |
Consultants | $ 335,000 |
Related-Party Transactions (Det
Related-Party Transactions (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Relatedparty Transactions Details Abstract | ||
Capital lease payments | $ 10,000 | |
Building lease payments | 53,882 | 51,843 |
Purchase of products for resale | 27,992 | 52,089 |
Total | $ 81,874 | $ 113,932 |
Concentrations (Details Narrati
Concentrations (Details Narrative) | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Risks and Uncertainties [Abstract] | ||
Concentration risk percentage | 5.00% | 12.00% |