Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 13, 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-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 13,061,480 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets: | ' | ' |
Cash | $1,705,000 | $1,104,000 |
Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $414,000 and $324,000, respectively | 3,759,000 | 2,143,000 |
Inventory | 5,983,000 | 6,293,000 |
Prepaid inventory | 787,000 | 256,000 |
Prepaid and other current assets | 290,000 | 178,000 |
Total Current Assets | 12,524,000 | 9,974,000 |
Property and equipment, net of accumulated depreciation of $3,243,000 and $2,796,000, respectively | 4,069,000 | 3,686,000 |
Brand names | 1,029,000 | 1,029,000 |
Deferred financing fees, net of amortization of $90,000 and $40,000, respectively | 17,000 | 60,000 |
Total assets | 17,639,000 | 14,749,000 |
Current Liabilities: | ' | ' |
Accounts payable | 5,788,000 | 3,612,000 |
Accrued expenses | 147,000 | 136,000 |
Line of credit | 4,159,000 | 4,524,000 |
Current portion of long term financing obligation | 128,000 | 111,000 |
Current portion of capital leases payable | 119,000 | 79,000 |
Current portion of term loan | 184,000 | 165,000 |
Total current liabilities | 10,525,000 | 8,627,000 |
Long term financing obligation, less current portion, net of discount of $488,000 and $526,000, respectively | 2,087,000 | 2,147,000 |
Capital leases payable, less current portion | 489,000 | 106,000 |
Term loan, less current portion | 341,000 | 482,000 |
Total Liabilities | 13,442,000 | 11,362,000 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Common stock, $.0001 par value, 19,500,000 shares authorized, 13,060,971 and 12,922,832 shares issued and outstanding, respectively | 1,000 | 1,000 |
Additional paid in capital | 25,625,000 | 25,276,000 |
Accumulated deficit | -21,523,000 | -21,984,000 |
Total stockholders' equity | 4,197,000 | 3,387,000 |
Total liabilities and stockholders' equity | 17,639,000 | 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 and 9,411 shares issued and outstanding, respectively | $94,000 | $94,000 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Allowance for Doubtful Accounts, returns and discounts for trade accounts receivable | $414,000 | $324,000 |
Accumulated Depreciation | 3,243,000 | 2,796,000 |
Accumulated Amortization, deferred financing fees | 90,000 | 40,000 |
Discount, long term financing obligation | $488,000 | $526,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 19,500,000 | 19,500,000 |
Common stock, shares issued | 13,060,971 | 12,922,832 |
Common stock, shares outstanding | 13,060,971 | 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 | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Sales | $12,319,000 | $10,076,000 | $32,456,000 | $27,721,000 |
Cost of goods sold | 8,434,000 | 6,900,000 | 21,962,000 | 19,553,000 |
Gross profit | 3,885,000 | 3,176,000 | 10,494,000 | 8,168,000 |
Operating expenses: | ' | ' | ' | ' |
Delivery and handling expenses | 1,310,000 | 1,040,000 | 3,131,000 | 2,900,000 |
Selling and marketing expense | 1,480,000 | 1,159,000 | 3,604,000 | 2,999,000 |
General and administrative expense | 849,000 | 763,000 | 2,730,000 | 2,663,000 |
Total operating expenses | 3,639,000 | 2,962,000 | 9,465,000 | 8,562,000 |
Income (loss) from operations | 246,000 | 214,000 | 1,029,000 | -394,000 |
Interest expense | -195,000 | -180,000 | -560,000 | -469,000 |
Income (loss) before provision for income taxes | 51,000 | 34,000 | 469,000 | -863,000 |
Income taxes | -3,000 | 0 | -3,000 | 0 |
Net income (loss) | 48,000 | 34,000 | 466,000 | -863,000 |
Preferred stock dividends | ' | ' | -5,000 | -5,000 |
Net income (loss) attributable to common stockholders | $48,000 | $34,000 | $461,000 | ($868,000) |
Income (loss) per share available to common stockholders, basic | $0 | $0 | $0.04 | ($0.07) |
Weighted average number of shares outstanding - basic | 13,053,627 | 12,627,864 | 13,034,707 | 12,498,935 |
Income (loss) per share available to common stockholders, diluted | $0 | $0 | $0.03 | ($0.07) |
Weighted average number of shares outstanding - diluted | 13,135,317 | 13,496,714 | 13,291,536 | 12,498,935 |
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 | ' | ' | ' |
Fair Value of common shares issued for services | ' | ' | 10,000 | ' | 10,000 |
Fair Value of common shares issued for services, shares | 2,299 | ' | ' | ' | 2,299 |
Common shares issued upon exercise of stock options | ' | ' | 26,000 | ' | 26,000 |
Common shares issued upon exercise of stock options, shares | 134,783 | ' | ' | ' | ' |
Fair value vesting of options issued to employees | ' | ' | 308,000 | ' | 308,000 |
Common stock paid for Series A preferred stock dividend | ' | ' | 5,000 | -5,000 | ' |
Common stock paid for Series A preferred stock dividend, shares | 1,057 | ' | ' | ' | ' |
Net income | ' | ' | ' | 466,000 | 466,000 |
Balance at Sep. 30, 2014 | $1,000 | $94,000 | $25,625,000 | ($21,523,000) | $4,197,000 |
Balance, Shares at Sep. 30, 2014 | 13,060,971 | 9,411 | ' | ' | ' |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities: | ' | ' |
Net income (loss) | $466,000 | ($863,000) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ' | ' |
Depreciation and amortization | 536,000 | 387,000 |
Fair value of stock options issued to employees | 308,000 | 257,000 |
Fair value of common stock issued for services and bonus | 10,000 | 5,000 |
(Decrease) increase in allowance for doubtful accounts | 90,000 | -24,000 |
Changes in assets and liabilities: | ' | ' |
Accounts receivable | -1,706,000 | -1,200,000 |
Inventory | 309,000 | -911,000 |
Prepaid expenses and inventory and other current assets | -644,000 | -434,000 |
Accounts payable | 2,177,000 | 1,847,000 |
Accrued expenses | 11,000 | -99,000 |
Net cash provided by (used in) operating activities | 1,557,000 | -1,035,000 |
Cash flows from investing activities: | ' | ' |
Purchase of property and equipment | -355,000 | -447,000 |
Net cash used in investing activities | -355,000 | -447,000 |
Cash flows from financing activities: | ' | ' |
Proceeds from stock option and warrant exercises | 26,000 | 105,000 |
Principal repayments on long term financing obligation | -81,000 | -66,000 |
Principal repayments on capital lease obligation | -52,000 | -52,000 |
Payment of deferred finance fees | -7,000 | -21,000 |
Increased borrowing on note payable | ' | 217,000 |
Principal repayments on term loan | -122,000 | -108,000 |
Net (repayment) borrowing on line of credit | -365,000 | 1,290,000 |
Net cash (used in) provided by financing activities | -601,000 | 1,365,000 |
Net increase (decrease) in cash | 601,000 | -117,000 |
Cash at beginning of period | 1,104,000 | 1,163,000 |
Cash at end of period | 1,705,000 | 1,046,000 |
Cash paid during the period for: | ' | ' |
Interest | 560,000 | 518,000 |
Non cash investing and financing activities: | ' | ' |
Series A Preferred stock converted to common stock | 0 | 10,000 |
Series B Preferred stock converted to common stock | 0 | 456,000 |
Dividends paid in common stock | 0 | 74,000 |
Common stock issued in settlement of Series A preferred stock dividend | 5,000 | 5,000 |
Property and equipment acquired through capital lease | $475,000 | $13,000 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation | ' | ||||||||||||||||
1. Basis of Presentation | |||||||||||||||||
The accompanying interim condensed financial statements are unaudited, but in the opinion of management of Reeds, Inc. (the “Company”), contain all adjustments, which include normal recurring adjustments necessary to present fairly the financial position at September 30, 2014 and the results of operations and cash flows for the three and nine months ended September 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 three and nine months ended September 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 nine months ended September 30, 2014 and the three months ended September 30, 2013 the calculations of diluted earnings per share included stock options and warrants, calculated under the treasury method, and excluded preferred stock since the effect was antidilutive. For the nine months ended September 30, 2013 the calculations of basic and diluted loss per share are the same as the effect of stock options, warrants, and preferred stock are antidilutive. The calculation of weighted average shares outstanding – diluted is as follows: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to common stockholders | $ | 48,000 | $ | 34,000 | $ | 461,000 | $ | (868,000 | ) | ||||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding - basic | 13,053,627 | 12,627,864 | 13,034,707 | 12,498,935 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||||||
Warrants and options | 81,690 | 868,850 | 256,829 | - | |||||||||||||
Weighted average shares outstanding-diluted | 13,135,317 | 13,496,714 | 13,291,536 | 12,498,935 | |||||||||||||
The Company had potentially dilutive securities that consisted of: | |||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||
Warrants | 101,963 | 211,182 | |||||||||||||||
Options | 716,833 | 657,668 | |||||||||||||||
Series A Preferred Stock | 9,411 | 41,644 | |||||||||||||||
Total | 828,207 | 910,494 | |||||||||||||||
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. | |||||||||||||||||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-10). ASU 2014-15 provides guidance as to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures. | |||||||||||||||||
Other recent accounting pronouncements were issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the “SEC”), however such pronouncements are not believed by management to have a material impact on the Company’s present or future 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 three and nine months ended September 30, 2014. | |||||||||||||||||
During the three months ended September 30, 2014, the Company had two customers which accounted for approximately 28% and 16% of sales, and in the three months ended September 30, 2013 one customer who accounted for approximately 33% of sales. During the nine months ended September 30, 2014, the Company had two customers which accounted for approximately 34% and 13% of sales respectively, and during the nine months ended September 30, 2013 the Company had one customer who accounted for approximately 34% of sales. No other customers accounted for more than 10% of sales in either year. As of September 30, 2014, the Company had accounts receivable due from two customers who comprised $1,100,000 (26%) and $628,000 (15%) of its total accounts receivable and as of December 31, 2013 the Company had accounts receivable due from one customer who comprised $734,000 (21%), of its total accounts receivable. | |||||||||||||||||
During the three months ended September 30, 2014, the Company had one vendor which accounted for approximately 26% of all purchases, and in the three months ended September 30, 2013 one vendor who accounted for approximately 31% of all purchases. During the nine months ended September 30, 2014, the Company had one vendor, which accounted for approximately 26% of all purchases, and during the nine months ended September 30, 2013 the Company had one vendor who accounted for approximately 29% of all purchases. No other vendor accounted for more than 10% of all purchases in either year. As of September 30, 2014, the Company had accounts payable due to a vendor who comprised 30% of its total accounts payable and as of December 31, 2013 the Company had accounts payable due to one vendor who comprised 35% of its total accounts payable. No other vendor exceeded 10% of the balance of accounts payable as of September 30, 2014 and December 31, 2013. | |||||||||||||||||
Advertising | |||||||||||||||||
Advertising costs are expensed as incurred. For the three months ended September 30, 2014 and 2013, advertising costs were $460,000 and $38,000, respectively, and for the nine months ended September 30, 2014 and 2013, advertising costs were $571,000 and $90,000, respectively. The Company paid $407,000 for its inaugural cable television advertising commercials during the three months ended September 30, 2014 | |||||||||||||||||
Comprehensive Income | |||||||||||||||||
For the three and nine months ended September 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 September 30, 2014 or December 31, 2013. |
Inventory
Inventory | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Inventory | ' | ||||||||
2. Inventory | |||||||||
Inventory consists of the following as of: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Raw Materials and packaging | $ | 3,602,000 | $ | 3,118,000 | |||||
Finished Goods | 2,381,000 | 3,175,000 | |||||||
$ | 5,983,000 | $ | 6,293,000 |
Property_and_Equipment
Property and Equipment | 9 Months Ended | ||||||||
Sep. 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-Sep-14 | 31-Dec-13 | ||||||||
Land | $ | 1,108,000 | $ | 1,108,000 | |||||
Building | 1,858,000 | 1,829,000 | |||||||
Vehicles | 338,000 | 338,000 | |||||||
Machinery and equipment | 3,560,000 | 2,763,000 | |||||||
Office equipment | 448,000 | 444,000 | |||||||
7,312,000 | 6,482,000 | ||||||||
Accumulated depreciation | (3,243,000 | ) | (2,796,000 | ) | |||||
$ | 4,069,000 | $ | 3,686,000 | ||||||
Machinery and equipment at September 30, 2014 and December 31, 2013 includes equipment held under capital leases of $890,000 and $322,000, respectively. Accumulated depreciation on equipment held under capital leases was $290,000 and $208,000 at September 30, 2014 and December 31, 2013, respectively. |
Line_of_Credit
Line of Credit | 9 Months Ended |
Sep. 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 $4,500,00 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. The $4.8 million line of credit was extended to December 31, 2014. | |
At September 30, 2014 and December 31, 2013, the aggregate amount outstanding under the line of credit was $4,159,000 and $4,524,000, respectively. The line of credit is based on 85% of eligible accounts receivable and 50% of eligible inventory and is secured by substantially all of the Company’s assets. The interest rate is at the prime rate plus 3.75% (7% at September 30, 2014). 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, The original expiration date of November 7, 2014 and $500,000 over-advance were extended to December 31, 2014. | |
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 September 30, 2014, the credit availability under the revolving line of credit was above $100,000. This revolving line of credit matures December 31, 2014. |
Term_Loan
Term Loan | 9 Months Ended | ||||||||
Sep. 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. | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Term loan | $ | 525,000 | $ | 647,000 | |||||
Less current portion | (184,000 | ) | (165,000 | ) | |||||
Long term debt | $ | 341,000 | $ | 482,000 |
Longterm_Financing_Obligation
Long-term Financing Obligation | 9 Months Ended | ||||||||
Sep. 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.(See Note 10) | |||||||||
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 during the nine months ended September 30, 2014 and 2013 was $38,000 and $38,000, respectively. | |||||||||
Long term financing obligation is comprised of the following as of: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Financing obligation | $ | 2,703,000 | $ | 2,784,000 | |||||
Valuation discount | (488,000 | ) | (526,000 | ) | |||||
2,215,000 | 2,258,000 | ||||||||
Less current portion | (128,000 | ) | (111,000 | ) | |||||
Long term financing obligation | $ | 2,087,000 | $ | 2,147,000 |
Stockholders_Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2014 | |
Equity [Abstract] | ' |
Stockholders' Equity | ' |
7. Stockholders’ Equity | |
Preferred Stock | |
On July 25, 2014, dividends were paid on the Series A Preferred stock in the amount of $5,000, by issuing 1,057 shares of common stock. | |
During the nine months ended September 30, 2013, the remaining 45,602 shares of Series B Convertible Preferred Stock were converted to 319,214 shares of common stock. Accrued dividends of $74,000 were paid by issuing 47,890 shares of common stock. | |
Common Stock | |
During the nine months ended September 30, 2014, the Company issued 2,299 shares of common stock for consulting services valued at $4.35 per share with an aggregate value of $10,000 for services rendered. During the nine months ended September 30, 2013, the Company issued 1,250 shares of common stock for services at $4.00 per share with a value of $5,000 for services rendered. |
Stock_Based_Compensation
Stock Based Compensation | 9 Months Ended | |||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||||||||
Stock Based Compensation | ' | |||||||||||||||||||||
8. Stock Based Compensation | ||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||
During the nine months ended September 30, 2014, the Company granted 477,500 stock options to various employees at the market price of $4.74 to $5.70 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 nine months ended September 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 grant date fair value of the options granted during the nine months ended September 30, 2014, was approximately $765,000. | ||||||||||||||||||||||
On June 5, 2014, the Company repriced 323,000 employee options to an exercise price of $4.60 per share, which were previously $4.74-$6.70 per share. The total increase in stock compensation expense, as a result of the repricing was approximately $4,000. | ||||||||||||||||||||||
Total stock-based compensation recognized on the Company’s statement of operations for the nine months ended September 30, 2014 and 2013 was $307,000 and $257,000, respectively. Stock based compensation expense for the three months ended September 30, 2014 and 2013 was $90,000 and $69,000 respectively. As of September 30, 2014, the aggregate value of unvested options was $1,108,000 which will vest over an average period of three to four years. There were 204,634 stock options exercised in the nine months ended September 30, 2014 at exercise prices between $1.14 and $5.70 per share. The Company received $25,700 for 10,000 of such exercises and allowed cash-less exercise of 194,634 of such options, issuing 124,783 shares of common stock for a total of 134,783 shares issued relative to stock options in the nine months ended September 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 nine months ended September 30, 2014: | ||||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | |||||||||||||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||||||||||||
Contractual | Value | |||||||||||||||||||||
Terms (Years) | ||||||||||||||||||||||
Outstanding at December 31, 2013 | 639,334 | $ | 1.84 | |||||||||||||||||||
Granted | 477,500 | $ | 5.06 | |||||||||||||||||||
Exercised | (204,634 | ) | $ | 2.39 | ||||||||||||||||||
Forfeited or expired | (195,367 | ) | - | |||||||||||||||||||
Outstanding at September 30, 2014 | 716,833 | $ | 3.96 | 3.82 | $ | 1,397,000 | ||||||||||||||||
Exercisable at September 30, 2014 | 198,123 | $ | 2.55 | 3.12 | $ | 679,000 | ||||||||||||||||
The aggregate intrinsic value was calculated as the difference between the market price, which was $5.90, and the exercise price of the Company’s common stock as of September 30, 2014. | ||||||||||||||||||||||
F-9 | ||||||||||||||||||||||
The following table summarizes information about stock options at September 30, 2014: | ||||||||||||||||||||||
Options Outstanding at | Options Exercisable at | |||||||||||||||||||||
30-Sep-14 | 30-Sep-14 | |||||||||||||||||||||
Range of Exercise Price | Number of Shares | Weighted Average | Weighted Average Exercise Price | Number of Shares | Weighted | |||||||||||||||||
Outstanding | Remaining | Exercisable | Average | |||||||||||||||||||
Contractual Life (years) | Exercise Price | |||||||||||||||||||||
$0.01 - $1.99 | 107,833 | 2.22 | $ | 1.24 | 87,483 | $ | 1.22 | |||||||||||||||
$2.00 - $4.99 | 489,000 | 3.92 | $ | 4.27 | 110,640 | $ | 3.6 | |||||||||||||||
$5.00 - $5.99 | 120,000 | 4.82 | $ | 5.13 | 0 | NA | ||||||||||||||||
716,833 | 198,123 | |||||||||||||||||||||
Stock Warrants | ||||||||||||||||||||||
During the nine months ended September 30, 2014, no warrants were granted or exercised. The following table summarizes stock warrant activity for the nine months ended September 30, 2014: | ||||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | |||||||||||||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||||||||||||
Contractual | Value | |||||||||||||||||||||
Terms (Years) | ||||||||||||||||||||||
Outstanding at December 31, 2013 | 101,963 | $ | 2.3 | |||||||||||||||||||
Granted | - | - | ||||||||||||||||||||
Exercised | - | - | ||||||||||||||||||||
Forfeited or expired | - | - | ||||||||||||||||||||
Outstanding at September 30, 2014 | 101,963 | $ | 2.3 | 0.62 | $ | 367,000 | ||||||||||||||||
Exercisable at September 30, 2014 | 101,963 | $ | 2.3 | 0.62 | $ | 367,000 | ||||||||||||||||
The intrinsic value was calculated as the difference between the market price, which was $5.90, and the exercise price of the Company’s common stock, as of September 30, 2014. |
Income_Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Disclosure [Abstract] | ' |
Income Taxes | ' |
9. Income Taxes | |
For the three months ended September 30, 2014, net income was $48,000, and for the nine months ended September 30, 2014 net income was $466,000 and no income tax provision was recorded. For the three months ended September 30, 2013, net income was $34,000 and for the nine months ended September 30, 2013 net loss was ($863,000), and our provision for income taxes was zero. We made no provision for income taxes during periods of net income due to our utilization of federal net operating loss carryforwards to offset both regular taxable income and alternative minimum taxable income. | |
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 September 30, 2014, the Company does not have a liability for unrecognized tax uncertainties. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
10. Subsequent Events | |
Effective October 1, 2014, the Company executed Amendment #1 to the Long-term Financing Obligation (see Note 6). In exchange for a release from the $150,000 personal guarantee by the principal shareholder and Chief Executive Office, and a release of the brewery equipment which was collateral for the lease agreement, the Company issued 200,000 warrants to purchase it’s common stock for $5.60 per share for five years. The 200,000 warrants were valued at $584,000 using the Black Scholes option pricing model. The following assumptions were made in valuing the 200,000 warrants; term of 5 years, volatility of 59.53%, expected dividends 0% and discount rate of 2.19%. The warrants will be amortized over 5 years. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 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 nine months ended September 30, 2014 and the three months ended September 30, 2013 the calculations of diluted earnings per share included stock options and warrants, calculated under the treasury method, and excluded preferred stock since the effect was antidilutive. For the nine months ended September 30, 2013 the calculations of basic and diluted loss per share are the same as the effect of stock options, warrants, and preferred stock are antidilutive. The calculation of weighted average shares outstanding – diluted is as follows: | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to common stockholders | $ | 48,000 | $ | 34,000 | $ | 461,000 | $ | (868,000 | ) | ||||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding - basic | 13,053,627 | 12,627,864 | 13,034,707 | 12,498,935 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||||||
Warrants and options | 81,690 | 868,850 | 256,829 | - | |||||||||||||
Weighted average shares outstanding-diluted | 13,135,317 | 13,496,714 | 13,291,536 | 12,498,935 | |||||||||||||
The Company had potentially dilutive securities that consisted of: | |||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||
Warrants | 101,963 | 211,182 | |||||||||||||||
Options | 716,833 | 657,668 | |||||||||||||||
Series A Preferred Stock | 9,411 | 41,644 | |||||||||||||||
Total | 828,207 | 910,494 | |||||||||||||||
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. | |||||||||||||||||
In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Presentation of Financial Statements - Going Concern (Subtopic 205-10). ASU 2014-15 provides guidance as to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statement presentation and disclosures. | |||||||||||||||||
Other recent accounting pronouncements were issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the “SEC”), however such pronouncements are not believed by management to have a material impact on the Company’s present or future 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 three and nine months ended September 30, 2014. | |||||||||||||||||
During the three months ended September 30, 2014, the Company had two customers which accounted for approximately 28% and 16% of sales, and in the three months ended September 30, 2013 one customer who accounted for approximately 33% of sales. During the nine months ended September 30, 2014, the Company had two customers which accounted for approximately 34% and 13% of sales respectively, and during the nine months ended September 30, 2013 the Company had one customer who accounted for approximately 34% of sales. No other customers accounted for more than 10% of sales in either year. As of September 30, 2014, the Company had accounts receivable due from two customers who comprised $1,100,000 (26%) and $628,000 (15%) of its total accounts receivable and as of December 31, 2013 the Company had accounts receivable due from one customer who comprised $734,000 (21%), of its total accounts receivable. | |||||||||||||||||
During the three months ended September 30, 2014, the Company had one vendor which accounted for approximately 26% of all purchases, and in the three months ended September 30, 2013 one vendor who accounted for approximately 31% of all purchases. During the nine months ended September 30, 2014, the Company had one vendor, which accounted for approximately 26% of all purchases, and during the nine months ended September 30, 2013 the Company had one vendor who accounted for approximately 29% of all purchases. No other vendor accounted for more than 10% of all purchases in either year. As of September 30, 2014, the Company had accounts payable due to a vendor who comprised 30% of its total accounts payable and as of December 31, 2013 the Company had accounts payable due to one vendor who comprised 35% of its total accounts payable. No other vendor exceeded 10% of the balance of accounts payable as of September 30, 2014 and December 31, 2013. | |||||||||||||||||
Advertising | ' | ||||||||||||||||
Advertising | |||||||||||||||||
Advertising costs are expensed as incurred. For the three months ended September 30, 2014 and 2013, advertising costs were $460,000 and $38,000, respectively, and for the nine months ended September 30, 2014 and 2013, advertising costs were $571,000 and $90,000, respectively. The Company paid $407,000 for its inaugural cable television advertising commercials during the three months ended September 30, 2014. | |||||||||||||||||
Comprehensive Income | ' | ||||||||||||||||
Comprehensive Income | |||||||||||||||||
For the three and nine months ended September 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 September 30, 2014 or December 31, 2013. |
Basis_of_Presentation_Tables
Basis of Presentation (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 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 | Nine months ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Net income (loss) attributable to common stockholders | $ | 48,000 | $ | 34,000 | $ | 461,000 | $ | (868,000 | ) | ||||||||
Denominator: | |||||||||||||||||
Weighted average shares outstanding - basic | 13,071,186 | 12,627,864 | 13,034,707 | 12,498,935 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||||||
Warrants and options | 81,690 | 868,850 | 256,829 | - | |||||||||||||
Weighted average shares outstanding-diluted | 13,152,876 | 13,496,714 | 13,291,536 | 12,498,935 | |||||||||||||
Schedule of Potentially Dilutive Securities | ' | ||||||||||||||||
The Company had potentially dilutive securities that consisted of: | |||||||||||||||||
30-Sep-14 | 30-Sep-13 | ||||||||||||||||
Warrants | 101,963 | 211,182 | |||||||||||||||
Options | 716,834 | 657,668 | |||||||||||||||
Series A Preferred Stock | 9,411 | 41,644 | |||||||||||||||
Total | 828,208 | 910,494 |
Inventory_Tables
Inventory (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Inventory Disclosure [Abstract] | ' | ||||||||
Schedule of Inventory | ' | ||||||||
Inventory consists of the following as of: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Raw Materials and packaging | $ | 3,602,000 | $ | 3,118,000 | |||||
Finished Goods | 2,381,000 | 3,175,000 | |||||||
$ | 5,983,000 | $ | 6,293,000 |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | ' | ||||||||
Schedule of Property and Equipment | ' | ||||||||
Property and equipment are comprised of the following as of: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Land | $ | 1,108,000 | $ | 1,108,000 | |||||
Building | 1,858,000 | 1,829,000 | |||||||
Vehicles | 338,000 | 338,000 | |||||||
Machinery and equipment | 3,560,000 | 2,763,000 | |||||||
Office equipment | 448,000 | 444,000 | |||||||
7,312,000 | 6,482,000 | ||||||||
Accumulated depreciation | (3,243,000 | ) | (2,796,000 | ) | |||||
$ | 4,069,000 | $ | 3,686,000 |
Term_Loan_Tables
Term Loan (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Term Loan | ' | ||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Term loan | $ | 525,000 | $ | 647,000 | |||||
Less current portion | (184,000 | ) | (165,000 | ) | |||||
Long term debt | $ | 341,000 | $ | 482,000 |
Longterm_Financing_Obligation_
Long-term Financing Obligation (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Schedule of Long-term Financing Obligation | ' | ||||||||
Long term financing obligation is comprised of the following as of: | |||||||||
30-Sep-14 | 31-Dec-13 | ||||||||
Financing obligation | $ | 2,703,000 | $ | 2,784,000 | |||||
Valuation discount | (488,000 | ) | (526,000 | ) | |||||
2,215,000 | 2,258,000 | ||||||||
Less current portion | (128,000 | ) | (111,000 | ) | |||||
Long term financing obligation | $ | 2,087,000 | $ | 2,147,000 |
Stock_Based_Compensation_Table
Stock Based Compensation (Tables) | 9 Months Ended | |||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||||||||||||||
Schedule of Stock Option Activity | ' | |||||||||||||||||||||
The following table summarizes stock option activity for the nine months ended September 30, 2014: | ||||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | |||||||||||||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||||||||||||
Contractual | Value | |||||||||||||||||||||
Terms (Years) | ||||||||||||||||||||||
Outstanding at December 31, 2013 | 639,334 | $ | 1.84 | |||||||||||||||||||
Granted | 477,500 | $ | 5.06 | |||||||||||||||||||
Exercised | (204,634 | ) | $ | 2.39 | ||||||||||||||||||
Forfeited or expired | (195,367 | ) | - | |||||||||||||||||||
Outstanding at September 30, 2014 | 716,833 | $ | 3.96 | 3.82 | $ | 1,397,000 | ||||||||||||||||
Exercisable at September 30, 2014 | 198,123 | $ | 2.55 | 3.12 | $ | 679,000 | ||||||||||||||||
Schedule of Information Regarding Stock Options | ' | |||||||||||||||||||||
The following table summarizes information about stock options at September 30, 2014: | ||||||||||||||||||||||
Options Outstanding at | Options Exercisable at | |||||||||||||||||||||
30-Sep-14 | 30-Sep-14 | |||||||||||||||||||||
Range of Exercise Price | Number of Shares | Weighted Average | Weighted Average Exercise Price | Number of Shares | Weighted | |||||||||||||||||
Outstanding | Remaining | Exercisable | Average | |||||||||||||||||||
Contractual Life (years) | Exercise Price | |||||||||||||||||||||
$0.01 - $1.99 | 107,833 | 2.22 | $ | 1.24 | 87,483 | $ | 1.22 | |||||||||||||||
$2.00 - $4.99 | 489,000 | 3.92 | $ | 4.27 | 110,640 | $ | 3.6 | |||||||||||||||
$5.00 - $5.99 | 120,000 | 4.82 | $ | 5.13 | 0 | NA | ||||||||||||||||
716,833 | 198,123 | |||||||||||||||||||||
Schedule of Stock Warrants Activity | ' | |||||||||||||||||||||
During the nine months ended September 30, 2014, no warrants were granted or exercised. The following table summarizes stock warrant activity for the nine months ended September 30, 2014: | ||||||||||||||||||||||
Shares | Weighted-Average | Weighted-Average | Aggregate | |||||||||||||||||||
Exercise Price | Remaining | Intrinsic | ||||||||||||||||||||
Contractual | Value | |||||||||||||||||||||
Terms (Years) | ||||||||||||||||||||||
Outstanding at December 31, 2013 | 101,963 | $ | 2.3 | |||||||||||||||||||
Granted | - | - | ||||||||||||||||||||
Exercised | - | - | ||||||||||||||||||||
Forfeited or expired | - | - | ||||||||||||||||||||
Outstanding at September 30,2014 | 101,963 | $ | 2.3 | 0.62 | $ | 367,000 | ||||||||||||||||
Exercisable at September 30,2014 | 101,963 | $ | 2.3 | 0.62 | $ | 367,000 |
Basis_of_Presentation_Details_
Basis of Presentation (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 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% | 10.00% | ' |
Percentage of account excess for accounts payable during period | 10.00% | ' | 10.00% | ' | 10.00% |
Advertising costs | 460,000 | 38,000 | 571,000 | 90,000 | ' |
Paid inaugural cable television advertising commercials | ' | ' | 407,000 | ' | ' |
Vendor One [Member] | ' | ' | ' | ' | ' |
Percentage of amount due to vendor for purchase | 26.00% | 31.00% | 26.00% | 29.00% | ' |
Percentage of accounts payable due to vendor | 30.00% | ' | 30.00% | ' | 35.00% |
Vendor Two [Member] | ' | ' | ' | ' | ' |
Percentage of accounts payable due to vendor | 11.00% | ' | 11.00% | ' | ' |
Customer One | ' | ' | ' | ' | ' |
Percentage of sale accounted to customer | 28.00% | 33.00% | 34.00% | 34.00% | ' |
Account receivables from customer | 1,100,000 | ' | 1,100,000 | ' | 734,000 |
Percentage of receivables from customer to net receivables | 26.00% | ' | 26.00% | ' | 21.00% |
Customer Two | ' | ' | ' | ' | ' |
Percentage of sale accounted to customer | 16.00% | ' | 13.00% | ' | ' |
Account receivables from customer | $628,000 | ' | $628,000 | ' | ' |
Percentage of receivables from customer to net receivables | 15.00% | ' | 15.00% | ' | ' |
Basis_of_Presentation_Schedule
Basis of Presentation - Schedule of Weighted Average Shares Outstanding Diluted (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' | ' | ' | ' |
Net income (loss) attributable to common stockholders | $48,000 | $34,000 | $461,000 | ($868,000) |
Weighted average shares outstanding - basic | 13,053,627 | 12,627,864 | 13,034,707 | 12,498,935 |
Warrants and options | 81,690 | 868,850 | 256,829 | ' |
Weighted average shares outstanding-diluted | 13,135,317 | 13,496,714 | 13,291,536 | 12,498,935 |
Basis_of_Presentation_Schedule1
Basis of Presentation - Schedule of Potentially Dilutive Securities (Details) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Potentially dilutive securities | 828,207 | 910,494 |
Warrants [Member] | ' | ' |
Potentially dilutive securities | 101,963 | 211,182 |
Options [Member] | ' | ' |
Potentially dilutive securities | 716,833 | 657,668 |
Series A Preferred Stock [Member] | ' | ' |
Potentially dilutive securities | 9,411 | 41,644 |
Inventory_Schedule_of_Inventor
Inventory - Schedule of Inventory (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Inventory Disclosure [Abstract] | ' | ' |
Raw Materials and packaging | $3,602,000 | $3,118,000 |
Finished Goods | 2,381,000 | 3,175,000 |
Inventory, total | $5,983,000 | $6,293,000 |
Property_and_Equipment_Details
Property and Equipment (Details Narrative) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment [Abstract] | ' | ' |
Equipment held under capital leases | $890,000 | $322,000 |
Accumulated depreciation for assets held under capital lease | $290,000 | $208,000 |
Property_and_Equipment_Schedul
Property and Equipment - Schedule of Property and Equipment (Details) (USD $) | Sep. 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 | 338,000 | 338,000 |
Machinery and equipment | 3,560,000 | 2,763,000 |
Office equipment | 448,000 | 444,000 |
Property and equipment, gross | 7,312,000 | 6,482,000 |
Accumulated depreciation | -3,243,000 | -2,796,000 |
Property and equipment, net | $4,069,000 | $3,686,000 |
Line_of_Credit_Details_Narrati
Line of Credit (Details Narrative) (USD $) | 9 Months Ended | 13 Months Ended | 0 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 20, 2013 | 1-May-13 | Nov. 09, 2011 | |
December 31, 2014 [Member] | PMC Financial Services Group, LLC [Member] | Loan And Security Agreement [Member] | ||||
PMC Financial Services Group, LLC [Member] | ||||||
Line of credit current | $4,159,000 | $4,159,000 | $4,524,000 | ' | ' | $4,500,000 |
Long term loan | ' | ' | ' | ' | ' | 750,000 |
Line of credit increased | ' | 4,800,000 | ' | ' | ' | ' |
Revolving line of credit granted over advance | ' | 500,000 | ' | 4,800,000 | ' | ' |
Maximum credit availability under revolving line of credit | 100,000 | ' | ' | ' | ' | ' |
Line of credit facility interest rate description | ' | ' | ' | ' | ' | ' |
The interest rate on the revolving line of credit is at the prime rate plus 3.75% (7% at September 30, 2014). | ||||||
Line of credit interest rate | 3.75% | ' | ' | ' | 11.60% | ' |
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 extended date | 31-Dec-14 | ' | ' | ' | ' | ' |
Line of credit expiration date | 7-Nov-14 | ' | ' | ' | ' | ' |
Line of credit availability expected to falls below | 100,000 | 100,000 | ' | ' | ' | ' |
Line of credit capital expenditures in excess | $500,000 | ' | ' | ' | ' | ' |
Term_Loan_Details_Narrative
Term Loan (Details Narrative) (USD $) | 9 Months Ended | 0 Months Ended |
Sep. 30, 2014 | 1-May-13 | |
PMC Financial Services Group, LLC [Member] | ||
Term loan amount | ' | $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% | 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 $) | Sep. 30, 2014 | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Term loan | $525,000 | $647,000 |
Less current portion | -184,000 | -165,000 |
Long term debt | $341,000 | $482,000 |
Longterm_Financing_Obligation_1
Long-term Financing Obligation (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
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 | ' |
Amortization of debt discount | 38,000 | 38,000 |
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 $) | Sep. 30, 2014 | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Financing obligation | $2,703,000 | $2,784,000 |
Valuation discount | -488,000 | -526,000 |
Financing obligation, net of discount | 2,215,000 | 2,258,000 |
Less current portion | -128,000 | -111,000 |
Long term financing obligation | $2,087,000 | $2,147,000 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 9 Months Ended | 0 Months Ended | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | Jul. 25, 2014 | Sep. 30, 2013 | |
Series A Preferred Stock [Member] | Series B Preferred Stock [Member] | |||
Dividends paid | ' | ' | $5,000 | ' |
Number of shares issued during period for dividends payable | ' | 47,890 | 1,057 | ' |
Number of shares converted | ' | ' | ' | 45,602 |
Number of shares converted into common stock | ' | ' | ' | 319,214 |
Accrued dividends | ' | 74,000 | ' | ' |
Fair value of common shares issued for services, shares | 2,299 | 1,250 | ' | ' |
Fair value of common stock per share, value | $4.35 | $4 | ' | ' |
Fair value of common shares issued for services | $10,000 | $5,000 | ' | ' |
Stock_Based_Compensation_Detai
Stock Based Compensation (Details Narrative) (USD $) | 0 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jun. 05, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Stock options granted to employees | ' | ' | ' | 477,500 | ' |
Volatility rate, minimum | ' | ' | ' | 59.43% | ' |
Volatility rate, maximum | ' | ' | ' | 66.30% | ' |
Discount rate | ' | ' | ' | 0.73% | ' |
Expected dividend yield | ' | ' | ' | 0.00% | ' |
Fair value of options granted | ' | ' | ' | $765,000 | ' |
Number of employee options repriced | 323,000 | ' | ' | ' | ' |
Stock option, exercise price | $4.60 | ' | ' | $2.39 | ' |
Increase in stock compensation expense | 4,000 | ' | ' | ' | ' |
Stock based compensation | ' | 90,000 | 69,000 | 307,000 | 257,000 |
Aggregate value of unvested options | ' | ' | ' | 1,108,000 | ' |
Stock options exercise shares | ' | ' | ' | 204,634 | ' |
Proceeds From Stock Options Exercised | ' | ' | ' | 26,000 | ' |
Exercise of stock options issued during the period | ' | ' | ' | 477,500 | 10,000 |
Option exercise price per share | ' | ' | ' | $5.90 | ' |
Exercises Stock Option Plan Two [Member] | ' | ' | ' | ' | ' |
Stock options exercise shares | ' | ' | ' | 194,634 | ' |
Options [Member] | ' | ' | ' | ' | ' |
Stock options exercise shares | ' | ' | ' | 134,783 | ' |
Exercise of stock options issued during the period | ' | ' | ' | 124,783 | ' |
Warrants [Member] | ' | ' | ' | ' | ' |
Warrant exercise price per share | ' | $5.90 | ' | $5.90 | ' |
Exercises Stock Option Plan One [Member] | ' | ' | ' | ' | ' |
Stock options exercise shares | ' | ' | ' | 10,000 | ' |
Proceeds From Stock Options Exercised | ' | ' | ' | $25,700 | ' |
Minimum [Member] | ' | ' | ' | ' | ' |
Stock options at market price per share | ' | ' | ' | $4.74 | ' |
Expected term | ' | ' | ' | '3 years 6 months | ' |
Stock option, exercise price | $4.74 | ' | ' | $1.14 | ' |
Unvested option period | ' | ' | ' | '3 years | ' |
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 options at market price per share | ' | ' | ' | $5.70 | ' |
Expected term | ' | ' | ' | '4 years 6 months | ' |
Stock option, exercise price | $6.70 | ' | ' | $5.70 | ' |
Unvested option period | ' | ' | ' | '4 years | ' |
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 | ' |
Stock_Based_Compensation_Sched
Stock Based Compensation - Schedule of Stock Option Activity (Details) (USD $) | 0 Months Ended | 9 Months Ended | |
Jun. 05, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ' | ' |
Shares Outstanding, Beginning balance | ' | 639,334 | ' |
Shares, Granted | ' | 477,500 | 10,000 |
Shares, Exercised | ' | -204,634 | ' |
Shares, Forfeited or expired | ' | -195,367 | ' |
Shares Outstanding, Ending balance | ' | 716,833 | ' |
Shares Exercisable | ' | 198,123 | ' |
Weighted Average Exercise Price, Outstanding, Beginning | ' | $1.84 | ' |
Weighted Average Exercise Price, Granted | ' | $5.06 | ' |
Weighted Average Exercise Price, Exercised | $4.60 | $2.39 | ' |
Weighted Average Exercise Price, Forfeited or expired | ' | ' | ' |
Weighted Average Exercise Price, Outstanding, Ending | ' | $3.96 | ' |
Weighted Average Exercise Price, Exercisable | ' | $2.55 | ' |
Weighted Average Remaining Contractual Terms (Years), Outstanding | ' | '3 years 9 months 26 days | ' |
Weighted Average Remaining Contractual Terms (Years), Exercisable | ' | '3 years 1 month 13 days | ' |
Aggregate Intrinsic Value, Share Outstanding | ' | $1,397,000 | ' |
Aggregate Intrinsic Value, Share Exercisable | ' | $679,000 | ' |
Stock_Based_Compensation_Sched1
Stock Based Compensation - Schedule of Information Regarding Stock Options (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Number of Shares Outstanding | 716,833 |
Weighted Average Remaining Contractual Life (years) | '3 years 9 months 26 days |
Number of Shares Exercisable | 198,123 |
Range One [Member] | ' |
Range of Exercise Price Lower Limit | 0.01 |
Range of Exercise Price Upper limit | 1.99 |
Number of Shares Outstanding | 107,833 |
Weighted Average Remaining Contractual Life (years) | '2 years 2 months 19 days |
Weighted Average Exercise Price | 1.24 |
Number of Shares Exercisable | 87,483 |
Weighted Average Exercise Price | 1.22 |
Range Two [Member] | ' |
Range of Exercise Price Lower Limit | 2 |
Range of Exercise Price Upper limit | 4.99 |
Number of Shares Outstanding | 489,000 |
Weighted Average Remaining Contractual Life (years) | '3 years 11 months 1 day |
Weighted Average Exercise Price | 4.27 |
Number of Shares Exercisable | 110,640 |
Weighted Average Exercise Price | 3.6 |
Range Three [Member] | ' |
Range of Exercise Price Lower Limit | 5 |
Range of Exercise Price Upper limit | 5.99 |
Number of Shares Outstanding | 120,000 |
Weighted Average Remaining Contractual Life (years) | '4 years 9 months 26 days |
Weighted Average Exercise Price | 5.13 |
Number of Shares Exercisable | 0 |
Weighted Average Exercise Price | 0 |
Stock_Based_Compensation_Sched2
Stock Based Compensation - Schedule of Stock Warrants Activity (Details) (Warrants [Member], USD $) | 9 Months Ended |
Sep. 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 | '7 months 13 days |
Weighted Average Remaining Contractual Terms (Years), Exercisable | '7 months 13 days |
Aggregate Intrinsic Value, Outstanding | $367,000 |
Aggregate Intrinsic Value, Exercisable | $367,000 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Net income (loss) | $48,000 | $34,000 | $466,000 | ($863,000) |
Provision of income taxes | $3,000 | $0 | $3,000 | $0 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 9 Months Ended | 0 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Oct. 01, 2014 | Oct. 01, 2014 | |
Subsequent Event [Member] | Subsequent Event [Member] | |||
Warrants [Member] | Chief Executive Officer [Member] | |||
Proceeds financial obligation limit guaranteed by related party | ' | ' | ' | $150,000 |
Issuance of warrant to purchases of common stock | ' | ' | 200,000 | ' |
common stock, per shares | $4.35 | $4 | $5.60 | ' |
Warrant terms | ' | ' | '5 years | ' |
Warrant value | ' | ' | $584,000 | ' |
Fair Value Assumptions, Expected Term | ' | ' | '5 years | ' |
Fair Value Assumptions, volatility rate | ' | ' | 59.53% | ' |
Fair Value Assumptions, expected dividend | 0.00% | ' | 0.00% | ' |
Fair Value Assumptions, discount rate | ' | ' | 2.19% | ' |
Amortization of warrant, term | ' | ' | '5 years | ' |