Document_And_Entity_Informatio
Document And Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 12, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'REED'S, INC. | ' |
Entity Central Index Key | '0001140215 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 13,051,309 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Current assets: | ' | ' |
Cash | $1,213,000 | $1,104,000 |
Trade accounts receivable, net of allowance for doubtful accounts, returns and discounts of $310,000 and $324,000, respectively | 2,881,000 | 2,143,000 |
Inventory, net of reserve for obsolescence of $118,000 and $176,000, respectively | 5,499,000 | 6,293,000 |
Prepaid inventory | 886,000 | 256,000 |
Prepaid and other current assets | 160,000 | 178,000 |
Total Current Assets | 10,639,000 | 9,974,000 |
Property and equipment, net of accumulated depreciation of $3,099,000 and $2,796,000, respectively | 3,537,000 | 3,686,000 |
Brand names | 1,029,000 | 1,029,000 |
Deferred financing fees, net of amortization of $58,000 and $40,000, respectively | 34,000 | 60,000 |
Total assets | 15,239,000 | 14,749,000 |
Current liabilities: | ' | ' |
Accounts payable | 4,131,000 | 3,612,000 |
Accrued expenses | 144,000 | 136,000 |
Line of credit | 3,982,000 | 4,524,000 |
Current portion of long term financing obligation | 122,000 | 111,000 |
Current portion of capital leases payable | 45,000 | 79,000 |
Current portion of term loan | 177,000 | 165,000 |
Total current liabilities | 8,601,000 | 8,627,000 |
Long term financing obligation, less current portion, net of discount of $501,000 and $526,000, respectively | 2,109,000 | 2,147,000 |
Capital leases payable, less current portion | 86,000 | 106,000 |
Term loan, less current portion | 390,000 | 482,000 |
Total Liabilities | 11,186,000 | 11,362,000 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock, $.0001 par value, 19,500,000 shares authorized, 13,050,252 and 12,922,832 shares issued and outstanding, respectively | 1,000 | 1,000 |
Additional paid in capital | 25,529,000 | 25,276,000 |
Accumulated deficit | -21,571,000 | -21,984,000 |
Total stockholders' equity | 4,053,000 | 3,387,000 |
Total liabilities and stockholders' equity | 15,239,000 | 14,749,000 |
Series A Convertible Preferred Stock [Member] | ' | ' |
Stockholders' equity: | ' | ' |
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding | $94,000 | $94,000 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Allowance for Doubtful Accounts, returns and discounts for trade accounts receivable | $310,000 | $324,000 |
Reserve for obsolescence, inventory | 118,000 | 176,000 |
Accumulated Depreciation | 3,099,000 | 2,796,000 |
Accumulated Amortization, deferred financing fees | 58,000 | 40,000 |
Discount, long term financing obligation | $501,000 | $526,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 19,500,000 | 19,500,000 |
Common stock, shares issued | 13,050,252 | 12,922,832 |
Common stock, shares outstanding | 13,050,252 | 12,922,832 |
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 | 9,411 |
Preferred stock, shares outstanding | 9,411 | 9,411 |
Condensed_Statements_of_Operat
Condensed Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales, net | $11,187,000 | $9,519,000 | $20,136,000 | $17,645,000 |
Cost of goods sold | 7,483,000 | 7,062,000 | 13,530,000 | 12,653,000 |
Gross profit | 3,704,000 | 2,457,000 | 6,606,000 | 4,992,000 |
Operating expenses: | ' | ' | ' | ' |
Delivery and handling expenses | 926,000 | 954,000 | 1,821,000 | 1,860,000 |
Selling and marketing expense | 1,049,000 | 960,000 | 2,117,000 | 1,840,000 |
General and administrative expense | 913,000 | 912,000 | 1,885,000 | 1,900,000 |
Total operating expenses | 2,888,000 | 2,826,000 | 5,823,000 | 5,600,000 |
Income (loss) from operations | 816,000 | -369,000 | 783,000 | -608,000 |
Interest expense | -178,000 | -125,000 | -365,000 | -289,000 |
Net income (loss) | 638,000 | -494,000 | 418,000 | -897,000 |
Preferred stock dividends | -5,000 | -5,000 | -5,000 | -5,000 |
Net income (loss) attributable to common stockholders | $633,000 | ($499,000) | $413,000 | ($902,000) |
Income (loss) per share available to common stockholders, basic | $0.05 | ($0.04) | $0.03 | ($0.07) |
Weighted average number of shares outstanding - basic | 13,046,631 | 12,543,983 | 13,025,195 | 12,413,958 |
Income (loss) per share available to common stockholders, diluted | $0.05 | ($0.04) | $0.03 | ($0.07) |
Weighted average number of shares outstanding - diluted | 13,256,624 | 12,543,983 | 13,298,114 | 12,413,958 |
Condensed_Statement_of_Changes
Condensed Statement of Changes in Stockholders' Equity (Unaudited) (USD $) | Common Stock [Member] | Series A Preferred Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
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 | ' | ' | ' |
Common shares issued upon exercise of stock options | ' | ' | 26,000 | ' | 26,000 |
Common shares issued upon exercise of stock options, shares | 125,121 | ' | ' | ' | -183,700 |
Fair value vesting of options issued for bonuses and services | ' | ' | 217,000 | ' | 217,000 |
Fair value of common shares issued for services | ' | ' | 10,000 | ' | 10,000 |
Fair value of common shares issued for services, shares | 2,299 | ' | ' | ' | ' |
Series A preferred stock dividend | ' | ' | ' | -5,000 | -5,000 |
Net income | ' | ' | ' | 418,000 | 418,000 |
Balance at Jun. 30, 2014 | $1,000 | $94,000 | $25,529,000 | ($21,571,000) | $4,053,000 |
Balance, Shares at Jun. 30, 2014 | 13,050,252 | 9,411 | ' | ' | ' |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Cash flows from operating activities: | ' | ' |
Net income (loss) | $418,000 | ($897,000) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 361,000 | 298,000 |
Fair value of stock options issued to employees | 217,000 | 188,000 |
Fair value of common stock issued for services and bonus | 10,000 | 5,000 |
(Decrease) increase in allowance for doubtful accounts | -14,000 | -34,000 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -724,000 | -1,240,000 |
Inventory | 794,000 | -591,000 |
Prepaid expenses and inventory and other current assets | -612,000 | -212,000 |
Accounts payable | 519,000 | 1,362,000 |
Accrued expenses | 4,000 | -79,000 |
Net cash provided by (used in) operating activities | 973,000 | -1,200,000 |
Cash flows from investing activities: | ' | ' |
Purchase of property and equipment | -155,000 | -286,000 |
Net cash used in investing activities | -155,000 | -286,000 |
Cash flows from financing activities: | ' | ' |
Proceeds from stock option exercises | 26,000 | 30,000 |
Payment of deferred financing fees | -7,000 | ' |
Principal repayments on long term financing obligation | -52,000 | -43,000 |
Principal repayments on capital lease obligation | -56,000 | -33,000 |
Increased borrowing on note payable | ' | 217,000 |
Principal repayments on term loan | -79,000 | -81,000 |
Net draw down (repayment) on line of credit | -541,000 | 1,049,000 |
Net cash (used in) provided by financing activities | -709,000 | 1,139,000 |
Net (decrease) increase in cash | 109,000 | -347,000 |
Cash at beginning of period | 1,104,000 | 1,163,000 |
Cash at end of period | 1,213,000 | 816,000 |
Cash paid during the period for: | ' | ' |
Interest | 365,000 | 338,000 |
Non cash investing and financing activities: | ' | ' |
Series B Preferred stock converted to common stock | ' | 456,000 |
Dividends payable in common stock | 5,000 | 5,000 |
Common stock issued in settlement of Series A and B preferred stock dividend | ' | 74,000 |
Property and equipment acquired through capital lease obligation | $0 | $13,000 |
Basis_of_Presentation_and_Summ
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation and Summary of Significant Accounting Policies | ' | ||||||||||||||||
1. Basis of Presentation and Summary of Significant Accounting Policies | |||||||||||||||||
The accompanying interim condensed financial statements are unaudited, but in the opinion of management of Reed’s, Inc. (the “Company”), contain all adjustments, which include normal recurring adjustments necessary to present fairly the financial position at June 30, 2014 and the results of operations and cash flows for the six months ended June 30, 2014 and 2013. The balance sheet as of December 31, 2013 is derived from the Company’s audited financial statements. | |||||||||||||||||
Certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these condensed financial statements are adequate to make the information presented herein not misleading. For further information, refer to the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 25, 2014. | |||||||||||||||||
The results of operations for the six months ended June 30, 2014 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2014. | |||||||||||||||||
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, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, analysis of impairments of recorded intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. | |||||||||||||||||
Income (Loss) per Common Share | |||||||||||||||||
Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing the net income applicable to common stock holders 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 when their effect is antidilutive. | |||||||||||||||||
For the three and six months ended June 30, 2014 the calculations of diluted earnings per share included stock options and warrants, calculated under the treasury stock method, and excluded preferred stock since the effect was antidilutive. For the three and six months ended June 30, 2013 the calculations of basic and diluted loss per share are the same. The calculation of weighted average shares outstanding – diluted is as follows: | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to common stockholders | $ | 633,000 | $ | (499,000 | ) | $ | 413,000 | $ | (902,000 | ) | |||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding - basic | 13,046,631 | 12,543,983 | 13,025,195 | 12,413,958 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||||||
Warrants and options | 209,993 | – | 272,919 | – | |||||||||||||
Weighted average shares outstanding-diluted | 13,256,624 | 12,543,983 | 13,298,114 | 12,413,958 | |||||||||||||
The Company had potentially dilutive securities that consisted of: | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Warrants | 101,963 | 317,253 | |||||||||||||||
Series A Preferred Stock | 37,644 | 41,644 | |||||||||||||||
Options | 648,967 | 839,669 | |||||||||||||||
Total | 788,574 | 1,198,566 | |||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. | |||||||||||||||||
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company’s operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company’s results of operations or financial condition. | |||||||||||||||||
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. | |||||||||||||||||
Concentrations | |||||||||||||||||
The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company may be exposed to risk for the amounts of funds held in one bank 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 six months ended June 30, 2014. | |||||||||||||||||
During the three months ended June 30, 2014 and 2013, the Company had two customers which accounted for approximately 39.4% and 10% of sales in 2014, and 34% and 9% of sales in 2013, respectively. During the six months ended June 30, 2014 and 2013, the Company had two customers which accounted for approximately 37% and 11% of sales in 2014, and 34% and 10% of sales in 2013, respectively. No other customers accounted for more than 10% of sales in either year. As of June 30, 2014, the Company had accounts receivable due from a customer who comprised $1,182,000 (37%) of its total accounts receivable and as of December 31, 2013 the Company had accounts receivable due from two customers who comprised $571,000 (23%), and $424,000 (17%), respectively, of its total accounts receivable. | |||||||||||||||||
During the six months ended June 30, 2014, the Company had one vendor which accounted for approximately 26% of purchases, and in the six months ended June 30, 2013 one vendor who accounted for approximately 28% of purchases. No other vendor accounted for more than 10% of purchases in either period. As of June 30, 2014, the Company had two vendors which accounted for approximately 29% and 11% of total accounts payable and as of December 31, 2013 the Company had accounts payable due to one vendor who comprised 23% of its total. No other account was in excess of 10% of the balance of accounts payable as of June 30, 2014 and December 31, 2013. | |||||||||||||||||
Advertising | |||||||||||||||||
Advertising costs are expensed as incurred. For the three months ended June 30, 2014 and 2013, advertising costs were $41,000 and $19,000, respectively and for the six months ended June 30, 2014 and 2013, advertising costs were $111,000 and $40,000 respectively. | |||||||||||||||||
Comprehensive Income | |||||||||||||||||
For the three months and six months ended June 30, 2014 and 2013, the Company had no items of comprehensive income. | |||||||||||||||||
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 Company had no such assets or liabilities recorded to be valued on the basis above at June 30, 2014 or December 31, 2013. |
Inventory
Inventory | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
2. Inventory | |||||||||
Inventory is valued at the lower of cost (first-in, first-out or market) and, net of reserves, is comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Raw Materials and packaging | $ | 2,976,000 | $ | 3,118,000 | |||||
Finished Goods | 2,523,000 | 3,175,000 | |||||||
$ | 5,499,000 | $ | 6,293,000 |
Property_and_Equipment
Property and Equipment | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
3. Property and Equipment | |||||||||
Property and equipment are comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Land | $ | 1,108,000 | $ | 1,108,000 | |||||
Building | 1,858,000 | 1,829,000 | |||||||
Vehicles | 337,000 | 338,000 | |||||||
Machinery and equipment | 2,885,000 | 2,763,000 | |||||||
Office equipment | 448,000 | 444,000 | |||||||
6,636,000 | 6,482,000 | ||||||||
Accumulated depreciation | (3,099,000 | ) | (2,796,000 | ) | |||||
$ | 3,537,000 | $ | 3,686,000 | ||||||
Depreciation expense for the six months ended June 30, 2014 and 2013 was $303,000 and $249,000, respectively. | |||||||||
Depreciation expense for the three months ended June 30, 2014 and 2013 was $152,000 and $128,000, respectively. | |||||||||
Machinery and equipment at June 30, 2014 and December 31, 2013 includes equipment held under capital leases of $415,000. Accumulated depreciation on equipment held under capital leases was $274,000 on June 30, 2014 and $231,000 on December 31, 2013. |
Line_of_Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2014 | |
Debt Disclosure [Abstract] | ' |
Line of Credit | ' |
4. 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 5). On September 20, 2013, the line of credit was increased to $4,800,000 effective September 1, 2013 to September 30, 2014, after which it will be $4,500,000. | |
At June 30, 2014 and December 31, 2013, the aggregate amount outstanding under the line of credit was $3,982,000 and $4,524,000 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 September 30, 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 June 30, 2014, the credit availability under the revolving line of credit was above $100,000. This revolving line of credit matures on November 8, 2014. |
Term_Loan
Term Loan | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Term Loan | ' | ||||||||
5. Term Loan | |||||||||
On May 1, 2013 the term loan was increased to $750,000. Other terms of the term loan remain the same. The term loan bears interest at the prime rate plus 11.6%, which shall not be below 14.85%, 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. | |||||||||
Term loan is Comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Term loan | $ | 567,000 | $ | 647,000 | |||||
Less current portion | (177,000 | ) | (165,000 | ) | |||||
Long term debt | $ | 390,000 | $ | 482,000 |
Longterm_Financing_Obligation
Long-term Financing Obligation | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Long-term Financing Obligation | ' | ||||||||
6. Long-term Financing Obligation | |||||||||
In 2009 the Company sold 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. | |||||||||
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. | |||||||||
Long term financing obligation is comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Financing obligation | $ | 2,732,000 | $ | 2,784,000 | |||||
Valuation discount | (501,000 | ) | (526,000 | ) | |||||
2,231,000 | 2,258,000 | ||||||||
Less current portion | (122,000 | ) | (111,000 | ) | |||||
Long term financing obligation | $ | 2,109,000 | $ | 2,147,000 |
Stockholders_Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2014 | |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
7. Stockholders’ Equity | |
Preferred Stock | |
Series A Preferred stock consists of 500,000 shares $10.00 par value, 5% non-cumulative, participating, preferred stock. As of June 30, 2014 and December 31, 2013, there were 9,411 shares outstanding 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. On June 30, 2014, dividends were accrued on the Series A Preferred stock in the amount of $5,000 and the dividends were paid July 25, 2014 by issuing 1,057 shares of 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. | |
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. | |
Common Stock | |
Common stock consists of $.0001 par value, 19,500,000 shares authorized, 13,050,252 shares issued and outstanding as of June 30, 2014 and 12,922,832 shares issued and outstanding as of December 31, 2013. During the six months ended June 30, 2014, the company issued 2,299 shares valued at $4.35 per share for ($10,000) for consulting services. |
Stock_Based_Compensation
Stock Based Compensation | 6 Months Ended | |||||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||||
Stock Based Compensation | ' | |||||||||||||||||||||
Stock Based Compensation | ' | |||||||||||||||||||||
8. Stock Based Compensation | ||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||
During the six months ended June 30, 2014, the Company granted 357,500 stock options to various employees at the market price of $4.60 per share. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. Assumptions used in valuing stock options granted during the six months ended June 30, 2014 are as follows: (i) volatility rate of between 59.43% and 66.3%, (ii) discount rate of 0.73%, (iii) zero expected dividend yield, and (iv) expected term of 3.5 to 4.5 years based upon the average of the term of the option and the vesting period. The aggregate fair value of the options granted during the six months ended June 30, 2014, was approximately $580,000. | ||||||||||||||||||||||
On June 5, 2014, the Company repriced 103,000 employee options to an exercise price of $4.60 per share, which were previously $4.74 per share and $6.40 per share. The total increase in stock compensation expense, as a result of the repricing was approximately $2,000. | ||||||||||||||||||||||
Total stock-based compensation recognized on the Company’s statement of operations for the six months ended June 30, 2014 and 2013 was $217,000 and $188,000, respectively. Stock based compensation expense for the three months ended June 30, 2014 and 2013 was $118,000 and $69,000 respectively. As of June 30, 2014, the aggregate value of unvested options was $924,000 which will vest over an average period of three to four years. There were 183,700 stock options exercised in the six months ended June 30, 2014 at exercise prices between $1.14 and $4.00 per share. The Company received $25,700 for 10,000 of such exercises and allowed cash-less exercise of 173,700 of such options, issuing 115,121 shares of common stock for a total of 125,121 shares issued relative to stock options in the six months ended June 30, 2014. | ||||||||||||||||||||||
Stock options granted under our equity incentive plans generally vest over 3 – 4 years from the date of grant, at 33% or 25% per year respectively and expire 5 years from the date of grant. The following table summarizes stock option activity for the six months ended June 30, 2014: | ||||||||||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | |||||||||||||||||||
Average | Average | Intrinsic | ||||||||||||||||||||
Exercise | Remaining | Value | ||||||||||||||||||||
Price | Contractual | |||||||||||||||||||||
Terms | ||||||||||||||||||||||
(Years) | ||||||||||||||||||||||
Outstanding at January 1, 2014 | 639,334 | $ | 3.18 | |||||||||||||||||||
Granted | 357,500 | - | ||||||||||||||||||||
Exercised | (183,700 | ) | 2.66 | |||||||||||||||||||
Forfeited or expired | (164,167 | ) | 4.39 | |||||||||||||||||||
Outstanding at June 30, 2014 | 648,967 | $ | 3.72 | 3.83 | $ | 980,000 | ||||||||||||||||
Exercisable at June 30, 2014 | 225,227 | $ | 2.68 | 2.89 | $ | 732,000 | ||||||||||||||||
The aggregate intrinsic value was calculated as the difference between the market price, which was $5.23 per share, and the exercise price of the Company’s stock options as of June 30, 2014. | ||||||||||||||||||||||
The following table summarizes information about stock options at June 30, 2014: | ||||||||||||||||||||||
Options Outstanding at June 30, 2014 | Options Exercisable at June 30, 2014 | |||||||||||||||||||||
Range | Number of | Weighted | Weighted | Number | Weighted | |||||||||||||||||
of Exercise | Shares | Average | Average | of Shares | Average | |||||||||||||||||
Price | Outstanding | Remaining | Exercise | Exercisable | Exercise | |||||||||||||||||
Contractual | Price | Price | ||||||||||||||||||||
Life | ||||||||||||||||||||||
(years) | ||||||||||||||||||||||
$0.01 - $1.99 | 112,833 | 2.4 | $ | 1.27 | 92,483 | $ | 1.26 | |||||||||||||||
$2.00 - $4.99 | 536,134 | 4.1 | $ | 4.24 | 132,774 | $ | 3.67 | |||||||||||||||
648,967 | 225,257 | |||||||||||||||||||||
Stock Warrants | ||||||||||||||||||||||
During the three months ended June 30, 2014, no warrants were either granted or exercised. The following table summarizes stock warrant activity for the six months ended June 30, 2014: | ||||||||||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | |||||||||||||||||||
Average | Average | Intrinsic | ||||||||||||||||||||
Exercise | Remaining | Value | ||||||||||||||||||||
Price | Contractual | |||||||||||||||||||||
Terms | ||||||||||||||||||||||
(Years) | ||||||||||||||||||||||
Outstanding at December 31, 2013 | 101,963 | $ | 2.3 | |||||||||||||||||||
Granted | - | - | ||||||||||||||||||||
Exercised | - | - | ||||||||||||||||||||
Forfeited or expired | - | - | ||||||||||||||||||||
Outstanding at June 30, 2014 | 101,963 | $ | 2.3 | 0.87 | $ | 298,514 | ||||||||||||||||
Exercisable at June 30, 2014 | 101,963 | $ | 2.3 | 0.87 | $ | 298,514 | ||||||||||||||||
The intrinsic value was calculated as the difference between the market price, which was $5.23, and the exercise price of the Company’s stock warrants as of June 30, 2014. |
Income_Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
9. Income Taxes | |
For the three and six months ended June 30, 2014, net income was $638,000 and $418,000, respectively, and our provision for income taxes was zero. We made no provision for income taxes due to our utilization of federal net operating loss carry forwards to offset both regular taxable income and alternative minimum taxable income. For the three and six months ended June 30, 2013, net loss was $494,000 and $897,000, respectively and no income tax provision was recorded. | |
In accordance with Accounting Standards Codification (“ASC”) 740-10, Income Taxes, the Company evaluates its deferred tax assets to determine if a valuation allowance is required based on the consideration of all available evidence using a “more likely than not” standard, with significant weight being given to evidence that can be objectively verified. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability; the length of statutory carryover periods for operating losses and tax credit carryovers; and available tax planning alternatives. Our deferred tax assets are composed primarily of U.S. federal net operating loss carryforwards. Based on available objective evidence, management believes it is more likely than not that these deferred tax assets are not recognizable and will not be recognizable until its determined that we have sufficient taxable income. Under ASC 740-10, 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. ASC 740-10 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods, and disclosures. As of June 30, 2014 or 2013 the Company did not have a liability for unrecognized tax uncertainties. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
10. Subsequent Events | |
On July 1, 2014, the Company signed a $300,000 Letter of Credit through City National Bank for the benefit of an advertising company as security for invoices for a national advertising campaign. The letter of credit expires December 31, 2014. | |
On July 25, 2014, the Company granted 110,000 stock options to employees. These options vest over three and four years and have a strike price of $5.08 per share. The options were valued at $269,000 using the Black-Scholes pricing model and will be expensed to the Company’s statement of operations as they vest. |
Basis_of_Presentation_and_Summ1
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Income (Loss) per Common Share | ' | ||||||||||||||||
Income (Loss) per Common Share | |||||||||||||||||
Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing the net income applicable to common stock holders 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 when their effect is antidilutive. | |||||||||||||||||
For the three and six months ended June 30, 2014 the calculations of diluted earnings per share included stock options and warrants, calculated under the treasury stock method, and excluded preferred stock since the effect was antidilutive. For the three and six months ended June 30, 2013 the calculations of basic and diluted loss per share are the same. The calculation of weighted average shares outstanding – diluted is as follows: | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to common stockholders | $ | 633,000 | $ | (499,000 | ) | $ | 413,000 | $ | (902,000 | ) | |||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding - basic | 13,046,631 | 12,543,983 | 13,025,195 | 12,413,958 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||||||
Warrants and options | 209,993 | – | 272,919 | – | |||||||||||||
Weighted average shares outstanding-diluted | 13,256,624 | 12,543,983 | 13,298,114 | 12,413,958 | |||||||||||||
The Company had potentially dilutive securities that consisted of: | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Warrants | 101,963 | 317,253 | |||||||||||||||
Series A Preferred Stock | 37,644 | 41,644 | |||||||||||||||
Options | 648,967 | 839,669 | |||||||||||||||
Total | 788,574 | 1,198,566 | |||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting. | |||||||||||||||||
In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company’s operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company’s results of operations or financial condition. | |||||||||||||||||
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. | |||||||||||||||||
Concentrations | ' | ||||||||||||||||
Concentrations | |||||||||||||||||
The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000. The Company may be exposed to risk for the amounts of funds held in one bank 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 six months ended June 30, 2014. | |||||||||||||||||
During the three months ended June 30, 2014 and 2013, the Company had two customers which accounted for approximately 39.4% and 10% of sales in 2014, and 34% and 9% of sales in 2013, respectively. During the six months ended June 30, 2014 and 2013, the Company had two customers which accounted for approximately 37% and 11% of sales in 2014, and 34% and 10% of sales in 2013, respectively. No other customers accounted for more than 10% of sales in either year. As of June 30, 2014, the Company had accounts receivable due from a customer who comprised $1,182,000 (37%) of its total accounts receivable and as of December 31, 2013 the Company had accounts receivable due from two customers who comprised $571,000 (23%), and $424,000 (17%), respectively, of its total accounts receivable. | |||||||||||||||||
During the six months ended June 30, 2014, the Company had one vendor which accounted for approximately 26% of purchases, and in the six months ended June 30, 2013 one vendor who accounted for approximately 28% of purchases. No other vendor accounted for more than 10% of purchases in either period. As of June 30, 2014, the Company had two vendors which accounted for approximately 29% and 11% of total accounts payable and as of December 31, 2013 the Company had accounts payable due to one vendor who comprised 23% of its total. No other account was in excess of 10% of the balance of accounts payable as of June 30, 2014 and December 31, 2013. | |||||||||||||||||
Advertising | ' | ||||||||||||||||
Advertising | |||||||||||||||||
Advertising costs are expensed as incurred. For the three months ended June 30, 2014 and 2013, advertising costs were $41,000 and $19,000, respectively and for the six months ended June 30, 2014 and 2013, advertising costs were $111,000 and $40,000 respectively. | |||||||||||||||||
Comprehensive Income | ' | ||||||||||||||||
Comprehensive Income | |||||||||||||||||
For the three months and six months ended June 30, 2014 and 2013, the Company had no items of comprehensive income. | |||||||||||||||||
Fair Value of Financial Instruments | ' | ||||||||||||||||
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 Company had no such assets or liabilities recorded to be valued on the basis above at June 30, 2014 or December 31, 2013. |
Basis_of_Presentation_and_Summ2
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedule of Weighted Average Shares Outstanding Diluted | ' | ||||||||||||||||
The calculation of weighted average shares outstanding – diluted is as follows: | |||||||||||||||||
Three months ended | Six months ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to common stockholders | $ | 633,000 | $ | (499,000 | ) | $ | 413,000 | $ | (902,000 | ) | |||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding - basic | 13,046,631 | 12,543,983 | 13,025,195 | 12,413,958 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||||||
Warrants and options | 209,993 | – | 272,919 | – | |||||||||||||
Weighted average shares outstanding-diluted | 13,256,624 | 12,543,983 | 13,298,114 | 12,413,958 | |||||||||||||
Schedule of Potentially Dilutive Securities | ' | ||||||||||||||||
The Company had potentially dilutive securities that consisted of: | |||||||||||||||||
30-Jun-14 | 30-Jun-13 | ||||||||||||||||
Warrants | 101,963 | 317,253 | |||||||||||||||
Series A Preferred Stock | 37,644 | 41,644 | |||||||||||||||
Options | 648,967 | 839,669 | |||||||||||||||
Total | 788,574 | 1,198,566 |
Inventory_Tables
Inventory (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Inventory | ' | ||||||||
Inventory is valued at the lower of cost (first-in, first-out or market) and, net of reserves, is comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Raw Materials and packaging | $ | 2,976,000 | $ | 3,118,000 | |||||
Finished Goods | 2,523,000 | 3,175,000 | |||||||
$ | 5,499,000 | $ | 6,293,000 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of Property and equipment | ' | ||||||||
Property and equipment are comprised of the following as of: | |||||||||
June 30, 2014 | 31-Dec-13 | ||||||||
Land | $ | 1,108,000 | $ | 1,108,000 | |||||
Building | 1,858,000 | 1,829,000 | |||||||
Vehicles | 337,000 | 338,000 | |||||||
Machinery and equipment | 2,885,000 | 2,763,000 | |||||||
Office equipment | 448,000 | 444,000 | |||||||
6,636,000 | 6,482,000 | ||||||||
Accumulated depreciation | (3,099,000 | ) | (2,796,000 | ) | |||||
$ | 3,537,000 | $ | 3,686,000 |
Term_Loan_Tables
Term Loan (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Term Loan | ' | ||||||||
Term loan is Comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Term loan | $ | 567,000 | $ | 647,000 | |||||
Less current portion | (177,000 | ) | (165,000 | ) | |||||
Long term debt | $ | 390,000 | $ | 482,000 |
Longterm_Financing_Obligation_
Long-term Financing Obligation (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Long-term Financing Obligation | ' | ||||||||
Long term financing obligation is comprised of the following as of: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Financing obligation | $ | 2,732,000 | $ | 2,784,000 | |||||
Valuation discount | (501,000 | ) | (526,000 | ) | |||||
2,231,000 | 2,258,000 | ||||||||
Less current portion | (122,000 | ) | (111,000 | ) | |||||
Long term financing obligation | $ | 2,109,000 | $ | 2,147,000 |
Stock_Based_Compensation_Table
Stock Based Compensation (Tables) | 6 Months Ended | |||||||||||||||||||||
Jun. 30, 2014 | ||||||||||||||||||||||
Stock Based Compensation Tables | ' | |||||||||||||||||||||
Schedule of Stock Option Activity | ' | |||||||||||||||||||||
The following table summarizes stock option activity for the six months ended June 30, 2014: | ||||||||||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | |||||||||||||||||||
Average | Average | Intrinsic | ||||||||||||||||||||
Exercise | Remaining | Value | ||||||||||||||||||||
Price | Contractual | |||||||||||||||||||||
Terms | ||||||||||||||||||||||
(Years) | ||||||||||||||||||||||
Outstanding at January 1, 2014 | 639,334 | $ | 3.18 | |||||||||||||||||||
Granted | 357,500 | - | ||||||||||||||||||||
Exercised | (183,700 | ) | 2.66 | |||||||||||||||||||
Forfeited or expired | (164,167 | ) | 4.39 | |||||||||||||||||||
Outstanding at June 30, 2014 | 648,967 | $ | 3.72 | 3.83 | $ | 980,000 | ||||||||||||||||
Exercisable at June 30, 2014 | 225,227 | $ | 2.68 | 2.89 | $ | 732,000 | ||||||||||||||||
Schedule of Information Regarding Stock Options | ' | |||||||||||||||||||||
The following table summarizes information about stock options at June 30, 2014: | ||||||||||||||||||||||
Options Outstanding at June 30, 2014 | Options Exercisable at June 30, 2014 | |||||||||||||||||||||
Range | Number of | Weighted | Weighted | Number | Weighted | |||||||||||||||||
of Exercise | Shares | Average | Average | of Shares | Average | |||||||||||||||||
Price | Outstanding | Remaining | Exercise | Exercisable | Exercise | |||||||||||||||||
Contractual | Price | Price | ||||||||||||||||||||
Life | ||||||||||||||||||||||
(years) | ||||||||||||||||||||||
$0.01 - $1.99 | 112,833 | 2.4 | $ | 1.27 | 92,483 | $ | 1.26 | |||||||||||||||
$2.00 - $4.99 | 536,134 | 4.1 | $ | 4.24 | 132,774 | $ | 3.67 | |||||||||||||||
648,967 | 225,257 | |||||||||||||||||||||
Schedule of Stock Warrants Activity | ' | |||||||||||||||||||||
The following table summarizes stock warrant activity for the six months ended June 30, 2014: | ||||||||||||||||||||||
Shares | Weighted- | Weighted- | Aggregate | |||||||||||||||||||
Average | Average | Intrinsic | ||||||||||||||||||||
Exercise | Remaining | Value | ||||||||||||||||||||
Price | Contractual | |||||||||||||||||||||
Terms | ||||||||||||||||||||||
(Years) | ||||||||||||||||||||||
Outstanding at December 31, 2013 | 101,963 | $ | 2.3 | |||||||||||||||||||
Granted | - | - | ||||||||||||||||||||
Exercised | - | - | ||||||||||||||||||||
Forfeited or expired | - | - | ||||||||||||||||||||
Outstanding at June 30, 2014 | 101,963 | $ | 2.3 | 0.87 | $ | 298,514 | ||||||||||||||||
Exercisable at June 30, 2014 | 101,963 | $ | 2.3 | 0.87 | $ | 298,514 |
Basis_of_Presentation_and_Summ3
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Maximum cash deposit guaranteed by federal deposit insurance corporation | $250,000 | ' | $250,000 | ' | ' |
Maximum percentage of sales incurred by each customer | ' | ' | 10.00% | ' | ' |
Percentage of amount due to vendor for purchase | ' | ' | 26.00% | 28.00% | ' |
Maximum percentage of purchase incurred by each vendor | ' | ' | 10.00% | ' | ' |
Percentage of account excess for accounts payable during period | 10.00% | ' | 10.00% | ' | 10.00% |
Advertising costs | 41,000 | 19,000 | 111,000 | 40,000 | ' |
Vendor One [Member] | ' | ' | ' | ' | ' |
Percentage of accounts payable due to vendor | 29.00% | ' | 29.00% | ' | 23.00% |
Vendor Two [Member] | ' | ' | ' | ' | ' |
Percentage of accounts payable due to vendor | 11.00% | ' | 11.00% | ' | ' |
Customer One | ' | ' | ' | ' | ' |
Percentage of sale accounted to customer | 39.40% | 34.00% | 37.00% | 34.00% | ' |
Account receivables from customer | 1,182,000 | ' | 1,182,000 | ' | 571,000 |
Percentage of receivables from customer to net receivables | 37.00% | ' | 37.00% | ' | 23.00% |
Customer Two | ' | ' | ' | ' | ' |
Percentage of sale accounted to customer | 10.00% | 9.00% | 11.00% | 10.00% | ' |
Account receivables from customer | ' | ' | ' | ' | 424,000 |
Percentage of receivables from customer to net receivables | ' | ' | ' | ' | 17.00% |
Basis_of_Presentation_and_Summ4
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Weighted Average Shares Outstanding Diluted (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Net income (loss) attributable to common stockholders | $633,000 | ($499,000) | $413,000 | ($902,000) |
Weighted average shares outstanding - basic | 13,046,631 | 12,543,983 | 13,025,195 | 12,413,958 |
Warrants and options | 209,993 | ' | 272,919 | ' |
Weighted average shares outstanding-diluted | 13,256,624 | 12,543,983 | 13,298,114 | 12,413,958 |
Basis_of_Presentation_and_Summ5
Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Potentially dilutive securities | 788,574 | 1,198,566 |
Warrants [Member] | ' | ' |
Potentially dilutive securities | 101,963 | 317,253 |
Series A Preferred Stock [Member] | ' | ' |
Potentially dilutive securities | 37,644 | 41,644 |
Options [Member] | ' | ' |
Potentially dilutive securities | 648,967 | 839,669 |
Inventory_Schedule_of_Inventor
Inventory - Schedule of Inventory (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials and packaging | $2,976,000 | $3,118,000 |
Finished Goods | 2,523,000 | 3,175,000 |
Inventory, total | $5,499,000 | $6,293,000 |
Property_and_Equipment_Details
Property and Equipment (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Property, Plant and Equipment [Abstract] | ' | ' | ' | ' | ' |
Depreciation expense | $152,000 | $128,000 | $303,000 | $249,000 | ' |
Equipment held under capital leases | 415,000 | ' | 415,000 | ' | 415,000 |
Accumulated depreciation for assets held under capital lease | $274,000 | ' | $274,000 | ' | $231,000 |
Property_and_Equipment_Schedul
Property and Equipment - Schedule of Property and Equipment (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Abstract] | ' | ' |
Land | $1,108,000 | $1,108,000 |
Building | 1,858,000 | 1,829,000 |
Vehicles | 337,000 | 338,000 |
Machinery and equipment | 2,885,000 | 2,763,000 |
Office equipment | 448,000 | 444,000 |
Property and equipment, gross | 6,636,000 | 6,482,000 |
Accumulated depreciation | -3,099,000 | -2,796,000 |
Property and equipment, net | $3,537,000 | $3,686,000 |
Line_of_Credit_Details_Narrati
Line of Credit (Details Narrative) (USD $) | 0 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | ||
Sep. 20, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | 1-May-13 | Nov. 09, 2011 | Jun. 30, 2014 | Sep. 20, 2013 | |
Maximum [Member] | PMC Financial Services Group, LLC [Member] | PMC Financial Services Group, LLC [Member] | PMC Financial Services Group, LLC [Member] | PMC Financial Services Group, LLC [Member] | ||||
Line of credit current | ' | $3,982,000 | $4,524,000 | ' | ' | $4,500,000 | ' | $4,800,000 |
Term loan amount | ' | ' | ' | ' | 750,000 | 750,000 | ' | ' |
Revolving Line of credit facility outstanding | 200,000 | ' | ' | ' | ' | ' | ' | 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% | ' | 11.60% | ' | ' | ' |
Percentage of termination fee for revolving amount | ' | ' | ' | 1.00% | ' | ' | ' | ' |
Revolving line of credit granted over advance | 500,000 | ' | ' | ' | ' | ' | ' | ' |
Debt service coverage ratio under credit availability amount | ' | 100,000 | ' | ' | ' | ' | ' | ' |
Revolving line of credit capital expenditure excess amount | ' | 500,000 | ' | ' | ' | ' | ' | ' |
Maximum credit availability under revolving line of credit | ' | $100,000 | ' | ' | ' | ' | ' | ' |
Term_Loan_Details_Narrative
Term Loan (Details Narrative) (USD $) | 6 Months Ended | 12 Months Ended | 0 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | 1-May-13 | Nov. 09, 2011 | |
PMC Financial Services Group, LLC [Member] | PMC Financial Services Group, LLC [Member] | |||
Term loan amount | ' | ' | $750,000 | $750,000 |
Loan bears interest, description | ' | ' | ' | ' |
The term loan bears interest at the prime rate plus 11.6%, which shall not be below 14.85%, 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. | ||||
Line of credit interest rate | 3.75% | 7.00% | 11.60% | ' |
Maximum limit of line of credit interest rate | ' | ' | 14.85% | ' |
Payment of principle and interest amount for loan | ' | ' | $21,000 | ' |
Term_Loan_Schedule_of_Term_Loa
Term Loan - Schedule of Term Loan (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Term loan | $567,000 | $647,000 |
Less current portion | 177,000 | 165,000 |
Long term debt | $390,000 | $482,000 |
Longterm_Financing_Obligation_1
Long-term Financing Obligation (Details Narrative) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
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 term | '5 years |
Warrants issued during period value | 752,000 |
Warrants expected dividends | 0.00% |
Valuation discount amortized term | '15 years |
Minimum [Member] | ' |
Warrants strike price | $2.10 |
Warrants volatility rate | 91.36% |
Warrants discount rate | 2.15% |
Maximum [Member] | ' |
Warrants strike price | $2.25 |
Warrants volatility rate | 110.90% |
Warrants discount rate | 2.20% |
Chief Executive Officer [Member] | ' |
Proceeds financial obligation limit guaranteed by related party | $150,000 |
Longterm_Financing_Obligation_2
Long-term Financing Obligation - Schedule of Long-term Financing Obligation (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Financing obligation | $2,732,000 | $2,784,000 |
Valuation discount | -501,000 | -526,000 |
Financing obligation, net of discount | 2,231,000 | 2,258,000 |
Less current portion | -122,000 | -111,000 |
Long term financing obligation | $2,109,000 | $2,147,000 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | |
Common stock, authorized | 19,500,000 | 19,500,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, issued | 13,050,252 | 12,922,832 |
Common stock, outstanding | 13,050,252 | 12,922,832 |
Fair value of common stock per share, value | $4.35 | ' |
Fair value of common shares issued for services | $10,000 | ' |
Series A Preferred Stock [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 | 9,411 |
Preferred stock shares, liquidation preference | $10 | $10 |
Percentage of prorate annual non cumulative dividend | 5.00% | ' |
Dividends accrued Preferred stock, Amount | $5,000 | ' |
Dividends accrued Preferred stock, Shares | 1,057 | ' |
Preferred stock holders rights to receive at price per share | $10 | ' |
Common Stock [Member] | ' | ' |
Fair value of common shares issued for services, shares | 2,299 | ' |
Stock_Based_Compensation_Detai
Stock Based Compensation (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 05, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Stock options granted to employees | ' | ' | ' | 357,500 | ' |
Stock options at market price per share | ' | ' | ' | $4.60 | ' |
Volatility rate, minimum | ' | ' | ' | 59.43% | ' |
Volatility rate, maximum | ' | ' | ' | 66.30% | ' |
Discount rate | ' | ' | ' | 0.00% | ' |
Expected dividend yield | ' | ' | ' | 0.00% | ' |
Expected term | ' | ' | ' | '3 years 6 months | ' |
Fair value of options granted | ' | ' | ' | $580,000 | ' |
Number of employee options repriced | 103,000 | ' | ' | ' | ' |
Increase in stock compensation expense | 2,000 | ' | ' | ' | ' |
Stock based compensation | ' | 118,000 | 69,000 | 217,000 | 188,000 |
Aggregate value of unvested options | ' | ' | ' | 424,000 | ' |
Stock options exercise shares | ' | ' | ' | 183,700 | ' |
Stock option, exercise price | $4.60 | ' | ' | $2.66 | ' |
Proceeds From Stock Options Exercised | ' | ' | ' | 26,000 | ' |
Exercise of stock options issued during the period | ' | ' | ' | 357,500 | 10,000 |
Option exercise price per share | ' | ' | ' | $5.23 | ' |
Minimum [Member] | ' | ' | ' | ' | ' |
Stock option, exercise price | $4.74 | ' | ' | $1.14 | ' |
Share based compensation cost amortized option vest period | ' | ' | ' | '3 years | ' |
Percentage of stock options granted under equity incentive plan | ' | ' | ' | 25.00% | ' |
Warrant expiration year | ' | ' | ' | '5 years | ' |
Maximum [Member] | ' | ' | ' | ' | ' |
Stock option, exercise price | $6.40 | ' | ' | $4 | ' |
Share based compensation cost amortized option vest period | ' | ' | ' | '4 years | ' |
Percentage of stock options granted under equity incentive plan | ' | ' | ' | 33.00% | ' |
Warrant expiration year | ' | ' | ' | '5 years | ' |
Exercises Stock Option Plan One [Member] | ' | ' | ' | ' | ' |
Stock options exercise shares | ' | ' | ' | 10,000 | ' |
Proceeds From Stock Options Exercised | ' | ' | ' | $25,700 | ' |
Exercises Stock Option Plan Two [Member] | ' | ' | ' | ' | ' |
Stock options exercise shares | ' | ' | ' | 173,700 | ' |
Options [Member] | ' | ' | ' | ' | ' |
Stock options exercise shares | ' | ' | ' | 125,121 | ' |
Exercise of stock options issued during the period | ' | ' | ' | 115,121 | ' |
Warrants [Member] | ' | ' | ' | ' | ' |
Warrant exercise price per share | ' | ' | ' | $5.23 | ' |
Stock_Based_Compensation_Sched
Stock Based Compensation - Schedule of Stock Option Activity (Details) (USD $) | 0 Months Ended | 6 Months Ended | |
Jun. 05, 2014 | Jun. 30, 2014 | Jun. 30, 2013 | |
Stock Based Compensation - Schedule Of Stock Option Activity Details | ' | ' | ' |
Shares Outstanding, Beginning balance | ' | 639,334 | ' |
Shares, Granted | ' | 357,500 | 10,000 |
Shares, Exercised | ' | -183,700 | ' |
Shares, Forfeited or expired | ' | -164,167 | ' |
Shares Outstanding, Ending balance | ' | 648,967 | ' |
Shares Exercisable | ' | 225,227 | ' |
Weighted Average Exercise Price, Outstanding, Beginning | ' | $3.18 | ' |
Weighted Average Exercise Price, Granted | ' | ' | ' |
Weighted Average Exercise Price, Exercised | $4.60 | $2.66 | ' |
Weighted Average Exercise Price, Forfeited or expired | ' | $4.39 | ' |
Weighted Average Exercise Price, Outstanding, Ending | ' | $3.72 | ' |
Weighted Average Exercise Price, Exercisable | ' | $2.68 | ' |
Weighted Average Remaining Contractual Terms (Years), Outstanding | ' | '3 years 9 months 29 days | ' |
Weighted Average Remaining Contractual Terms (Years), Exercisable | ' | '2 years 10 months 21 days | ' |
Aggregate Intrinsic Value, Share Outstanding | ' | $980,000 | ' |
Aggregate Intrinsic Value, Share Exercisable | ' | $732,000 | ' |
Stock_Based_Compensation_Sched1
Stock Based Compensation - Schedule of Information Regarding Stock Options (Details) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Number of Shares Outstanding | 648,967 |
Weighted Average Remaining Contractual Life (years) | '3 years 9 months 29 days |
Number of Shares Exercisable | 225,257 |
Range One [Member] | ' |
Range of Exercise Price Lower Limit | 0.01 |
Range of Exercise Price Upper limit | 1.99 |
Number of Shares Outstanding | 112,833 |
Weighted Average Remaining Contractual Life (years) | '2 years 4 months 24 days |
Weighted Average Exercise Price | 1.27 |
Number of Shares Exercisable | 92,483 |
Weighted Average Exercise Price | 1.26 |
Range Two [Member] | ' |
Range of Exercise Price Lower Limit | 2 |
Range of Exercise Price Upper limit | 4.99 |
Number of Shares Outstanding | 536,134 |
Weighted Average Remaining Contractual Life (years) | '4 years 1 month 6 days |
Weighted Average Exercise Price | 4.24 |
Number of Shares Exercisable | 132,774 |
Weighted Average Exercise Price | 3.67 |
Stock_Based_Compensation_Sched2
Stock Based Compensation - Schedule of Stock Warrants Activity (Details) (Warrants [Member], USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Warrants [Member] | ' |
Shares Outstanding, Beginning Balance | 101,963 |
Shares Granted | ' |
Shares Exercised | ' |
Shares Forfeited or expired | ' |
Shares Outstanding, Ending Balance | 101,963 |
Warrants Exercisable | 101,963 |
Weighted Average Exercise Price, Outstanding, Beginning | $2.30 |
Weighted Average Exercise Price, Granted | ' |
Weighted Average Exercise Price, Exercised | ' |
Weighted Average Exercise Price, Forfeited or expired | ' |
Weighted Average Exercise Price, Outstanding, Ending | $2.30 |
Weighted Average Exercise Price, Exercisable | $2.30 |
Weighted Average Remaining Contractual Terms (Years), Outstanding | '10 months 13 days |
Weighted Average Remaining Contractual Terms (Years), Exercisable | '10 months 13 days |
Aggregate Intrinsic Value, Outstanding | $298,514 |
Aggregate Intrinsic Value, Exercisable | $298,514 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Net income (loss) | $638,000 | ($494,000) | $418,000 | ($897,000) |
Provision of income taxes | ' | ' | $0 | ' |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 6 Months Ended | 0 Months Ended | ||||
Jun. 30, 2014 | Jun. 30, 2013 | Jul. 25, 2014 | Jul. 25, 2014 | Jul. 25, 2014 | Jul. 01, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||
Minimum [Member] | Maximum [Member] | City National Bank [Member] | ||||
Letter of credit | ' | ' | ' | ' | ' | $300,000 |
Letter of credit expires date | 7-Nov-14 | ' | ' | ' | ' | 31-Dec-14 |
Number of option granted for employees and consultants | 357,500 | 10,000 | 110,000 | ' | ' | ' |
Option vesting expected term | '3 years 6 months | ' | ' | '3 years | '4 years | ' |
Number of option exercised price per share | ' | ' | $5.08 | ' | ' | ' |
Option granted for employees, value | ' | ' | $269,000 | ' | ' | ' |