Tristar Wellness Solutions (TWSI) 10-Q 19 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 17, 2015
Document And Entity Information
Entity Registrant Name	TRISTAR WELLNESS SOLUTIONS, INC.
Entity Central Index Key	1,109,153
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer	No
Is Entity a Voluntary Filer	No
Is Entity's Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		27,996,715
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current assets
Cash and cash equivalents	$ 497	$ 189
Accounts receivables, net	$ 457	652
Receivable from related party		1
Prepaid expenses and other	$ 160	141
Inventories, net	635	814
Total current assets	1,749	1,797
Non-current assets
Accounts receivables, net of current portion	41	41
Property and equipment, net	325	312
Intangible assets, net	738	782
Other non-current assets	122	137
Total non-current assets	1,226	1,272
TOTAL ASSETS	2,975	3,069
Current liabilities
Accounts payable and accrued expenses	3,131	2,450
Accounts payable and accrued expenses due to related parties	1,794	1,839
Short-term notes (net of debt discount $405 and $12 as of June 30, 2015 and December 31, 2014, respectively)	1,760	588
Short-term notes (in default)	3,744	3,744
Short-term notes - related party (net of debt discount $10 and $0 as of June 30, 2015 and December 31, 2014, respectively)	345	200
Short-term notes - (in default) related party	4,100	4,100
Convertible notes	652	671
Convertible notes (in default)- related party	$ 230	230
Deferred revenue		48
Derivative liability	$ 962	270
Total current liabilities	16,718	14,140
TOTAL LIABILITIES	16,718	14,140
STOCKHOLDERS' DEFICIT
Convertible preferred stock, $0.001 par value; 10,000,000 shares authorized; 5,621,667 and 5,621,667 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively	6	6
Common stock; $0.0001 par value; 50,000,000 shares authorized; 27,546,715 and 24,221,715 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively	3	2
Additional paid-in capital	20,701	20,055
Other comprehensive gain	276	182
Accumulated deficit	(34,729)	(31,316)
TOTAL STOCKHOLDERS' DEFICIT	(13,743)	(11,071)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 2,975	$ 3,069

Condensed Consolidated Balance3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Current liabilities
Short-term notes, net of debt discount	$ 405	$ 12
Short-term notes - related party	$ 10	$ 0
STOCKHOLDERS' DEFICIT
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	10,000,000	10,000,000
Convertible preferred stock, shares issued	5,621,667	5,621,667
Convertible preferred stock, shares outstanding	5,621,667	5,621,667
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	27,546,715	24,221,715
Common stock, shares outstanding	27,546,715	24,221,715

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Condensed Consolidated Statements Of Operations
Sales Revenue	$ 782	$ 1,224	$ 1,927	$ 2,527
Cost of Goods Sold	372	844	770	1,882
Gross profit	410	380	1,157	645
Operating expenses:
General and administrative	836	967	1,601	1,692
Sales, marketing and development expenses	466	676	1,009	1,403
Amortization on intangible assets	22	22	44	42
Total operating expenses	1,324	1,665	2,654	3,137
Loss from operations	(914)	(1,285)	(1,497)	(2,492)
Other income and (expenses)
Interest expense	(631)	$ (951)	(1,160)	$ (1,503)
Gain on sale of assets and liabilities	1		33
Change in fair value of derivative liability	(183)	$ 289	(692)	$ (1,510)
Other expenses	61	12	(97)
Total other income (expenses)	(752)	(650)	(1,916)	$ (3,013)
Net loss	(1,666)	(1,935)	(3,413)	(5,505)
Other comprehensive gain (loss)
Foreign currency translation gain (loss)	(50)	63	94	24
Total comprehensive loss	$ (1,716)	$ (1,872)	$ (3,319)	$ (5,481)
Loss per share	$ (0.06)	$ (0.08)	$ (0.13)	$ (0.24)
Diluted loss per share	$ (0.06)	$ (0.08)	$ (0.13)	$ (0.24)
Weighted average common shares outstanding	26,763,748	23,041,715	25,558,870	22,563,814
Diluted weighted average common shares outstanding	26,763,748	23,041,715	25,558,870	22,563,814

Condensed Consolidated Stateme5

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities
Loss for the period from continuing operations	$ (3,413)	$ (5,505)
Adjustments to reconcile net profit/loss from continuing operations to net cash provided by operating activities:
Depreciation expenses	49	135
Change in fair value of derivative liability	692	1,510
Amortization of debt discount	109	871
Intangible asset amortization	44	$ 42
Issuance of warrants for services	11
Imputed interest on note payable	35	$ 21
Changes in operating assets and liabilities:
Accounts receivables	195	$ 81
Accounts receivables- Related Party	1
Inventory	179	$ 30
Prepaid expenses	(19)	24
Accounts payable and accruals	781	$ 286
Other non-current assets	$ 15
Other receivables		$ 54
Deferred revenue	$ (48)	(192)
Accounts payable and accrued expenses - related party	(45)	415
Net cash used in operating activities from continuing operations	(1,414)	(2,228)
Cash flow from investing activities:
Purchase of property plant and equipment	(62)	(28)
Net cash provided by (used in) investing activities	(62)	(28)
Cash flow from financing activities
Proceeds from issuance of short-term notes	$ 1,595	1,564
Proceeds from issuance of short-term convertible notes - related party		$ 230
Rrepayment of short-term notes- related party	$ (55)
Proceeds from issuance of convertible notes		$ 330
Proceeds from issuance of common stock	$ 150
Net cash generated from financing activities from continuing operations	1,690	$ 2,124
Cumulative translation adjustment	94	24
Net change in cash	308	(108)
Cash and cash equivalent, beginning	189	193
Cash and cash equivalent, ending	497	85
Supplemental schedule of non-cash activities
Issuance of warrants in conjunction with promissory notes	512	$ 845
Increase in additional paid in capital on extinguishment of debt	$ 213
Debt discount due to embedded derivative liabilities within convertible debentures issued		$ 282
Conversion of notes payable to common stock	$ 19	$ 8

The Company

The Company	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 1. The Company	TriStar Wellness Solutions, Inc. (“the Company”) was incorporated on August 28, 2000 in the state of Nevada under the name “Quadric Acquisitions”. From the date of its incorporation through April 27, 2012, the Company had several name changes and different business plans all under prior management that is no longer with the Company. On April 27, 2012, the Company underwent a change of control transaction and changed its business plan. On January 7, 2013, the Company changed its name from Biopack Environmental Solutions, Inc. to TriStar Wellness Solutions, Inc. with the State of Nevada, and such change was effected with FINRA on January 18, 2013. The Company conducts its current operations under the name TriStar Wellness Solutions, Inc. All of the Company’s operations are conducted through its wholly-owned subsidiary, HemCon Medical Technologies Inc., an Oregon corporation (“HemCon”), and involve the development, marketing and sale of HemCon’s advanced wound care products.

Summary of Significant Accounti

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 2. Summary of Significant Accounting Policies	There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on April 15, 2015. Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2014. All intercompany balances and transactions have been eliminated. Use of Estimates In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the fair value of equity instruments upon issuance, and estimating the useful lives of depreciable assets and whether impairment charges may apply. Recently Issued Accounting Pronouncements In April 2015, the FASB issued ASU 2015-03, S implifying the Presentation of Debt Issuance Costs In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic

Liquidity and Going Concern

Liquidity and Going Concern	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 3. Liquidity and Going Concern	The Company's unaudited condensed consolidated interim financial statements are prepared using accounting principles generally accepted in the United States of America (GAAP) applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenue sufficient to cover its operating costs and allow it to continue as a going concern. In addition, as of June 30, 2015, the Company had an accumulated deficit of $34,729, and had incurred a net loss for the six months ended June 30, 2015 of $3,413 and had negative working capital of $14,969. Funding has been provided by related parties as well as new investors committed to make it possible to maintain, expand, and ensure the advancement of the TriStar Wellness products. The consolidated financial statements for the fiscal year ended December 31, 2014 states that because the Company has suffered recurring operating losses from operations, there is substantial doubt about the Company’s ability to continue as a going concern. A “going concern” opinion indicates that the consolidated financial statements have been prepared assuming the Company will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Inventories

Inventories	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 4. Inventories	Inventories, net consist of the following at June 30, 2015 and December 31, 2014 (in thousands): June 30, December 31, 2015 2014 Raw materials $ 225 $ 157 Work in Progress 381 178 Finished Goods 29 479 $ 635 $ 814 Reserve for obsolescence was approximately $186 and $227, as of June 30, 2015 and December 31, 2014, respectively.

Property and Equipment

Property and Equipment	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 5. Property and Equipment	Property and equipment consist of the following at June 30, 2015 and December 31, 2014 (in thousands): Estimates Useful Life June 30, December 31, (Years) 2015 2014 Manufacturing Equipment 7-10 $ 290 $ 290 Leasehold Improvements 7 48 - Office Furniture and Equipment 3-7 135 121 Computer Equipment and Software 1-5 23 23 496 434 Less: Accumulated Depreciation, amortization and impairments (171 ) (122 ) $ 325 $ 312 Depreciation expense was approximately $49 and $135, for the six months ended June 30, 2015 and 2014, respectively.

Loans Payable

Loans Payable	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 6. Loans Payable	June 30, December 31, 2015 2014 Short-term notes (net of debt discount $405 and $12 as of June 30, 2015 and December 31, 2014, respectively) 1,760 588 Short-term notes (in default) 3,744 3,744 Short-term notes - related party (net of debt discount $10 and $0 as of June 30, 2015 and December 31, 2014, respectively) 345 200 Short-term notes - (in default) related party 4,100 4,100 $ 9,949 $ 8,632 Convertible notes 652 671 Convertible notes (in default)- related party 230 230 $ 882 $ 901 Promissory Notes First Quarter 2015 Activities During the quarter ended March 31, 2015, the Company issued promissory notes (the “Notes”) to a third party, in the principal amount of $510. The Notes has an interest rate of 18% per annum, simple interest and is due on or before September 30, 2015. In connection with the Note, the Company issued warrants to purchase 1,020,000 shares of our common stock at an exercise price of $0.20 per share. The relative fair value of the warrants compared to the debt was recorded as a component of stockholders’ equity with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of March 31, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.3% - 1.7%, volatility – 77.5% - 80.8%, expected term – 4 years, expected dividends– N/A. The debt discounts related to the warrants are being amortized over a 0.8 year period (through maturity) on a straight-line basis. The Company also recorded 6% accrued facility fees in aggregate for approximately $31 in connection with the Notes. The accrued loan fees is due on September 30, 2015. The Company recorded a $95 discount at issuance, and of the $95 discount recorded at issuance the portion relating to the detachable warrants of $64 was credited to additional paid in capital and the $31 loan fee described above was credited to accrued expense. During the quarter ended March 31, 2015, the Company issued promissory note (the “Note”) to a third party, in the principal amount of $90. The Note has an interest rate of 18% per annum, simple interest and is due on or before September 30, 2015. In connection with the Note, the Company issued warrants to purchase 180,000 shares of our common stock at an exercise price of $0.20 per share. The relative fair value of the warrants compared to the debt was recorded as a component of stockholders’ equity with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of March 31, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.5%, volatility – 80.2%, expected term – 4 years, expected dividends– N/A. The debt discounts related to the warrants are being amortized over a 0.6 year period (through maturity) on a straight-line basis. The Company also recorded 6% accrued loan fees in aggregate for approximately $5 in connection with the Notes. The accrued facility fees is due on September 30, 2015. The Company recorded an $18 discount at issuance, and of the $18 discount recorded at issuance the portion relating to the detachable warrants of $12 was credited to additional paid in capital and the $6 facility fee described above was credited to accrued expense. During the quarter ended March 31, 2015, the Company issued promissory notes to several third parties, in the principal amount of $95. The notes have effective interest rate of 30% per annum, simple interest and were due on September 30, 2015. On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with John Linderman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6 in the equity. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of March 31, 2015 were $40 and $13, respectively. On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with James Barickman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6 in the equity. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of March 31, 2015 were $40 and $13, respectively. On March 3, 2015, the Company entered into a promissory note agreement (the “Note”) with NorthStar Consumer Products, LLC, one of the largest shareholders and an entity controlled by John Linderman and James Barickman, to settle the outstanding accounts payable of $381 with principal of $180 promissory note. The Note is due on September 2, 2017, with interest rate of 18% per annum. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $201 in the equity. The outstanding accrued interest is $2 as of March 31, 2015. During the quarter ended March 31, 2015, the Company recorded total amortization on debt discount of $25. Second Quarter 2015 Activities During the quarter ended June 30, 2015, the Company issued promissory notes (the “Notes”) to a third party, in the principal amount of $200. The Notes has an interest rate of 18% per annum, simple interest and is due on or before November 30, 2015. In connection with the Note, the Company issued warrants to purchase 800,000 shares of our common stock at an exercise price of $0.10 per share. The relative fair value of the warrants compared to the debt was recorded as a component of stockholders’ equity with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of June 30, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.50% - 1.58%, volatility – 77.003% - 78.42%, expected term – 4 years, expected dividends– N/A. The debt discounts related to the warrants are being amortized over a 0.6 year period (through maturity) on a straight-line basis. The Company also recorded 6% accrued facility fees in aggregate for approximately $12 in connection with the Notes. The accrued loan fees is due on November 30, 2015. The Company recorded a $71 discount at issuance, and of the $71 discount recorded at issuance the portion relating to the detachable warrants of $59 was credited to additional paid in capital and the $12 loan fee described above was credited to accrued expense. On June 8, 2015, the Company issued a promissory note (the “Note”) to a third party, in the principal amount of $700. The Note has effective interest rate of 35% per annum, simple interest and is due on June 30, 2016. In connection with this promissory note, the Company issued 280,000 shares of common stock on July 6, 2015. The fair value of the common stock to the debt were recorded as a component of stockholders’ equity with the offset recorded as a discount on the promissory note and included as a component of promissory notes in the accompanying consolidated balance sheet as of June 30, 2015. The fair value of the common stock was based on the stock price on the issuance date on the market. The debt discounts related to the common stock are being amortized over the term of the promissory notes on a straight-line basis. The Company also recorded 35% accrued facility fees in aggregate for approximately $245 in connection with the Note. The accrued loan fees is due on June 30, 2016. The Company recorded a $328 discount at issuance, and of the $328 discount recorded at issuance the portion relating to the detachable common stock of $83 was credited to additional paid in capital and the $245 loan fee described above was credited to accrued expense. During the quarter ended June 30, 2015, the Company paid back principal amount of $8 and $8 to James Barickman and John Linderman, for the debt issued during the quarter ended March 31, 2015 During the quarter ended June 30, 2015, the Company recorded total amortization on debt discount of $83. The outstanding accrued interest is $2,264 as of June 30, 2015. As of June 30, 2015, the company had $8,074 with past due maturities. $4,330 is related party to entities controlled by Mr. Fredrick Voight, one of our former officers and a former member of our Board of Directors. The company is working with the respective parties to extend the maturity dates of these notes.

Stockholders' Equity

Stockholders' Equity	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 7. Stockholders' Equity	Diluted Shares There were 405,000 shares of Series A, 1,000,000 shares of Series B and no shares of Series C outstanding as of June 30, 2015. Each share of A,B & C Preferred converts into five shares of common stock. Preferred A,B & C are convertible into 7,025,000. Each share of Preferred D is convertible into twenty five shares of common stock. Convertible preferred stock was considered anti-dilutive for the three months and six months ended June 30, 2015 and 2014, due to net losses. As of June 30, 2015, there are 4,216,667 Series D Convertible Preferred Shares which are convertible into 105,416,675 of common shares. Total preferred convertible is 112,441,675 common shares. All Series D Convertible Preferred Stock voting rights are on an “as converted to common stock” basis. Dividends are not mandatory. If declared by the Board Series D Preferred Stock shall have preference over common stock and equal to other series of preferred stock. As of June 30, 2015, there are 14,476,600 warrants which are convertible into one share of common stock with a weighted average exercise price of $1.07. In addition, convertible debt of $652 as of June 30, 2015 is convertible into 45,730,153 shares of the Company’s common stock. Common Stock Issued for Cash During the six months ended June 30, 2015, the Company issued 3,325,000 shares of common stock for approximately $150 in cash and $19 from a convertible debt instrument. The shares were issued to third parties. Detachable Warrants During the six months ended June 30, 2015, the Company issued Promissory Notes containing 2,100,000 detachable Warrants. The detachable Warrants were valued at approximately $0.085 per warrant using the Black-Scholes model at June 30, 2015. The relative fair value of the detachable Warrants compared to the debt of approximately $512 was recorded as a component of stockholders’ equity and accrued expenses with the offset recorded as a discount on the promissory notes and included as a component of promissory notes in the accompanying condensed consolidated balance sheet as of June 30, 2015. The fair value of the warrants was determined using the Black-Scholes model with the following assumptions: risk free interest rate – 1.3% - 1.7%, volatility – 77.5% - 80.8%, expected term – 4 years, expected dividends– N/A. The debt discount related to the warrants are being amortized over a nine month period (through maturity) on a straight-line basis.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 8. Related Party Transactions	Consulting Agreements On January 6, 2014 the Company entered into a revised consulting agreement with Chord Advisors, LLC ("Chord"). David Horin, the Company's Chief Financial Officer has a significant equity partnership stake in Chord. Currently the agreement is on a month to month basis. The Company has agreed to pay Chord a monthly consulting fee of approximately $13 for Mr. Horin's services and services of his firm and 50,000 warrants upon the consummation of a financing transaction in excess of $2 million with an exercise price equal to the exercise price of such warrants in a financing transaction. The Company incurred $38 and $38 for the three months ended June 30, 2015 and 2014, respectively. The Company incurred $75 and $75 for the six months ended June 30, 2015 and 2014, respectively, and has an account payable balance related to this agreement of $224 as of June 30, 2015. Accounts Payable and Accrued Expenses As of June 30, 2015, the Company owed Daystar Funding LP $50, Chord Advisors $224 and Rivercoach $72. Daystar Funding LP and Rivercoach are controlled by Mr. Fredrick Voight, one of our former officers and a former member of our Board of Directors. Related Party Notes On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with John Linderman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. The outstanding principal and accrued interest as of June 30, 2015 were $33 and $14, respectively. On March 3, 2015, the Company entered into a promissory note modification agreement (the “Modified Note”) with James Barickman, one of the Company’s largest shareholders, to replace the original promissory note (the “Old Note”), which was issued on May 6, 2013 with principal of $50. The Old Note had an interest rate of 18% per annum, simple interest, and is currently past due. As of March 2, 2015, the Company has recorded $18 accrued interest related to the Old Note, and this past accrued unpaid interest was settled for $12 per Modified Note. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $6. The Modified Note is due on March 1, 2016, with interest rate of 18% per annum. On March 4, 2015, the Company paid back $10, and the outstanding principal and accrued interest as of June 30, 2015 were $33 and $14, respectively. On March 3, 2015, the Company entered into a promissory note agreement (the “Note”) with NorthStar Consumer Products, LLC, one of the largest shareholders and an entity controlled by John Linderman and James Barickman, to settle the outstanding accounts payable of $355 with principal of $180 promissory note. The Note is due on September 2, 2017, with interest rate of 18% per annum. The modification was accounted for as a debt extinguishment in accordance with ASC 470. As a result of the modification, the Company recorded a gain on extinguishment of debt of $175. The outstanding accrued interest is $11 as of June 30, 2015. As of June 30, 2015, the Company owed to Daystar Funding, LP $4,330 and accrued interest of $1,405. Daystar Funding LP and is controlled by Mr. Fredrick Voight, one of our former officers and a former member of our Board of Directors. As of June 30, 2015, the company had $4,330 with past due maturity dates to related party to entities by controlled by Mr. Fredrick Voight, one of our former officers and a former member of our Board of Directors. The company is working with the respective parties to extend the maturity dates of these notes.

Intangible Assets, Net

Intangible Assets, Net	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 9. Intangible Assets, Net	For the six months ended June 30, 2015, intangible assets consisted primarily of patents, customer lists, non-compete arrangements and a trade name. Patents, customer lists, non-compete arrangements and a trade name acquired in business combinations under the purchase method of accounting are recorded at fair value net of accumulated amortization since the acquisition date. The intangible assets are amortized over their estimated useful life which is 4 to 16 years. The amortization expense for the six months ended June 30, 2015 and 2014 was $44 and $42, respectively. Amortized as of Balance as of Life in June 30, December 31, June 30, December 31, Description Years Price 2014 2014 2014 2014 Patents 12 $ 336 $ 60 $ 46 $ 276 $ 290 Customer list 14 198 32 25 166 173 Trade name 16 266 29 22 237 244 Non-compete agreement 4 127 68 52 59 75 $ 927 $ 189 $ 145 $ 738 $ 782

Litigation

Litigation	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 10. Litigation	The Company recognizes a liability for a contingency when it is probable that liability has been incurred and when the amount of loss can be reasonably estimated. When a range of probable loss can be estimated, the Company accrues the most likely amount of such loss, and if such amount is not determinable, then the Company accrues the minimum of the range of probable loss. As of June 30, 2015, there was no litigation against the Company and therefore the litigation accrual was zero.

Fair Value Measurements

Fair Value Measurements	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 11. Fair Value Measurements	The Company has adopted the provisions of ASC 820 which defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. ASC 820 provides guidance on how to measure certain financial assets and financial liabilities at fair value. The requirement to measure an asset as liability at fair value is determined under the U.S. GAAP. Certain of the Company’s assets and liabilities are considered to be financial instruments and are required to be measured at fair value in the consolidated balance sheets. Certain of these financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, short-term debt and deferred revenue are measured at cost, which approximates fair value due to the short-term maturity of these instruments. Derivative liabilities are measured at fair value. The Company measures fair value basis based on the following key objectives: · Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; · A three-level hierarchy (“Valuation Hierarchy”) which prioritizes the use of observable pricing data (Level 1 and Level 2 inputs as defined below) over unobservable pricing data (Level 3 inputs as defined below) is used in measuring value; and · The Company’s creditworthiness is considered when measuring the fair value of liabilities. The valuation hierarchy used in measuring fair value is defined as follows: · Level 1 inputs are observed inputs such as quoted prices for identical instruments inactive markets; · Level 2 inputs are inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments inactive markets or quoted prices for identical or similar instruments in markets that are not active; and · Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs are unobservable. Level 3 requires significant management judgment or estimation. All items measures at fair value are required to be classified and disclosed as a Level 1, 2 or 3 asset or liability based on the inputs used to measure for value of an asset or liability in its entirety. An asset or liability classified as Level 1 is measured by quoted prices in active markets for identical instruments. An asset or liability classified as Level 2 is measured using significant observable inputs and an asset or liability classified as Level 3 is measured using significant unobservable inputs. The following tables classify the Company’s liabilities measured at fair value on a recurring basis (primarily reflecting an increase in stock price per share) into the fair value as of June 30, 2015 and December 31, 2014 (in thousands): June 30, 2015 Description Level 1 Level 2 Level 3 Derivative liability - conversion options $ - $ - $ 962 December 31, 2014 Description Level 1 Level 2 Level 3 Derivative liability - conversion options $ - $ - $ 270 There were no transfers between Level 1, 2 or 3 during the six months ended June 30, 2015. The following table presents changes in Level 3 liabilities measured at fair value from the period ended December 31, 2014 through June 30, 2015. Both observable and unobservable inputs are used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. Balance as of December 31, 2014 $ 270 Change in fair value of derivative liability - conversion option 692 Balance - June 30, 2015 $ 962 ____________ * The Notes contain an embedded conversion feature that the Company has determined is a derivative requiring bifurcation in accordance with the provisions of ASC 815.

Subsequent Events

Subsequent Events	6 Months Ended
	Jun. 30, 2015
Notes to Financial Statements
Note 12. Subsequent Events	The Company issued 450,000 common shares of stock to in relation to a debt instrument.

Summary of Significant Accoun18

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2015
Summary Of Significant Accounting Policies Policies
Basis of Presentation and Principles of Consolidation	The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions to Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. Interim results are not necessarily indicative of results for a full year. The condensed consolidated financial statements and notes should be read in conjunction with the financial statements and notes for the year ended December 31, 2014. All intercompany balances and transactions have been eliminated.
Use of Estimates	In preparing financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payment arrangements, estimating the fair value of equity instruments upon issuance, and estimating the useful lives of depreciable assets and whether impairment charges may apply.
Recently Issued Accounting Pronouncements	In April 2015, the FASB issued ASU 2015-03, S implifying the Presentation of Debt Issuance Costs In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic

Inventories (Tables)

Inventories (Tables)	6 Months Ended
	Jun. 30, 2015
Inventories Tables
Inventories	Inventories, net consist of the following at June 30, 2015 and December 31, 2014 (in thousands): June 30, December 31, 2015 2014 Raw materials $ 225 $ 157 Work in Progress 381 178 Finished Goods 29 479 $ 635 $ 814

Property and Equipment (Tables)

Property and Equipment (Tables)	6 Months Ended
	Jun. 30, 2015
Property And Equipment Tables
Property and Equipment	Estimates Useful Life June 30, December 31, (Years) 2015 2014 Manufacturing Equipment 7-10 $ 290 $ 290 Leasehold Improvements 7 48 - Office Furniture and Equipment 3-7 135 121 Computer Equipment and Software 1-5 23 23 496 434 Less: Accumulated Depreciation, amortization and impairments (171 ) (122 ) $ 325 $ 312

Loans Payable (Tables)

Loans Payable (Tables)	6 Months Ended
	Jun. 30, 2015
Loans Payable Tables
Schedule of Short term loans	June 30, December 31, 2015 2014 Short-term notes (net of debt discount $405 and $12 as of June 30, 2015 and December 31, 2014, respectively) 1,760 588 Short-term notes (in default) 3,744 3,744 Short-term notes - related party (net of debt discount $10 and $0 as of June 30, 2015 and December 31, 2014, respectively) 345 200 Short-term notes - (in default) related party 4,100 4,100 $ 9,949 $ 8,632 Convertible notes 652 671 Convertible notes (in default)- related party 230 230 $ 882 $ 901

Intangible Assets, Net (Tables)

Intangible Assets, Net (Tables)	6 Months Ended
	Jun. 30, 2015
Intangible Assets Net Tables
Schedule of intangible assets	The amortization expense for the six months ended June 30, 2015 and 2014 was $44 and $42, respectively. Amortized as of Balance as of Life in June 30, December 31, June 30, December 31, Description Years Price 2014 2014 2014 2014 Patents 12 $ 336 $ 60 $ 46 $ 276 $ 290 Customer list 14 198 32 25 166 173 Trade name 16 266 29 22 237 244 Non-compete agreement 4 127 68 52 59 75 $ 927 $ 189 $ 145 $ 738 $ 782

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	6 Months Ended
	Jun. 30, 2015
Fair Value Measurements Tables
Assets and liabilities by level measured at fair value on a recurring basis	June 30, 2015 Description Level 1 Level 2 Level 3 Derivative liability - conversion options $ - $ - $ 962 December 31, 2014 Description Level 1 Level 2 Level 3 Derivative liability - conversion options $ - $ - $ 270
Changes in Level 3 liabilities measured at fair value	Balance as of December 31, 2014 $ 270 Change in fair value of derivative liability - conversion option 692 Balance - June 30, 2015 $ 962

Liquidity and Going Concern (De

Liquidity and Going Concern (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Liquidity And Going Concern Details Narrative
Accumulated deficit	$ (34,729)		$ (34,729)		$ (31,316)
Working capital deficit	14,969		14,969
Net loss	$ (1,666)	$ (1,935)	$ (3,413)	$ (5,505)

Inventories (Details)

Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventories Details
Raw Materials	$ 225	$ 157
Work In Progress	381	178
Finished Goods	29	479
Inventories, net	$ 635	$ 814

Inventories (Details Narrative)

Inventories (Details Narrative) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Inventories Details Narrative
Reserve for obsolescence	$ 186	$ 227

Property and Equipment (Details

Property and Equipment (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Property and Equipment, Gross	$ 496	$ 434
Less: Accumulated Depreciation, amortization and impairments	(171)	(122)
Property and Equipment, Net	325	312
Manufacturing Equipment [Member]
Property and Equipment, Gross	$ 290	$ 290
Manufacturing Equipment [Member] | Minimum [Member]
Estimates Useful Life	7 years
Manufacturing Equipment [Member] | Maximum [Member]
Estimates Useful Life	10 years
Leasehold Improvements [Member]
Estimates Useful Life	7 years
Property and Equipment, Gross	$ 48
Office Furniture and Equipment [Member]
Property and Equipment, Gross	$ 135	$ 121
Office Furniture and Equipment [Member] | Minimum [Member]
Estimates Useful Life	3 years
Office Furniture and Equipment [Member] | Maximum [Member]
Estimates Useful Life	7 years
Computer Equipment and Software [Member]
Property and Equipment, Gross	$ 23	$ 23
Computer Equipment and Software [Member] | Minimum [Member]
Estimates Useful Life	1 year
Computer Equipment and Software [Member] | Maximum [Member]
Estimates Useful Life	5 years

Property and Equipment (Detai28

Property and Equipment (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Property And Equipment Details Narrative
Depreciation expense	$ 49	$ 135

Loans Payable (Details)

Loans Payable (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Loans Payable Details
Short-term notes (net of debt discount $405 and $12 as of June 30, 2015 and December 31, 2014, respectively)	$ 1,760	$ 588
Short-term notes (in default)	3,744	3,744
Short-term notes - related party (net of debt discount $10 and $0 as of June 30, 2015 and December 31, 2014, respectively)	345	200
Short-term notes - (in default) related party	4,100	4,100
Loans Payable	9,949	8,632
Convertible notes	652	671
Convertible notes - related party	230	230
Convertible notes, Total	$ 882	$ 901

Loans Payable (Details Narrativ

Loans Payable (Details Narrative) - Jun. 30, 2015 - USD ($) $ in Thousands	Total
Accrued interest	$ 2,264
Past due maturities	8,074
Related party to entities	4,330
Amortization of debt discount	83
John Linderman [Member]
Principal repaid	8
James Barickman [Member]
Principal repaid	8
Second Quarter 2015 Activities 1 [Member]
Promissory notes issued	$ 200

Stockholders' Equity (Details N

Stockholders' Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Preferred convertible	$ 112,441,675
Convertible warrants	14,476,600
Weighted average exercise price	$ 1.07
Convertible debt	$ 652
Convertible shares of Company common stock	45,730,153
Common Stock Issued, Shares	3,325,000
Proceeds from issuance of common stock	$ 150
Convertible debt instrument	$ 19
Detachable Warrants [Member]
Issued detachable Warrants	2,100,000
Issued detachable Warrants, per warrant	$ 0.085
Fair value of detachable Warrants	$ 512
Series A Convertible Preferred Stock
Preferred shares outstanding	405,000
Series B Convertible Preferred Stock
Preferred shares outstanding	1,000,000
Series C Convertible Preferred Stock
Preferred shares outstanding
Series D Convertible Preferred Stock
Preferred shares outstanding	4,216,667
Converted common shares	105,416,675

Related Party Transactions (Det

Related Party Transactions (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Consulting fee incurred	$ 75	$ 75
Past due maturities	8,074
Chord Advisors [Member]
Accounts Payable and Accrued Expenses	224
Rivercoach [Member]
Accounts Payable and Accrued Expenses	72
John Linderman [Member]
Outstanding principal	33
Accrued interest	14
James Barickman [Member]
Outstanding principal	33
Accrued interest	14
NorthStar Consumer Products, LLC [Member]
Outstanding accrued interest	11
Mr. Fredrick [Member]
Past due maturities	4,330
DayStar Funding, LP [Member]
Accounts Payable and Accrued Expenses	50
Accrued interest	1,405
Company owed balance	$ 4,330

Intangible Assets, Net (Details

Intangible Assets, Net (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Intangible assets, Price	$ 927
Intangible assets, Amortized	189	$ 145
Intangible asset, balance	$ 738	782
Patents [Member]
Intangible assets, Life in Years	12 years
Intangible assets, Price	$ 336
Intangible assets, Amortized	60	46
Intangible asset, balance	$ 276	290
Customer Lists [Member]
Intangible assets, Life in Years	14 years
Intangible assets, Price	$ 198
Intangible assets, Amortized	32	25
Intangible asset, balance	$ 166	173
Trade Name [Member]
Intangible assets, Life in Years	16 years
Intangible assets, Price	$ 266
Intangible assets, Amortized	29	22
Intangible asset, balance	$ 237	244
Non-compete Agreements [Member]
Intangible assets, Life in Years	4 years
Intangible assets, Price	$ 127
Intangible assets, Amortized	68	52
Intangible asset, balance	$ 59	$ 75

Intangible Assets, Net (Detai34

Intangible Assets, Net (Details Narrative) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Intangible Assets Net Details Narrative
Amortization expense	$ 44	$ 42

Fair Value Measurements (Detail

Fair Value Measurements (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Level 1 [Member]
Derivative liability- conversion options
Level 2 [Member]
Derivative liability- conversion options
Level 3 [Member]
Derivative liability- conversion options	$ 962	$ 270

Fair Value Measurements (Deta36

Fair Value Measurements (Details 1) $ in Thousands	6 Months Ended
	Jun. 30, 2015USD ($)
Fair Value Measurements Details 1
Beginning balance	$ 270
Change in fair value of derivative liability-conversion option	692
Ending balance	$ 962

Uncategorized Items - twsi-2015

Label	Element	Value
Amortization on intangible assets	us-gaap_AmortizationOfIntangibleAssets	$ 22
Amortization on intangible assets	us-gaap_AmortizationOfIntangibleAssets	22
Change in fair value of derivative liability	TWSI_ChangeInFairValueOfDerivativeLiability	(183)
Change in fair value of derivative liability	TWSI_ChangeInFairValueOfDerivativeLiability	$ 289