Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Jun. 30, 2016 | |
Document And Entity Information | ||
Entity Registrant Name | REED'S, INC. | |
Entity Central Index Key | 1,140,215 | |
Document Type | 10-K | |
Document Period End Date | Dec. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filer | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Public Float | $ 28,320,000 | |
Entity Common Stock, Shares Outstanding | 13,982,230 | |
Trading Symbol | REED | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 451,000 | $ 1,816,000 |
Trade accounts receivable, net of allowance for doubtful accounts and returns and discounts of $256,000 and $356,000, respectively | 2,485,000 | 2,894,000 |
Inventory, net of reserve for obsolescence of $115,000 and $290,000, respectively | 6,885,000 | 7,974,000 |
Prepaid and other current assets | 500,000 | 769,000 |
Total Current Assets | 10,321,000 | 13,453,000 |
Property and equipment, net of accumulated depreciation of $4,719,000 and $4,216,000, respectively | 7,726,000 | 5,369,000 |
Brand names | 805,000 | 1,029,000 |
Total assets | 18,852,000 | 19,851,000 |
Current Liabilities: | ||
Accounts payable | 5,959,000 | 7,458,000 |
Accrued expenses | 215,000 | 168,000 |
Line of credit | 4,384,000 | 4,443,000 |
Current portion of long term financing obligations | 190,000 | 160,000 |
Current portion of capital leases payable | 183,000 | 153,000 |
Current portion of bank notes | 953,000 | 341,000 |
Total current liabilities | 11,884,000 | 12,723,000 |
Other Long Term Liabilities | 130,000 | |
Long term financing obligation, less current portion, net of discount of $825,000 and $935,000, respectively | 1,363,000 | 1,443,000 |
Capital leases payable, less current portion | 438,000 | 490,000 |
Bank notes, net of discount $78,000 and $132,000, respectively | 5,919,000 | 4,410,000 |
Warrant liability | 775,000 | |
Total Liabilities | 20,509,000 | 19,066,000 |
Stockholders' equity (deficit): | ||
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, 13,982,230 and 13,160,860 shares issued and outstanding, respectively | 1,000 | 1,000 |
Additional paid in capital | 29,971,000 | 27,399,000 |
Accumulated deficit | (31,723,000) | (26,709,000) |
Total stockholders' equity (deficit) | (1,657,000) | 785,000 |
Total liabilities and stockholders' equity (deficit) | $ 18,852,000 | $ 19,851,000 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowance for doubtful accounts and returns and discounts | $ 256,000 | $ 356,000 |
Inventory, reserve for obsolescence net | 115,000 | 290,000 |
Property and equipment, accumulated depreciation | 4,719,000 | 4,216,000 |
Long term financing obligation, discount | 825,000 | 935,000 |
Bank notes, discount | $ 78,000 | $ 132,000 |
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 | $ .0001 |
Common stock, shares authorized | 19,500,000 | 19,500,000 |
Common stock, shares issued | 13,982,230 | 13,160,860 |
Common stock, shares outstanding | 13,982,230 | 13,160,860 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Statement [Abstract] | ||
Net Sales | $ 42,472,000 | $ 45,948,000 |
Cost of goods sold | 33,490,000 | 34,343,000 |
Gross profit | 8,982,000 | 11,605,000 |
Operating expenses: | ||
Delivery and handling expenses | 3,902,000 | 5,100,000 |
Selling and marketing expense | 3,701,000 | 4,867,000 |
General and administrative expense | 4,208,000 | 4,368,000 |
Impairment of assets | 224,000 | |
Total operating expenses | 12,035,000 | 14,335,000 |
Loss from operations | (3,053,000) | (2,730,000) |
Interest expense | (1,724,000) | (1,231,000) |
Change in fair value of warrant liability | (232,000) | |
Net loss | (5,009,000) | (3,961,000) |
Preferred Stock Dividends | (5,000) | (5,000) |
Net loss attributable to common stockholders | $ (5,014,000) | $ (3,966,000) |
Loss per share - basic and diluted | $ (0.37) | $ (0.30) |
Weighted average number of shares outstanding - basic and diluted | 13,619,930 | 13,147,815 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock [Member] | 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 | |||
Fair Value of common stock issued for services | 1,000 | 1,000 | |||
Fair Value of common stock issued for services, shares | 247 | ||||
Common shares issued upon exercise of warrants | |||||
Common shares issued upon exercise of warrants, shares | 57,112 | ||||
Common shares issued upon exercise of options | 75,000 | $ 75,000 | |||
Common shares issued upon exercise of options, Shares | 34,692 | 135,833 | |||
Fair value of warrants granted as valuation discount | 141,000 | $ 141,000 | |||
Fair value vesting of options issued to employees | 877,000 | 877,000 | |||
Series A preferred stock dividend | 5,000 | (5,000) | |||
Series A preferred stock dividend, shares | 751 | ||||
Net loss | (3,961,000) | (3,961,000) | |||
Balance at Dec. 31, 2015 | $ 1,000 | $ 94,000 | 27,399,000 | (26,709,000) | 785,000 |
Balance, Shares at Dec. 31, 2015 | 13,160,860 | 9,411 | |||
Fair Value of common stock issued for services | 15,000 | 15,000 | |||
Fair Value of common stock issued for services, shares | 4,228 | ||||
Common shares issued upon exercise of warrants | 45,000 | 45,000 | |||
Common shares issued upon exercise of warrants, shares | 16,260 | ||||
Common shares issued upon exercise of options | 71,000 | $ 71,000 | |||
Common shares issued upon exercise of options, Shares | 76,966 | 84,000 | |||
Fair value vesting of warrants issued as debt discount | 91,000 | $ 91,000 | |||
Fair value of vested options | 658,000 | 658,000 | |||
Common shares issued upon sale of securities | 1,687,000 | 1,687,000 | |||
Common shares issued upon sale of securities, shares | 722,412 | ||||
Series A preferred stock dividend | 5,000 | (5,000) | |||
Series A preferred stock dividend, shares | 1,504 | ||||
Net loss | (5,009,000) | (5,009,000) | |||
Balance at Dec. 31, 2016 | $ 1,000 | $ 94,000 | $ 29,971,000 | $ (31,723,000) | $ (1,657,000) |
Balance, Shares at Dec. 31, 2016 | 13,982,230 | 9,411 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (5,009,000) | $ (3,961,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 642,000 | 933,000 |
Fair value of vested stock options issued to employees | 658,000 | 877,000 |
Fair value of common stock issued for services | 15,000 | 1,000 |
(Decrease) increase in allowance for doubtful accounts | (100,000) | 103,000 |
(Decrease) increase in reserve for impairment of assets | 484,000 | |
Change in fair value of warrant liability | 232,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 509,000 | (497,000) |
Inventory | 1,089,000 | (381,000) |
Prepaid expenses and other assets | 269,000 | (25,000) |
Accounts payable | (1,499,000) | 1,564,000 |
Accrued expenses | 17,000 | 38,000 |
Increase in other long term obligations | 160,000 | |
Net cash used in operating activities | (2,533,000) | (1,348,000) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (410,000) | (532,000) |
Net cash used in investing activities | (410,000) | (532,000) |
Cash flows from financing activities: | ||
Proceeds from stock option and warrant exercises | 116,000 | 75,000 |
Principal payments on capital expansion loan | (375,000) | |
Proceeds from sale of common stock | 2,230,000 | |
Proceeds from borrowing on Term Loan B | 1,500,000 | |
Principal repayments on long term financial obligation | (160,000) | (134,000) |
Principal repayments on capital lease obligation | (174,000) | (138,000) |
Net borrowings (repayments) on existing line of credit | (59,000) | 1,434,000 |
Net cash provided by financing activities | 1,578,000 | 2,737,000 |
Net increase (decrease) in cash | (1,365,000) | 857,000 |
Cash at beginning of period | 1,816,000 | 959,000 |
Cash at end of period | 451,000 | 1,816,000 |
Supplemental disclosures of cash flow information: | ||
Interest | 1,746,000 | 1,187,000 |
Non Cash Investing and Financing Activities | ||
Property and equipment acquired through capital expansion loan | 2,442,000 | 915,000 |
Property and equipment acquired through capital lease obligations | 152,000 | 179,000 |
Other current assets acquired through capital expansion loan | 297,000 | |
Fair value of warrants granted as debt discount | 91,000 | 141,000 |
Dividends payable in common stock | 5,000 | 5,000 |
Warrant liability from private financing | $ 543,000 |
Operations and Liquidity
Operations and Liquidity | 12 Months Ended |
Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Liquidity | (1) Operations and Liquidity A) Nature of Operations Reed’s, Inc. (the “Company”) was organized under the laws of the state of Florida in January 1991. In 2001, the Company changed its name from Original Beverage Corporation to Reed’s, Inc. and changed its state of incorporation from Florida to Delaware. The Company is engaged primarily in the business of developing, manufacturing and marketing natural non-alcoholic beverages, as well as candies and ice creams. We currently manufacture, market and sell seven unique product lines: ● Reed’s Ginger Brews, ● Virgil’s Root Beer, Cream Sodas, Dr. Better and Real Cola, including ZERO diet sodas, ● Culture Club Kombucha, ● China Colas, ● Reed’s Ginger candy and ice creams, ● Sonoma Sparkler and other juice based products. The Company sells its products primarily in natural food stores, supermarket chains, and upscale gourmet stores in the United States and Canada. B) Cash and Liquidity The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2016 the Company recorded a net loss of $ 5,009,000 and utilized cash in operations of $2,533,000. As of December 31, 2016, we had a working capital deficiency of $1,563,000 and a stockholders’ deficit of $1,657,000. As of March 31, 2017, the Company had a cash balance of $197,000 and had available borrowing on our existing line of credit of $191,000. On April 21, 2017, the Company issued a convertible note resulting in net proceeds of $3,240,000. Furthermore, during the year ended December 31, 2016, we were able to extend the maturity date of our operating line of credit and our other bank loans through October 21, 2018. We estimate the Company currently has sufficient cash and liquidity to meet its anticipated working capital for the next twelve months. Historically, we have financed our operations primarily through private sales of common stock, preferred stock, a line of credit from a financial institution and cash generated from operations. We anticipate that our primary capital source will be positive cash flow from operations. If our sales goals do not materialize as planned, we believe that the Company can reduce its operating costs and achieve positive cash flow from operations. However, we may not generate sufficient revenues from product sales in the future to achieve profitable operations. If we are not able to achieve profitable operations at some point in the future, we may have insufficient working capital to maintain our operations as we presently intend to conduct them or to fund our expansion, marketing, and product development plans. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | (2) Significant Accounting Policies A) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long term assets and intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. B) Accounts Receivable The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At December 31, 2016 and 2015, the allowance for doubtful accounts and returns and discounts was approximately $256,000 and $356,000, respectively. C) Inventories Inventories are stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and/or our ability to sell the product(s) concerned and production requirements. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. D) Property and Equipment and Related Depreciation Property and equipment is stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: Property and Equipment Type Years of Depreciation Building 39 years Machinery and equipment 5-12 years Vehicles 5 years Office equipment 5-7 years Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2016 the Company recognized a charge of $260,000 for impairments for its property and equipment in anticipation of early retirement of equipment with the Los Angeles plant. There were no charges for equipment impairment prior to that in the prior years. E) Intangible Assets and Impairment Policy Intangible assets are comprised of indefinite-lived brand names acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. These indefinite-lived intangible assets are not amortized, but are assessed for impairment annually and evaluated annually to determine whether the indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If further testing is necessary, we compare the estimated fair value of our indefinite-lived intangible asset with its book value. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. For the years ended December 31, 2016 the Company recognized an impairment charge of $224,000 for the China Cola brand. For 2015, the Company did not recognize any impairment charges for its indefinite-lived intangible assets. F) Concentrations The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2016. The Company may be exposed to risk for the amounts of funds held in bank accounts more than 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 more than the guarantee during the years ended December 31, 2016 and 2015. During the year ended December 31, 2016, the Company had two customers who accounted for approximately 22% and 12% of its sales, respectively; and during the year ended December 31, 2015, the Company had two customers who accounted for approximately 28% and 14% of its sales, respectively. No other customer accounted for more than 10% of sales in either year. As of December 31, 2016, the Company had accounts receivable due from one customer who comprised $719,000 (25%) of its total accounts receivable; and as of December 31, 2015, the Company had accounts receivable due from two customers who comprised $782,000 (24%) and $373,000 (12%), respectively, of its total accounts receivable. No other customer accounted for more than 10% of accounts receivable in either year. During the year ended December 31, 2016, the Company had utilized three separate co-pack packers for most its production and bottling of beverage products in the Eastern United States. Although there are other packers and the Company has outfitted our own brewery and bottling plant, a change in packers may cause a delay in the production process, which could ultimately affect operating results. During the years ended December 31, 2016 and 2015, the Company had one vendor which accounted for approximately 26% and 25%, respectively of purchases. At December 31, 2016 and 2015, the Company had accounts payable due to two vendors who comprised 13% and 10% for the year ended December 31, 2016, and 14% and 12% of its total accounts payable, for the year ended December 31, 2015. No other account was more than 10% of the balance of accounts payable as of December 31, 2016, and December 31, 2015. G) Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and long-term financing obligations approximate their fair values since the interest rates on these obligations are based on prevailing market interest rates. The fair value of the warrant liability of $775,000 at December 31, 2016 was valued using Level 2 inputs. H) Cost of sales Cost of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold consists of direct production costs in excess of charges allocated to finished goods in production. Plant costs include labor costs, production supplies, repairs and maintenance, direct inventory write-off charges and adjustments to the inventory reserve. Charges for labor and overhead allocated to finished goods are determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production of our products are classified as operating expenses. I) Delivery and Handling Expenses Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution after manufacture and are included as part of operating expenses. J) Income Taxes The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. K) Revenue Recognition Revenue is recognized on the sale of a product when the risk of loss transfers to our customers, and collection of the receivable is reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The allowance for returns is regularly reviewed and adjusted by management based on historical trends of returned items. Amounts paid by customers for shipping and handling costs are included in sales. The Company accounts for certain sales incentives for customers, including slotting fees, as a reduction of gross sales. These sales incentives for the years ended December 31, 2016 and 2015 were approximately $3,726,000 and $3,765,000, respectively. L) Net Loss Per Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the years ended December 31, 2016 and 2015, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of the following as of: December 31, 2016 2015 Warrants 803,909 341,261 Series A Preferred Stock 37,644 37,644 Options 1,048,500 980,000 Total 1,890,053 1,358,905 M) Advertising Costs Advertising costs are expensed as incurred and are included in selling expense in the amount of $254,000 and $105,000, for the years ended December 31, 2016 and 2015, respectively. N) Stock Compensation Expense The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. O) Reclassification In presenting the Company’s statement of operations for the year ended December 31, 2015, the Company previously included $235,000 of banking fees as general and administrative expenses. In presenting the Company’s statement of operations for the years ended December 31, 2016 and 2015, the Company has reclassified these expenses to interest expense. P) 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 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20 all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In March 2016, the FASB issued the ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. The ASU also allows for an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Inventory
Inventory | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventory | (3) Inventory Inventory is valued at the lower of cost (first-in, first-out) or market, and is comprised of the following as of: December 31, 2016 December 31, 2015 Raw Materials and Packaging $ 3,874,000 $ 4,411,000 Finished Goods 3,011,000 3,563,000 $ 6,885,000 $ 7,974,000 Consistent with prior years the Company prepaid for glass raw materials that was used in the following year. As of December 31, 2016, there was a balance of $294,000 as compared to a balance of $47,000 for prepaid inventory of as of December 31, 2015. The Company also decreased its reserve for obsolescence for the year ended December 31, 2016 by $175,000 to $115,000 from $290,000, respectively as obsolete inventory was disposed. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | (4) Property and Equipment Property and equipment is comprised of the following as of: December 31, 2016 December 31, 2015 Land $ 1,107,000 $ 1,107,000 Building 1,875,000 1,875,000 Vehicles 600,000 500,000 Machinery and equipment 3,696,000 3,800,000 Equipment under capital leases 226,000 857,000 Office equipment 475,000 469,000 Construction In Progress 4,610,000 977,000 12,589,000 9,585,000 Accumulated depreciation (4,863,000 ) (4,216,000 ) $ 7,726,000 $ 5,369,000 Depreciation expense for the years ended December 31, 2016 and 2015 was $647,000 and $828,000, respectively. In addition, during the year ended December 31, 2016, the Company established a reserve of $260,000 for obsolete equipment in anticipation of the Los Angeles plant completion which is included as part of the cost of goods sold. Accumulated depreciation on equipment held under capital leases was $226,000 and $461,000 as of December 31, 2016, and 2015, respectively. (See note 8). |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (5) Intangible Assets Brand Names Brand names consist of the following three trademarks for natural beverage as of December 31, 2016, and 2015. Virgil’s, China Cola, and Sonoma Sparkler brand names are deemed to have indefinite lives and are not amortized, but are tested for impairment annually. For the year ended December 31, 2016 the Company recognized an impairment charge of $224,000 for its China Cola Brand. The Company did not recognize any impairment for the year ended December 31, 2015. December 31, 2016 December 31, 2015 Virgil’s $ 576,000 $ 576,000 China Cola 224,000 224,000 Sonoma Sparkler 229,000 229,000 Purchased Brands 1,029,000 1,029,000 Less reserve for impairment (224,000 ) - Brand names $ 805,000 $ 1,029,000 |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Notes Payable | (6) Notes Payable The Company has a Loan and Security Agreement with PMC Financial Services Group, LLC (PMC) that provides a $6,000,000 revolving line of credit, a $3,000,000 term loan, and a Capital Expansion loan up to $4,700,000. The loans are secured by substantially all the assets of the Company and become due on January 1, 2019. The notes are as follows: Revolving Line of Credit The agreement provides a $6,000,000 revolving line of credit. At December 31, 2016 and 2015, the aggregate amount outstanding under the line of credit was $4,384,000 and$4,443,000, respectively. The interest rate on the Revolving Loan was the prime rate plus .35% but was modified on December 7, 2016, such that the rate charge will be calculated on a sliding scale based on the trailing 6 month Earnings Before Interest Taxes and Depreciation (“EBITDA”). If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. As of December 31, 2016, our effective rate under the revolving line was 9.5%. The monthly management fee is .45% of the average monthly loan balance. 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 Company’s assets. As of December 31, 2016, the Company had no borrowing availability under the line of credit agreement On April 25, 2016, the Company agreed with PMC to amend the definition of eligible inventory to include certain glass containers in exchange for 10,000 warrants. The total value of the line did not increase and the inclusion of the glass as defined under the amendment expired December 31, 2016. In connection with the agreement, the Company granted PMC 10,000 warrants at an exercise price of $3.90 per share with a term of five years and six months. The 10,000 warrants were valued at $15,000 using the Black Scholes Merton option pricing model and were recorded as a valuation discount. The following assumptions were made in valuing the 10,000 warrants; term of 5.5 years, volatility of 56.35%, expected dividends of 0% and discount rate of 1.50%. The value of the warrants was recorded as a valuation discount at issuance and was fully amortized to interest expense during the year ended December 31, 2016. The line of credit matures on January 1, 2019 and is subject to a 1% prepayment penalty for prepayment prior to the first anniversary of the effective date. Bank Notes Bank notes consist of the following as of December 31, 2016 and 2015: December 31, 2016 December 31, 2015 (A) Term Loans $ 3,000,000 $ 3,000,000 (B) Capex loan 3,950,000 1,883,000 (C) Valuation discount (78,000 ) (132,000 ) Net 6,872,000 4,751,000 Current portion (953,000 ) (341,000 ) Long term portion $ 5,919,000 $ 4,410,000 (A) Term Loans In connection with the Loan and Security Agreement with PMC, the Company entered into two Term Loans of $1,500,000 each, for an aggregate borrowing of $3,000,000. The term loans are secured by all of the unencumbered assets of the Company and are due on January 1, 2019. The annual interest rate on the first loan was prime plus 5.75% (currently 9.5%), and the rate on the second loan was prime plus 11.60% (currently 14.85%) but was modified on December 7, 2016 such that the new rate will be based on the trailing 6 month EBITDA. If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. As of December 31, 2016, and 2015, the amount outstanding was $3,000,000 and $3,000,000 respectively. (B) Capital Expansion (“CAPEX”) Loan In connection with the Loan and Security Agreement with PMC, the Company entered into a Capital expansion loan which, after amendment allows a total borrowing of $4,700,000. The loans are secured by all of the property and equipment purchased under the loan. The interest rate on the CAPEX loan is the prime rate plus 5.75% (9.5% at December 31, 2016). Interest only is payable on CAPEX Loans through January 31, 2017, at which time principal and interest will be aggregated and repaid in equal monthly payments of principal and interest based on 48 month amortization. Currently, the estimated amount that will become due in a year is $953,000. At December 31, 2016 and 2015, the balance on the CAPEX loan balance was $3,950,000 and $1,883,000 respectively, and as of December 31, 2016, the Company had future borrowing availability of $750,000. In addition, Reed’s agreed to pre-pay the CAPEX Loan by at least $300,000 from the proceeds of the sale of idle equipment, if such sale were to occur. In conjunction with this loan the Company placed equipment with a cost of $250,000 at a co-packing facility to enable the co-packer to manufacture our products. Should the Company be unable to secure access to the equipment in the event of failure of the co-packer, the amount will become due and payable by the Company immediately. (C) Issuance of Warrants upon Amendments On November 9, 2015, as part of restructuring of the Term Loans with PMC, the Company granted PMC 125,000 warrants at an exercise price of $4.50 per share for five years and six months. The 125,000 warrants were valued at $141,000 using the Black Scholes Merton option pricing model and were recorded as a valuation discount. The following assumptions were made in valuing the 125,000 warrants; term of 5.5 years, volatility of 56.04%, expected dividends 0% and discount rate of 0.68%. The value of the warrants of $141,000 was recorded as a valuation discount and is being amortized over the remaining 16 months of the term loans. On May 13, 2016, as part of a further restructuring of the loans with PMC, the Company granted PMC 50,000 warrants at an exercise price of $4.50 per share with a term of five years and six months. The 50,000 warrants were valued at $38,000 using the Black Scholes Merton option pricing model and were recorded as a valuation discount. The following assumptions were made in valuing the 50,000 warrants; term of 5.5 years, volatility of 54.17%, expected dividends of 0% and discount rate of 1.49%. The value of the warrants of $38,000 was recorded as a valuation discount and is being amortized over the remaining term of the loans. On December 7, 2016, the Company agreed to reprice the exercise price of 50,000 common stock purchase warrants granted under Amendment Twelve from $4.50 to $4.10 and to reprice the exercise price of 125,000 common stock purchase warrants granted under Amendment Ten from $5.01 to $4.10. The following assumptions were made in repricing the warrants; term of 3.5 years, volatility of 49.52%, expected dividends 0% and discount rate of 0.74%. The incremental value of the warrants before and after the modification of $38,000 will be amortized over the remaining 24 months of the term loans. Reed’s also agreed to pay a one-time fee of $35,000. During the years ended December 31, 2016 and 2015 amortization of the discount was $130,000 and $9,000 respectively, and the unamortized discount was $78,000 and $132,000 as of December 31, 2016 and 2015, respectively. (D) Interest Rates Notwithstanding the other borrowing terms above, if Excess Borrowing Availability under the $6 million Revolving line of credit remains more than $1,500,000 at all times during the preceding month (currently Reed’s Borrowing Availability is zero) the additional interest rate for all loans will be eliminated. The following chart summarizes the loans as of December 31, 2016, Description Base Interest Rate Increase in Prime Original rate Additional Interest Current rate Term A 9.00 % 0.50 % 9.50 % 3.00 % 12.50 % Term B 11.60 % 0.50 % 12.10 % 3.00 % 15.10 % Line of Credit (Prime Plus) 0.35 % 3.75 % 4.10 % 3.00 % 7.10 % Capital Loans 9.00 % 0.50 % 9.50 % 3.00 % 12.50 % |
Long term Financing Obligation
Long term Financing Obligation | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Long term Financing Obligation | (7) Long Term Financing Obligation Long term financing obligation is comprised of the following as of: December 31, 2016 2015 Financing obligation $ 2,378,000 $ 2,538,000 Valuation discount (825,000 ) (935,000 ) Net long term financing obligation $ 1,553,000 $ 1,603,000 Less current portion (190,000 ) (160,000 ) Long term financing obligation $ 1,363,000 $ 1,443,000 On June 15, 2009, the Company closed escrow on the sale of its two buildings and its brewery equipment and concurrently entered 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, former Chief Executive Officer and current Chief Innovation 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. Amortization of valuation discount was $50,000 during both of the years ended December 31, 2016 and 2015. 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 Office, 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 and were recorded as a valuation discount. 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. The aggregate amount due under the financing obligation at December 31, 2016 and 2015 was $2,377,000 and $2,538,000, respectively. Aggregate future obligations under the financing obligation are as follows: Year Amount 2017 $ 190,000 2018 222,000 2019 259,000 2020 299,000 2021 344,000 Thereafter 1,064,000 Total $ 2,378,000 |
Obligations Under Capital Lease
Obligations Under Capital Leases | 12 Months Ended |
Dec. 31, 2016 | |
Leases [Abstract] | |
Obligations Under Capital Leases | (8) Obligations Under Capital Leases The Company leases equipment for its brewery operations with an aggregate value of $903,000 under 10 non-cancelable capital leases. In addition, the company leases vehicles and office equipment with rates and monthly payments range from $189 to $10,441 per month, including interest, at interest rates ranging from 3.50% to 17.31% per annum. The principal balance due under these leases was $621,000 and $643,000 at December 31, 2016 and 2015, respectively. At December 31, 2016, monthly payments under these leases aggregated $19,000. The leases expire at various dates through 2021. Future minimum lease payments under capital leases are as follows: Years Ending December 31, 2017 $ 223,000 2018 227,000 2019 190,000 2020 62,000 2021 6,000 Total payments $ 708,000 Less: Amount representing interest (87,000 ) Present value of net minimum lease payments $ 621,000 Less: Current portion (183,000 ) Non-current portion $ 438,000 |
Warrant Liability
Warrant Liability | 12 Months Ended |
Dec. 31, 2016 | |
Warrant Liability | |
Warrant Liability | (9) Warrant Liability The Company issued warrants to investors and a placement agent as part of our June 2, 2016 financing transaction. In accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), the fair value of these warrants are classified as a liability on the Company’s balance sheet as according to the warrant terms, a fundamental transaction could give rise to an obligation of the Company to pay cash to such warrant holders. Corresponding changes to the fair value of the warrants are recognized in earnings on the Company’s statements of operations in each subsequent period. The warrant liability was valued at the following dates using Black-Scholes-Merton option pricing model with the following average assumptions: Issuance Date December 31, 2016 Stock Price $ 3.34 $ 4.10 Risk free interest rate 1.50 % 1.58 % Expected Volatility 55.82 % 55.81 % Expected life in years 5 4.42 Expected dividend yield 0 % 0 % Fair Value – Warrants $ 543,000 $ 775,000 The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the warrant was determined by the remaining contractual life of the warrant instrument. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | (10) Stockholders’ Equity Preferred Stock Series A Series A Preferred stock consists of 500,000 shares $10.00 par value, 5% non-cumulative, participating, preferred stock. As of December 31, 2016, and 2015, there were 9,411 shares outstanding, with a liquidation preference of $10.00 per share. Each share of Series A Preferred stock can be converted into four shares of Reed’s common stock. The Series A Preferred shares have a 5% pro-rata annual non-cumulative dividend. The dividend can be paid in cash or, in the sole and absolute discretion of our board of directors, in shares of common stock based on its then fair market value. We cannot declare or pay any dividend on shares of our securities ranking junior to the preferred stock until the holders of our preferred stock have received the full non-cumulative dividend to which they are entitled. In addition, the holders of our preferred stock are entitled to receive pro rata distributions of dividends on an “as converted” basis with the holders of our common stock. During the year ended December 31, 2016 the Company accrued and paid a $5,000 dividend 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 enough such shares to affect the conversion of all outstanding shares of Series A preferred stock. During 2016, no shares of Series A preferred stock were converted into common stock. Except as provided by law, the holders of our Series A preferred stock do not have the right to vote on any matters, including, without limitation, the election of directors. However, so long as any shares of Series A preferred stock are outstanding, we shall not, without first obtaining the approval of at least a majority of the holders of the Series A preferred stock, authorize or issue any equity security having a preference over the Series A preferred stock with respect to dividends, liquidation, redemption or voting, including any other security convertible into or exercisable for any equity security other than any senior preferred stock. Common Stock Common stock consists of $.0001 par value, 19,500,000 shares authorized, 13,982,230 shares outstanding as of December 31, 2016, and 13,160,860 shares outstanding as of December 31, 2015. During the year ended December 31, 2016, the Company entered into a securities purchase agreement with institutional investors in a private financing transaction for the issuance and sale of 692,412 shares of the Company’s common stock and warrants to purchase 346,206 shares of common stock. The net proceeds to the Company from the offering were $2,113,000 after deducting underwriting discounts, commissions and offering expenses. The investor warrants have an exercise price of $4.25 per share and a term of 5 years. As per the terms of the offering, the placement agent received 72,703 warrants and a term of 5 years at an exercise price of $3.74. In connection with the issuance of the warrants, the Company recorded a warrant liability on its balance sheet as a fundamental transaction could give rise to an obligation of the Company to pay cash to such warrant holders. Corresponding changes to the fair value of the warrants are recognized in earnings on the Company’s statements of operations in each subsequent period. The Company determined the aggregate initial fair value of the warrants in the financing transaction to be $543,000 valued using Black-Scholes-Merton option pricing model. For financial statement purposes, the amount of the warrant liability created from the issuance of the warrants of $543,000 has been offset to the net cash proceeds received of $2,113,000, resulting in a reduction of additional paid-in capital of $543,000 from the sale of the shares of common stock and warrants. During the year ended December 31, 2016, the Company sold 30,000 shares of its common stock to certain officers of the Company at $3.90 per share with total proceeds of $117,000. During the year ended December 31, 2016, the Company issued 4,228 shares of common stock for consulting services valued at an aggregate value of $15,000 for services rendered. |
Stock Options and Warrants
Stock Options and Warrants | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Warrants | (11) Stock Options and Warrants A) Stock Options In 2007, the Company adopted the Reed’s Inc. 2007 Stock Option Plan and in 2015 the Company adopted the Reed’s Inc. 2015 Incentive and Non-statutory Stock Option Plan (the “Plans”). The options under both plans shall be granted from time to time by the Board of Directors. Individuals eligible to receive options include employees of the Company, consultants to the Company and directors of the Company. The options shall have a fixed price, which will not be less than 100% of the fair market value per share on the grant date or 110% of the fair market value per share on the grant date for Chief Executive Officer of the Company. The total number of options authorized is 1,500,000 and 500,000, respectively for the Plans. During the years ended December 31, 2016 and 2015, the Company granted 172,500 and 548,000 options, respectively, to purchase the Company’s common stock at a weighted exercise price of $4.01 and $5.63, respectively, to employees under the Plans. The fair value of the options granted during the years ended December 31, 2016 and 2015 was $714,000 and $1,398,000, respectively. The weighted-average grant date fair value of options granted during 2016 and 2015 was $4.01 and $2.54, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table. For purposes of determining the expected life of the option, an average of the estimated holding period is used. The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. Year ended December 31, 2016 2015 Expected volatility 57 % 56 - 62% Expected dividends — — Expected average term (in years) 1.77 3.5 - 4.5 Risk free rate - average 0.77%-1.81% 0.69% - 1.64% Forfeiture rate 0 0 The aggregate fair value of the options vesting, net of forfeitures, during the years ended December 31, 2016 and 2015 was $658,000 and $877,000, respectively, and has been reflected as compensation cost. As of December 31, 2016, the aggregate value of unvested options was $700,000 which will be amortized as compensation cost as the options vest, over 2 to 4 years. During the year ended December 31, 2016 there were 84,000 options exercised into 76,966 shares of common stock at an average price of $1.37. Most of such exercises were cash-less, however, the Company did receive proceeds from certain exercises aggregating $71,000. During the year ended December 31, 2015 there were 135,833 stock options exercised on a cashless basis at exercise prices between $1.14 and $4.60 per share, issuing 57,112 shares of common stock. A summary of option activity as of December 31, 2016, and changes during the two years then ended is presented below: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 705,333 $ 3.96 Granted 548,000 5.01 Exercised (135,833 ) 3.36 Forfeited or expired (137,500 ) 4.85 Outstanding at December 31, 2015 980,000 3.96 3.41 $ 843,000 Granted 172,500 4.01 Exercised (84,000 ) 1.36 Forfeited or expired (20,000 ) 4.92 Outstanding at December 31, 2016 1,048,500 $ 4.68 3.80 $ 61,000 Exercisable at December 31, 2016 543,534 $ 4.61 3.04 $ 39,000 As of December 31, 2016, the aggregate intrinsic values of $61,000 was calculated as the difference between the market price and the exercise price of the Company’s stock, which was $4.10 as of December 31, 2016. A summary of the status of the Company’s non-vested shares granted under the Company’s stock option plan as of December 31, 2016 and changes during the year then ended is presented below: Additional information regarding options outstanding as of December 31, 2016, is as follows: Shares Weighted- Average Grant Date Fair Value Nonvested at December 31, 2015 661,083 $ 2.41 Granted 172,500 4.01 Vested (316,117 ) 4.61 Forfeited (12,500 ) 4.92 Nonvested at December 31, 2016 504,966 $ 4.68 B) Warrants Options Outstanding at December 31, 2016 Options Exercisable at December 31, 2016 Range of Exercise Price Number of Shares Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $2.00 - $3.99 237,500 6.27 $ 3.83 143,700 $ 3.89 $4.00 - $5.99 811,000 3.08 $ 4.93 399,834 $ 4.87 1,048,500 3.80 $ 4.68 543,534 $ 4.61 On June 2, 2016, the Company granted warrants to purchase 346,206 shares of common stock in connection with the common stock offering. The warrants have an exercise price of $4.25 per share and a term of 5 years. In addition, the Company granted Maxim Group LLC who acted as the placement agent for the offering warrants to purchase up to 72,703 shares of common stock at an exercise price of $3.74 and are exercisable for a term of 5 years. The exercise prices of the warrants are subject to customary adjustments in the event of stock dividends and splits, and the warrants contain protective provisions in the event of fundamental transactions. During the year ended December 31, 2016, 16,260 warrants were exercised into 16,260 shares of common stock for $45,000. The following table summarizes warrant activity for the two years ended December 31, 2016: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31,2014 301,963 $ 4.49 Granted 125,000 $ 4.50 Exercised (34,692 ) Forfeited or expired (51,010 ) - Outstanding at December 31, 2015 341,261 $ 5.17 3.30 $ 152,000 Granted 478,909 $ 4.50 Exercised (16,260 ) $ 2.77 Forfeited or expired (1 ) Outstanding at December 31, 2016 803,909 $ 4.50 4.00 $ 26,000 Exercisable at December 31, 2016 803,909 $ 4.54 4.20 $ 26,000 As of December 31, 2016, the aggregate intrinsic value of $26,000 for both outstanding and exercisable was calculated as the difference between the market price of the company which was $4.10 and the exercise price. The following table summarizes the outstanding warrants to purchase Common Stock at December 31, 2016: Number Price Expiration Dates 200,000 $ 5.60 Sep-19 125,000 $ 4.10 May-21 10,000 $ 3.90 Oct-21 50,000 $ 4.10 Nov-21 346,206 $ 4.25 Jun-21 72,703 $ 3.74 Jun-21 803,909 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (12) Income Taxes At December 31, 2016 and 2015, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $21.3 million and $18.6 million for Federal purposes, respectively, and $14.5 million and $13.3 million for state purposes respectively. The Federal carryforward expires in 2034 and the state carryforward expires in 2019. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized a deferred tax asset for this benefit. Effective January 1, 2007, the Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, 2016 and 2015, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption. The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, 2016, and 2015, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years 2009 through 2016 remain open to examination by the major taxing jurisdictions to which the Company is subject. Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time. Significant components of the Company’s deferred income tax assets are as follows as of: December 31, 2016 December 31 2015 Deferred income tax asset: Net operating loss carryforward $ 10,325,000 $ 9,034,000 Valuation allowance (10,325,000 ) (9,034,000 ) Net deferred income tax asset $ 0 $ 0 Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: December 31, 2016 December 31 2015 Federal Statutory tax rate (34 %) (34 %) State tax, net of federal benefit (5 %) (5 %) (39 %) (39 %) Valuation allowance 39 % 39 % Effective tax rate -% -% |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (13) Commitments and Contingencies Lease Commitments The Company leases warehouse space under non-cancelable operating leases. Rental expense under these and other operating leases for the years ended December 31, 2016 and 2015 was $137,000 and $209,000, respectively. These leases expire in November 2017. Future payments under these leases as of December 31, 2016, are as follows: Year ending December 31, Amount 2017 $ 137,000 2018 - Total $ 137,000 Other Commitments The Company has entered into contracts with customers with clauses that commit the Company to pay fees if the Company terminates the agreement early or without cause. The contracts call for the customer to have the right to distribute the Company’s products to a defined type of retailer within a defined geographic region. If the Company should terminate the contract or not automatically renew the agreements without cause, amounts would be due to the customer. As of December 31, 2016 and 2015, the Company has no plans to terminate or not renew any agreement with any of their customers; therefore, no such fees have been accrued in the accompanying financial statements. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | (14) Legal Proceedings From time to time, we are a party to claims and legal proceedings arising in the ordinary course of business. Our management evaluates our exposure to these claims and proceedings individually and in the aggregate and provides for potential losses on such litigation if the amount of the loss is estimable and the loss is probable. We believe that there are no material litigation matters at the current time. Although the results of such litigation matters and claims cannot be predicted with certainty, we believe that the final outcome of such claims and proceedings will not have a material adverse impact on our financial position, liquidity, or results of operations. |
Related Party Activity
Related Party Activity | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Activity | (15) Related Party Activity During the year, Judy Reed, wife of Christopher J. Reed, served as Corporate Secretary along with being a member of the Board of Directors. Her replacement to the board was elected November 29, 2017 and she has agreed to remain as Corporate Secretary until a replacement can be found. Complete compensation information follows below in Part III. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | (16) Subsequent Events On April 19, 2017, three accredited investors that are party to that certain Securities Purchase Agreement dated May 26, 2016 and hold participation rights in the Company’s financing transactions agreed to waive their participation rights with regard to the April 21, 2017 financing. In consideration, these investors’ participation rights, expiring in May 2017, were extended for a period of two years. In addition, the Company increased the terms of their outstanding warrants by one year and reduced the exercise price from $4.25 to $3.00 and also issued five-year warrants to purchase an aggregate of 210,111 shares of common stock at the exercise price of $3.00 to these investors. The newly issued warrants contain customary anti-dilution provisions. After December 31, 2016 Chris Reed (CEO) and Daniel Miles (CFO) advanced working capital funds of $381,000 and $120,000 respectively to the Company for working capital uses. Chris Reed will be repaid $240,000 in April 2017 and the remainder for both Chris Reed and Daniel Miles will be repaid by the end of this year. On April 19, 2017, Chris Reed resigned from his position as Chief Executive Officer of Reed’s, effective immediately. Concurrently, Mr. Reed was appointed as Chief Innovation Officer. Mr. Reed will continue to serve as non-independent director of Reed’s Board of Directors. On April 19, 2017, Stefan Freeman, one of the Company’s independent directors, was appointed as interim Chief Executive Officer of Reed’s. On April 21, 2017 (“Closing Date”), pursuant to a Securities Purchase Agreement (“Purchase Agreement”), Reed’s Inc., a Delaware corporation (“Reed’s” or the “Company”) sold and issued a convertible subordinated note in the principal amount of $3,400,000 (“Note”) and warrants to purchase 1,416,667 shares of common stock (“Warrant Shares”) to Raptor/ Harbor Reeds SPV, LLC. The Note bears interest at a rate of 12% per annum, compounded monthly on a 365-day year/ 30-day month basis. The Note is secured by a second priority security interest in the Company’s assets, which is subordinate to the first priority security interest of PMC Financial Services Group, LLC. The Note matures on the two-year anniversary of the Closing date and may not be prepaid. After 180 days, the Note may be converted, at any time and from time to time, into 1,133,333 shares of common stock of the Company (“Conversion Shares”). The Warrants will expire on the fifth (5th) anniversary of the Closing Date and have an exercise price equal to $4.00. Warrants will not be exercisable until 180 days after the Closing date. The Note and Warrant contain customary anti-dilution provisions and the Conversion Shares and Warrant Shares are subject to a registration rights agreement. The investor was granted a right to participate in future financing transactions of the Company for a term of two years. To facilitate the close of the agreement between Reed’s Inc. and Raptor/ Harbor Reeds SPV LLC, Reed’s Inc. granted an acceleration of the maturity of existing indebtedness with PMC from January 1, 2019 to October 21, 2018. The fair value of the warrants and conversion feature was determined to be $3,400,000 and will be recorded as a valuation discount and amortized as interest expense over the term of the note. The Company intends to use the net proceeds from the offering of approximately $3,240,000 for working capital and general corporate purposes. Wunderlich Securities, the Company’s placement agent, will receive a fee of approximately $160,000 of the gross proceeds. |
Significant Accounting Polici23
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates | A) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long term assets and intangibles, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. |
Accounts Receivable | B) Accounts Receivable The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding. The allowance for doubtful accounts and returns and discounts is established through a provision reducing the carrying value of receivables. At December 31, 2016 and 2015, the allowance for doubtful accounts and returns and discounts was approximately $256,000 and $356,000, respectively. |
Inventories | C) Inventories Inventories are stated at the lower of cost to purchase and/or manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and/or our ability to sell the product(s) concerned and production requirements. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market conditions or other factors, which may result in cancellations of advance orders or a reduction in the rate of reorders placed by customers. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. |
Property and Equipment and Related Depreciation | D) Property and Equipment and Related Depreciation Property and equipment is stated at cost. Expenditures for major renewals and improvements that extend the useful lives of property and equipment or increase production capacity are capitalized, and expenditures for repairs and maintenance are charged to expense as incurred. Depreciation is calculated using accelerated and straight-line methods over the estimated useful lives of the assets as follows: Property and Equipment Type Years of Depreciation Building 39 years Machinery and equipment 5-12 years Vehicles 5 years Office equipment 5-7 years Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2016 the Company recognized a charge of $260,000 for impairments for its property and equipment in anticipation of early retirement of equipment with the Los Angeles plant. There were no charges for equipment impairment prior to that in the prior years. |
Intangible Assets and Impairment Policy | E) Intangible Assets and Impairment Policy Intangible assets are comprised of indefinite-lived brand names acquired and have been assigned an indefinite life as we currently anticipate that these brand names will contribute cash flows to the Company perpetually. These indefinite-lived intangible assets are not amortized, but are assessed for impairment annually and evaluated annually to determine whether the indefinite useful life is appropriate. As part of our impairment test, we first assess qualitative factors to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If further testing is necessary, we compare the estimated fair value of our indefinite-lived intangible asset with its book value. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, as determined by its discounted cash flows, an impairment loss is recognized in an amount equal to that excess. For the years ended December 31, 2016 the Company recognized an impairment charge of $224,000 for the China Cola brand. For 2015, the Company did not recognize any impairment charges for its indefinite-lived intangible assets. |
Concentrations | F) Concentrations The Company’s cash balances on deposit with banks are guaranteed by the Federal Deposit Insurance Corporation up to $250,000 at December 31, 2016. The Company may be exposed to risk for the amounts of funds held in bank accounts more than 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 more than the guarantee during the years ended December 31, 2016 and 2015. During the year ended December 31, 2016, the Company had two customers who accounted for approximately 22% and 12% of its sales, respectively; and during the year ended December 31, 2015, the Company had two customers who accounted for approximately 28% and 14% of its sales, respectively. No other customer accounted for more than 10% of sales in either year. As of December 31, 2016, the Company had accounts receivable due from one customer who comprised $719,000 (25%) of its total accounts receivable; and as of December 31, 2015, the Company had accounts receivable due from two customers who comprised $782,000 (24%) and $373,000 (12%), respectively, of its total accounts receivable. No other customer accounted for more than 10% of accounts receivable in either year. During the year ended December 31, 2016, the Company had utilized three separate co-pack packers for most its production and bottling of beverage products in the Eastern United States. Although there are other packers and the Company has outfitted our own brewery and bottling plant, a change in packers may cause a delay in the production process, which could ultimately affect operating results. During the years ended December 31, 2016 and 2015, the Company had one vendor which accounted for approximately 26% and 25%, respectively of purchases. At December 31, 2016 and 2015, the Company had accounts payable due to two vendors who comprised 13% and 10% for the year ended December 31, 2016, and 14% and 12% of its total accounts payable, for the year ended December 31, 2015. No other account was more than 10% of the balance of accounts payable as of December 31, 2016, and December 31, 2015. |
Fair Value of Financial Instruments | G) Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, short-term bank loans, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of capital lease obligations and long-term financing obligations approximate their fair values since the interest rates on these obligations are based on prevailing market interest rates. The fair value of the warrant liability of $775,000 at December 31, 2016 was valued using Level 2 inputs. |
Cost of Sales | H) Cost of sales Cost of goods sold is comprised of the costs of raw materials and packaging utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Additionally, cost of goods sold consists of direct production costs in excess of charges allocated to finished goods in production. Plant costs include labor costs, production supplies, repairs and maintenance, direct inventory write-off charges and adjustments to the inventory reserve. Charges for labor and overhead allocated to finished goods are determined on a market cost basis, which may be lower than the actual costs incurred. Plant costs in excess of production allocations are expensed in the period incurred rather than added to the cost of finished goods produced. Expenses not related to the production of our products are classified as operating expenses. |
Delivery and Handling Expenses | I) Delivery and Handling Expenses Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution after manufacture and are included as part of operating expenses. |
Income Taxes | J) Income Taxes The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. |
Revenue Recognition | K) Revenue Recognition Revenue is recognized on the sale of a product when the risk of loss transfers to our customers, and collection of the receivable is reasonably assured, which generally occurs when the product is shipped. A product is not shipped without an order from the customer and credit acceptance procedures performed. The allowance for returns is regularly reviewed and adjusted by management based on historical trends of returned items. Amounts paid by customers for shipping and handling costs are included in sales. The Company accounts for certain sales incentives for customers, including slotting fees, as a reduction of gross sales. These sales incentives for the years ended December 31, 2016 and 2015 were approximately $3,726,000 and $3,765,000, respectively. |
Net Loss Per Share | L) Net Loss Per Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is antidilutive. For the years ended December 31, 2016 and 2015, the calculations of basic and diluted loss per share are the same because potential dilutive securities would have an anti-dilutive effect. The potentially dilutive securities consisted of the following as of: December 31, 2016 2015 Warrants 803,909 341,261 Series A Preferred Stock 37,644 37,644 Options 1,048,500 980,000 Total 1,890,053 1,358,905 |
Advertising Costs | M) Advertising Costs Advertising costs are expensed as incurred and are included in selling expense in the amount of $254,000 and $105,000, for the years ended December 31, 2016 and 2015, respectively. |
Stock Compensation Expense | N) Stock Compensation Expense The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. |
Reclassification | O) Reclassification In presenting the Company’s statement of operations for the year ended December 31, 2015, the Company previously included $235,000 of banking fees as general and administrative expenses. In presenting the Company’s statement of operations for the years ended December 31, 2016 and 2015, the Company has reclassified these expenses to interest expense. |
Recent Accounting Pronouncements | P) 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 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, and ASU 2016-20 all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. The standard can be adopted either retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). The Company is currently in the process of analyzing the information necessary to determine the impact of adopting this new guidance on its financial position, results of operations, and cash flows. The Company will adopt the provisions of this statement in the first quarter of fiscal 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest period presented in the financial statements. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. In March 2016, the FASB issued the ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in this ASU require, among other things, that all income tax effects of awards be recognized in the income statement when the awards vest or are settled. The ASU also allows for an employer to repurchase more of an employee’s shares than it can today for tax withholding purposes without triggering liability accounting and allows for a policy election to account for forfeitures as they occur. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted for any entity in any interim or annual period. The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Significant Accounting Polici24
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Estimated Useful Lives of Property and Equipment and Related Depreciation | Property and Equipment Type Years of Depreciation Building 39 years Machinery and equipment 5-12 years Vehicles 5 years Office equipment 5-7 years |
Schedule of Potentially Dilutive Securities | The potentially dilutive securities consisted of the following as of: December 31, 2016 2015 Warrants 803,909 341,261 Series A Preferred Stock 37,644 37,644 Options 1,048,500 980,000 Total 1,890,053 1,358,905 |
Inventory (Tables)
Inventory (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory is valued at the lower of cost (first-in, first-out) or market, and is comprised of the following as of: December 31, 2016 December 31, 2015 Raw Materials and Packaging $ 3,874,000 $ 4,411,000 Finished Goods 3,011,000 3,563,000 $ 6,885,000 $ 7,974,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment is comprised of the following as of: December 31, 2016 December 31, 2015 Land $ 1,107,000 $ 1,107,000 Building 1,875,000 1,875,000 Vehicles 600,000 500,000 Machinery and equipment 3,696,000 3,800,000 Equipment under capital leases 226,000 857,000 Office equipment 475,000 469,000 Construction In Progress 4,610,000 977,000 12,589,000 9,585,000 Accumulated depreciation (4,863,000 ) (4,216,000 ) $ 7,726,000 $ 5,369,000 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets Trademarks | The Company did not recognize any impairment for the year ended December 31, 2015. December 31, 2016 December 31, 2015 Virgil’s $ 576,000 $ 576,000 China Cola 224,000 224,000 Sonoma Sparkler 229,000 229,000 Purchased Brands 1,029,000 1,029,000 Less reserve for impairment (224,000 ) - Brand names $ 805,000 $ 1,029,000 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Notes Payable [Abstract] | |
Schedule of Bank Notes | Bank notes consist of the following as of December 31, 2016 and 2015: December 31, 2016 December 31, 2015 (A) Term Loans $ 3,000,000 $ 3,000,000 (B) Capex loan 3,950,000 1,883,000 (C) Valuation discount (78,000 ) (132,000 ) Net 6,872,000 4,751,000 Current portion (953,000 ) (341,000 ) Long term portion $ 5,919,000 $ 4,410,000 |
Schedule of Interest Rates of Loans | The following chart summarizes the loans as of December 31, 2016, Description Base Interest Rate Increase in Prime Original rate Additional Interest Current rate Term A 9.00 % 0.50 % 9.50 % 3.00 % 12.50 % Term B 11.60 % 0.50 % 12.10 % 3.00 % 15.10 % Line of Credit (Prime Plus) 0.35 % 3.75 % 4.10 % 3.00 % 7.10 % Capital Loans 9.00 % 0.50 % 9.50 % 3.00 % 12.50 % |
Long Term Financing Obligation
Long Term Financing Obligation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Long Term Financing Obligation | Long term financing obligation is comprised of the following as of: December 31, 2016 2015 Financing obligation $ 2,378,000 $ 2,538,000 Valuation discount (825,000 ) (935,000 ) Net long term financing obligation $ 1,553,000 $ 1,603,000 Less current portion (190,000 ) (160,000 ) Long term financing obligation $ 1,363,000 $ 1,443,000 |
Schedule of Aggregate Future Obligations Under the Financing Obligation | The aggregate amount due under the financing obligation at December 31, 2016 and 2015 was $2,377,000 and $2,538,000, respectively. Aggregate future obligations under the financing obligation are as follows: Year Amount 2017 $ 190,000 2018 222,000 2019 259,000 2020 299,000 2021 344,000 Thereafter 1,064,000 Total $ 2,378,000 |
Obligations Under Capital Lea30
Obligations Under Capital Leases (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
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, 2017 $ 223,000 2018 227,000 2019 190,000 2020 62,000 2021 6,000 Total payments $ 708,000 Less: Amount representing interest (87,000 ) Present value of net minimum lease payments $ 621,000 Less: Current portion (183,000 ) Non-current portion $ 438,000 |
Warrant Liability (Tables)
Warrant Liability (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Warrant Liability | |
Schedule of Warrant Liability Using Assumptions | The warrant liability was valued at the following dates using Black-Scholes-Merton option pricing model with the following average assumptions: Issuance Date December 31, 2016 Stock Price $ 3.34 $ 4.10 Risk free interest rate 1.50 % 1.58 % Expected Volatility 55.82 % 55.81 % Expected life in years 5 4.42 Expected dividend yield 0 % 0 % Fair Value – Warrants $ 543,000 $ 775,000 |
Stock Options and Warrants (Tab
Stock Options and Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Fair Value of Option Award Valuation Assumptions | The risk-free rate for periods within the contractual life of the options is based on the U. S. Treasury yield in effect at the time of the grant. Year ended December 31, 2016 2015 Expected volatility 57 % 56 - 62% Expected dividends — — Expected average term (in years) 1.77 3.5 - 4.5 Risk free rate - average 0.77%-1.81% 0.69% - 1.64% Forfeiture rate 0 0 |
Schedule of Stock Option Activity | A summary of option activity as of December 31, 2016, and changes during the two years then ended is presented below: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 705,333 $ 3.96 Granted 548,000 5.01 Exercised (135,833 ) 3.36 Forfeited or expired (137,500 ) 4.85 Outstanding at December 31, 2015 980,000 3.96 3.41 $ 843,000 Granted 172,500 4.01 Exercised (84,000 ) 1.36 Forfeited or expired (20,000 ) 4.92 Outstanding at December 31, 2016 1,048,500 $ 4.68 3.80 $ 61,000 Exercisable at December 31, 2016 543,534 $ 4.61 3.04 $ 39,000 |
Schedule of Nonvested Shares Granted Under the Stock Option Plan | Additional information regarding options outstanding as of December 31, 2016, is as follows: Shares Weighted- Average Grant Date Fair Value Nonvested at December 31, 2015 661,083 $ 2.41 Granted 172,500 4.01 Vested (316,117 ) 4.61 Forfeited (12,500 ) 4.92 Nonvested at December 31, 2016 504,966 $ 4.68 |
Schedule of Information Regarding Stock Options | Options Outstanding at December 31, 2016 Options Exercisable at December 31, 2016 Range of Exercise Price Number of Shares Outstanding Weighted Average Remaining Contractual Life (years) Weighted Average Exercise Price Number of Shares Exercisable Weighted Average Exercise Price $2.00 - $3.99 237,500 6.27 $ 3.83 143,700 $ 3.89 $4.00 - $5.99 811,000 3.08 $ 4.93 399,834 $ 4.87 1,048,500 3.80 $ 4.68 543,534 $ 4.61 |
Schedule of Stock Warrants Activity | The following table summarizes warrant activity for the two years ended December 31, 2016: Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31,2014 301,963 $ 4.49 Granted 125,000 $ 4.50 Exercised (34,692 ) Forfeited or expired (51,010 ) - Outstanding at December 31, 2015 341,261 $ 5.17 3.30 $ 152,000 Granted 478,909 $ 4.50 Exercised (16,260 ) $ 2.77 Forfeited or expired (1 ) Outstanding at December 31, 2016 803,909 $ 4.50 4.00 $ 26,000 Exercisable at December 31, 2016 803,909 $ 4.54 4.20 $ 26,000 |
Schedule of Outstanding Warrants to Purchase Common Stock | The following table summarizes the outstanding warrants to purchase Common Stock at December 31, 2016: Number Price Expiration Dates 200,000 $ 5.60 Sep-19 125,000 $ 4.10 May-21 10,000 $ 3.90 Oct-21 50,000 $ 4.10 Nov-21 346,206 $ 4.25 Jun-21 72,703 $ 3.74 Jun-21 803,909 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Deferred Income Tax Assets | Significant components of the Company’s deferred income tax assets are as follows as of: December 31, 2016 December 31 2015 Deferred income tax asset: Net operating loss carryforward $ 10,325,000 $ 9,034,000 Valuation allowance (10,325,000 ) (9,034,000 ) Net deferred income tax asset $ 0 $ 0 |
Schedule of Reconciliation of Effective Income Tax Rate to U.S. Statutory Rate | Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: December 31, 2016 December 31 2015 Federal Statutory tax rate (34 %) (34 %) State tax, net of federal benefit (5 %) (5 %) (39 %) (39 %) Valuation allowance 39 % 39 % Effective tax rate -% -% |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Payments Under Operating Leases | Future payments under these leases as of December 31, 2016, are as follows: Year ending December 31, Amount 2017 $ 137,000 2018 - Total $ 137,000 |
Operations and Liquidity (Detai
Operations and Liquidity (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Net loss | $ 5,009,000 | $ 3,961,000 | |
Net cash provided by (used in) operating activities | 2,533,000 | 1,348,000 | |
Working capital deficiency | 1,563,000 | ||
Stockholders' deficit | 1,657,000 | (785,000) | $ (3,652,000) |
Cash balance | 451,000 | 1,816,000 | $ 959,000 |
Line of credit | 4,384,000 | $ 4,443,000 | |
March 31, 2017 [Member] | |||
Cash balance | 197,000 | ||
Line of credit | 191,000 | ||
April 21, 2017 [Member] | |||
Net proceeds | $ 3,240,000 |
Significant Accounting Polici36
Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for doubtful accounts and returns and discounts | $ 256,000 | $ 356,000 |
Impairments charges | 224,000 | |
Maximum cash deposit guaranteed by FDIC | 250,000 | |
Fair value of the warrant liability | 775,000 | |
Sales incentives | 3,726,000 | 3,765,000 |
Selling expense | 254,000 | 105,000 |
General and administrative expense | 4,208,000 | $ 4,368,000 |
Scenario, Previously Reported [Member] | ||
General and administrative expense | $ 235,000 | |
Customer One [Member] | Sales Revenue, Net [Member] | ||
Percentage of sale accounted to customer | 22.00% | |
Customer One [Member] | Accounts Receivable [Member] | ||
Percentage of sale accounted to customer | 25.00% | 24.00% |
Account receivables from customer | $ 719,000 | $ 782,000 |
Customer Two [Member] | Sales Revenue, Net [Member] | ||
Percentage of sale accounted to customer | 12.00% | |
Customer Two [Member] | Accounts Receivable [Member] | ||
Percentage of sale accounted to customer | 12.00% | |
Account receivables from customer | $ 373,000 | |
Customer One [Member] | Sales Revenue, Net [Member] | ||
Percentage of sale accounted to customer | 28.00% | |
Customer Two [Member] | Sales Revenue, Net [Member] | ||
Percentage of sale accounted to customer | 14.00% | |
No Other Customer [Member] | Sales Revenue, Net [Member] | Maximum [Member] | ||
Percentage of sale accounted to customer | 10.00% | |
No Other Customer [Member] | Accounts Receivable [Member] | Maximum [Member] | ||
Percentage of sale accounted to customer | 10.00% | |
Vendor One [Member] | ||
Percentage of sale accounted to customer | 26.00% | 25.00% |
Vendor One [Member] | Accounts Payable [Member] | ||
Percentage of sale accounted to customer | 13.00% | 14.00% |
Vendor Two [Member] | Accounts Payable [Member] | ||
Percentage of sale accounted to customer | 10.00% | 12.00% |
No Other Vendor [Member] | Maximum [Member] | ||
Percentage of sale accounted to customer | 10.00% | 10.00% |
China Cola Brand [Member] | ||
Impairment of intangible assets, finite-lived | $ 224,000 |
Significant Accounting Polici37
Significant Accounting Policies - Schedule of Estimated Useful Lives of Property and Equipment and Related Depreciation (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Building [Member] | |
Expected useful life of assets | P39Y |
Machinery And Equipment [Member] | Minimum [Member] | |
Expected useful life of assets | P5Y |
Machinery And Equipment [Member] | Maximum [Member] | |
Expected useful life of assets | P12Y |
Vehicles [Member] | |
Expected useful life of assets | P5Y |
Office Equipment [Member] | Minimum [Member] | |
Expected useful life of assets | P5Y |
Office Equipment [Member] | Maximum [Member] | |
Expected useful life of assets | P7Y |
Significant Accounting Polici38
Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Potentially dilutive securities | 1,890,053 | 1,358,905 |
Warrants [Member] | ||
Potentially dilutive securities | 803,909 | 341,261 |
Series A Preferred Stock [Member] | ||
Potentially dilutive securities | 37,644 | 37,644 |
Options [Member] | ||
Potentially dilutive securities | 1,048,500 | 980,000 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Prepaid inventory | $ 294,000 | $ 47,000 |
Decreased it reserve for obsolescence net | 115,000 | $ 290,000 |
Inventory Valuation and Obsolescence [Member] | ||
Decreased it reserve for obsolescence net | 290,000 | |
Minimum [Member] | ||
Decreased it reserve for obsolescence net | 115,000 | |
Maximum [Member] | ||
Decreased it reserve for obsolescence net | $ 175,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw Materials and Packaging | $ 3,874,000 | $ 4,411,000 |
Finished Goods | 3,011,000 | 3,563,000 |
Inventory, total | $ 6,885,000 | $ 7,974,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 647,000 | $ 828,000 |
Reserve for obsolete equipment | 260,000 | |
Accumulated depreciation for equipment held under capital leases | $ 226,000 | $ 461,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 1,107,000 | $ 1,107,000 |
Building | 1,875,000 | 1,875,000 |
Vehicles | 600,000 | 500,000 |
Machinery and equipment | 3,696,000 | 3,800,000 |
Equipment under capital leases | 226,000 | 857,000 |
Office equipment | 475,000 | 469,000 |
Construction in progress | 4,610,000 | 977,000 |
Property and equipment, gross | 12,589,000 | 9,585,000 |
Accumulated depreciation | (4,719,000) | (4,216,000) |
Property and equipment, net | $ 7,726,000 | $ 5,369,000 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
China Cola Brand [Member] | ||
Impairment of intangible assets, finite-lived | $ 224,000 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Intangible Assets Trademarks (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Purchased Brands | $ 1,029,000 | $ 1,029,000 |
Less reserve for impairment | (224,000) | |
Brand names | 805,000 | 1,029,000 |
Virgil's [Member] | ||
Purchased Brands | 576,000 | 576,000 |
China Cola [Member] | ||
Purchased Brands | 224,000 | 224,000 |
Sonoma Sparkler [Member] | ||
Purchased Brands | $ 229,000 | $ 229,000 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) | Dec. 07, 2016USD ($)$ / shares | May 13, 2016USD ($)$ / sharesshares | Apr. 25, 2016USD ($)$ / sharesshares | Nov. 09, 2015USD ($)$ / sharesshares | Dec. 31, 2016USD ($)Installmentsshares | Dec. 31, 2015USD ($) | Jun. 02, 2016$ / shares |
Line of credit | $ 4,384,000 | $ 4,443,000 | |||||
Term Loan | $ 2,378,000 | ||||||
Percentage of borrowing based on accounts receivable | 85.00% | ||||||
Percentage of borrowing based on eligible inventory | 60.00% | ||||||
Change in fair value of warrant liability | $ 232,000 | ||||||
Term loan amount | 1,500,000 | ||||||
Line of credit borrowing availability | 6,000,000 | ||||||
Valuation discount amortized during the period | 130,000 | 9,000 | |||||
Unamortized balance | 78,000 | 132,000 | |||||
Capex Loan [Member] | |||||||
Line of credit borrowing availability | $ 750,000 | ||||||
Capex loan interest rate | 9.50% | ||||||
Number of monthly installments | Installments | 48 | ||||||
Loan due amount | $ 953,000 | ||||||
Loan balance amount | 3,950,000 | 1,883,000 | |||||
Equipment loan cost | $ 250,000 | ||||||
Warrants [Member] | |||||||
Warrants exercise price per share | $ / shares | $ 4.25 | ||||||
Warrants granted | shares | 803,909 | ||||||
Change in fair value of warrant liability | $ 775,000 | ||||||
Valuation discount amortized during the period | $ 584,000 | ||||||
Revolving Loan [Member] | |||||||
Loan bears interest, description | If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. As of December 31, 2016, our effective rate under the revolving line was 9.5%. The monthly management fee is .45% of the average monthly loan balance. | ||||||
Revolving loan, effective interest rate | 9.50% | ||||||
Term Loans [Member] | |||||||
Loan bears interest, description | If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. | ||||||
Term loan outstanding principal balance | $ 3,000,000 | $ 3,000,000 | |||||
Prime Rate [Member] | |||||||
Revolving loan, effective interest rate | 0.35% | ||||||
Prime Rate [Member] | Capex Loan [Member] | |||||||
Capex loan interest rate | 5.75% | ||||||
Minimum [Member] | Capex Loan [Member] | |||||||
Repayments of Debt | $ 300,000 | ||||||
Below $1,000,000 [Member] | Revolving Loan [Member] | |||||||
Revolving loan, effective interest rate | 12.00% | ||||||
Term loan outstanding principal balance | $ 1,000,000 | ||||||
Below $1,000,000 [Member] | Term Loans [Member] | |||||||
Revolving loan, effective interest rate | 12.00% | ||||||
Term loan outstanding principal balance | $ 1,000,000 | ||||||
Rises To $1,500,000 [Member] | Revolving Loan [Member] | |||||||
Revolving loan, effective interest rate | 9.00% | ||||||
Term loan outstanding principal balance | $ 1,500,000 | ||||||
Rises To $1,500,000 [Member] | Term Loans [Member] | |||||||
Revolving loan, effective interest rate | 9.00% | ||||||
Term loan outstanding principal balance | $ 1,500,000 | ||||||
PMC Financial Services Group, LLC [Member] | |||||||
Warrants exercise price per share | $ / shares | $ 4.50 | ||||||
Warrants granted | shares | 50,000 | ||||||
Change in fair value of warrant liability | $ 38,000 | ||||||
Warrants term | 3 years 6 months | 5 years 6 months | |||||
Volatility rate | 49.52% | 54.17% | |||||
Expected dividends | 0.00% | 0.00% | |||||
Discount rate | 0.74% | 1.49% | |||||
Valuation discount amortized during the period | $ 38,000 | $ 38,000 | |||||
Valuation of discount amortized period | 24 months | ||||||
one-time fee | $ 35,000 | ||||||
PMC Financial Services Group, LLC [Member] | Amendment Twelve [Member] | |||||||
common stock purchase warrants | 50,000 | ||||||
PMC Financial Services Group, LLC [Member] | Amendment Ten [Member] | |||||||
common stock purchase warrants | $ 125,000 | ||||||
PMC Financial Services Group, LLC [Member] | Warrants [Member] | |||||||
Loan maturity date | Dec. 31, 2016 | ||||||
Number of warrants issued during period | shares | 10,000 | ||||||
Warrants exercise price per share | $ / shares | $ 3.90 | ||||||
Warrants granted | shares | 10,000 | ||||||
Change in fair value of warrant liability | $ 15,000 | ||||||
Warrants term | 5 years 6 months | ||||||
Volatility rate | 56.35% | ||||||
Expected dividends | 0.00% | ||||||
Discount rate | 1.50% | ||||||
Line of credit maturity date | Jan. 1, 2019 | ||||||
Percentage of prepayment penalty for prepayment prior to the first anniversary | 1.00% | ||||||
PMC Financial Services Group, LLC [Member] | One Term Loans [Member] | |||||||
Loan maturity date | Jan. 1, 2019 | ||||||
Revolving loan, effective interest rate | 9.50% | ||||||
Term loan amount | $ 1,500,000 | ||||||
Line of credit borrowing availability | $ 3,000,000 | ||||||
PMC Financial Services Group, LLC [Member] | Two Term Loans [Member] | |||||||
Loan maturity date | Jan. 1, 2019 | ||||||
Revolving loan, effective interest rate | 14.85% | ||||||
Term loan amount | $ 1,500,000 | ||||||
Line of credit borrowing availability | $ 3,000,000 | ||||||
PMC Financial Services Group, LLC [Member] | Term Loans [Member] | |||||||
Loan bears interest, description | The annual interest rate on the first loan was prime plus 5.75% (currently 9.5%), and the rate on the second loan was prime plus 11.60% (currently 14.85%) but was modified on December 7, 2016 such that the new rate will be based on the trailing 6 month EBITDA. If the EBITDA measuring point stays below $1,000,000 where it is now, the rate will rise to 12% from the current rate of 9%. If EBITDA rises to $1,500,000 then the rate will be reduced to 9%. | ||||||
Warrants exercise price per share | $ / shares | $ 4.50 | ||||||
Warrants granted | shares | 125,000 | ||||||
Change in fair value of warrant liability | $ 141,000 | ||||||
Warrants term | 5 years 6 months | ||||||
Volatility rate | 56.04% | ||||||
Expected dividends | 0.00% | ||||||
Discount rate | 0.68% | ||||||
Warrants amortized period | 16 months | ||||||
Valuation discount amortized during the period | $ 141,000 | ||||||
PMC Financial Services Group, LLC [Member] | Prime Rate [Member] | One Term Loans [Member] | |||||||
Revolving loan, effective interest rate | 5.75% | ||||||
PMC Financial Services Group, LLC [Member] | Prime Rate [Member] | Two Term Loans [Member] | |||||||
Revolving loan, effective interest rate | 11.60% | ||||||
PMC Financial Services Group, LLC [Member] | Maximum [Member] | Amendment Twelve [Member] | |||||||
Warrants exercise price per share | $ / shares | $ 4.50 | ||||||
PMC Financial Services Group, LLC [Member] | Maximum [Member] | Amendment Ten [Member] | |||||||
Warrants exercise price per share | $ / shares | 4.10 | ||||||
PMC Financial Services Group, LLC [Member] | Minimum [Member] | Amendment Twelve [Member] | |||||||
Warrants exercise price per share | $ / shares | 4.10 | ||||||
PMC Financial Services Group, LLC [Member] | Minimum [Member] | Amendment Ten [Member] | |||||||
Warrants exercise price per share | $ / shares | $ 5.01 | ||||||
PMC Financial Services Group, LLC [Member] | Loan and Security Agreement [Member] | |||||||
Line of credit | $ 6,000,000 | ||||||
Term Loan | $ 3,000,000 | ||||||
Loan maturity date | Jan. 1, 2019 | ||||||
PMC Financial Services Group, LLC [Member] | Loan and Security Agreement [Member] | Capex Loan [Member] | |||||||
Term Loan | $ 4,700,000 | ||||||
PMC Financial Services Group, LLC [Member] | Loan and Security Agreement [Member] | Maximum [Member] | |||||||
Capital Expansion loan | $ 4,700,000 |
Notes Payable - Schedule of Ban
Notes Payable - Schedule of Bank Notes (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Valuation discount | $ (78,000) | $ (132,000) |
Bank Notes [Member] | ||
Term Loans | 3,000,000 | 3,000,000 |
Capital expansion loan | 3,950,000 | 1,883,000 |
Valuation discount | (78,000) | (132,000) |
Net | 6,872,000 | 4,751,000 |
Current portion | (953,000) | (341,000) |
Long-term portion | $ 5,919,000 | $ 4,410,000 |
Notes Payable - Schedule of Int
Notes Payable - Schedule of Interest Rates of Loans (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Term A [Member] | |
Original Rate | 9.50% |
Additional Interest | 3.00% |
Current rate | 12.50% |
Term B [Member] | |
Original Rate | 12.10% |
Additional Interest | 3.00% |
Current rate | 15.10% |
Line of Credit (Prime Plus) [Member] | |
Original Rate | 4.10% |
Additional Interest | 3.00% |
Current rate | 7.10% |
Capital Loans [Member] | |
Original Rate | 9.50% |
Additional Interest | 3.00% |
Current rate | 12.50% |
Base Interest Rate [Member] | Term A [Member] | |
Original Rate | 9.00% |
Base Interest Rate [Member] | Term B [Member] | |
Original Rate | 11.60% |
Base Interest Rate [Member] | Line of Credit (Prime Plus) [Member] | |
Original Rate | 0.35% |
Base Interest Rate [Member] | Capital Loans [Member] | |
Original Rate | 9.00% |
Increase in Prime [Member] | Term A [Member] | |
Original Rate | 0.50% |
Increase in Prime [Member] | Term B [Member] | |
Original Rate | 0.50% |
Increase in Prime [Member] | Line of Credit (Prime Plus) [Member] | |
Original Rate | 3.75% |
Increase in Prime [Member] | Capital Loans [Member] | |
Original Rate | 0.50% |
Long Term Financing Obligatio48
Long Term Financing Obligation (Details Narrative) - USD ($) | Jun. 02, 2016 | Oct. 02, 2014 | Dec. 31, 2016 | Dec. 31, 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% | |||
Change in fair value of warrant liability | $ 232,000 | |||
Amortization of valuation discount | 130,000 | 9,000 | ||
Aggregate amount due under financing obligation | 2,377,000 | 2,538,000 | ||
Chief Executive Officer [Member] | ||||
Proceeds financial obligation limit guaranteed by related party | $ 150,000 | |||
Warrants [Member] | ||||
Number of warrants issued to purchase of common stock | 346,206 | |||
Warrants exercise price per share | $ 4.25 | |||
Warrants term | 5 years | |||
Change in fair value of warrant liability | 775,000 | |||
Amortization of valuation discount | $ 584,000 | |||
Warrants [Member] | Financing Obligation [Member] | ||||
Number of warrants issued to purchase of common stock | 200,000 | 400,000 | ||
Warrants exercise price per share | $ 5.60 | $ 1.20 | ||
Warrants term | 5 years | 5 years | ||
Change in fair value of warrant liability | $ 584,000 | $ 752,000 | ||
Warrants expected term | 5 years | 5 years | ||
Warrants volatility rate | 59.53% | |||
Warrants expected dividends | 0.00% | 0.00% | ||
Warrants discount rate | 1.25% | |||
Amortization of warrant, term | 15 years | |||
Amortization of valuation discount | $ 50,000 | $ 50,000 | ||
Warrants [Member] | Financing Obligation [Member] | Minimum [Member] | ||||
Warrants strike price | $ 2.10 | |||
Warrants volatility rate | 91.36% | |||
Warrants discount rate | 2.15% | |||
Warrants [Member] | Financing Obligation [Member] | Maximum [Member] | ||||
Warrants strike price | $ 2.25 | |||
Warrants volatility rate | 110.90% | |||
Warrants discount rate | 2.20% | |||
Christopher J. Reed [Member] | ||||
Proceeds financial obligation limit guaranteed by related party | $ 150,000 |
Long Term Financing Obligatio49
Long Term Financing Obligation - Schedule of Long Term Financing Obligation (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Valuation discount | $ (825,000) | $ (935,000) |
Less current portion | 190,000 | 160,000 |
Long term financing obligation | 1,363,000 | 1,443,000 |
Long Term Financing Obligation [Member] | ||
Financing obligation | 2,378,000 | 2,538,000 |
Valuation discount | (825,000) | (935,000) |
Net long term financing obligation | 1,553,000 | 1,603,000 |
Less current portion | (190,000) | (160,000) |
Long term financing obligation | $ 1,363,000 | $ 1,443,000 |
Long Term Financing Obligatio50
Long Term Financing Obligation - Schedule of Aggregate Future Obligations Under the Financing Obligation (Details) | Dec. 31, 2016USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 190,000 |
2,018 | 222,000 |
2,019 | 259,000 |
2,020 | 299,000 |
2,021 | 344,000 |
Thereafter | 1,064,000 |
Total | $ 2,378,000 |
Obligations Under Capital Lea51
Obligations Under Capital Leases (Details Narrative) | 12 Months Ended | |
Dec. 31, 2016USD ($)Installments | Dec. 31, 2015USD ($) | |
Equipment held under capital leases | $ 903,000 | |
Number of non-cancelable capital leases | Installments | 10 | |
Principal balance due under leases | $ 621,000 | $ 643,000 |
Payment of lease amount | $ 19,000 | |
Lease expire year | 2,021 | |
Minimum [Member] | ||
Payment of lease range per month | $ 189 | |
Percentage of interest for lease amount | 3.50% | |
Maximum [Member] | ||
Payment of lease range per month | $ 10,441 | |
Percentage of interest for lease amount | 17.31% |
Obligations Under Capital Lea52
Obligations Under Capital Leases - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Leases [Abstract] | ||
2,017 | $ 223,000 | |
2,018 | 227,000 | |
2,019 | 190,000 | |
2,020 | 62,000 | |
2,021 | 6,000 | |
Total payments | 708,000 | |
Less: Amount representing interest | (87,000) | |
Present value of net minimum lease payments | 621,000 | $ 643,000 |
Less: Current portion | (183,000) | (153,000) |
Non-current portion | $ 438,000 | $ 490,000 |
Warrant Liability - Schedule of
Warrant Liability - Schedule of Warrant Liability (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Expected Volatility | 57.00% | |
Expected life in years | 1 year 9 months 7 days | |
Fair Value - Warrants | $ 232,000 | |
Warrants [Member] | ||
Stock Price | $ 4.10 | |
Risk free interest rate | 1.58% | |
Expected Volatility | 55.81% | |
Expected life in years | 4 years 5 months 1 day | |
Expected dividend yield | 0.00% | |
Fair Value - Warrants | $ 775,000 | |
Issuance Date [Member | ||
Stock Price | $ 3.34 | |
Risk free interest rate | 1.50% | |
Expected Volatility | 55.82% | |
Expected life in years | 5 years | |
Expected dividend yield | 0.00% | |
Fair Value - Warrants | $ 543,000 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, par value | $ 10 | $ 10 |
Preferred stock, shares outstanding | 9,411 | 9,411 |
Common stock, par value | $ 0.0001 | $ .0001 |
Common stock, shares authorized | 19,500,000 | 19,500,000 |
Common stock, shares outstanding | 13,982,230 | 13,160,860 |
Initial fair value of warrants | $ 543,000 | |
Issuance of warrants | 543,000 | |
Proceeds from warrants offset value | 2,113,000 | |
Net reduction of additional paid in capital | 543,000 | |
Common stock issued for services, value | $ 15,000 | $ 1,000 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 500,000 | |
Preferred stock, par value | $ 10 | |
Percentage of noncumulative preferred stock | 5.00% | |
Preferred stock, shares outstanding | 9,411 | |
Preferred stock shares, liquidation preference | $ 10 | |
Preferred stock holders rights to receive at price per share | $ 10 | |
Common stock issued for services, value | ||
Preferred Shareholders [Member] | ||
Dividend payable to preferred shareholders | $ 5,000 | $ 5,000 |
Number of preferred stock converted | 1,504 | 751 |
Institutional Investors [Member] | ||
Number of shares issuance and sale of common stock during period | 692,412 | |
Number of warrants to purchase of common stock shares | 346,206 | |
Net proceeds from offering | $ 2,113,000 | |
Warrants exercise price per share | $ 4.25 | |
Warrant term | 5 years | |
Placement Agent [Member] | ||
Number of warrants to purchase of common stock shares | 72,703 | |
Warrants exercise price per share | $ 3.74 | |
Warrant term | 5 years | |
Officers [Member] | ||
Number of shares issuance and sale of common stock during period | 30,000 | |
Sale of stock price per share | $ 3.90 | |
Proceeds from sale of stock | $ 117,000 | |
Consulting Services [Member] | ||
Common stock issued for services, shares | 4,228 | |
Common stock issued for services, value | $ 15,000 |
Stock Options and Warrants (Det
Stock Options and Warrants (Details Narrative) - USD ($) | Jun. 02, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Percentage of option fixed price | 100.00% | ||
Fair market value per share | 110.00% | ||
Shares granted | 172,500 | 548,000 | |
Stock options at market price per share | $ 4.01 | $ 5.01 | |
Fair value of options granted | $ 714,000 | $ 1,398,000 | |
Weighted-average grant date fair value | $ 4.01 | $ 5.63 | |
Stock based compensation cost | $ 658,000 | $ 877,000 | |
Aggregate value of unvested options | $ 700,000 | ||
Number of option issued under cash-less exercise | 84,000 | 135,833 | |
Number of common stock shares issued during the period | 76,966 | 57,112 | |
Number of option issued under cash-less exercise price per share | $ 1.36 | $ 3.36 | |
Proceeds from stock options exercised | $ 71,000 | ||
Aggregate intrinsic values | $ 61,000 | ||
Market price per share | $ 4.10 | ||
Stock warrant received value | $ 543,000 | ||
Warrants [Member] | |||
Market price per share | $ 4.10 | ||
Warrants to purchase common stock | 346,206 | ||
Warrants exercise price per share | $ 4.25 | ||
Warrants term | 5 years | ||
Number of warrants exercised | 16,260 | ||
Aggregate intrinsic values outstanding | $ 26,000 | ||
Aggregate intrinsic values exercisable | $ 26,000 | ||
Warrants [Member] | Maxim Group LLC [Member] | |||
Warrants to purchase common stock | 72,703 | ||
Warrants exercise price per share | $ 3.74 | ||
Warrants term | 5 years | ||
Common Stock [Member] | |||
Number of warrants exercised | 16,260 | ||
Stock warrant received value | $ 45,000 | ||
2007 Stock Option Plan [Member] | |||
Number of option authorized | 1,500,000 | ||
2015 Stock Option Plan [Member] | |||
Number of option authorized | 500,000 | ||
Minimum [Member] | |||
Option vesting period | 2 years | ||
Number of option issued under cash-less exercise price per share | 1.14 | ||
Maximum [Member] | |||
Option vesting period | 4 years | ||
Number of option issued under cash-less exercise price per share | $ 4.60 |
Stock Options and Warrants - Sc
Stock Options and Warrants - Schedule of Fair Value of Option Award Valuation Assumptions (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Expected volatility | 57.00% | |
Expected dividends | ||
Expected average term (in years) | 1 year 9 months 7 days | |
Forfeiture rate | 0.00% | 0.00% |
Minimum [Member] | ||
Expected volatility | 56.00% | |
Expected average term (in years) | 3 years 6 months | |
Risk free rate - average | 0.77% | 0.69% |
Maximum [Member] | ||
Expected volatility | 62.00% | |
Expected average term (in years) | 4 years 6 months | |
Risk free rate - average | 1.81% | 1.64% |
Stock Options and Warrants - 57
Stock Options and Warrants - Schedule of Stock Option Activity (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Shares Outstanding, Beginning balance | 980,000 | 705,333 |
Shares, Granted | 172,500 | 548,000 |
Shares, Exercised | (84,000) | (135,833) |
Shares, Forfeited or expired | (20,000) | (137,500) |
Shares Outstanding, Ending balance | 1,048,500 | 980,000 |
Shares Exercisable | 543,534 | |
Weighted-Average Exercise Price, Outstanding, Beginning | $ 3.96 | $ 3.96 |
Weighted-Average Exercise Price, Granted | 4.01 | 5.01 |
Weighted-Average Exercise Price, Exercised | 1.36 | 3.36 |
Weighted-Average Exercise Price, Forfeited or expired | 4.92 | 4.85 |
Weighted-Average Exercise Price, Outstanding, Ending | 4.68 | $ 3.96 |
Weighted-Average Exercise Price, Exercisable | $ 4.61 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning | 3 years 4 months 28 days | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending | 3 years 9 months 18 days | 3 years 4 months 28 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable | 3 years 15 days | |
Aggregate Intrinsic Value, Share Outstanding, Beginning | $ 843,000 | |
Aggregate Intrinsic Value, Share Outstanding, Ending | 61,000 | 843,000 |
Aggregate Intrinsic Value, Share Exercisable | $ 39,000 |
Stock Options and Warrants - 58
Stock Options and Warrants - Schedule of Nonvested Shares Granted Under the Stock Option Plan (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Nonvested, Shares Outstanding, Beginning | 661,083 | |
Nonvested, Shares Granted | 172,500 | 548,000 |
Nonvested, Shares Vested | (316,117) | |
Nonvested, Shares Forfeited | (12,500) | |
Nonvested, Shares Outstanding, Ending | 504,966 | 661,083 |
Weighted-Average Grant Date Fair Value, Nonvested Shares Outstanding, Beginning balance | $ 2.41 | |
Weighted-Average Grant Date Fair Value, Nonvested Shares Granted | 4.10 | |
Weighted-Average Grant Date Fair Value, Nonvested Shares Vested | 4.61 | |
Weighted-Average Grant Date Fair Value, Nonvested Shares Forfeited | 4.92 | |
Weighted-Average Grant Date Fair Value, Nonvested Shares Outstanding, Ending balance | $ 4.68 | $ 2.41 |
Stock Options and Warrants - 59
Stock Options and Warrants - Schedule of Information Regarding Stock Options (Details) | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Number of Shares Outstanding | shares | 1,048,500 |
Weighted Average Remaining Contractual Life (years) | 3 years 4 months 28 days |
Weighted Average Exercise Price | $ 4.68 |
Number of Shares Exercisable | shares | 543,534 |
Weighted Average Exercise Price | $ 4.61 |
Range One [Member] | |
Range of Exercise Price Lower Limit | 2 |
Range of Exercise Price Upper limit | $ 3.99 |
Number of Shares Outstanding | shares | 237,500 |
Weighted Average Remaining Contractual Life (years) | 6 years 3 months 7 days |
Weighted Average Exercise Price | $ 3.83 |
Number of Shares Exercisable | shares | 143,700 |
Weighted Average Exercise Price | $ 3.89 |
Range Two [Member] | |
Range of Exercise Price Lower Limit | 4 |
Range of Exercise Price Upper limit | $ 5.99 |
Number of Shares Outstanding | shares | 811,000 |
Weighted Average Remaining Contractual Life (years) | 3 years 29 days |
Weighted Average Exercise Price | $ 4.93 |
Number of Shares Exercisable | shares | 399,834 |
Weighted Average Exercise Price | $ 4.87 |
Stock Options and Warrants - 60
Stock Options and Warrants - Schedule of Stock Warrants Activity (Details) - Warrants [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Shares Outstanding, Beginning Balance | 341,261 | 301,963 |
Shares, Granted | 478,909 | 125,000 |
Shares, Exercised | (16,260) | (34,692) |
Shares, Forfeited or expired | (1) | (51,010) |
Shares Outstanding, Ending Balance | 803,909 | 341,261 |
Shares Exercisable, Ending Balance | 803,909 | |
Weighted-Average Exercise Price, Outstanding Beginning Balance | $ 5.17 | $ 4.49 |
Weighted-Average Exercise Price, Granted | 4.50 | 4.50 |
Weighted-Average Exercise Price, Exercised | 2.77 | |
Weighted-Average Exercise Price, Forfeited or expired | ||
Weighted-Average Exercise Price, Outstanding Ending Balance | 4.50 | $ 5.17 |
Weighted-Average Exercise Price, Exercisable Ending Balance | $ 4.54 | |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning Balance | 3 years 3 months 18 days | 0 years |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending Balance | 4 years | 3 years 3 months 18 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable Ending Balance | 4 years 2 months 12 days | |
Aggregate Intrinsic Value Shares Outstanding Beginning | $ 152,000 | |
Aggregate Intrinsic Value Shares Outstanding Ending | 26,000 | $ 152,000 |
Aggregate Intrinsic Value Shares Exercisable | $ 26,000 |
Stock Options and Warrants - 61
Stock Options and Warrants - Schedule of Outstanding Warrants to Purchase Common Stock (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Jun. 02, 2016 | |
Warrants One [Member] | ||
Number of warrants outstanding | 200,000 | |
Warrants Exercise Price | $ 5.60 | |
Warrants Expiration Dates | Sep19 | |
Warrants Two [Member] | ||
Number of warrants outstanding | 125,000 | |
Warrants Exercise Price | $ 4.10 | |
Warrants Expiration Dates | May21 | |
Warrants Three [Member] | ||
Number of warrants outstanding | 10,000 | |
Warrants Exercise Price | $ 3.90 | |
Warrants Expiration Dates | Oct21 | |
Warrants Four [Member] | ||
Number of warrants outstanding | 50,000 | |
Warrants Exercise Price | $ 4.10 | |
Warrants Expiration Dates | Nov21 | |
Warrants Five [Member] | ||
Number of warrants outstanding | 346,206 | |
Warrants Exercise Price | $ 4.25 | |
Warrants Expiration Dates | Jun21 | |
Warrants Six [Member] | ||
Number of warrants outstanding | 72,703 | |
Warrants Exercise Price | $ 3.74 | |
Warrants Expiration Dates | Jun21 | |
Warrants [Member] | ||
Number of warrants outstanding | 803,909 | |
Warrants Exercise Price | $ 4.25 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal net operating loss carryforwards | $ 21,300,000 | $ 18,600,000 |
State net operating loss carryforwards | $ 14,500,000 | $ 13,300,000 |
Federal carryforward loss expires year | 2,034 | |
State carryforward loss expires year | 2,019 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Income Tax Assets (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carry forward | $ 10,325,000 | $ 9,034,000 |
Valuation allowance | (10,325,000) | (9,034,000) |
Net deferred income tax asset | $ 0 | $ 0 |
Income Taxes - Schedule of Reco
Income Taxes - Schedule of Reconciliation of Effective Income Tax rate to U.S. Statutory Rate (Details) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||
Federal Statutory tax rate | (34.00%) | (34.00%) |
State tax net of federal benefit | (5.00%) | (5.00%) |
Change in valuation | (39.00%) | (39.00%) |
Valuation allowance | 39.00% | 39.00% |
Effective tax rate | 0.00% | 0.00% |
Commitments and Contingencies65
Commitments and Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rental expense | $ 137,000 | $ 209,000 |
Lease expire date | November 2,017 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Payments Under Operating Leases (Details) | Dec. 31, 2016USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 137,000 |
2,018 | |
Total | $ 137,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Apr. 19, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Fair value of the warrants and conversion feature | $ 232,000 | ||
Subsequent Event [Member] | |||
Fair value of the warrants and conversion feature | 3,400,000 | ||
Net proceeds from offering cost | 3,240,000 | ||
Gross proceeds from receiving fee | $ 160,000 | ||
Subsequent Event [Member] | April 21, 2017 [Member] | Securities Purchase Agreement [Member] | Harbor Reeds SPV LLC [Member] | |||
Warrant to purchase shares of common stock | 1,416,667 | ||
Note bears interest rate | 12.00% | ||
Subsequent Event [Member] | April 21, 2017 [Member] | Securities Purchase Agreement [Member] | PMC Financial Services Group, LLC [Member] | |||
Warrant exercise price | $ 4 | ||
Note maturity term | 2 years | ||
Number of converted shares of common stock | 1,133,333 | ||
Subsequent Event [Member] | April 21, 2017 [Member] | Securities Purchase Agreement [Member] | Note [Member] | |||
Convertible principal amount | $ 3,400,000 | ||
Subsequent Event [Member] | Chris Reed (CEO) [Member] | |||
Advanced working capital funds | 381,000 | ||
Subsequent Event [Member] | Chris Reed (CEO) [Member] | April 2017 [Member] | |||
Repayments of debt | 240,000 | ||
Subsequent Event [Member] | Daniel Miles (CFO) [Member] | |||
Advanced working capital funds | $ 120,000 | ||
Subsequent Event [Member] | Investors [Member] | |||
Warrant term | 5 years | ||
Warrant exercise price | $ 3 | ||
Warrant to purchase shares of common stock | 210,111 | ||
Subsequent Event [Member] | Investors [Member] | Minimum [Member] | |||
Warrant exercise price | $ 3 | ||
Subsequent Event [Member] | Investors [Member] | Maximum [Member] | |||
Warrant exercise price | $ 4.25 |