Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Jun. 30, 2013 | Mar. 18, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'REEDS INC | ' | ' |
Entity Central Index Key | '0001140215 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Entity Voluntary Filer | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | $50,556,000 | ' |
Entity Common Stock, Shares Outstanding | ' | ' | 13,037,952 |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current assets: | ' | ' |
Cash | $1,104,000 | $1,163,000 |
Inventory | 6,293,000 | 5,794,000 |
Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $324,000 and $399,000, respectively | 2,143,000 | 1,961,000 |
Prepaid inventory | 256,000 | 201,000 |
Prepaid and other current assets | 178,000 | 212,000 |
Total Current Assets | 9,974,000 | 9,331,000 |
Property and equipment, net of accumulated depreciation of $2,796,000 and $2,351,000, respectively | 3,686,000 | 3,422,000 |
Brand names | 1,029,000 | 1,029,000 |
Deferred financing fees, net of amortization of $40,000 and $26,000, respectively | 60,000 | 54,000 |
Total assets | 14,749,000 | 13,836,000 |
Current Liabilities: | ' | ' |
Accounts payable | 3,612,000 | 3,368,000 |
Accrued expenses | 136,000 | 233,000 |
Dividends payable | ' | 74,000 |
Line of credit | 4,524,000 | 3,023,000 |
Current portion of long term financing obligation | 111,000 | 90,000 |
Current portion of capital leases payable | 79,000 | 69,000 |
Current portion of term loan | 165,000 | 176,000 |
Total current liabilities | 8,627,000 | 7,033,000 |
Long term financing obligation, less current portion, net of discount of $526,000 and $576,000, respectively | 2,147,000 | 2,208,000 |
Capital leases payable, less current portion | 106,000 | 98,000 |
Term loan, less current portion | 482,000 | 399,000 |
Total Liabilities | 11,362,000 | 9,738,000 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock, $.0001 par value, 19,500,000 shares authorized, 12,992,832 and 12,084,673 shares issued and outstanding, respectively | 1,000 | 1,000 |
Additional paid in capital | 25,276,000 | 23,996,000 |
Accumulated deficit | -21,984,000 | -20,459,000 |
Total stockholders' equity | 3,387,000 | 4,098,000 |
Total liabilities and stockholders' equity | 14,749,000 | 13,836,000 |
Series A Convertible Preferred Stock [Member] | ' | ' |
Stockholders' equity: | ' | ' |
Convertible Preferred Stock | 94,000 | 104,000 |
Series B Convertible Preferred Stock [Member] | ' | ' |
Stockholders' equity: | ' | ' |
Convertible Preferred Stock | ' | $456,000 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Allowance for Doubtful Accounts and returns and discounts | $324,000 | $399,000 |
Accumulated Depreciation | 2,796,000 | 2,351,000 |
Accumulated Amortization, deferred financing fees | 40,000 | 26,000 |
Discount, long term financing obligation | $526,000 | $576,000 |
Common stock par value | $0.00 | $0.00 |
Common stock, shares authorized | 19,500,000 | 19,500,000 |
Common stock, shares issued | 12,992,832 | 12,084,673 |
Common stock, shares outstanding | 12,992,832 | 12,084,673 |
Series A Convertible Preferred Stock [Member] | ' | ' |
Preferred stock par value | $10 | $10 |
Preferred stock shares authorized | 500,000 | 500,000 |
Preferred stock shares issued | 9,411 | 10,411 |
Preferred stock shares outstanding | 9,411 | 10,411 |
Series B Convertible Preferred Stock [Member] | ' | ' |
Preferred stock par value | $10 | $10 |
Preferred stock shares authorized | 500,000 | 500,000 |
Preferred stock shares issued | ' | 45,602 |
Preferred stock shares outstanding | ' | 45,602 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Statements Of Operations | ' | ' |
Sales, net | $37,281,000 | $30,007,000 |
Cost of goods sold | 26,487,000 | 20,863,000 |
Gross profit | 10,794,000 | 9,144,000 |
Operating expenses: | ' | ' |
Delivery and handling expenses | 3,977,000 | 2,634,000 |
Selling and marketing expense | 4,180,000 | 3,145,000 |
General and administrative expense | 3,506,000 | 3,229,000 |
Total operating expenses | 11,663,000 | 9,008,000 |
Income (loss) from operations | -869,000 | 136,000 |
Interest expense | -651,000 | -660,000 |
Net loss | -1,520,000 | -524,000 |
Preferred stock dividend | -5,000 | -45,000 |
Net loss attributable to common stockholders | ($1,525,000) | ($569,000) |
Loss per share attributable to common stockholders - basic and diluted | ($0.12) | ($0.05) |
Weighted average number of shares outstanding - basic and diluted | 12,541,074 | 11,361,053 |
Statements_of_Changes_in_Stock
Statements of Changes in Stockholders' Equity (USD $) | Common Stock | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Additional Paid-In Capital | Retained Earnings / Accumulated Deficit | Total |
Balance at Dec. 31, 2011 | $1,000 | $466,000 | $804,000 | $22,924,000 | ($19,890,000) | $4,305,000 |
Balance, Shares at Dec. 31, 2011 | 10,885,833 | 46,621 | 80,415 | ' | ' | ' |
Fair value of common stock issued for services and finance fees | ' | ' | ' | 23,000 | ' | 23,000 |
Fair value of common stock issued for services and finance fees, Shares | 14,965 | ' | ' | ' | ' | ' |
Exercise of warrants | ' | ' | ' | 147,000 | ' | 147,000 |
Exercise of warrants, Shares | 416,048 | ' | ' | ' | ' | ' |
Series A and Series B preferred stock dividend | ' | ' | ' | ' | -45,000 | -45,000 |
Common stock issued upon conversion of Series A preferred stock | ' | -362,000 | ' | 362,000 | ' | ' |
Common stock issued upon conversion of Series A preferred stock, Shares | 144,840 | -36,210 | ' | ' | ' | ' |
Common stock issued upon conversion of Series B preferred stock, Amount | ' | ' | -348,000 | 348,000 | ' | ' |
Common stock issued upon conversion of Series B preferred stock, Shares | 243,691 | ' | -34,813 | ' | ' | ' |
Fair value vesting of options issued to employees | ' | ' | ' | 107,000 | ' | 107,000 |
Series A preferred stock dividend | ' | ' | ' | 5,000 | ' | 5,000 |
Series A preferred stock dividend, shares | 1,064 | ' | ' | ' | ' | ' |
Common stock paid for Series A and Series B preferred stock dividend | ' | ' | ' | 55,000 | ' | 55,000 |
Common stock paid for Series A and Series B preferred stock dividend, Shares | 32,073 | ' | ' | ' | ' | ' |
Exercise of stock options | ' | ' | ' | 30,000 | ' | 30,000 |
Exercise of stock options, Shares | 347,223 | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | -524,000 | -524,000 |
Balance at Dec. 31, 2012 | 1,000 | 104,000 | 456,000 | 23,996,000 | -20,459,000 | 4,098,000 |
Balance, Shares at Dec. 31, 2012 | 12,084,673 | 10,411 | 45,602 | ' | ' | ' |
Fair value of common stock issued for services and finance fees | ' | ' | ' | 5,000 | ' | 5,000 |
Fair value of common stock issued for services and finance fees, Shares | 1,250 | ' | ' | ' | ' | ' |
Exercise of warrants | ' | ' | ' | 373,000 | ' | 373,000 |
Exercise of warrants, Shares | 188,635 | ' | ' | ' | ' | ' |
Common stock issued upon conversion of Series A preferred stock | ' | -10,000 | ' | 10,000 | ' | ' |
Common stock issued upon conversion of Series A preferred stock, Shares | 4,000 | -1,000 | ' | ' | ' | ' |
Common stock issued upon conversion of Series B preferred stock, Amount | ' | ' | -456,000 | 456,000 | ' | ' |
Common stock issued upon conversion of Series B preferred stock, Shares | 319,214 | ' | -45,602 | ' | ' | ' |
Fair value vesting of options issued to employees | ' | ' | ' | 327,000 | ' | 327,000 |
Series A preferred stock dividend | 1,064 | ' | ' | 5,000 | -5,000 | ' |
Common stock paid for Series A and Series B preferred stock dividend | ' | ' | ' | 74,000 | ' | 74,000 |
Common stock paid for Series A and Series B preferred stock dividend, Shares | 47,890 | ' | ' | ' | ' | ' |
Exercise of stock options | ' | ' | ' | 30,000 | ' | 30,000 |
Exercise of stock options, Shares | 276,106 | ' | ' | ' | ' | ' |
Net loss | ' | ' | ' | ' | -1,520,000 | -1,520,000 |
Balance at Dec. 31, 2013 | $1,000 | $94,000 | ' | $25,276,000 | ($21,984,000) | $3,387,000 |
Balance, Shares at Dec. 31, 2013 | 12,922,832 | 9,411 | ' | ' | ' | ' |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($1,520,000) | ($524,000) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ' | ' |
Depreciation and amortization | 550,000 | 738,000 |
Fair value vesting of stock options issued to employees | 327,000 | 107,000 |
Fair value of common stock issued for services | 5,000 | 23,000 |
(Decrease) increase in allowance for doubtful accounts | -75,000 | 264,000 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -107,000 | -599,000 |
Inventory | -499,000 | 305,000 |
Prepaid expenses and inventory and other current assets | -21,000 | -122,000 |
Accounts payable | 244,000 | 1,058,000 |
Accrued expenses | -97,000 | -73,000 |
Net cash provided by (used in) operating activities | -1,193,000 | 1,177,000 |
Cash flows from investing activities: | ' | ' |
Purchase of property and equipment | -602,000 | -507,000 |
Net cash used in investing activities | -602,000 | -507,000 |
Cash flows from financing activities: | ' | ' |
Proceeds from stock option and warrant exercises | 403,000 | 177,000 |
Payments for deferred financing fees | -61,000 | -44,000 |
Increased borrowings on note payable | 217,000 | ' |
Principal repayments on note payable | -145,000 | -153,000 |
Principal repayments on long term financing obligation | -90,000 | -71,000 |
Principal repayments on capital lease obligation | -89,000 | -57,000 |
Net borrowings (repayments) on existing line of credit | 1,501,000 | -72,000 |
Net cash provided by (used in) financing activities | 1,736,000 | -220,000 |
Net (decrease) increase in cash | -59,000 | 450,000 |
Cash at beginning of year | 1,163,000 | 713,000 |
Cash at end of year | 1,104,000 | 1,163,000 |
Cash paid during the year for: | ' | ' |
Interest | 712,000 | 668,000 |
Taxes | ' | ' |
Non cash investing and financing activities: | ' | ' |
Series A Preferred stock converted to common stock | 10,000 | 362,000 |
Series B Preferred stock converted to common stock | 456,000 | 348,000 |
Common Stock issued in settlement of Series A and Series B preferred | 5,000 | 55,000 |
Series B preferred stock dividend payable in common stock | 74,000 | 74,000 |
Property and equipment acquired through capital lease obligation | $107,000 | $15,000 |
Operations_and_Summary_of_Sign
Operations and Summary of Significant Accounting Policies | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Operations and Summary of Significant Accounting Policies | ' | ||||||||
-1 | Operations and Summary of Significant Accounting Policies | ||||||||
A) | Nature of Operations | ||||||||
Reed’s, Inc. (the “Company”) was organized under the laws of the state of Florida in January 1991. In 2001, the Company changed its name from Original Beverage Corporation to Reed’s, Inc. and changed its state of incorporation from Florida to Delaware. The Company is engaged primarily in the business of developing, manufacturing and marketing natural non-alcoholic beverages, as well as candies and ice creams. We currently manufacture, market and sell seven unique product lines: | |||||||||
● | Reed’s Ginger Brews, | ||||||||
● | Virgil’s Root Beer, Cream Sodas, Dr. Better and Real Cola, including ZERO diet sodas, | ||||||||
● | Culture Club Kombucha, | ||||||||
● | China Colas, | ||||||||
● | Reed’s Ginger Chews, | ||||||||
● | Reed’s Ginger Ice Creams, | ||||||||
● | Sonoma Sparkler Sparkling Juices | ||||||||
The Company sells its products primarily in natural food stores, supermarket chains, and upscale gourmet stores in the United States and Canada. | |||||||||
B) | Use of Estimates | ||||||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. | |||||||||
C) | Accounts Receivable | ||||||||
The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. | |||||||||
The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At December 31, 2013 and 2012, the allowance for doubtful accounts and returns and discounts was approximately $324,000 and $399,000, respectively. | |||||||||
D) | Property and Equipment and Related Depreciation | ||||||||
Property and equipment is stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: | |||||||||
Property and Equipment Type | Years of Depreciation | ||||||||
Building | 39 years | ||||||||
Machinery and equipment | 5-12 years | ||||||||
Vehicles | 5 years | ||||||||
Office equipment | 5-7 years | ||||||||
Management assess the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2013 and 2012, the Company did not recognize any impairments for its property and equipment. | |||||||||
E) | Intangible Assets and Impairment Policy | ||||||||
Intangible assets are comprised of indefinite-lived brand names acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. These indefinite-lived intangible assets are not amortized, but are assessed for impairment annually and evaluated annually to determine whether the indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If further testing is necessary, we compare the estimated fair value of our indefinite-lived intangible asset with its book value. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. For the years ended December 31, 2013 and 2012, the Company did not recognize any impairment charges for its indefinite-lived intangible assets. | |||||||||
F) | Concentrations | ||||||||
The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2013. The Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high quality financial institutions. The Company had cash balances in excess of the guarantee during the years ended December 31, 2013 and 2012. | |||||||||
During the year ended December 31, 2013, the Company had two customers who accounted for approximately 32% and 10% of its sales, respectively; and during the year ended December 31, 2012, the Company had two customers who accounted for approximately 30% and 10% of its sales, respectively. No other customer accounted for more than 10% of sales in either year. As of December 31, 2013 the Company had accounts receivable due from two customers who comprised $571,000 (23%) and $424,000 (17%) of its total accounts receivable; and as of December 31, 2012 the Company had accounts receivable due from two customers who comprised $580,000 (25%) and $340,000 (14%), respectively, of its total accounts receivable. | |||||||||
The Company currently relies on a single contract packer for a majority of its production and bottling of beverage products. The Company has different packers available for their production of products. Although there are other packers and the Company has outfitted their own brewery and bottling plant, a change in packers may cause a delay in the production process, which could ultimately affect operating results. | |||||||||
During the years ended December 31, 2013 and 2012, the Company had one vendor which accounted for approximately 29% and 24%, respectively of all purchases. At December 31, 2013 and 2012, the Company had accounts payable due to a vendor who comprised 21% and 27% of its total accounts payable, respectively. No other account was in excess of 10% of the balance of accounts payable as of December 31, 2013 and December 31, 2012. | |||||||||
G) | Fair Value of Financial Instruments | ||||||||
The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: | |||||||||
Level 1—Quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. | |||||||||
Level 3—Unobservable inputs based on the Company’s assumptions. | |||||||||
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of long-term loans approximate their fair values due to the fact that the interest rates on these loans are reset each year based on prevailing market interest rates. | |||||||||
The Company has no such assets or liabilities recorded to be valued on the basis above at December 31, 2013 and 2012. | |||||||||
H) | Cost of sales | ||||||||
Cost of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold consists of direct production costs in excess of charges allocated to finished goods in production. Plant costs include labor costs, production supplies, repairs and maintenance, and inventory write-off. Charges for labor and overhead allocated to finished goods are determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production of our products are classified as operating expenses. | |||||||||
I) | Delivery and Handling Expenses | ||||||||
Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution after manufacture and are included as part of operating expenses. | |||||||||
J) | Income Taxes | ||||||||
The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. | |||||||||
K) | Revenue Recognition | ||||||||
Revenue is recognized on the sale of a product when the risk of loss transfers to our customers, and collection of the receivable is reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The allowance for returns is regularly reviewed and adjusted by management based on historical trends of returned items. Amounts paid by customers for shipping and handling costs are included in sales. | |||||||||
The Company accounts for certain sales incentives for customers, including slotting fees, as a reduction of gross sales. These sales incentives for the years ended December 31, 2013 and 2012 approximated $3,804,000 and $2,345,000, respectively. | |||||||||
L) | Net Loss Per Share | ||||||||
Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. | |||||||||
For the years ended December 31, 2013 and 2012, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of the following as of: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Warrants | 101,963 | 317,253 | |||||||
Series A Preferred Stock | 37,644 | 41,644 | |||||||
Series B Preferred Stock | - | 319,214 | |||||||
Options | 639,334 | 607,000 | |||||||
Total | 778,941 | 1,285,111 | |||||||
M) | Advertising Costs | ||||||||
Advertising costs are expensed as incurred and are included in selling expense in the amount of $120,000 and $111,000, for the years ended December 31, 2013 and 2012, respectively. | |||||||||
N) | Stock Compensation Expense | ||||||||
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | |||||||||
The fair value of the Company’s stock options and warrants grant is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. | |||||||||
O) | Recent Accounting Pronouncements | ||||||||
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-04. This update clarifies how entities measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. This guidance is effective for fiscal years beginning after December 15, 2013 and interim reporting periods thereafter. This update is not expected to have an impact on the Company’s financial position or results of operations | |||||||||
In April 2013, the FASB issued ASU 2013-07 to clarify when it is appropriate to apply the liquidation basis of accounting. Additionally, the update provides guidance for recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. Under the amendment, entities are required to prepare their financial statements under the liquidation basis of accounting when a liquidation becomes imminent. This guidance is effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods thereafter. This update is not expected to have an impact on the Company’s financial position or results of operations. | |||||||||
In July 2013, the FASB issued ASU 2013-11 which provides guidance relating to the financial statement presentation of unrecognized tax benefits. The update provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, if such settlement is required or expected in the event the uncertain tax position is disallowed. This update does not require any new recurring disclosures and is effective for public entities for fiscal years beginning after December 15, 2013, and interim reporting periods thereafter. This update is not expected to have an impact on the Company’s financial position or results of operations. | |||||||||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Inventory
Inventory | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
-2 | Inventory | ||||||||
Inventory is valued at the lower of cost (first-in, first-out) or market, and is comprised of the following as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Raw Materials and Packaging | $ | 3,118,000 | $ | 3,524,000 | |||||
Finished Goods | 3,175,000 | 2,270,000 | |||||||
$ | 6,293,000 | $ | 5,794,000 |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
-3 | Property and Equipment | ||||||||
Property and equipment is comprised of the following as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Land | $ | 1,108,000 | $ | 1,108,000 | |||||
Building | 1,829,000 | 1,737,000 | |||||||
Vehicles | 338,000 | 320,000 | |||||||
Machinery and equipment | 2,763,000 | 2,174,000 | |||||||
Office equipment | 444,000 | 434,000 | |||||||
6,482,000 | 5,773,000 | ||||||||
Accumulated depreciation | (2,796,000 | ) | (2,351,000 | ) | |||||
$ | 3,686,000 | $ | 3,422,000 | ||||||
Depreciation expense for the years ended December 31, 2013 and 2012 was $445,000 and $612,000, respectively. | |||||||||
Machinery and equipment at December 31, 2013 and 2012 includes equipment held under capital leases of $415,000 and $309,000, respectively (see Note 8). Accumulated depreciation on equipment held under leases was $231,000 and $149,000 as of December 31, 2013 and 2012, respectively. |
Intangible_Assets
Intangible Assets | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
Intangible Assets | ' | ||||||||
-4 | Intangible Assets | ||||||||
Brand Names | |||||||||
Brand names consist of the following three trademarks for natural beverage as of December 31, 2012 and 2012 as follows: | |||||||||
Virgil’s | $ | 576,000 | |||||||
China Cola | 224,000 | ||||||||
Sonoma Sparkler | 229,000 | ||||||||
$ | 1,029,000 | ||||||||
Virgil’s, China Cola, and Sonoma Sparkler brand names are deemed to have indefinite lives and are not amortized, but are reviewed for impairment annually. For the years ended December 31, 2013 and 2012, the Company did not recognize any impairment charges for its indefinite-lived intangible assets. | |||||||||
Deferred Financing Fees | |||||||||
Deferred financing fees are comprised of the following as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Loan fees relating to financing | $ | 100,000 | $ | 80,000 | |||||
Accumulated amortization | (40,000 | ) | (26,000 | ) | |||||
$ | 60,000 | $ | 54,000 | ||||||
Amortization expense for the years ended December 31, 2013 and 2012 was approximately $55,000 and $75,000 respectively. | |||||||||
Amortization of deferred financing fees is as follows for the years ending December 31: | |||||||||
Year | Amount | ||||||||
2014 | 54,000 | ||||||||
2015 | 3,000 | ||||||||
2016 | 3,000 | ||||||||
Total | $ | 60,000 |
Line_of_Credit
Line of Credit | 12 Months Ended | |
Dec. 31, 2013 | ||
Debt Disclosure [Abstract] | ' | |
Line of Credit | ' | |
-5 | Line of Credit | |
On November 9, 2011, the Company entered into a Loan and Security Agreement with PMC Financial Services Group, LLC (PMC) which provides a $4,500,000 revolving line of credit and a $750,000 term loan (see Note 7). On September 20, 2013, the line of credit was increased to $4,800,000 effective September 1, 2013 to May 31, 2014, after which it will be $4,500,000. At December 31, 2013 and December 31, 2012, the aggregate amount outstanding under the line of credit was $4,524,000 and $3,023,000 respectively. The line of credit is based on 85% of eligible accounts receivable and 50% of eligible inventory, expires on November 7, 2014, and is secured by substantially all of the Company’s assets. The interest rate is at the prime rate plus 3.75% (7% at December 31, 2013). There is an early termination fee of 1% of the maximum revolver amount during 2014. Also on September 20, 2013, the Company was granted an over-advance on its revolving line of credit calculation of $500,000 effective September 1, 2013 to May 31, 2014, after which it will be $200,000. | ||
The revolving line of credit agreement includes a financial covenant debt service coverage ratio that is effective only if the credit availability under the revolving line of credit falls below $100,000 and a financial covenant that the Company will not make capital expenditures in excess of $500,000 in any fiscal year. At December 31, 2013, the credit availability under the revolving line of credit was below $100,000, and during 2013 the Company expended more than $500,000 for capital expenditures. Accordingly at December 31, 2013, the Company was in default under the loan agreement with PMC. The defaults were waived by PMC on March 19, 2014. This revolving line of credit matures on November 8, 2014. |
Longterm_Financing_Obligation
Long-term Financing Obligation | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long-term Financing Obligation | ' | ||||||||
-6 | Long Term Financing Obligation | ||||||||
Long term financing obligation is comprised of the following as of: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Financing obligation | $ | 2,784,000 | $ | 2,874,000 | |||||
Valuation discount | (526,000 | ) | (576,000 | ) | |||||
2,258,000 | 2,298,000 | ||||||||
Less current portion | (111,000 | ) | (90,000 | ) | |||||
Long term financing obligation | $ | 2,147,000 | $ | 2,208,000 | |||||
On June 15, 2009, the Company closed escrow on the sale of its two buildings and its brewery equipment and concurrently entered into a long-term lease agreement for the same property and equipment. In connection with the lease the Company has the option to repurchase the buildings and brewery equipment from 12 months after the commencement date to the end of the lease term at the greater of the fair market value or an agreed upon amount. Since the lease contains a buyback provision and other related terms, the Company determined it had continuing involvement that did not warrant the recognition of a sale; therefore, the transaction has been accounted for as a long-term financing. The proceeds from the sale, net of transaction costs, have been recorded as a financing obligation in the amount of $3,056,000. Monthly payments under the financing agreement are recorded as interest expense and a reduction in the financing obligation at an implicit rate of 9.9%. The financing obligation is personally guaranteed up to a limit of $150,000 by the principal shareholder and Chief Executive Officer, Christopher J. Reed. | |||||||||
In connection with the financing obligation, the Company issued an aggregate of 400,000 warrants to purchase its common stock at $1.20 per share for five years. The 400,000 warrants were valued at $752,000 and reflected as a debt discount, using the Black Scholes option pricing model. The following assumptions were utilized in valuing the 400,000 warrants: strike price of $2.10 to $2.25; term of 5 years; volatility of 91.36% to 110.9%; expected dividends 0%; and discount rate of 2.15% to 2.20%. The 400,000 warrants were recorded as valuation discount and are being amortized over 15 years, the term of the purchase option. Amortization of valuation discount was $50,000 during both of the years ended December 31, 2013 and 2012. | |||||||||
The aggregate amount due under the financing obligation at December 31, 2013 and 2012 was $2,784,000 and $2,874,000, respectively. Aggregate future obligations under the financing obligation are as follows: | |||||||||
Year | |||||||||
2014 | $ | 111,000 | |||||||
2015 | 135,000 | ||||||||
2016 | 160,000 | ||||||||
2017 | 190,000 | ||||||||
2018 | 222,000 | ||||||||
Thereafter | 1,966,000 | ||||||||
Total | $ | 2,784,000 |
Term_Loan
Term Loan | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Term Loan | ' | ||||||||
-7 | Term Loan | ||||||||
In connection with the Loan and Security Agreement with PMC Financial Services Group, LLC (see Note 5), the Company entered into a Term Loan. The loan is for $750,000, bears interest at the prime rate plus 11.6%, not to be below 14.85% (14.85% at December 31, 2013), is secured by all of the unencumbered assets of the Company, and is to be repaid in 48 equal installments of principal and interest of $21,000. This loan matures on April 20, 2017. | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Term loan | $ | 647,000 | $ | 575,000 | |||||
Less current portion | (165,000 | ) | (176,000 | ) | |||||
Long term debt | $ | 482,000 | $ | 399,000 | |||||
Aggregate future obligations under the term loan are as follows: | |||||||||
Year | |||||||||
2014 | $ | 165,000 | |||||||
2015 | 482,000 | ||||||||
Total | $ | 647,000 | |||||||
Obligations_Under_Capital_Leas
Obligations Under Capital Leases | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Leases [Abstract] | ' | ||||
Obligations Under Capital Leases | ' | ||||
-8 | Obligations Under Capital Leases | ||||
The Company leases equipment for its brewery operations with an aggregate value of $415,000 under 12 non-cancelable capital leases. Most of the leases are personally guaranteed by the Company’s chief executive officer. Monthly payments range from $189 to $1,680 per month, including interest, at interest rates ranging from 6.51% to 17.32% per annum. At December 31, 2013, monthly payments under these leases aggregated $10,000. The leases expire at various dates through 2018. | |||||
Future minimum lease payments under capital leases are as follows: | |||||
Years Ending December 31, | |||||
2014 | 100,000 | ||||
2015 | 57,000 | ||||
2016 | 40,000 | ||||
2017 | 24,000 | ||||
2018 | 12,000 | ||||
Total payments | 233,000 | ||||
Less: Amount representing interest | (48,000 | ) | |||
Present value of net minimum lease payments | 185,000 | ||||
Less: Current portion | 79,000 | ||||
Non-current portion | $ | 106,000 |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | |
Dec. 31, 2013 | ||
Equity [Abstract] | ' | |
Stockholders' Equity | ' | |
-9 | Stockholders’ Equity | |
Preferred Stock | ||
Series A | ||
Series A Preferred stock consists of 500,000 shares $10.00 par value, 5% non-cumulative, participating, preferred stock. As of December 31, 2013 and 2012, there were 9,411 and 10,411 shares outstanding, respectively, with a liquidation preference of $10.00 per share. | ||
The Series A Preferred shares have a 5% pro-rata annual non-cumulative dividend. The dividend can be paid in cash or, in the sole and absolute discretion of our board of directors, in shares of common stock based on its then fair market value. We cannot declare or pay any dividend on shares of our securities ranking junior to the preferred stock until the holders of our preferred stock have received the full non-cumulative dividend to which they are entitled. In addition, the holders of our preferred stock are entitled to receive pro rata distributions of dividends on an “as converted” basis with the holders of our common stock. During the year ended December 31, 2013 the Company accrued and paid a $5,000 dividend payable to the preferred shareholders, which the board of directors elected to pay through the issuance of 1,064 shares of its common stock. During the year ended December 31, 2012 the Company accrued and paid a $16,000 dividend payable to the preferred shareholders, which the board of directors elected to pay through the issuance of 4,760 shares of its common stock. | ||
In the event of any liquidation, dissolution or winding up of the Company, or if there is a change of control event, then, subject to the rights of the holders of our more senior securities, if any, the holders of our Series A preferred stock are entitled to receive, prior to the holders of any of our junior securities, $10.00 per share plus all accrued and unpaid dividends. Thereafter, all remaining assets shall be distributed pro rata among all of our security holders. Since June 30, 2008, we have the right, but not the obligation, to redeem all or any portion of the Series A preferred stock by paying the holders thereof the sum of the original purchase price per share, which was $10.00, plus all accrued and unpaid dividends. | ||
The Series A preferred stock may be converted, at the option of the holder, at any time after issuance and prior to the date such stock is redeemed, into four shares of common stock, subject to adjustment in the event of stock splits, reverse stock splits, stock dividends, recapitalization, reclassification and similar transactions. We are obligated to reserve out of our authorized but unissued shares of common stock a sufficient number of such shares to effect the conversion of all outstanding shares of Series A preferred stock. During 2013, 1,000 shares of Series A preferred stock were converted into 4,000 shares of common stock and during 2012, 36,210 shares of Series A preferred stock were converted into 144,840 shares of common stock. | ||
Except as provided by law, the holders of our Series A preferred stock do not have the right to vote on any matters, including, without limitation, the election of directors. However, so long as any shares of Series A preferred stock are outstanding, we shall not, without first obtaining the approval of at least a majority of the holders of the Series A preferred stock, authorize or issue any equity security having a preference over the Series A preferred stock with respect to dividends, liquidation, redemption or voting, including any other security convertible into or exercisable for any equity security other than any senior preferred stock. | ||
Series B | ||
Series B Preferred stock consists of 500,000 shares $10.00 par value, 5% non-cumulative, participating, preferred stock. On February 5, 2012, the Company completed a standby offering of 12,780 shares of its Series B Convertible Preferred Stock at $10.00 per share, for gross proceeds of $127,800. In connection with the offering, the Company also issued warrants to purchase 3,575 shares of common stock at $1.79 per share for five years. The Company paid legal and broker fees of approximately $11,000 in connection with the offering, resulting in net proceeds to the Company of $117,000. | ||
At December 31, 2013 there were no shares of Series B Preferred stock outstanding. At December 31, 2012 there were 45,602 shares of Series B Preferred stock outstanding. | ||
The Series B Preferred shares have a 5% pro-rata annual non-cumulative dividend payable quarterly for a period of three years. The dividend can be paid in cash or, in the sole and absolute discretion of our board of directors, in shares of common stock based on its then fair market value. We cannot declare or pay any dividend on shares of our securities ranking junior to the preferred stock until the holders of our preferred stock have received the full non-cumulative dividend to which they are entitled. During the year ended December 31, 2012, $29,000 in dividends were accrued and $38,000 of dividends were paid by the issuance of 27,313 shares of common stock. During the year ended December 31, 2013, the balance of 45,602 shares of Series B Convertible Preferred Stock were converted to 319,214 shares of common stock and accrued dividends of $74,000 were paid by issuing 47,890 shares of common stock. | ||
Common Stock | ||
Common stock consists of $.0001 par value, 19,500,000 shares authorized, 12,922,832 shares issued and outstanding as of December 31, 2013 and 12,084,673 shares issued and outstanding as of December 31, 2012. | ||
During the year ended December 31, 2013, the Company issued 1,250 shares of common stock for services at $4.00 per share with a value of $5,000. During the year ended December 31, 2012, the Company issued 14,965 shares of common stock for services rendered at prices ranging from $1.13 to $2.17 per share with a value of $23,000. |
Stock_Options_and_Warrants
Stock Options and Warrants | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Stock Options And Warrants | ' | ||||||||||||||||||||
Stock Options and Warrants | ' | ||||||||||||||||||||
-10 | Stock Options and Warrants | ||||||||||||||||||||
A) | Stock Options | ||||||||||||||||||||
In 2001, the Company adopted the Original Beverage Corporation 2001 Stock Option Plan and, in 2007, the Company adopted the Reed’s Inc. 2007 Stock Option Plan (the “Plans”). The options under both plans shall be granted from time to time by the Compensation Committee. Individuals eligible to receive options include employees of the Company, consultants to the Company and directors of the Company. The options shall have a fixed price, which will not be less than 100% of the fair market value per share on the grant date. The total number of options authorized is 500,000 and 1,500,000, respectively for the Original Beverage Corporation 2001 Stock Option Plan and the Reed’s Inc. 2007 Stock Option Plan. | |||||||||||||||||||||
During the years ended December 31, 2013 and 2012, the Company granted 414,000 and 10,000 options, respectively, to purchase the Company’s common stock at a weighted price exercise of $3.99 and $1.85, respectively, to employees under the Plans. The aggregate value of the options vesting, net of forfeitures, during the years ended December 31, 2013 and 2012 was $327,000 and $107,000, respectively, and has been reflected as compensation cost. As of December 31, 2013, the aggregate value of unvested options was $532,000, which will be amortized as compensation cost as the options vest, over 2 - 3 years. | |||||||||||||||||||||
On April 9, 2012, the Company repriced 20,000 employee options to an exercise price of $1.83, which were previously $2.43 per share and $2.06 per share. The total increase in stock compensation expense, as a result of the repricing was $3,000. On December 23, 2012, the Company repriced 20,000 employee options to an exercise price of $1.14, which were previously $2.06 per share; and extended the termination date of 420,000 employee options until December 22, 2016. Such options previously were to expire on dates that were between 8 months and 48 months from the extension date. The total increase in stock compensation expense, as a result of the repricing and extensions, was $53,000; of which $48,000 was recognized in the year ended December 31, 2012 and $5,000 in the year ended December 31, 2013. During the year ended December 31, 2013 there were 348,332 options exercised at an average price of $1.14. Most of such exercises were cash-less, however, the Company did receive proceeds from certain exercises aggregating $30,000. During the year ended December 31, 2012 there were 408,334 stock options exercised at a price of $1.05 per share. Most of such exercises were cash-less, however, the Company did receive proceeds from certain exercises aggregating $30,000. | |||||||||||||||||||||
The weighted-average grant date fair value of options granted during 2013 and 2012 was $1.97 and $0.40, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. For purposes of determining the expected life of the option, an average of the estimated holding period is used. The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. | |||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Expected volatility | 71 | % | 48 | % | |||||||||||||||||
Expected dividends | — | — | |||||||||||||||||||
Expected average term (in years) | 3 | 3 | |||||||||||||||||||
Risk free rate - average | 0.8 | % | 0.9 | % | |||||||||||||||||
Forfeiture rate | 0 | % | 0 | % | |||||||||||||||||
A summary of option activity as of December 31, 2013 and changes during the two years then ended is presented below: | |||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | ||||||||||||||||||
Exercise Price | Remaining | Intrinsic | |||||||||||||||||||
Contractual | Value | ||||||||||||||||||||
Terms (Years) | |||||||||||||||||||||
Outstanding at January 1, 2012 | 1,172,000 | $ | 1.55 | ||||||||||||||||||
Granted | 10,000 | $ | 1.85 | ||||||||||||||||||
Exercised | (408,334 | ) | $ | 1.05 | |||||||||||||||||
Forfeited or expired | (166,666 | ) | $ | 4.46 | |||||||||||||||||
Outstanding at December 31, 2012 | 607,000 | $ | 1.27 | ||||||||||||||||||
Granted | 414,000 | $ | 3.99 | ||||||||||||||||||
Exercised | (348,332 | ) | $ | 1.14 | |||||||||||||||||
Forfeited or expired | (33,334 | ) | $ | 3.71 | |||||||||||||||||
Outstanding at December 31, 2013 | 639,334 | $ | 3.18 | 3.7 | $ | 3,070,000 | |||||||||||||||
Exercisable at December 31, 2013 | 269,083 | $ | 1.84 | 3 | $ | 1,637,000 | |||||||||||||||
As of December 31, 2013, the aggregate intrinsic values of $3,070,000 and $1,637,000 were calculated as the difference between the market price and the exercise price of the Company’s stock, which was $7.98 as of December 31, 2013. | |||||||||||||||||||||
A summary of the status of the Company’s nonvested shares granted under the Company’s stock option plan as of December 31, 2013 and changes during the year then ended is presented below: | |||||||||||||||||||||
Weighted- | |||||||||||||||||||||
Average | |||||||||||||||||||||
Grant Date | |||||||||||||||||||||
Shares | Fair Value | ||||||||||||||||||||
Nonvested at December 31, 2012 | 195,836 | $ | 0.65 | ||||||||||||||||||
Granted | 414,000 | $ | 1.96 | ||||||||||||||||||
Vested | (206,251 | ) | $ | 0.86 | |||||||||||||||||
Forfeited | (33,334 | ) | $ | 1.74 | |||||||||||||||||
Nonvested at December 31, 2013 | 370,251 | $ | 1.89 | ||||||||||||||||||
Additional information regarding options outstanding as of December 31, 2013 is as follows: | |||||||||||||||||||||
Options Outstanding at December 31, 2013 | Options Exercisable at | ||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||
Range of Exercise Price | Number of Shares Outstanding | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Number of Shares Exercisable | Weighted Average Exercise Price | ||||||||||||||||
$0.01 - $1.99 | 190,334 | 2.9 | $ | 1.34 | 166,999 | $ | 1.27 | ||||||||||||||
$2.00 - $4.99 | 429,000 | 3.9 | $ | 3.84 | 102,084 | $ | 2.78 | ||||||||||||||
$5.00 - $6.99 | 20,000 | 4.8 | $ | 6.7 | - | - | |||||||||||||||
639,334 | 269,083 | ||||||||||||||||||||
B) | Warrants | ||||||||||||||||||||
During the years ended December 31, 2013 and 2012 there were no warrants granted. During the year ended December 31, 2013 there were 215,290 warrants exercised at prices between $2.10 per share and $2.77 per share (an average price of $2.45), resulting in proceeds to the Company of $373,000 and 188,635 shares of common stock issued. | |||||||||||||||||||||
The following table summarizes warrant activity for the two years ended December 31, 2013: | |||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | ||||||||||||||||||
Exercise Price | Remaining | Intrinsic | |||||||||||||||||||
Contractual | Value | ||||||||||||||||||||
Terms (Years) | |||||||||||||||||||||
Outstanding at December 31, 2011 | 2,006,870 | $ | 4.32 | ||||||||||||||||||
Granted | - | - | |||||||||||||||||||
Exercised | (574,622 | ) | $ | 1.61 | |||||||||||||||||
Forfeited or expired | (1,114,995 | ) | $ | 6.26 | |||||||||||||||||
Outstanding at December 31, 2012 | 317,253 | $ | 2.4 | ||||||||||||||||||
Granted | - | - | |||||||||||||||||||
Exercised | (215,290 | ) | $ | 2.45 | |||||||||||||||||
Forfeited or expired | - | - | |||||||||||||||||||
Outstanding at December 31, 2013 | 101,963 | $ | 2.3 | 1.9 | $ | 579,000 | |||||||||||||||
Exercisable at December 31, 2013 | 101,963 | $ | 2.3 | 1.9 | $ | 579,000 | |||||||||||||||
As of December 31, 2013, the aggregate intrinsic value of $579,000 was calculated as the difference between the market price and the exercise price of the Company’s stock, which was $7.98 as of December 31, 2013. | |||||||||||||||||||||
The fair value of each warrant is estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility is based on the historical volatility of the Company. For purposes of determining the expected life of the warrant, the full contract life of the warrant is used. The risk-free rate for periods within the contractual life of the warrants is based on the U. S. Treasury yield in effect at the time of the grant. | |||||||||||||||||||||
The following table summarizes the outstanding warrants to purchase Common Stock at December 31, 2013: | |||||||||||||||||||||
Number | Exercise Price | Expiration Dates | |||||||||||||||||||
20,803 | $ | 2.1 | Feb-15 | ||||||||||||||||||
64,899 | $ | 2.25 | Apr-15 | ||||||||||||||||||
16,261 | $ | 2.77 | Feb-16 | ||||||||||||||||||
101,963 |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income Taxes | ' | ||||||||
-11 | Income Taxes | ||||||||
At December 31, 2013 and 2012, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $17.8 million and $16.5 million for Federal purposes, respectively, and $13.3 million and $12.5million for state purposes respectively. The Federal carryforward expires in 2033 and the state carryforward expires in 2018. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized a deferred tax asset for this benefit. | |||||||||
Effective January 1, 2007, the Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2013 and 2012, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption. | |||||||||
The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2013 and 2012, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2007 through 2013 remain open to examination by the major taxing jurisdictions to which the Company is subject. | |||||||||
Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize a deferred tax asset at that time. | |||||||||
Significant components of the Company’s deferred income tax assets are as follows as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Deferred income tax asset: | |||||||||
Net operating loss carry forward | $ | 6,400,000 | $ | 6,000,000 | |||||
Valuation allowance | (6,400,000 | ) | (6,000,000 | ) | |||||
Net deferred income tax asset | $ | — | $ | — | |||||
Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Federal Statutory tax rate | (34 | )% | (34 | )% | |||||
State tax, net of federal benefit | (5 | )% | (5 | )% | |||||
(39 | )% | (39 | )% | ||||||
Valuation allowance | 39 | % | 39 | % | |||||
Effective tax rate | - | % | - | % |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Commitments and Contingencies | ' | ||||
-12 | Commitments and Contingencies | ||||
Lease Commitments | |||||
The Company leases warehouse space under non-cancelable operating leases. Rental expense under these and other operating leases for the years ended December 31, 2013 and 2012 was $196,000 and $237,000, respectively. | |||||
Future payments under these leases as of December 31, 2013 are as follows: | |||||
Year ending December 31, | Amount | ||||
2014 | $ | 186,000 | |||
2015 | 92,000 | ||||
2016 | 95,000 | ||||
2017 | 89,000 | ||||
Total | $ | 462,000 | |||
Other Commitments | |||||
The Company has entered into contracts with customers with clauses that commit the Company to pay fees if the Company terminates the agreement early or without cause. The contracts call for the customer to have the right to distribute the Company’s products to a defined type of retailer within a defined geographic region. If the Company should terminate the contract or not automatically renew the agreements without cause, amounts would be due to the customer. As of December 31, 2013 and 2012, the Company has no plans to terminate or not renew any agreement with any of their customers; therefore, no such fees have been accrued in the accompanying financial statements. |
Legal_Proceedings
Legal Proceedings | 12 Months Ended | |
Dec. 31, 2013 | ||
Legal Proceedings | ' | |
Legal Proceedings | ' | |
-13 | Legal Proceedings | |
From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable. | ||
From August 3, 2005 through April 7, 2006, we issued 333,156 shares of our common stock in connection with our initial public offering. These securities represented all of the shares issued in connection with the initial public offering prior to October 11, 2006. These shares issued in connection with the initial public offering may have been issued in violation of either federal or state securities laws, or both, and may be subject to rescission. | ||
On August 12, 2006, we made a rescission offer to all holders of the outstanding shares that we believe are subject to rescission, pursuant to which we offered to repurchase these shares then outstanding from the holders. At the expiration of the rescission offer on September 18, 2006, the rescission offer was accepted by 32 of the offerees to the extent of 28,420 shares for an aggregate of $119,000, including statutory interest. The shares that were tendered for rescission were purchased by third parties and not from our funds. | ||
Federal securities laws do not provide that a rescission offer will terminate a purchaser’s right to rescind a sale of stock that was not registered as required or was not otherwise exempt from such registration requirements. With respect to the offerees who rejected the rescission offer, we may continue to be liable under Federal and state securities laws for up to an amount equal to the value of all shares of common stock issued in connection with the initial public offering plus any statutory interest we may be required to pay. If it is determined that we offered securities without properly registering them under federal or state law, or securing an exemption from registration, regulators could impose monetary fines or other sanctions as provided under these laws. However, we believe the rescission offer provides us with additional meritorious defenses against any future claims relating to these shares. | ||
Except as set forth above, we believe that there are no material litigation matters at the current time. Although the results of such litigation matters and claims cannot be predicted with certainty, we believe that the final outcome of such claims and proceedings will not have a material adverse impact on our financial position, liquidity, or results of operations. |
Related_Party_Activity
Related Party Activity | 12 Months Ended | |
Dec. 31, 2013 | ||
Related Party Transactions [Abstract] | ' | |
Related Party Activity | ' | |
-14 | Related Party Activity | |
During the year ended December 31, 2008, the Company entered into an agreement for the distribution of its products internationally. The agreement is between the Company and a company controlled by two brothers of Christopher Reed, Chief Executive Officer of the Company. The agreement remains in effect until terminated by either party and requires the Company to pay 10% of the defined sales of the previous month. During the years ended December 31, 2013 and 2012, the Company paid commissions of $1,000, and during the year ended December 31, 2012, the Company paid commissions of $15,000. |
Subsequent_Events
Subsequent Events | 12 Months Ended | |
Dec. 31, 2013 | ||
Subsequent Events [Abstract] | ' | |
Subsequent Events | ' | |
-15 | Subsequent Events | |
During the first quarter of 2014, Company employees exercised options to purchase 173,700 shares of the Company’s common stock on a cashless basis at prices between $1.14 and $4.00 per share. The Company issued 115,120 shares of common stock for such cash-less exercises of options. | ||
On January 30, 2014 and February 4, 2014, respectively, the Company’s former CFO and former COO resigned from the Company. At the time of their separation from the Company, the former officers held unvested options issued in 2013 to purchase an aggregate of 37,500 shares of the Company’s common stock which were due to vest through March 2016. The Company agreed to accelerate vesting of these options so they were 100% vested as of February 17, 2014. Employee stock options which are subject to accelerated vesting at termination are treated as a modification. As such, the Company will recognize an expense related to the accelerated vesting in the amount of $151,000 during the first quarter of 2014, which is the fair value of the options determined using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 0.75%; dividend yield of 0%; volatility of 59%; and an expected life of 3 years. | ||
On February 17, 2014, the Company granted options to employees to purchase 165,500 shares of the company’s common stock with an exercise price of $7.07 per share. The fair value of the options on the date granted was determined to be approximately $466,000 using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 0.75%; dividend yield of 0%; volatility of 59%; and an expected life of 3 years |
Operations_and_Summary_of_Sign1
Operations and Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Nature of Operations | ' | ||||||||
A) | Nature of Operations | ||||||||
Reed’s, Inc. (the “Company”) was organized under the laws of the state of Florida in January 1991. In 2001, the Company changed its name from Original Beverage Corporation to Reed’s, Inc. and changed its state of incorporation from Florida to Delaware. The Company is engaged primarily in the business of developing, manufacturing and marketing natural non-alcoholic beverages, as well as candies and ice creams. We currently manufacture, market and sell seven unique product lines: | |||||||||
● | Reed’s Ginger Brews, | ||||||||
● | Virgil’s Root Beer, Cream Sodas, Dr. Better and Real Cola, including ZERO diet sodas, | ||||||||
● | Culture Club Kombucha, | ||||||||
● | China Colas, | ||||||||
● | Reed’s Ginger Chews, | ||||||||
● | Reed’s Ginger Ice Creams, | ||||||||
● | Sonoma Sparkler Sparkling Juices | ||||||||
The Company sells its products primarily in natural food stores, supermarket chains, and upscale gourmet stores in the United States and Canada. | |||||||||
Use of Estimates | ' | ||||||||
B) | Use of Estimates | ||||||||
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. | |||||||||
Accounts Receivable | ' | ||||||||
C) | Accounts Receivable | ||||||||
The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. | |||||||||
The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At December 31, 2013 and 2012, the allowance for doubtful accounts and returns and discounts was approximately $324,000 and $399,000, respectively. | |||||||||
Property and Equipment and Related Depreciation | ' | ||||||||
D) | Property and Equipment and Related Depreciation | ||||||||
Property and equipment is stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: | |||||||||
Property and Equipment Type | Years of Depreciation | ||||||||
Building | 39 years | ||||||||
Machinery and equipment | 5-12 years | ||||||||
Vehicles | 5 years | ||||||||
Office equipment | 5-7 years | ||||||||
Management assess the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2013 and 2012, the Company did not recognize any impairments for its property and equipment. | |||||||||
Intangible Assets and Impairment Policy | ' | ||||||||
E) | Intangible Assets and Impairment Policy | ||||||||
Intangible assets are comprised of indefinite-lived brand names acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. These indefinite-lived intangible assets are not amortized, but are assessed for impairment annually and evaluated annually to determine whether the indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If further testing is necessary, we compare the estimated fair value of our indefinite-lived intangible asset with its book value. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. For the years ended December 31, 2013 and 2012, the Company did not recognize any impairment charges for its indefinite-lived intangible assets. | |||||||||
Concentrations | ' | ||||||||
F) | Concentrations | ||||||||
The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2013. The Company may be exposed to risk for the amounts of funds held in bank accounts in excess of the insurance limit. In assessing the risk, the Company’s policy is to maintain cash balances with high quality financial institutions. The Company had cash balances in excess of the guarantee during the years ended December 31, 2013 and 2012. | |||||||||
During the year ended December 31, 2013, the Company had two customers who accounted for approximately 32% and 10% of its sales, respectively; and during the year ended December 31, 2012, the Company had two customers who accounted for approximately 30% and 10% of its sales, respectively. No other customer accounted for more than 10% of sales in either year. As of December 31, 2013 the Company had accounts receivable due from two customers who comprised $571,000 (23%) and $424,000 (17%) of its total accounts receivable; and as of December 31, 2012 the Company had accounts receivable due from two customers who comprised $580,000 (25%) and $340,000 (14%), respectively, of its total accounts receivable. | |||||||||
The Company currently relies on a single contract packer for a majority of its production and bottling of beverage products. The Company has different packers available for their production of products. Although there are other packers and the Company has outfitted their own brewery and bottling plant, a change in packers may cause a delay in the production process, which could ultimately affect operating results. | |||||||||
During the years ended December 31, 2013 and 2012, the Company had one vendor which accounted for approximately 29% and 24%, respectively of all purchases. At December 31, 2013 and 2012, the Company had accounts payable due to a vendor who comprised 21% and 27% of its total accounts payable, respectively. No other account was in excess of 10% of the balance of accounts payable as of December 31, 2013 and December 31, 2012. | |||||||||
Fair Value of Financial Instruments | ' | ||||||||
G) | Fair Value of Financial Instruments | ||||||||
The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: | |||||||||
Level 1—Quoted prices in active markets for identical assets or liabilities. | |||||||||
Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. | |||||||||
Level 3—Unobservable inputs based on the Company’s assumptions. | |||||||||
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of long-term loans approximate their fair values due to the fact that the interest rates on these loans are reset each year based on prevailing market interest rates. | |||||||||
The Company has no such assets or liabilities recorded to be valued on the basis above at December 31, 2013 and 2012. | |||||||||
Cost of sales | ' | ||||||||
H) | Cost of sales | ||||||||
Cost of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold consists of direct production costs in excess of charges allocated to finished goods in production. Plant costs include labor costs, production supplies, repairs and maintenance, and inventory write-off. Charges for labor and overhead allocated to finished goods are determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production of our products are classified as operating expenses. | |||||||||
Delivery and Handling Expenses | ' | ||||||||
I) | Delivery and Handling Expenses | ||||||||
Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution after manufacture and are included as part of operating expenses. | |||||||||
Income Taxes | ' | ||||||||
J) | Income Taxes | ||||||||
The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. | |||||||||
Revenue Recognition | ' | ||||||||
K) | Revenue Recognition | ||||||||
Revenue is recognized on the sale of a product when the risk of loss transfers to our customers, and collection of the receivable is reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The allowance for returns is regularly reviewed and adjusted by management based on historical trends of returned items. Amounts paid by customers for shipping and handling costs are included in sales. | |||||||||
The Company accounts for certain sales incentives for customers, including slotting fees, as a reduction of gross sales. These sales incentives for the years ended December 31, 2013 and 2012 approximated $3,804,000 and $2,345,000, respectively. | |||||||||
Net Loss Per Share | ' | ||||||||
L) | Net Loss Per Share | ||||||||
Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation as their effect is antidilutive. | |||||||||
For the years ended December 31, 2013 and 2012, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of the following as of: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Warrants | 101,963 | 317,253 | |||||||
Series A Preferred Stock | 37,644 | 41,644 | |||||||
Series B Preferred Stock | - | 319,214 | |||||||
Options | 639,334 | 607,000 | |||||||
Total | 778,941 | 1,285,111 | |||||||
Advertising Costs | ' | ||||||||
M) | Advertising Costs | ||||||||
Advertising costs are expensed as incurred and are included in selling expense in the amount of $120,000 and $111,000, for the years ended December 31, 2013 and 2012, respectively. | |||||||||
Stock Compensation Expense | ' | ||||||||
N) | Stock Compensation Expense | ||||||||
The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. | |||||||||
The fair value of the Company’s stock options and warrants grant is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. | |||||||||
Recent Accounting Pronouncements | ' | ||||||||
O) | Recent Accounting Pronouncements | ||||||||
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-04. This update clarifies how entities measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. This guidance is effective for fiscal years beginning after December 15, 2013 and interim reporting periods thereafter. This update is not expected to have an impact on the Company’s financial position or results of operations | |||||||||
In April 2013, the FASB issued ASU 2013-07 to clarify when it is appropriate to apply the liquidation basis of accounting. Additionally, the update provides guidance for recognition and measurement of assets and liabilities and requirements for financial statements prepared using the liquidation basis of accounting. Under the amendment, entities are required to prepare their financial statements under the liquidation basis of accounting when a liquidation becomes imminent. This guidance is effective for annual reporting periods beginning after December 15, 2013, and interim reporting periods thereafter. This update is not expected to have an impact on the Company’s financial position or results of operations. | |||||||||
In July 2013, the FASB issued ASU 2013-11 which provides guidance relating to the financial statement presentation of unrecognized tax benefits. The update provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward, if such settlement is required or expected in the event the uncertain tax position is disallowed. This update does not require any new recurring disclosures and is effective for public entities for fiscal years beginning after December 15, 2013, and interim reporting periods thereafter. This update is not expected to have an impact on the Company’s financial position or results of operations. | |||||||||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Operations_and_Summary_of_Sign2
Operations and Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Schedule of Estimated Useful Lives | ' | ||||||||
Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: | |||||||||
Property and Equipment Type | Years of Depreciation | ||||||||
Building | 39 years | ||||||||
Machinery and equipment | 5-12 years | ||||||||
Vehicles | 5 years | ||||||||
Office equipment | 5-7 years | ||||||||
Schedule of Potentially Dilutive Securities | ' | ||||||||
The potentially dilutive securities consisted of the following as of: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Warrants | 101,963 | 317,253 | |||||||
Series A Preferred Stock | 37,644 | 41,644 | |||||||
Series B Preferred Stock | - | 319,214 | |||||||
Options | 639,334 | 607,000 | |||||||
Total | 778,941 | 1,285,111 |
Inventory_Tables
Inventory (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Inventory | ' | ||||||||
Inventory is valued at the lower of cost (first-in, first-out) or market, and is comprised of the following as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Raw Materials and Packaging | $ | 3,118,000 | $ | 3,524,000 | |||||
Finished Goods | 3,175,000 | 2,270,000 | |||||||
$ | 6,293,000 | $ | 5,794,000 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of Property and equipment | ' | ||||||||
Property and equipment is comprised of the following as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Land | $ | 1,108,000 | $ | 1,108,000 | |||||
Building | 1,829,000 | 1,737,000 | |||||||
Vehicles | 338,000 | 320,000 | |||||||
Machinery and equipment | 2,763,000 | 2,174,000 | |||||||
Office equipment | 444,000 | 434,000 | |||||||
6,482,000 | 5,773,000 | ||||||||
Accumulated depreciation | (2,796,000 | ) | (2,351,000 | ) | |||||
$ | 3,686,000 | $ | 3,422,000 |
Intangible_Assets_Tables
Intangible Assets (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||||||
Schedule of Intangible Assets Trademarks | ' | ||||||||
Brand names consist of the following three trademarks for natural beverage as of December 31, 2012 and 2012 as follows: | |||||||||
Virgil’s | $ | 576,000 | |||||||
China Cola | 224,000 | ||||||||
Sonoma Sparkler | 229,000 | ||||||||
$ | 1,029,000 | ||||||||
Schedule of Deferred Financing Fees | ' | ||||||||
Deferred financing fees are comprised of the following as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Loan fees relating to financing | $ | 100,000 | $ | 80,000 | |||||
Accumulated amortization | (40,000 | ) | (26,000 | ) | |||||
$ | 60,000 | $ | 54,000 | ||||||
Schedule of Amortization of Deferred Financing Fees | ' | ||||||||
Amortization of deferred financing fees is as follows for the years ending December 31: | |||||||||
Year | Amount | ||||||||
2014 | 54,000 | ||||||||
2015 | 3,000 | ||||||||
2016 | 3,000 | ||||||||
Total | $ | 60,000 |
Longterm_Financing_Obligation_
Long-term Financing Obligation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Long-term Financing Obligation | ' | ||||||||
Long term financing obligation is comprised of the following as of: | |||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Financing obligation | $ | 2,784,000 | $ | 2,874,000 | |||||
Valuation discount | (526,000 | ) | (576,000 | ) | |||||
2,258,000 | 2,298,000 | ||||||||
Less current portion | (111,000 | ) | (90,000 | ) | |||||
Long term financing obligation | $ | 2,147,000 | $ | 2,208,000 | |||||
Schedule of Aggregate Future Obligations Under the Financing Obligation | ' | ||||||||
Aggregate future obligations under the financing obligation are as follows: | |||||||||
Year | |||||||||
2014 | $ | 111,000 | |||||||
2015 | 135,000 | ||||||||
2016 | 160,000 | ||||||||
2017 | 190,000 | ||||||||
2018 | 222,000 | ||||||||
Thereafter | 1,966,000 | ||||||||
Total | $ | 2,784,000 |
Term_Loan_Tables
Term Loan (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Term Loan | ' | ||||||||
December 31, | |||||||||
2013 | 2012 | ||||||||
Term loan | $ | 647,000 | $ | 575,000 | |||||
Less current portion | (165,000 | ) | (176,000 | ) | |||||
Long term debt | $ | 482,000 | $ | 399,000 | |||||
Schedule of Aggregate Future Obligations Under the Term Loan | ' | ||||||||
Aggregate future obligations under the term loan are as follows: | |||||||||
Year | |||||||||
2014 | $ | 165,000 | |||||||
2015 | 482,000 | ||||||||
Total | $ | 647,000 |
Obligations_Under_Capital_Leas1
Obligations Under Capital Leases (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Leases [Abstract] | ' | ||||
Schedule of Future Minimum Lease Payments Under Capital Leases | ' | ||||
Future minimum lease payments under capital leases are as follows: | |||||
Years Ending December 31, | |||||
2014 | 100,000 | ||||
2015 | 57,000 | ||||
2016 | 40,000 | ||||
2017 | 24,000 | ||||
2018 | 12,000 | ||||
Total payments | 233,000 | ||||
Less: Amount representing interest | (48,000 | ) | |||
Present value of net minimum lease payments | 185,000 | ||||
Less: Current portion | 79,000 | ||||
Non-current portion | $ | 106,000 |
Stock_Options_and_Warrants_Tab
Stock Options and Warrants (Tables) | 12 Months Ended | ||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||
Stock Options And Warrants Tables | ' | ||||||||||||||||||||
Schedule of Fair Value of Each Option Award | ' | ||||||||||||||||||||
The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. | |||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Expected volatility | 71 | % | 48 | % | |||||||||||||||||
Expected dividends | — | — | |||||||||||||||||||
Expected average term (in years) | 3 | 3 | |||||||||||||||||||
Risk free rate - average | 0.8 | % | 0.9 | % | |||||||||||||||||
Forfeiture rate | 0 | % | 0 | % | |||||||||||||||||
Schedule of Stock Option Activity | ' | ||||||||||||||||||||
A summary of option activity as of December 31, 2013 and changes during the two years then ended is presented below: | |||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | ||||||||||||||||||
Exercise Price | Remaining | Intrinsic | |||||||||||||||||||
Contractual | Value | ||||||||||||||||||||
Terms (Years) | |||||||||||||||||||||
Outstanding at January 1, 2012 | 1,172,000 | $ | 1.55 | ||||||||||||||||||
Granted | 10,000 | $ | 1.85 | ||||||||||||||||||
Exercised | (408,334 | ) | $ | 1.05 | |||||||||||||||||
Forfeited or expired | (166,666 | ) | $ | 4.46 | |||||||||||||||||
Outstanding at December 31, 2012 | 607,000 | $ | 1.27 | ||||||||||||||||||
Granted | 414,000 | $ | 3.99 | ||||||||||||||||||
Exercised | (348,332 | ) | $ | 1.14 | |||||||||||||||||
Forfeited or expired | (33,334 | ) | $ | 3.71 | |||||||||||||||||
Outstanding at December 31, 2013 | 639,334 | $ | 3.18 | 3.7 | $ | 3,070,000 | |||||||||||||||
Exercisable at December 31, 2013 | 269,083 | $ | 1.84 | 3 | $ | 1,637,000 | |||||||||||||||
Schedule of Nonvested Shares Granted Under the stock option plan | ' | ||||||||||||||||||||
A summary of the status of the Company’s nonvested shares granted under the Company’s stock option plan as of December 31, 2013 and changes during the year then ended is presented below: | |||||||||||||||||||||
Weighted- | |||||||||||||||||||||
Average | |||||||||||||||||||||
Grant Date | |||||||||||||||||||||
Shares | Fair Value | ||||||||||||||||||||
Nonvested at December 31, 2012 | 195,836 | $ | 0.65 | ||||||||||||||||||
Granted | 414,000 | $ | 1.96 | ||||||||||||||||||
Vested | (206,251 | ) | $ | 0.86 | |||||||||||||||||
Forfeited | (33,334 | ) | $ | 1.74 | |||||||||||||||||
Nonvested at December 31, 2013 | 370,251 | $ | 1.89 | ||||||||||||||||||
Schedule of Information Regarding Stock Options | ' | ||||||||||||||||||||
Additional information regarding options outstanding as of December 31, 2013 is as follows: | |||||||||||||||||||||
Options Outstanding at December 31, 2013 | Options Exercisable at | ||||||||||||||||||||
31-Dec-13 | |||||||||||||||||||||
Range of Exercise Price | Number of Shares Outstanding | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Number of Shares Exercisable | Weighted Average Exercise Price | ||||||||||||||||
$0.01 - $1.99 | 190,334 | 2.9 | $ | 1.34 | 166,999 | $ | 1.27 | ||||||||||||||
$2.00 - $4.99 | 429,000 | 3.9 | $ | 3.84 | 102,084 | $ | 2.78 | ||||||||||||||
$5.00 - $6.99 | 20,000 | 4.8 | $ | 6.7 | - | - | |||||||||||||||
639,334 | 269,083 | ||||||||||||||||||||
Schedule of Stock Warrants Activity | ' | ||||||||||||||||||||
The following table summarizes warrant activity for the two years ended December 31, 2013: | |||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | ||||||||||||||||||
Exercise Price | Remaining | Intrinsic | |||||||||||||||||||
Contractual | Value | ||||||||||||||||||||
Terms (Years) | |||||||||||||||||||||
Outstanding at December 31, 2011 | 2,006,870 | $ | 4.32 | ||||||||||||||||||
Granted | - | - | |||||||||||||||||||
Exercised | (574,622 | ) | $ | 1.61 | |||||||||||||||||
Forfeited or expired | (1,114,995 | ) | $ | 6.26 | |||||||||||||||||
Outstanding at December 31, 2012 | 317,253 | $ | 2.4 | ||||||||||||||||||
Granted | - | - | |||||||||||||||||||
Exercised | (215,290 | ) | $ | 2.45 | |||||||||||||||||
Forfeited or expired | - | - | |||||||||||||||||||
Outstanding at December 31, 2013 | 101,963 | $ | 2.3 | 1.9 | $ | 579,000 | |||||||||||||||
Exercisable at December 31, 2013 | 101,963 | $ | 2.3 | 1.9 | $ | 579,000 | |||||||||||||||
Schedule of Outstanding Warrants to Purchase Common Stock | ' | ||||||||||||||||||||
The following table summarizes the outstanding warrants to purchase Common Stock at December 31, 2013: | |||||||||||||||||||||
Number | Exercise Price | Expiration Dates | |||||||||||||||||||
20,803 | $ | 2.1 | Feb-15 | ||||||||||||||||||
64,899 | $ | 2.25 | Apr-15 | ||||||||||||||||||
16,261 | $ | 2.77 | Feb-16 | ||||||||||||||||||
101,963 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of Deferred Income Tax Assets | ' | ||||||||
Significant components of the Company’s deferred income tax assets are as follows as of: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Deferred income tax asset: | |||||||||
Net operating loss carry forward | $ | 6,400,000 | $ | 6,000,000 | |||||
Valuation allowance | (6,400,000 | ) | (6,000,000 | ) | |||||
Net deferred income tax asset | $ | — | $ | — | |||||
Schedule of Effective Income Taxes Rate | ' | ||||||||
Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Federal Statutory tax rate | (34 | )% | (34 | )% | |||||
State tax, net of federal benefit | (5 | )% | (5 | )% | |||||
(39 | )% | (39 | )% | ||||||
Valuation allowance | 39 | % | 39 | % | |||||
Effective tax rate | - | % | - | % |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||
Schedule of Future Payments Under Leases | ' | ||||
Future payments under these leases as of December 31, 2013 are as follows: | |||||
Year ending December 31, | Amount | ||||
2014 | $ | 186,000 | |||
2015 | 92,000 | ||||
2016 | 95,000 | ||||
2017 | 89,000 | ||||
Total | $ | 462,000 |
Operations_and_Summary_of_Sign3
Operations and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Allowance for doubtful accounts and returns and discounts | $324,000 | $399,000 |
Maximum cash deposit guaranteed by federal deposit insurance corporation | 250,000 | ' |
Percentage of amount due to vendor for purchase | 29.00% | 24.00% |
Percentage of accounts payable due to vendor | 21.00% | 27.00% |
Percentage of account excess for accounts payable during period | 10.00% | 10.00% |
Sales incentives | 3,804,000 | 2,345,000 |
Advertising costs | 120,000 | 111,000 |
Customer One | ' | ' |
Percentage of sale accounted to customer | 32.00% | 30.00% |
Acccount recievables from customer | 571,000 | 580,000 |
Percentage of receivables from customer to net receivables | 25.00% | 25.00% |
Customer Two | ' | ' |
Percentage of sale accounted to customer | 10.00% | 10.00% |
Acccount recievables from customer | $424,000 | $340,000 |
Percentage of receivables from customer to net receivables | 17.00% | 14.00% |
Operations_and_Summary_of_Sign4
Operations and Summary of Significant Accounting Policies - Schedule of Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Building [Member] | ' |
Expected useful life of assets | 'P39Y |
Machinery And Equipment [Member] | Minimum [Member] | ' |
Expected useful life of assets | 'P5Y |
Machinery And Equipment [Member] | Maximum [Member] | ' |
Expected useful life of assets | 'P12Y |
Vehicles [Member] | ' |
Expected useful life of assets | 'P5Y |
Office Equipment [Member] | Minimum [Member] | ' |
Expected useful life of assets | 'P5Y |
Office Equipment [Member] | Maximum [Member] | ' |
Expected useful life of assets | 'P7Y |
Operations_and_Summary_of_Sign5
Operations and Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Potentially dilutive securities | 778,941 | 1,285,111 |
Warrant [Member] | ' | ' |
Potentially dilutive securities | 101,963 | 317,253 |
Series A Preferred Stock [Member] | ' | ' |
Potentially dilutive securities | 37,644 | 41,644 |
Series B Preferred Stock [Member] | ' | ' |
Potentially dilutive securities | ' | 319,214 |
Options [Member] | ' | ' |
Potentially dilutive securities | 639,334 | 607,000 |
Inventory_Schedule_of_Inventor
Inventory - Schedule of Inventory (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials and Packaging | $3,118,000 | $3,524,000 |
Finished Goods | 3,175,000 | 2,270,000 |
Inventory, total | $6,293,000 | $5,794,000 |
Property_and_Equipment_Details
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Property, Plant and Equipment [Abstract] | ' | ' |
Depreciation expense | $445,000 | $612,000 |
Equipment held under capital leases | 415,000 | 309,000 |
Accumulated depreciation for assets held under capital lease | $231,000 | $149,000 |
Property_and_Equipment_Schedul
Property and Equipment - Schedule of Property and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property, Plant and Equipment [Abstract] | ' | ' |
Land | $1,108,000 | $1,108,000 |
Building | 1,829,000 | 1,737,000 |
Vehicles | 338,000 | 320,000 |
Machinery and equipment | 2,763,000 | 2,174,000 |
Office equipment | 444,000 | 434,000 |
Total property and equipment | 6,482,000 | 5,773,000 |
Accumulated depreciation | -2,796,000 | -2,351,000 |
Property, plant and equipment, net | $3,686,000 | $3,422,000 |
Intangible_Assets_Details_Narr
Intangible Assets (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Amortization expense | $55,000 | $75,000 |
Intangible_Assets_Schedule_of_
Intangible Assets - Schedule of Intangible Assets Trademarks (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Natural Beverage | $1,029,000 | ' |
VirgilBs [Member] | ' | ' |
Natural Beverage | 576,000 | ' |
China Cola [Member] | ' | ' |
Natural Beverage | 224,000 | ' |
Sonoma Sparkler [Member] | ' | ' |
Natural Beverage | $229,000 | ' |
Intangible_Assets_Schedule_of_1
Intangible Assets - Schedule of Deferred Financing Fees (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
Loan fees relating to financing | $100,000 | $80,000 |
Accumulated amortization | -40,000 | -26,000 |
Deferred financing cost | $60,000 | $54,000 |
Intangible_Assets_Schedule_of_2
Intangible Assets - Schedule of Amortization of deferred financing fees (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ' |
2014 | $54,000 | ' |
2015 | 3,000 | ' |
2016 | 3,000 | ' |
Deferred financing cost | $60,000 | $54,000 |
Line_of_Credit_Details_Narrati
Line of Credit (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||
Sep. 20, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 02, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Nov. 09, 2011 | Dec. 31, 2013 | |
September 1, 2013 to May 31, 2014 [Member] | Minimum [Member] | Maximum [Member] | PMC Financial Services Group, LLC [Member] | PMC Financial Services Group, LLC [Member] | |||||
Line of credit current | ' | $4,524,000 | $3,023,000 | ' | ' | ' | ' | $4,500,000 | ' |
Term loan amount | ' | 217,000 | ' | ' | ' | ' | ' | 750,000 | 750,000 |
Revolving Line of credit increased | 4,800,000 | ' | ' | ' | 200,000 | ' | ' | ' | ' |
Revolving Line of credit facility outstanding | ' | 4,524,000 | 3,023,000 | 4,500,000 | ' | ' | ' | ' | ' |
Percentage of line of credit facility eligible to accounts receivable | ' | 85.00% | ' | ' | ' | ' | ' | ' | ' |
Percentage of line of credit facility eligible to inventory | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' |
Line of credit expiration date | ' | 7-Nov-14 | ' | ' | ' | ' | ' | ' | 8-Nov-14 |
Line of credit interest rate | ' | ' | ' | ' | ' | 3.75% | 7.00% | ' | ' |
Percentage of termination fee for revolving amount | ' | ' | ' | ' | ' | 1.00% | ' | ' | ' |
Debt service coverage ratio under credit availability amount | ' | 100,000 | ' | ' | ' | ' | ' | ' | ' |
Revolving line of credit granted over advance | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Revolving line of credit capital expenditure excess amount | ' | 500,000 | ' | ' | ' | ' | ' | ' | ' |
Credit availability under revolving line of credit | ' | 100,000 | ' | ' | ' | ' | ' | ' | ' |
Line of credit capital expenditures expanded | ' | $500,000 | ' | ' | ' | ' | ' | ' | ' |
Longterm_Financing_Obligation_1
Long-term Financing Obligation (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Proceeds from sale of transaction cost | $3,056,000 | ' |
Percentage of interest expense and reduction in the financing obligation at implicit rate | 9.90% | ' |
Number of warrants issued to purchase of common stock | 400,000 | ' |
Issuance of warrants price per share | $1.20 | ' |
Warrants issued during period value | 752,000 | ' |
Warrtans term | '5 years | ' |
Warrants expected dividents | 0.00% | ' |
Valuation discount amortized term | '15 years | ' |
Amortization of valuation discount | 50,000 | 50,000 |
Financing obligation | 2,784,000 | 2,874,000 |
Maximum [Member] | ' | ' |
Warrants strike price | $2.10 | ' |
Warrants volatility rate | 91.36% | ' |
Warrants discount rate | 2.15% | ' |
Minimum [Member] | ' | ' |
Warrants strike price | $2.25 | ' |
Warrants volatility rate | 110.90% | ' |
Warrants discount rate | 2.20% | ' |
Christopher J. Reed [Member] | ' | ' |
Proceeds finacial obligation limit guaranted by related party | $150,000 | ' |
Longterm_Financing_Obligation_2
Long-term Financing Obligation - Schedule of Long-term Financing Obligation (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Disclosure [Abstract] | ' | ' |
Financing obligation | $2,784,000 | $2,874,000 |
Valuation discount | -526,000 | -576,000 |
Financing obligation, net of discount | 2,258,000 | 2,298,000 |
Less current portion | -111,000 | -90,000 |
Long term financing obligation | $2,147,000 | $2,208,000 |
Longterm_Financing_Obligation_3
Long-term Financing Obligation - Schedule of Aggregate Future obligations Under the Financing Obligation (Details) (USD $) | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' |
2014 | $111,000 |
2015 | 135,000 |
2016 | 160,000 |
2017 | 190,000 |
2018 | 222,000 |
Thereafter | 1,966,000 |
Total | $2,784,000 |
Term_Loan_Details_Textuals
Term Loan (Details Textuals) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | Nov. 09, 2011 | Dec. 31, 2013 | |
PMC Financial Services Group, LLC [Member] | PMC Financial Services Group, LLC [Member] | |||
Term loan amount | $217,000 | ' | $750,000 | $750,000 |
Loan bears interest, description | ' | ' | ' | ' |
bears interest at the prime rate plus 11.6%, not to be below 14.85%, (14.5% at December 31, 2014) | ||||
Payment of principle and interest amount for loan | ' | ' | ' | $21,000 |
Term loan maturity date | ' | ' | ' | 20-Apr-17 |
Term_Loan_Schedule_of_Term_Loa
Term Loan - Schedule of Term Loan (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Disclosure [Abstract] | ' | ' |
Term loan | $647,000 | $575,000 |
Less current portion | -165,000 | -176,000 |
Long term debt | $482,000 | $399,000 |
Term_Loan_Schedule_of_Aggregat
Term Loan - Schedule of Aggregate Future Obligations Under the Term Loan (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Debt Disclosure [Abstract] | ' | ' |
2013 | $165,000 | ' |
2014 | 482,000 | ' |
Total | $647,000 | $575,000 |
Obligations_Under_Capital_Leas2
Obligations Under Capital Leases (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Equipment held under capital leases | $415,000 | $309,000 |
Payment of lease amount | 10,000 | ' |
lease expire date | 31-Dec-18 | ' |
Minimum [Member] | ' | ' |
Payment of lease range per month | 189 | ' |
Percentege of interest for lease amount | 6.51% | ' |
Maximum [Member] | ' | ' |
Payment of lease range per month | $1,680 | ' |
Percentege of interest for lease amount | 17.32% | ' |
Obligations_Under_Capital_Leas3
Obligations Under Capital Leases - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Leases [Abstract] | ' | ' |
2014 | $100,000 | ' |
2015 | 57,000 | ' |
2016 | 40,000 | ' |
2017 | 24,000 | ' |
2018 | 12,000 | ' |
Total payments | 233,000 | ' |
Less: Amount representing interest | -48,000 | ' |
Present value of net minimum lease payments | 185,000 | ' |
Less: Current portion | 79,000 | 69,000 |
Non-current portion | $106,000 | $98,000 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Feb. 05, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | |
Series A Preferred Stock [Member] | Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Series B Convertible Preferred Stock [Member] | Minimum [Member] | Maximum [Member] | |||
Preferred stock, shares authorized | ' | ' | 500,000 | ' | ' | 500,000 | ' | ' | ' | ' |
Preferred stock, par value | ' | ' | $10 | ' | ' | $10 | ' | ' | ' | ' |
Percentage of non cumulative preferred stock | ' | ' | 5.00% | ' | ' | 5.00% | ' | ' | ' | ' |
Preferred stock, shares outstanding | ' | ' | 9,411 | 10,411 | ' | 45,602 | ' | ' | ' | ' |
Preferred stock shares, liquidation preference | ' | ' | $10 | $10 | ' | ' | ' | ' | ' | ' |
Percentage of prorate annual non cumulative divident | ' | ' | 5.00% | ' | ' | 5.00% | ' | ' | ' | ' |
Preferred stock dividends accrued | ' | $5,000 | $5,000 | $16,000 | $29,000 | ' | ' | $74,000 | ' | ' |
Divident paid by issuance of common stock | ' | ' | 1,064 | 4,760 | 27,313 | ' | ' | 47,890 | ' | ' |
Preferred stock holders rights to receive at price per share | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' |
Number of preferred stock converted | ' | ' | 1,000 | 36,210 | 34,813 | ' | ' | ' | ' | ' |
Number of Preferred stock converted into common stock | ' | ' | 4,000 | 144,840 | ' | ' | ' | ' | ' | ' |
Preferred stock, shares issued | ' | ' | ' | ' | ' | ' | 12,780 | ' | ' | ' |
Preferred stock issuance price per share | ' | ' | ' | ' | ' | ' | $10 | ' | ' | ' |
Proceeds from issuance of shares | ' | ' | ' | ' | ' | ' | 127,800 | 127,800 | ' | ' |
Number of warrants issued to purchase of common stock | 400,000 | ' | ' | ' | ' | ' | 3,575 | ' | ' | ' |
Common stock price per share | ' | ' | ' | ' | ' | ' | $1.79 | ' | ' | ' |
Legal and broker fees | 11,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from equity sale | 117,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of Convertible preferred stock converted | ' | ' | ' | ' | ' | 45,602 | ' | ' | ' | ' |
Numbet of convertible preferred stock converted into common stock | ' | ' | ' | ' | ' | ' | ' | 319,214 | ' | ' |
Divident paid | ' | ' | ' | ' | 38,000 | ' | ' | ' | ' | ' |
Common stock, authorized | 19,500,000 | 19,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, par value | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, issued | 12,992,832 | 12,084,673 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock, outstanding | 12,992,832 | 12,084,673 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for services, shares | 1,250 | 14,965 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for services exercise price | $4 | ' | ' | ' | ' | ' | ' | ' | $1.13 | $2.17 |
Common stock issued for services, value | $5,000 | $23,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Stock_Options_and_Warrants_Det
Stock Options and Warrants (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | ||
Dec. 23, 2012 | Apr. 09, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Number of option authorized | ' | ' | 414,000 | 10,000 |
Issuance common stock under employees stock option plan per share | ' | ' | $3.99 | $1.85 |
Share based compensation options vesting, net of forfeitures | ' | ' | 327,000 | 107,000 |
Aggregate value of unvested options | ' | ' | $532,000 | ' |
Number of shares repriced by employee stock option | 20,000 | 20,000 | ' | ' |
Employee stock option exercise price description | ' | ' | ' | ' |
exercise price of $1.14, which were previously $2.06 per share | exercise price of $1.83, which were previously $2.43 per share and $2.06 per share | |||
Employee option termination date | 22-Dec-16 | ' | ' | ' |
Increase in stock compensation expense | ' | ' | 53,000 | ' |
Proceeds from repricing and extension | ' | ' | 5,000 | 48,000 |
Number of shares option excercised | ' | ' | 348,332 | 408,334 |
Option exercised price per share | ' | ' | $1.14 | $1.05 |
Proceeds from option excercised | ' | ' | 30,000 | ' |
Weighted average grant fair value | ' | ' | $1.96 | $0.40 |
Aggregate intrinsic value of share outstanding | ' | ' | 3,070,000 | 1,637,000 |
Average of market and exercise price per share | ' | ' | $7.98 | ' |
Warrants issued | ' | ' | 0 | 0 |
Number of warrants exercised | ' | ' | 215,290 | ' |
Warrants exerxised price description | ' | ' | ' | ' |
warrants exercised at prices between $2.10 per share and $2.77 per share (an average price of $2.45), resulting in proceeds to the Company of $373,000 and 188,635 shares of common stock issued. | ||||
Aggregate intrinsic value of share outstanding | ' | ' | 579,000 | ' |
Minimum [Member] | ' | ' | ' | ' |
Share based compensation cost amortized option vest period | ' | ' | '2 years | ' |
Maximum [Member] | ' | ' | ' | ' |
Share based compensation cost amortized option vest period | ' | ' | '3 years | ' |
Options [Member] | ' | ' | ' | ' |
Percentage of option fixed price | ' | ' | 100.00% | ' |
2001 Stock Option Plan [Member] | ' | ' | ' | ' |
Number of option authorized | ' | ' | 500,000 | ' |
2007 Stock Option Plan [Member] | ' | ' | ' | ' |
Number of option authorized | ' | ' | 1,500,000 | ' |
Warrant [Member] | ' | ' | ' | ' |
Average of market and exercise price per share | ' | ' | $7.98 | ' |
Aggregate intrinsic value of share outstanding | ' | ' | $579,000 | ' |
Stock_Option_And_Warrants_Sche
Stock Option And Warrants - Schedule of Fair Value of Each Option Award (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock Option And Warrants - Schedule Of Fair Value Of Each Option Award Details | ' | ' |
Expected volatility | 71.00% | 48.00% |
Expected dividends | ' | ' |
Expected average term (in years) | '3 years | '3 years |
Risk free rate - average | 8.00% | 9.00% |
Forfeiture rate | 0.00% | 0.00% |
Stock_Options_and_Warrants_Sch
Stock Options and Warrants - Schedule of Stock Option Activity (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock Option And Warrants - Schedule Of Fair Value Of Each Option Award Details | ' | ' |
Shares Outstanding, Beginning balance | 607,000 | 1,172,000 |
Shares, Granted | 414,000 | 10,000 |
Shares, Exercised | -348,332 | -408,334 |
Shares, Forfeited Or Expired | -33,334 | -166,666 |
Shares Outstanding, Ending balance | 639,334 | 607,000 |
Shares Exercisable | 269,083 | ' |
Weighted Average Exercise Price, Outstanding, Beginning | $1.27 | $1.55 |
Weighted Average Exercise Price, Granted | $3.99 | $1.85 |
Weighted Average Exercise Price, Exercised | $1.14 | $1.05 |
Weighted Average Exercise Price, Forfeited Or Expired | $3.71 | $4.46 |
Weighted Average Exercise Price, Outstanding, Ending | $3.18 | $1.27 |
Weighted Average Exercise Price, Exercisable | $1.84 | ' |
Weighted Average Remaining Contractual Terms (Years), Outstanding | '3 years 8 months 12 days | ' |
Weighted Average Remaining Contractual Terms (Years), Exercisable | '3 years | ' |
Aggregate Intrinsic Value, Share Outstanding | $3,070,000 | $1,637,000 |
Aggregate Intrinsic Value, Share Exercisable | $1,637,000 | ' |
Stock_Options_and_Warrants_Sch1
Stock Options and Warrants - Schedule of Nonvested Shares Granted Under the Stock Option Plan (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock Option And Warrants - Schedule Of Fair Value Of Each Option Award Details | ' | ' |
Nonvested, Shares Outstanding, Beginning | 195,836 | ' |
Nonvested, Shares Granted | 414,000 | 10,000 |
Nonvested, Shares Vested | -206,251 | ' |
Nonvested, Shares Forfeited | -33,334 | ' |
Nonvested, Shares Outstanding, Ending | 370,251 | 195,836 |
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, Beginning balance | $0.65 | ' |
Weighted Average Grant Date Fair Value, Nonvested Shares Granted | $1.96 | $0.40 |
Weighted Average Grant Date Fair Value, Nonvested Shares Vested | $0.86 | ' |
Weighted Average Grant Date Fair Value, Nonvested Shares Forfeited | $1.74 | ' |
Weighted Average Grant Date Fair Value, Nonvested Shares Outstanding, Ending balance | $1.89 | $0.65 |
Stock_Options_and_Warrants_Sch2
Stock Options and Warrants - Schedule of Information Regarding Stock Options (Details) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Number of Shares Outstanding | 639,334 |
Weighted Average Remaining Contractual Life (years) | '3 years 8 months 12 days |
Number of Shares Exercisable | 269,083 |
Weighted Average Exercise Price | ' |
Range One [Member] | ' |
Range of Exercise Price Lower Limit | $0.01 |
Range of Exercise Price Uper limit | $1.99 |
Number of Shares Outstanding | 190,334 |
Weighted Average Remaining Contractual Life (years) | '2 years 10 months 24 days |
Weighted Average Exercise Price | $1.34 |
Number of Shares Exercisable | 166,999 |
Weighted Average Exercise Price | $1.27 |
Range Two [Member] | ' |
Range of Exercise Price Lower Limit | $2 |
Range of Exercise Price Uper limit | $4.99 |
Number of Shares Outstanding | 429,000 |
Weighted Average Remaining Contractual Life (years) | '3 years 10 months 24 days |
Weighted Average Exercise Price | $3.84 |
Number of Shares Exercisable | 102,084 |
Weighted Average Exercise Price | $2.78 |
Range Three [Member] | ' |
Range of Exercise Price Lower Limit | $5 |
Range of Exercise Price Uper limit | $6.99 |
Number of Shares Outstanding | 20,000 |
Weighted Average Remaining Contractual Life (years) | '4 years 9 months 18 days |
Weighted Average Exercise Price | $6.70 |
Number of Shares Exercisable | ' |
Weighted Average Exercise Price | ' |
Stock_Options_and_Warrants_Sch3
Stock Options and Warrants - Schedule of Stock Warrants Activity (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Aggregate Intrinsic Value, Outstanding | $579,000 | ' |
Warrant [Member] | ' | ' |
Shares Outstanding, Beginning Balance | 317,253 | 2,006,870 |
Shares Granted | ' | ' |
Shares Exercised | -215,290 | -574,622 |
Shares Forfeited Or Expired | ' | -1,114,995 |
Shares Outstanding, Ending Balance | 101,963 | 317,253 |
Warrants Exercisable | 101,963 | ' |
Weighted Average Exercise Price, Outstanding, Beginning | $2.40 | $4.32 |
Weighted Average Exercise Price, Granted | ' | ' |
Weighted Average Exercise Price, Exercised | $2.45 | $1.61 |
Weighted Average Exercise Price, Forfeited Or Expired | $2.30 | $6.26 |
Weighted Average Exercise Price, Outstanding, Ending | $2.30 | $2.40 |
Weighted Average Remaining Contractual Terms (Years), Outstanding | ' | '1 year 10 months 24 days |
Weighted Average Remaining Contractual Terms (Years), Exercisable | ' | '1 year 10 months 24 days |
Aggregate Intrinsic Value, Outstanding | 579,000 | ' |
Aggregate Intrinsic Value, Exercisable | $579,000 | ' |
Stock_Options_and_Warrants_Sch4
Stock Options and Warrants - Schedule of Outstanding Warrants to Purchase Common Stock (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Number of warrants outstanding | 101,963 |
Warrants One [Member] | ' |
Number of warrants outstanding | 20,803 |
Warrants Exercise Price | 2.1 |
Warrants Expiration Dated | 'February 2015 |
Warrants Two [Member] | ' |
Number of warrants outstanding | 64,899 |
Warrants Exercise Price | 2.25 |
Warrants Expiration Dated | 'April 2015 |
Warrants Three [Member] | ' |
Number of warrants outstanding | 16,261 |
Warrants Exercise Price | 2.77 |
Warrants Expiration Dated | 'February 2016 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Federal net operating loss carryforwards | $17,800,000 | $16,500,000 |
State net operating loss carryforwards | $13,300,000 | $12,500,000 |
Federal net operating loss expiration date | '2033 | ' |
State net operating loss expiration date | '2018 | ' |
Income_Tax_Schedule_of_Deferre
Income Tax - Schedule of Deferred Income Tax Assets (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Tax Disclosure [Abstract] | ' | ' |
Net operating loss carry forward | $6,400,000 | $6,000,000 |
Valuation allowance | -6,400,000 | -6,000,000 |
Net deferred income tax asset | ' | ' |
Income_Tax_Schedule_of_Effecti
Income Tax - Schedule of Effective Income Taxes Rate (Details) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Federal Statutory tax rate | -34.00% | -34.00% |
State tax net of federal benefit | -5.00% | -5.00% |
Change in valuation | -39.00% | -39.00% |
Allowance | 39.00% | 39.00% |
Effective tax rate | 0.00% | 0.00% |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Rental expense | $196,000 | $237,000 |
Commitments_and_Contingencies_2
Commitments and Contingencies - Schedule of Future Payments Under Leases (Details) (USD $) | Dec. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' |
2014 | $186,000 |
2015 | 92,000 |
2016 | 95,000 |
2017 | 89,000 |
Total | $462,000 |
Legal_Proceedings_Details
Legal Proceedings (Details) (USD $) | 0 Months Ended | 8 Months Ended |
Aug. 12, 2006 | Apr. 07, 2006 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Issuance of common stock | ' | 333,156 |
Expiration date of rescission offer | 18-Sep-06 | ' |
Number of offerees | 32 | ' |
Stock issued during period for rescission offer | 28,420 | ' |
Stock issued during period value for rescission offer | $119,000 | ' |
Related_Party_Activity_Details
Related Party Activity (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Related Party Transactions [Abstract] | ' | ' |
Commissions | $1,000 | $15,000 |
Percentage of amount pay to defined sales | 10.00% | ' |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 3 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Feb. 17, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | |
Former Officer [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||
Minimum [Member] | Maximum [Member] | ||||||
Number of option exercised for employeees | ' | ' | ' | ' | 173,700 | ' | ' |
Number of option exercised price per share | ' | ' | ' | ' | ' | $1.14 | $4 |
Stock issued during period for cash less exercises of option | ' | ' | ' | ' | 115,120 | ' | ' |
Stock issued during period under unvested options | ' | ' | 37,500 | ' | ' | ' | ' |
Percentage of accelerated vesting option | ' | ' | ' | 100.00% | ' | ' | ' |
Expense related to the accelerated vesting in the amount | ' | ' | ' | ' | $151,000 | ' | ' |
Risk-free interest rate | 8.00% | 9.00% | ' | 0.75% | 0.75% | ' | ' |
Dividend yield | ' | ' | ' | 0.00% | 0.00% | ' | ' |
Volatility rate | 71.00% | 48.00% | ' | 59.00% | 59.00% | ' | ' |
Fair value expected term | '3 years | '3 years | ' | '3 years | '3 years | ' | ' |
Shares, Granted | 414,000 | 10,000 | ' | 165,500 | ' | ' | ' |
Stock option exercise price | $1.14 | $1.05 | ' | $7.07 | ' | ' | ' |
Fair value of market closing amount | ' | ' | ' | $466,000 | ' | ' | ' |