Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 13, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | REED'S, INC. | |
Entity Central Index Key | 1,140,215 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 13,122,367 | |
Trading Symbol | REED | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 215,000 | $ 959,000 |
Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $333,000 and $253,000, respectively | 3,586,000 | 2,500,000 |
Inventory, net of reserve for obsolescence of $75,000 and $90,000, respectively | 8,937,000 | 6,306,000 |
Prepaid inventory | 1,301,000 | 1,287,000 |
Prepaid and other current assets | 530,000 | 447,000 |
Total Current Assets | 14,569,000 | 11,499,000 |
Property and equipment, net of accumulated depreciation of $3,817,000 and $3,405,000, respectively | 5,057,000 | 4,572,000 |
Brand names | 1,029,000 | 1,029,000 |
Total assets | 20,655,000 | 17,100,000 |
Current Liabilities: | ||
Accounts payable | 7,538,000 | 5,894,000 |
Accrued expenses | 155,000 | 130,000 |
Line of credit | 4,635,000 | 3,009,000 |
Current portion of long term financing obligation | 147,000 | 134,000 |
Current portion of capital leases payable | 127,000 | 125,000 |
Total current liabilities | 12,602,000 | 9,292,000 |
Long term financing obligation, less current portion, net of discount of $999,000 and $1,031,000, respectively | 1,473,000 | 1,508,000 |
Capital leases payable, less current portion | 411,000 | 476,000 |
Capital expansion loan | 1,389,000 | 672,000 |
Term loan | 1,500,000 | 1,500,000 |
Total Liabilities | $ 17,375,000 | $ 13,448,000 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Series A Convertible Preferred stock, $10 par value, 500,000 shares authorized, 9,411 shares issued and outstanding | $ 94,000 | $ 94,000 |
Common stock, $.0001 par value, 19,500,000 shares authorized, 13,117573 and 13,068,058 shares issued and outstanding, respectively | 1,000 | 1,000 |
Additional paid in capital | 26,891,000 | 26,300,000 |
Accumulated deficit | (23,705,000) | (22,743,000) |
Total stockholders' equity | 3,281,000 | 3,652,000 |
Total liabilities and stockholders' equity | $ 20,655,000 | $ 17,100,000 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts, returns and discounts | $ 333,000 | $ 253,000 |
Inventory, reserve for obsolescence net | 75,000 | 90,000 |
Property and equipment, accumulated depreciation | 3,817,000 | 3,405,000 |
Long term financing obligation, net of discount | $ 990,000 | $ 1,031,000 |
Series A Convertible Preferred stock, par value | $ 10 | $ 10 |
Series A Convertible Preferred stock, shares authorized | 500,000 | 500,000 |
Series A Convertible Preferred stock, shares issued | 9,411 | 9,411 |
Series A Convertible Preferred stock, shares outstanding | 9,411 | 9,411 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 19,500,000 | 19,500,000 |
Common stock, shares issued | 13,117,573 | 13,068,058 |
Common stock, shares outstanding | 13,117,573 | 13,068,058 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Sales, net | $ 12,178,000 | $ 11,187,000 | $ 22,850,000 | $ 20,136,000 |
Cost of goods sold | 8,538,000 | 7,483,000 | 15,950,000 | 13,530,000 |
Gross profit | 3,640,000 | 3,704,000 | 6,900,000 | 6,606,000 |
Operating expenses: | ||||
Delivery and handling expenses | 1,429,000 | 926,000 | 2,597,000 | 1,821,000 |
Selling and marketing expense | 1,335,000 | 1,049,000 | 2,528,000 | 2,117,000 |
General and administrative expense | 1,369,000 | 913,000 | 2,338,000 | 1,885,000 |
Total operating expenses | 4,133,000 | 2,888,000 | 7,463,000 | 5,823,000 |
Income (loss) from operations | (493,000) | 816,000 | (563,000) | 783,000 |
Interest expense | (193,000) | (178,000) | (394,000) | (365,000) |
Net income (loss) | (686,000) | 638,000 | (957,000) | 418,000 |
Preferred stock dividends | (5,000) | (5,000) | (5,000) | (5,000) |
Net income (loss) attributable to common stockholders | $ (691,000) | $ 633,000 | $ (962,000) | $ 413,000 |
Income (loss) per share available to common stockholders, basic | $ (0.05) | $ 0.05 | $ (0.07) | $ 0.03 |
Weighted average number of shares outstanding - basic | 13,104,227 | 13,046,631 | 13,086,560 | 13,025,195 |
Income (loss) per share available to common stockholders, diluted | $ (0.05) | $ 0.05 | $ (0.07) | $ 0.03 |
Weighted average number of shares outstanding - diluted | 13,104,227 | 13,256,624 | 13,086,560 | 13,298,114 |
Condensed Statement of Changes
Condensed Statement of Changes in Stockholders' Equity (Unaudited) - 6 months ended Jun. 30, 2015 - USD ($) | Common Stock [Member] | Series A Preferred Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2014 | $ 1,000 | $ 94,000 | $ 26,300,000 | $ (22,743,000) | $ 3,652,000 |
Balance, Shares at Dec. 31, 2014 | 13,068,058 | 9,411 | |||
Common shares issued upon exercise of warrants | 31,000 | 31,000 | |||
Common shares issued upon exercise of warrants, Shares | 13,889 | ||||
Common shares issued upon exercise of options, Shares | 35,626 | ||||
Fair value vesting of options issued for services | $ 560,000 | 560,000 | |||
Series A Preferred Stock Dividend | $ (5,000) | (5,000) | |||
Net loss | (957,000) | (957,000) | |||
Balance at Jun. 30, 2015 | $ 1,000 | $ 94,000 | $ 26,891,000 | $ (23,705,000) | $ 3,281,000 |
Balance, Shares at Jun. 30, 2015 | 13,117,573 | 9,411 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net Income (loss) | $ (957,000) | $ 418,000 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 453,000 | 361,000 |
Fair value of stock options issued to employees | 560,000 | 217,000 |
Fair value of common stock issued for services and bonus | 10,000 | |
(Decrease) increase in allowance for doubtful accounts | (81,000) | (14,000) |
Changes in assets and liabilities: | ||
Accounts receivable | (1,005,000) | (724,000) |
Inventory | (2,631,000) | 794,000 |
Prepaid inventory | (14,000) | (630,225) |
Prepaid expenses and other current assets | 167,000 | 18,225 |
Accounts payable | 1,644,000 | 519,000 |
Accrued expenses | 20,000 | 4,000 |
Net cash provided by (used in) operating activities | (1,844,000) | 973,000 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (430,000) | (155,000) |
Net cash used in investing activities | (430,000) | (155,000) |
Cash flows from financing activities: | ||
Proceeds from stock option and warrant exercises | $ 31,000 | 26,000 |
Payment of deferred financing fees | (7,000) | |
Principal repayments on long term financing obligation | $ (64,000) | (52,000) |
Principal repayments on capital lease obligation | $ (63,000) | (56,000) |
Principal repayments on term loan | (79,000) | |
Net draw down (repayment) on line of credit | $ 1,626,000 | (541,000) |
Net cash (used in) provided by financing activities | 1,530,000 | (709,000) |
Net (decrease) increase in cash | (744,000) | 109,000 |
Cash at beginning of period | 959,000 | 1,104,000 |
Cash at end of period | 215,000 | 1,213,000 |
Cash paid during the period for: | ||
Interest | 395,000 | $ 365,000 |
Non Cash Investing and Financing Activities | ||
Property and equipment acquired through capital expansion loan | 466,000 | |
Other current assets acquired through capital expansion loan | 250,000 | |
Dividends Payable in common stock | $ 5,000 | $ 5,000 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
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 June 30, 2015 and the results of operations and cash flows for the six months ended June 30, 2015 and 2014. The balance sheet as of December 31, 2014 is derived from the Companys audited financial statements. Certain information and footnote disclosures normally included in the 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 Companys Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 26, 2015. The results of operations for the six months ended June 30, 2015 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2015. 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, 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 stockholders 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, 2015 the calculations of basic and diluted loss per share are the same, since the effect of the potentially dilutive securities was anti-dilutive. 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. The calculation of weighted average shares outstanding diluted is as follows: Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Net income (loss) attributable to common stockholders $ (691,000 ) $ 633,000 $ (962,000 ) $ 413,000 Denominator: Weighted average shares outstanding - basic 13,104,227 13,046,631 13,086,560 13,025,195 Effect of dilutive instruments: Warrants and options - 209,993 - 272,919 Weighted average shares outstanding-diluted 13,104,227 13,256,624 13,086,560 13,298,114 The Company had potentially dilutive securities that consisted of: June 30, 2015 June 30, 2014 Warrants 216,261 101,963 Series A Preferred Stock 37,644 37,644 Options 1,065,000 648,967 Total 1,318,905 788,574 Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 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, 2017, and early adoption is 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 August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entitys ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Companys financial statement presentation and disclosures. In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Companys consolidated financial statements. Early adoption is permitted. In February, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage- backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Companys consolidated financial statements. Early adoption is permitted. 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 Companys present or future consolidated financial statements. Concentrations The Companys 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 Companys policy is to maintain cash balances with high quality financial institutions. The Company had cash balances on deposit with banks in excess of $250,000 during the six months ended June 30, 2015. During the six months ended June 30, 2015 and 2014, the Company had two customers which accounted for approximately 32% and 14% of sales in 2015, and 37% and 11% of sales in 2014, respectively. No other customers accounted for more than 10% of sales in either period. During the three months ended June 30, 2015 and 2014, the Company had two customers which accounted for approximately 29% and 15% of sales in 2015, and 34% and 12% of sales in 2014, respectively. No other customers accounted for more than 10% of sales in either period. As of June 30, 2015, the Company had accounts receivable due from one customer who comprised 25% of its total accounts receivable and as of December 31, 2014 the Company had accounts receivable due from one customer which comprised 37% of its total accounts receivable. During the six months ended June 30, 2015, the Company had one vendor which accounted for approximately 27% of all purchases, and in the six months ended June 30, 2014 one vendor who accounted for approximately 25% of all purchases. No other vendor accounted for more than 10% of all purchases in either period. As of June 30, 2015, the Company had three vendors which accounted for approximately 14%, 13% and 10% respectively of total accounts payable and as of December 31, the Company had two vendors which accounted for approximately 11% and 10% of total accounts payable. No other account was in excess of 10% of the balance of accounts payable as of June 30, 2015 and December 31, 2014. Advertising Advertising costs are expensed as incurred. For the three months ended June 30, 2015 and 2014, advertising costs were $11,000 and $70,000, respectively and for the six months ended June 30, 2015 and 2014, advertising costs were $35,000 and $111,000 respectively. 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 1Quoted prices in active markets for identical assets or liabilities. Level 2Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3Unobservable inputs based on the Companys assumptions. The Company had no such assets or liabilities recorded to be valued on the basis above at June 30, 2015 or December 31, 2014. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2015 | |
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: June 30, 2015 December 31, 2014 (Unaudited) Raw Materials and packaging $ 6,124,000 $ 3,395,000 Finished Goods 2,813,000 2,911,000 $ 8,937,000 $ 6,306,000 |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 3. Property and Equipment Property and equipment are comprised of the following as of: June 30, 2015 December 31, 2014 (Unaudited) Land $ 1,108,000 $ 1,108,000 Building 1,871,000 1,868,000 Vehicles 337,000 338,000 Machinery and equipment 3,762,000 3,312,000 Equipment under capital leases 903,000 903,000 Asset Under Construction 427,000 - Office equipment 466,000 448,000 8,874,000 7,977,000 Accumulated depreciation (3,817,000 ) (3,405,000 ) $ 5,057,000 $ 4,572,000 Depreciation expense for the six months ended June 30, 2015 and 2014 was $412,000 and $352,000, respectively. Machinery and equipment at June 30, 2015 and December 31, 2014 includes equipment held under capital leases of $903,000. Accumulated depreciation on equipment held under capital leases was $394,000 on June 30, 2015 and $326,000 on December 31, 2014. |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2015 | |
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 was amended and extended for 2 years on December 5, 2014, provides a $6,000,000 revolving line of credit. The Amended Agreement extends and amends the Revolving Loan and Term Loan (see Note 5) and adds a new Capital Expansion Loan (the Capex Loan) (see Note 6). At June 30, 2015 and December 31, 2014, the aggregate amount outstanding under the line of credit was $4,635,000 and $3,009,000 respectively. The loans mature on December 5, 2016 and are subject to a 1% prepayment penalty for prepayment prior to the first anniversary of the effective date. As of the effective date of the Amended Agreement, all three loans have an effective interest rate of 9%. The revolving line of credit is based on 85% of accounts receivable and 60% of eligible inventory and is secured by substantially all of the Companys assets. The interest rate on the Revolving Loan is the prime rate plus 5.75% (9% at June 30, 2015). The amended monthly management fee is .45% of the average monthly loan balance. As of June 30, 2015, the Company had borrowing availability of $1,365,000 under the line of credit agreement. |
Term Loan
Term Loan | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Term Loan | 5. Term Loan In connection with the Loan and Security Agreement with PMC Financial Services Group, LLC (see Note 4), the Company entered into a Term Loan. The loan was $750,000, and was secured by all of the unencumbered assets of the Company. Effective December 5, 2014 the Term Loans outstanding principal balance was increased to $1,500,000 and the annual interest rate was revised to prime plus 5.75% (currently 9%). Monthly term loan payments are interest only until the December 16, 2016 maturity date when the principal balance is due. As of June 30, 2015 and December 31, 2014, the amount outstanding was $1,500,000. |
Capital Expansion (CAPEX) Loan
Capital Expansion (CAPEX) Loan | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Capital Expansion (CAPEX) Loan | 6. Capital Expansion (CAPEX) Loan In connection with the loan and security agreement with PMC, the Company entered into a CAPEX loan in the aggregate outstanding amount not to exceed $3,000,000. The CAPEX loan will finance new asset purchases for modernization and improvement of the beverage bottling equipment in the Los Angeles plant. Interest only on the CAPEX loan shall be paid from time to time until the end of each fiscal quarter, at which time the principal amounts of each outstanding CAPEX loan will be aggregated and repaid in 48 equal monthly installments of principal plus accrued but unpaid interest, or if earlier, the revolver maturity of December 2016 as discussed in Note 4. The interest rate on the CAPEX loan is the prime rate plus 5.75% (9% at June 30, 2015). At June 30, 2015 and December 31, 2014, the balance on the CAPEX loan balance was $1,389,000 and $672,000 and as of June 30, 2015, the Company had future borrowing availability of $1,611,000. |
Obligations Under Capital Lease
Obligations Under Capital Leases | 6 Months Ended |
Jun. 30, 2015 | |
Leases [Abstract] | |
Obligations Under Capital Leases | 7. Obligations Under Capital Leases The Company leases equipment for its brewery operations with an aggregate value of $903,000 under six non-cancelable capital leases. Most of the leases are personally guaranteed by the Companys chief executive officer. Monthly payments range from $341 to $10,441 per month, including interest, at interest rates ranging from 6.51% to 17.31% per annum. At June 30, 2015, monthly payments under these leases aggregated $16,000. The leases expire at various dates through 2019. Future minimum lease payments under capital leases are as follows: Years Ending December 31, 2015 90,000 2016 164,000 2017 149,000 2018 166,000 2019 103,000 Total payments 672,000 Less: Amount representing interest (134,000 ) Present value of net minimum lease payments 538,000 Less: Current portion (127,000 ) Non-current portion $ 411,000 |
Long-term Financing Obligation
Long-term Financing Obligation | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-term Financing Obligation | 8. Long-term Financing Obligation On June 15, 2009, the Company closed escrow on the sale of its two buildings and its brewery equipment and concurrently entered into a long-term lease agreement for the same property and equipment. In connection with the lease the Company has the option to repurchase the buildings and brewery equipment from 12 months after the commencement date to the end of the lease term at the greater of the fair market value or an agreed upon amount. Since the lease contains a buyback provision and other related terms, the Company determined it had continuing involvement that did not warrant the recognition of a sale; therefore, the transaction has been accounted for as a long-term financing. The proceeds from the sale, net of transaction costs, have been recorded as a financing obligation in the amount of $3,056,000. Monthly payments under the financing agreement are recorded as interest expense and a reduction in the financing obligation at an implicit rate of 9.9%. The financing obligation was personally guaranteed up to a limit of $150,000 by the principal shareholder and Chief Executive Officer, Christopher J. Reed. In connection with the financing obligation, the Company issued an aggregate of 400,000 warrants to purchase its common stock at $1.20 per share for five years. The 400,000 warrants were valued at $752,000 and reflected as a debt discount, using the Black Scholes Merton 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. Effective October 1, 2014, the Company executed Amendment #1 to the Long-term Financing Obligation. In exchange for a release from the $150,000 personal guarantee by the principal shareholder and Chief Executive Officer, and a release of the brewery equipment which was collateral for the lease agreement, the Company issued 200,000 warrants to purchase its common stock for $5.60 per share for five years. The 200,000 warrants were valued at $584,000 using the Black Scholes Merton 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 1.25%. The warrants value of $584,000 is being amortized over the remaining term of the purchase option. Long term financing obligation is comprised of the following as of: June 30, 2015 December 31, 2014 Financing obligation $ 2,610,000 $ 2,673,000 Valuation discount (990,000 ) (1,031,000 ) 1,620,000 1,642,000 Less current portion (147,000 ) (134,000 ) Long term financing obligation $ 1,473,000 $ 1,508,000 |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Stockholders' Equity | 9. 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, 2015 and December 31, 2014, 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, 2015, dividends were accrued on the Series A Preferred stock in the amount of $5,000 and the dividends will be distributed to the holders of record as of June 30, 2015 by issuing 751 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. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Compensation | 10. Stock Based Compensation Stock Options Stock options granted under our equity incentive plans generally vest over 3 years from the date of grant, at 33% per year or over 4 years at 25% per year and expire 5 years from the date of grant. The following table summarizes stock option activity for the six months ended June 30, 2015: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 705,334 $ 3.96 3.6 $ 1,362,000 Granted 538,000 5.63 Exercised (90,834 ) - Forfeited or expired (87,500 ) - Outstanding at June 30, 2015 1,065,000 $ 4.59 4.3 $ 1,494,000 Exercisable at June 30, 2015 352,876 $ 2.92 2.5 $ 820,000 During the six months ended June 30, 2015, the Company granted 538,000 stock options to various employees at the market price of $5.37 to $5.94 per share. The options have a 5 year life and vest over 4 years. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model. Assumptions used in valuing stock options granted during the six months ended June 30, 2015 are as follows: (i) volatility rate of between 57.78% and 60.69%, (ii) discount rate between 1.64% and 1.58%, (iii) zero expected dividend yield, and (iv) expected term of 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 six months ended June 30, 2015, was approximately $1,368,000 and will be amortized over the vesting period. The aggregate intrinsic value was calculated as the difference between the closing market price, which was $6.23, and the exercise price of the Companys stock options as of June 30, 2015. Stock-based compensation recognized on the Companys statement of operations for the six months ended June 30, 2015 and 2014 was $560,000 and $217,000, respectively. As of June 30, 2015, the aggregate value of unvested options was $1,546,000, which will be recognized as an expense as the options vest. There were 90,834 stock options exercised in the six months ended June 30, 2015 on a cashless basis at exercise prices between $1.14 and $4.60. The Company issued 35,626 shares of common stock on those exercises. The following table summarizes information about stock options at June 30, 2015: Options Outstanding at June 30, 2015 Options Exercisable at June 30, 2015 Range of Exercise Price Number of Shares Outstanding Weighted Average Remaining Contractual Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.01 - $1.99 69,000 1.5 $ 1.14 85,750 $ 1.70 $ 2.00 - $4.99 348,000 3.0 $ 4.20 190,460 $ 4.01 $ 5.00 - $6.99 648,000 4.6 $ 5.42 76,666 5.62 1,065,000 352,876 Stock Warrants On March 27, 2015, the Company received $31,250 for 13,889 warrants which were exercised at a $2.25 per share price. The following table summarizes stock warrant activity for the six months ended June 30, 2015: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2014 301,963 $ 4.49 3.3 $ 430,000 Granted - - Exercised (13,889 ) 2.25 Forfeited or expired (71,813 ) 2.10 Outstanding at June 30, 2015 216,261 $ 5.40 3.4 $ 56,260 Exercisable at June 30, 2015 216,261 $ 5.40 3.4 $ 56,260 The intrinsic value was calculated as the difference between the closing market price, which was $6.23, and the exercise price of the Companys warrants common stock, as of June 30, 2015. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes For the three and six months ended June 30, 2015, net loss was ($686,000) and ($956,000), 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. In accordance with Accounting Standards Codification (ASC) 740-10, Income Taxes |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
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 stockholders 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, 2015 the calculations of basic and diluted loss per share are the same, since the effect of the potentially dilutive securities was anti-dilutive. 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. The calculation of weighted average shares outstanding diluted is as follows: Three months ended Six months ended June 30, June 30, 2015 2014 2015 2014 Net income (loss) attributable to common stockholders $ (691,000 ) $ 633,000 $ (962,000 ) $ 413,000 Denominator: Weighted average shares outstanding - basic 13,104,227 13,046,631 13,086,560 13,025,195 Effect of dilutive instruments: Warrants and options - 209,993 - 272,919 Weighted average shares outstanding-diluted 13,104,227 13,256,624 13,086,560 13,298,114 The Company had potentially dilutive securities that consisted of: June 30, 2015 June 30, 2014 Warrants 216,261 101,963 Series A Preferred Stock 37,644 37,644 Options 1,065,000 648,967 Total 1,318,905 788,574 |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 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, 2017, and early adoption is 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 August 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entitys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entitys ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Companys financial statement presentation and disclosures. In January 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-01 (Subtopic 225-20) - Income Statement - Extraordinary and Unusual Items. ASU 2015-01 eliminates the concept of an extraordinary item from GAAP. As a result, an entity will no longer be required to segregate extraordinary items from the results of ordinary operations, to separately present an extraordinary item on its income statement, net of tax, after income from continuing operations or to disclose income taxes and earnings-per-share data applicable to an extraordinary item. However, ASU 2015-01 will still retain the presentation and disclosure guidance for items that are unusual in nature and occur infrequently. ASU 2015-01 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-01 is not expected to have a material effect on the Companys consolidated financial statements. Early adoption is permitted. In February, 2015, the FASB issued Accounting Standards Update (ASU) No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. ASU 2015-02 provides guidance on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage- backed security transactions). ASU 2015-02 is effective for periods beginning after December 15, 2015. The adoption of ASU 2015-02 is not expected to have a material effect on the Companys consolidated financial statements. Early adoption is permitted. 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 Companys present or future consolidated financial statements. |
Concentrations | Concentrations The Companys 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 Companys policy is to maintain cash balances with high quality financial institutions. The Company had cash balances on deposit with banks in excess of $250,000 during the six months ended June 30, 2015. During the six months ended June 30, 2015 and 2014, the Company had two customers which accounted for approximately 32% and 14% of sales in 2015, and 37% and 11% of sales in 2014, respectively. No other customers accounted for more than 10% of sales in either period. During the three months ended June 30, 2015 and 2014, the Company had two customers which accounted for approximately 29% and 15% of sales in 2015, and 34% and 12% of sales in 2014, respectively. No other customers accounted for more than 10% of sales in either period. As of June 30, 2015, the Company had accounts receivable due from one customer who comprised 25% of its total accounts receivable and as of December 31, 2014 the Company had accounts receivable due from one customer which comprised 37% of its total accounts receivable. During the six months ended June 30, 2015, the Company had one vendor which accounted for approximately 27% of all purchases, and in the six months ended June 30, 2014 one vendor who accounted for approximately 25% of all purchases. No other vendor accounted for more than 10% of all purchases in either period. As of June 30, 2015, the Company had three vendors which accounted for approximately 14%, 13% and 10% respectively of total accounts payable and as of December 31, the Company had two vendors which accounted for approximately 11% and 10% of total accounts payable. No other account was in excess of 10% of the balance of accounts payable as of June 30, 2015 and December 31, 2014. |
Advertising | Advertising Advertising costs are expensed as incurred. For the three months ended June 30, 2015 and 2014, advertising costs were $11,000 and $70,000, respectively and for the six months ended June 30, 2015 and 2014, advertising costs were $35,000 and $111,000 respectively. |
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 1Quoted prices in active markets for identical assets or liabilities. Level 2Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3Unobservable inputs based on the Companys assumptions. The Company had no such assets or liabilities recorded to be valued on the basis above at June 30, 2015 or December 31, 2014. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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, 2015 2014 2015 2014 Net income (loss) attributable to common stockholders $ (691,000 ) $ 633,000 $ (962,000 ) $ 413,000 Denominator: Weighted average shares outstanding - basic 13,104,227 13,046,631 13,086,560 13,025,195 Effect of dilutive instruments: Warrants and options - 209,993 - 272,919 Weighted average shares outstanding-diluted 13,104,227 13,256,624 13,086,560 13,298,114 |
Schedule of Potentially Dilutive Securities | The Company had potentially dilutive securities that consisted of: June 30, 2015 June 30, 2014 Warrants 216,261 101,963 Series A Preferred Stock 37,644 37,644 Options 1,065,000 648,967 Total 1,318,905 788,574 |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
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: June 30, 2015 December 31, 2014 (Unaudited) Raw Materials and packaging $ 6,124,000 $ 3,395,000 Finished Goods 2,813,000 2,911,000 $ 8,937,000 $ 6,306,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment are comprised of the following as of: June 30, 2015 December 31, 2014 (Unaudited) Land $ 1,108,000 $ 1,108,000 Building 1,871,000 1,868,000 Vehicles 337,000 338,000 Machinery and equipment 3,762,000 3,312,000 Equipment under capital leases 903,000 903,000 Asset Under Construction 427,000 - Office equipment 466,000 448,000 8,874,000 7,977,000 Accumulated depreciation (3,817,000 ) (3,405,000 ) $ 5,057,000 $ 4,572,000 |
Obligations Under Capital Lea22
Obligations Under Capital Leases (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Leases [Abstract] | |
Schedule of Future Minimum Lease Payments Under Capital Leases | Future minimum lease payments under capital leases are as follows: Years Ending December 31, 2015 90,000 2016 164,000 2017 149,000 2018 166,000 2019 103,000 Total payments 672,000 Less: Amount representing interest (134,000 ) Present value of net minimum lease payments 538,000 Less: Current portion (127,000 ) Non-current portion $ 411,000 |
Long-term Financing Obligation
Long-term Financing Obligation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Financing Obligation | Long term financing obligation is comprised of the following as of: June 30, 2015 December 31, 2014 Financing obligation $ 2,610,000 $ 2,673,000 Valuation discount (990,000 ) (1,031,000 ) 1,620,000 1,642,000 Less current portion (147,000 ) (134,000 ) Long term financing obligation $ 1,473,000 $ 1,508,000 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | The following table summarizes stock option activity for the six months ended June 30, 2015: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 705,334 $ 3.96 3.6 $ 1,362,000 Granted 538,000 5.63 Exercised (90,834 ) - Forfeited or expired (87,500 ) - Outstanding at June 30, 2015 1,065,000 $ 4.59 4.3 $ 1,494,000 Exercisable at June 30, 2015 352,876 $ 2.92 2.5 $ 820,000 |
Schedule of Information Regarding Stock Options | The following table summarizes information about stock options at June 30, 2015: Options Outstanding at June 30, 2015 Options Exercisable at June 30, 2015 Range of Exercise Price Number of Shares Outstanding Weighted Average Remaining Contractual Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $ 0.01 - $1.99 69,000 1.5 $ 1.14 85,750 $ 1.70 $ 2.00 - $4.99 348,000 3.0 $ 4.20 190,460 $ 4.01 $ 5.00 - $6.99 648,000 4.6 $ 5.42 76,666 5.62 1,065,000 352,876 |
Schedule of Stock Warrants Activity | The following table summarizes stock warrant activity for the six months ended June 30, 2015: Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2014 301,963 $ 4.49 3.3 $ 430,000 Granted - - Exercised (13,889 ) 2.25 Forfeited or expired (71,813 ) 2.10 Outstanding at June 30, 2015 216,261 $ 5.40 3.4 $ 56,260 Exercisable at June 30, 2015 216,261 $ 5.40 3.4 $ 56,260 |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Maximum cash deposit guaranteed by federal deposit insurance corporation | $ 250,000 | $ 250,000 | |||
Cash balances in excess during peirod | 250,000 | $ 250,000 | |||
Maximum percentage of sales incurred by each customer | 10.00% | ||||
Percentage of amount due to vendor for purchase | 27.00% | 25.00% | |||
Maximum percentage of purchase incurred by each vendor | 10.00% | 10.00% | |||
Percentage of account excess for accounts payable during period | 10.00% | 10.00% | |||
Advertising costs | $ 11,000 | $ 70,000 | $ 35,000 | $ 111,000 | |
Comprehensive income | |||||
Customer One | |||||
Percentage of sale accounted to customer | 29.00% | 15.00% | 32.00% | 37.00% | |
Percentage of receivables from customer to net receivables | 25.00% | 37.00% | 25.00% | 37.00% | |
Customer Two | |||||
Percentage of sale accounted to customer | 34.00% | 12.00% | 14.00% | 11.00% | |
Vendor One [Member] | |||||
Percentage of accounts payable due to vendor | 14.00% | 14.00% | 11.00% | ||
Vendor Two [Member] | |||||
Percentage of accounts payable due to vendor | 13.00% | 13.00% | 10.00% | ||
Vendor Three [Member] | |||||
Percentage of accounts payable due to vendor | 10.00% | 10.00% |
Basis of Presentation - Schedul
Basis of Presentation - Schedule of Weighted Average Shares Outstanding Diluted (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Accounting Policies [Abstract] | ||||
Net income (loss) attributable to common stockholders | $ (691,000) | $ 633,000 | $ (962,000) | $ 413,000 |
Weighted average shares outstanding - basic | 13,104,227 | 13,046,631 | 13,086,560 | 13,025,195 |
Warrants and options | 209,993 | 272,919 | ||
Weighted average shares outstanding-diluted | 13,104,227 | 13,256,624 | 13,086,560 | 13,298,114 |
Basis of Presentation - Sched27
Basis of Presentation - Schedule of Potentially Dilutive Securities (Details) - shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Potentially dilutive securities | 1,318,905 | 788,574 |
Warrants [Member] | ||
Potentially dilutive securities | 216,261 | 101,963 |
Series A Preferred Stock [Member] | ||
Potentially dilutive securities | 37,644 | 37,644 |
Options [Member] | ||
Potentially dilutive securities | 1,065,000 | 648,967 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Raw Materials and Packaging | $ 6,124,000 | $ 3,395,000 |
Finished Goods | 2,813,000 | 2,911,000 |
Inventory, total | $ 8,937,000 | $ 6,306,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | |||||
Depreciation expense | $ 213,000 | $ 153,000 | $ 412,000 | $ 352,000 | |
Machinery and equipment equipment held under capital leases | 903,000 | $ 903,000 | 903,000 | $ 903,000 | $ 903,000 |
Accumulated depreciation for equipment held under capital leases | $ 394,000 | $ 394,000 | $ 326,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Property, Plant and Equipment [Abstract] | |||
Land | $ 1,108,000 | $ 1,108,000 | |
Building | 1,871,000 | 1,868,000 | |
Vehicles | 337,000 | 338,000 | |
Machinery and equipment | 3,762,000 | 3,312,000 | |
Equipment under capital leases | 903,000 | $ 903,000 | $ 903,000 |
Asset Under Construction | 427,000 | ||
Office equipment | 466,000 | $ 448,000 | |
Property and equipment, gross | 8,874,000 | 7,977,000 | |
Accumulated depreciation | (3,817,000) | (3,405,000) | |
Property and equipment, net | $ 5,057,000 | $ 4,572,000 |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Nov. 09, 2011 | Jun. 30, 2015 | Dec. 31, 2014 |
Line of credit current | $ 4,635,000 | $ 3,009,000 | |
Extended line of credit date | Dec. 5, 2016 | ||
Percentage of prepayment penalty for prepayment prior to the first anniversary | 1.00% | ||
Revolving Loan, effective interest rate | 9.00% | ||
Percentage of borrowing based on accounts receivable | 85.00% | ||
Percentage of borrowing based on eligible inventory | 60.00% | ||
Percentage of monthly management fee as average monthly loan balance | 0.45% | ||
Line of Credit Agreement [Member] | |||
Line of credit borrowing availability | $ 1,365,000 | ||
Prime Rate [Member] | |||
Revolving Loan, effective interest rate | 5.75% | ||
PMC Financial Services Group, LLC [Member] | |||
Line of credit current | $ 6,000,000 | ||
Extended line of credit period | 2 years | ||
Extended line of credit date | Dec. 5, 2016 | ||
Revolving Loan, effective interest rate | 9.00% |
Term Loan (Details Narrative)
Term Loan (Details Narrative) - USD ($) | Dec. 05, 2014 | Nov. 09, 2011 | Jun. 30, 2015 | Dec. 31, 2014 |
Line of credit interest rate | 9.00% | |||
Term loan outstanding | $ 1,500,000 | $ 1,500,000 | ||
PMC Financial Services Group, LLC [Member] | ||||
Term loan amount | $ 750,000 | |||
Loan bears interest, description | the Term Loans outstanding principal balance was increased to $1,500,000 and the annual interest rate was revised to prime plus 5.75% (currently 9%). | In connection with the Loan and Security Agreement with PMC Financial Services Group, LLC (see Note 4), the Company entered into a Term Loan. The loan was $750,000, and was secured by all of the unencumbered assets of the Company. | ||
Line of credit interest rate | 9.00% | |||
Term loan outstanding principal balance | $ 1,500,000 | |||
Maturity date of term loan | Dec. 16, 2016 | |||
PMC Financial Services Group, LLC [Member] | Maximum [Member] | ||||
Line of credit interest rate | 5.75% |
Capital Expansion (CAPEX) Loan
Capital Expansion (CAPEX) Loan (Details Narrative) | 6 Months Ended | |
Jun. 30, 2015USD ($)Installments | Dec. 31, 2014USD ($) | |
Future borrowing availability | $ 1,611,000 | |
Capex Loan [Member] | ||
Excess of outstanding amount | $ 3,000,000 | |
Number of monthly installments | Installments | 48 | |
Capex loan interest rate | 9.00% | |
Loan balance amount | $ 1,389,000 | $ 672,000 |
Capex Loan [Member] | Prime Rate [Member] | ||
Capex loan interest rate | 5.75% |
Obligations Under Capital Lea34
Obligations Under Capital Leases (Details Narrative) | 6 Months Ended | ||
Jun. 30, 2015USD ($)Units | Dec. 31, 2014USD ($) | Jun. 30, 2014USD ($) | |
Equipment held under capital leases | $ 903,000 | $ 903,000 | $ 903,000 |
Number of non-cancelable capital leases | Units | 6 | ||
Payment of lease amount | $ 16,000 | ||
Lease expire year | 2,019 | ||
Minimum [Member] | |||
Payment of lease range per month | $ 341 | ||
Percentage of interest for lease amount | 6.51% | ||
Maximum [Member] | |||
Payment of lease range per month | $ 10,441 | ||
Percentage of interest for lease amount | 17.31% |
Obligations Under Capital Lea35
Obligations Under Capital Leases - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Leases [Abstract] | ||
2,015 | $ 90,000 | |
2,016 | 164,000 | |
2,017 | 149,000 | |
2,018 | 166,000 | |
2,019 | 103,000 | |
Total payments | 672,000 | |
Less: Amount representing interest | (134,000) | |
Present value of net minimum lease payments | 538,000 | |
Less: Current portion | (127,000) | $ (125,000) |
Non-current portion | $ 411,000 | $ 476,000 |
Long Term Financing Obligation
Long Term Financing Obligation (Details Narrative) - USD ($) | Oct. 01, 2014 | Jun. 30, 2015 |
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% | |
Amortization of warrant, term | 15 years | |
Warrants [Member] | ||
Number of warrants issued to purchase of common stock | 200,000 | |
Issuance of warrants price per share | $ 5.60 | |
Warrants term | 5 years | |
Warrants issued during period value | $ 584,000 | |
Warrants volatility rate | 59.53% | |
Warrants expected dividends | 0.00% | |
Warrants discount rate | 1.25% | |
Chief Executive Officer [Member] | ||
Proceeds financial obligation limit guaranteed by related party | $ 150,000 | |
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 |
Long Term Financing Obligatio37
Long Term Financing Obligation - Schedule of Long Term Financing Obligation (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Valuation discount | $ (990,000) | $ (1,031,000) |
Less current portion | 147,000 | 134,000 |
Long term financing obligation | 1,473,000 | 1,508,000 |
Long Term Financing Obligation [Member] | ||
Financing obligation | 2,610,000 | 2,673,000 |
Valuation discount | (990,000) | (1,031,000) |
Financing obligation, net of discount | 1,620,000 | 1,642,000 |
Less current portion | (147,000) | (134,000) |
Long term financing obligation | $ 1,473,000 | $ 1,508,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, par value | $ 10 | $ 10 |
Percentage of noncumulative preferred stock | 5.00% | |
Preferred stock, shares outstanding | 9,411 | 9,411 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, par value | $ 10 | $ 10 |
Preferred stock, shares outstanding | 9,411 | 9,411 |
Preferred stock shares, liquidation preference | $ 10 | |
Percentage of prorate annual non cumulative dividend | 5.00% | |
Dividend payable to preferred shareholders | $ 5,000 | |
Number of preferred stock converted | 751 | |
Preferred stock holders rights to receive at price per share | $ 10 |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | Mar. 27, 2015 | Jun. 30, 2015 | Jun. 30, 2014 |
Stock options granted shares | 538,000 | ||
Option expiration life period | 5 years | ||
Stock option vested period | 4 years | ||
Stock option fair value assumptions, expected volatility rate, minimum | 57.78% | ||
Stock option fair value assumptions, expected volatility rate, maximum | 60.69% | ||
Stock option fair value assumptions, expected dividend rate | 0.00% | ||
Stock option fair value assumptions, expected term | 4 years 6 months | ||
Fair value of the options granted | $ 1,368,000 | ||
Stock option exercise price, per share | $ 6.23 | ||
Stock based compensation | $ 560,000 | $ 217,000 | |
Aggregate value of unvested options | $ 1,546,000 | ||
Stock options exercised | 90,834 | ||
Number of option issued under cash-less exercise price per share | |||
Number of option issued under cash-less exercise | 35,626 | ||
Minimum [Member] | |||
Share based compensation cost amortized option vest period | 3 years | ||
Percentage of stock options granted under equity incentive plan | 33.00% | ||
Market price per share | $ 5.37 | ||
Stock option fair value assumptions, expected discount rate | 1.64% | ||
Number of option issued under cash-less exercise price per share | $ 1.14 | ||
Maximum [Member] | |||
Share based compensation cost amortized option vest period | 4 years | ||
Percentage of stock options granted under equity incentive plan | 25.00% | ||
Market price per share | $ 5.94 | ||
Stock option fair value assumptions, expected discount rate | 1.58% | ||
Number of option issued under cash-less exercise price per share | $ 4.60 | ||
Warrant [Member] | |||
Stock warrant received value | $ 31,250 | ||
Number of warrants exercised | 13,889 | ||
Warrant exercise price per share | $ 2.25 | $ 6.23 |
Stock Based Compensation - Sche
Stock Based Compensation - Schedule of Stock Option Activity (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares Outstanding, Beginning balance | 705,334 | |
Shares, Granted | 538,000 | |
Shares, Exercised | (90,834) | |
Shares, Forfeited or expired | (87,500) | |
Shares Outstanding, Ending balance | 1,065,000 | |
Shares Exercisable | 352,876 | |
Weighted-Average Exercise Price, Outstanding, Beginning | $ 3.96 | |
Weighted-Average Exercise Price, Granted | $ 5.63 | |
Weighted-Average Exercise Price, Exercised | ||
Weighted-Average Exercise Price, Forfeited or expired | ||
Weighted-Average Exercise Price, Outstanding, Ending | $ 4.59 | |
Weighted-Average Exercise Price, Exercisable | $ 2.92 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding | 4 years 3 months 18 days | 3 years 7 months 6 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable | 2 years 6 months | |
Aggregate Intrinsic Value, Share Outstanding, Begining | $ 1,362,000 | |
Aggregate Intrinsic Value, Share Outstanding, Ending | 1,494,000 | |
Aggregate Intrinsic Value, Share Exercisable | $ 820,000 |
Stock Based Compensation - Sc41
Stock Based Compensation - Schedule of Information Regarding Stock Options (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Number of Shares Outstanding | 1,065,000 | |
Weighted Average Remaining Contractual Life (years) | 4 years 3 months 18 days | 3 years 7 months 6 days |
Number of Shares Exercisable | 352,876 | |
Range One [Member] | ||
Range of Exercise Price Lower Limit | $ 0.01 | |
Range of Exercise Price Upper limit | $ 1.99 | |
Number of Shares Outstanding | 69,000 | |
Weighted Average Remaining Contractual Life (years) | 1 year 6 months | |
Weighted Average Exercise Price | $ 1.14 | |
Number of Shares Exercisable | 85,750 | |
Weighted Average Exercise Price | $ 1.70 | |
Range Two [Member] | ||
Range of Exercise Price Lower Limit | 2 | |
Range of Exercise Price Upper limit | $ 4.99 | |
Number of Shares Outstanding | 348,000 | |
Weighted Average Remaining Contractual Life (years) | 3 years | |
Weighted Average Exercise Price | $ 4.20 | |
Number of Shares Exercisable | 190,460 | |
Weighted Average Exercise Price | $ 4.01 | |
Range Three [Member] | ||
Range of Exercise Price Lower Limit | 5 | |
Range of Exercise Price Upper limit | $ 6.99 | |
Number of Shares Outstanding | 648,000 | |
Weighted Average Remaining Contractual Life (years) | 4 years 7 months 6 days | |
Weighted Average Exercise Price | $ 5.42 | |
Number of Shares Exercisable | 76,666 | |
Weighted Average Exercise Price | $ 5.62 |
Stock Based Compensation - Sc42
Stock Based Compensation - Schedule of Stock Warrants Activity (Details) - Warrants [Member] - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Shares Outstanding, Beginning Balance | 301,963 | |
Shares Granted | ||
Shares Exercised | (13,889) | |
Shares Forfeited Or Expired | (71,813) | |
Shares Outstanding, Ending Balance | 216,216 | |
Warrants Exercisable | 216,261 | |
Weighted Average Exercise Price, Outstanding, Beginning | $ 4.49 | |
Weighted Average Exercise Price, Granted | ||
Weighted Average Exercise Price, Exercised | $ 2.25 | |
Weighted Average Exercise Price, Forfeited Or Expired | 2.10 | |
Weighted Average Exercise Price, Outstanding, Ending | 5.40 | |
Weighted Average Exercise Price, Exercisable | $ 5.40 | |
Weighted Average Remaining Contractual Terms (Years), Outstanding | 3 years 4 months 24 days | 3 years 3 months 18 days |
Weighted Average Remaining Contractual Terms (Years), Exercisable | 3 years 4 months 24 days | |
Aggregate Intrinsic Value, Outstanding, Begining | $ 430,000 | |
Aggregate Intrinsic Value, Outstanding, Ending | 56,260 | |
Aggregate Intrinsic Value, Exercisable | $ 56,260 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||||
Net income (loss) | $ (686,000) | $ 638,000 | $ (957,000) | $ 418,000 |
Provision of income taxes | $ 0 | $ 0 |