Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 30, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | REED'S, INC. | |
Entity Central Index Key | 1,140,215 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 25,036,043 | |
Trading Symbol | REED | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 3,376,000 | $ 12,127,000 |
Accounts receivable, net of allowance for doubtful accounts and returns and discounts of $569,000 and $601,000, respectively | 2,464,000 | 2,691,000 |
Inventory, net of reserve for obsolescence of $451,000 and $509,000, respectively | 6,835,000 | 5,931,000 |
Prepaid expenses and other current assets | 316,000 | 199,000 |
Total Current Assets | 12,991,000 | 20,948,000 |
Property and equipment, net of accumulated depreciation and impairment reserves of $9,506,000 and $9,339,000, respectively | 203,000 | 353,000 |
Equipment held for sale | 2,184,000 | 2,370,000 |
Intangible assets | 805,000 | 805,000 |
Total assets | 16,183,000 | 24,476,000 |
Current Liabilities: | ||
Accounts payable | 4,543,000 | 7,480,000 |
Accrued expenses | 207,000 | 220,000 |
Advances from officers | 277,000 | |
Line of credit | 3,301,000 | |
Current portion of capital leases payable | 186,000 | 198,000 |
Current portion of long term financing obligation | 231,000 | 222,000 |
Bank notes | 6,440,000 | 6,947,000 |
Total current liabilities | 11,607,000 | 18,645,000 |
Capital leases payable, less current portion | 243,000 | 236,000 |
Long term financing obligation, less current portion, net of discount of $687,000 and $714,000, respectively | 1,219,000 | 1,250,000 |
Convertible note to a related party | 3,802,000 | 3,690,000 |
Warrant liability | 41,000 | 36,000 |
Other long term liabilities | 104,000 | 111,000 |
Total Liabilities | 17,016,000 | 23,968,000 |
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, 40,000,000 shares authorized, 25,036,043 and 24,619,591 shares issued and outstanding, respectively | 2,000 | 2,000 |
Common stock issuable, 838,140 and 400,000 shares, respectively | 84,000 | 680,000 |
Additional paid in capital | 50,703,000 | 49,833,000 |
Accumulated deficit | (51,716,000) | (50,101,000) |
Total stockholders’ equity (deficit) | (833,000) | 508,000 |
Total liabilities and stockholders’ equity (deficit) | $ 16,183,000 | $ 24,476,000 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance for doubtful accounts and returns and discounts | $ 569,000 | $ 601,000 |
Inventory, reserve for obsolescence net | 451,000 | 509,000 |
Property and equipment, accumulated depreciation and impairment reserves | 9,506,000 | 9,339,000 |
Long term financing obligation, discount | $ 687,000 | $ 714,000 |
Series A Convertible Preferred stock, par value | $ 10 | $ 10 |
Series A Convertible Preferred stock, shares authorized | 500,000 | 500,000 |
Series A Convertible Preferred stock, shares issued | 9,411 | 9,411 |
Series A Convertible Preferred stock, shares outstanding | 9,411 | 9,411 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 40,000,000 | 40,000,000 |
Common stock, shares issued | 25,036,043 | 24,619,591 |
Common stock, shares outstanding | 25,036,043 | 24,619,591 |
Common stock issuable shares | 838,140 | 400,000 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Net Sales | $ 8,288,000 | $ 8,295,000 |
Cost of goods sold | 5,985,000 | 7,239,000 |
Gross profit | 2,303,000 | 1,056,000 |
Operating expenses: | ||
Delivery and handling expense | 956,000 | 743,000 |
Selling and marketing expense | 1,013,000 | 788,000 |
General and administrative expense | 1,459,000 | 1,111,000 |
Total operating expenses | 3,428,000 | 2,642,000 |
Loss from operations | (1,125,000) | (1,586,000) |
Interest expense | (485,000) | (416,000) |
Change in fair value of warrant liability | (5,000) | 9,000 |
Net loss attributable to common stockholders | $ (1,615,000) | $ (1,993,000) |
Loss per share – basic and diluted | $ (0.06) | $ (0.14) |
Weighted average number of shares outstanding – basic and diluted | 24,989,863 | 13,982,230 |
Condensed Statement of Changes
Condensed Statement of Changes in Stockholders' Deficit (Unaudited) - 3 months ended Mar. 31, 2018 - USD ($) | Common Stock [Member] | Preferred Stock [Member] | Common Stock Issuable [Member] | Additional Paid In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 2,000 | $ 94,000 | $ 680,000 | $ 49,833,000 | $ (50,101,000) | $ 508,000 |
Balance, Shares at Dec. 31, 2017 | 24,619,591 | 9,411 | 400,000 | |||
Fair value of vested options | 161,000 | 161,000 | ||||
Fair value vesting of restricted common stock | $ 113,000 | 113,000 | ||||
Fair value vesting of restricted common stock, shares | 854,592 | |||||
Common shares issued to Directors for services provided in 2018 | $ (709,000) | 709,000 | ||||
Common shares issued to Directors for services provided in 2018, shares | 416,452 | (416,452) | ||||
Net loss | (1,616,000) | (1,615,000) | ||||
Balance at Mar. 31, 2018 | $ 2,000 | $ 94,000 | $ 84,000 | $ 50,703,000 | $ (51,716,000) | $ (833,000) |
Balance, Shares at Mar. 31, 2018 | 25,036,043 | 9,411 | 838,140 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (1,615,000) | $ (1,993,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 177,000 | 121,000 |
Amortization of debt discount | 28,000 | 73,000 |
Loss on sale of property and equipment | 26,000 | |
Fair value of vested stock options issued to employees | 161,000 | 140,000 |
Fair value of common stock issuable for services | 113,000 | |
(Decrease) increase in allowance for doubtful accounts | (32,000) | 26,000 |
(Decrease) increase in inventory reserve | (58,000) | 50,000 |
(Decrease) increase in fair value of warrant liability | 5,000 | (9,000) |
Accrual of interest on Convertible Note Payable | 112,000 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 259,000 | 45,000 |
Inventory | (846,000) | 1,319,000 |
Prepaid expenses and other assets | (117,000) | 124,000 |
Accounts payable | (2,829,000) | 656,000 |
Accrued expenses | (13,000) | 6,000 |
Other long term obligations | (7,000) | (31,000) |
Net cash used in operating activities | (4,636,000) | 527,000 |
Cash flows from investing activities: | ||
Proceeds from sale of property and equipment | 69,000 | 0 |
Purchase of property and equipment | (41,000) | |
Net cash provided by (used in) investing activities | 69,000 | (41,000) |
Cash flows from financing activities: | ||
Repayments on line of credit | (3,301,000) | (854,000) |
Principal repayments on capital expansion loan | (507,000) | (177,000) |
Principal repayments on long term financial obligation | (50,000) | (44,000) |
Net borrowings (repayments) on advances | (277,000) | 380,000 |
Principal repayments on capital lease obligation | (49,000) | (45,000) |
Net cash used in financing activities | (4,184,000) | (740,000) |
Net decrease in cash | (8,751,000) | (254,000) |
Cash at beginning of period | 12,127,000 | 451,000 |
Cash at end of period | 3,376,000 | 197,000 |
Supplemental disclosures of cash flow information: | ||
Interest | 334,000 | 400,000 |
Non Cash Investing and Financing Activities | ||
Property and equipment acquired through capital expansion loan | 288,000 | |
Property and equipment acquired through capital lease | 44,000 | |
Vendor credits issued for fixed asset purchases | 108,000 | |
Assets sold to third parties at cost | $ 69,000 |
Basis of Presentation and Liqui
Basis of Presentation and Liquidity | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Liquidity | 1. Basis of Presentation and Liquidity The accompanying interim condensed financial statements are unaudited, but in the opinion of management of Reed’s, Inc. (the “Company”), contain all adjustments, which include normal recurring adjustments necessary to present fairly the financial position at March 31, 2018 and the results of operations and cash flows for the three months ended March 31, 2018 and 2017. The balance sheet as of December 31, 2017 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these condensed financial statements are adequate to make the information presented herein not misleading. For further information, refer to the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on April 2, 2018. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2018. 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 three months ended March 31, 2018, the Company recorded a net loss of $1,615,000 and used cash from operations of $4,636,000. As of March 31, 2018, we had a stockholder’s deficit of $833,000 and working capital of $1,384,000 compared to stockholder’s equity of $508,000 and working capital of $2,303,000 at December 31, 2017. As of March 31, 2018, the Company had a cash balance of $3,376,000 and had available borrowing on our existing line of credit of $4,432,000 for a total of $7,808,000 of cash availability. Our line of credit expires in October 2018, which we believe will be renewed and or be replaced. In addition, the Company’s bank notes (“Notes”), totaling $6.9 million also become due in October 2018. The Company believes it can successfully restructure its debt before the Notes mature utilizing a combination of the cash on hand and or the cash realized from an anticipated sale of our plant facility and other assets. Furthermore, the anticipated sale of the Company’s facility is expected to relieve the Company of its long term financing obligation. Historically, we have financed our operations primarily through private sales of common stock, issuance of preferred stock, a line of credit from a financial institution, and cash generated from operations. We anticipate our primary capital source will be positive cash flow from operations. If our sales goals do not materialize as planned, we believe 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, or restructure our debt as planned, 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 we will be able to obtain such financing on acceptable terms, or at all. The Company anticipates a closing of the sale of our Los Angeles plan to be completed in the summer 2018. These actions may lead to certain charges including, but not limited to additional cash-related expenses, non-cash impairment charges, discontinued operations and/or other costs in connection with exit and disposal activities. Such transactions will be recognized when appropriate and may require cash payments for obligations such as one-time employee involuntary termination benefits, lease and other contract termination costs, costs to close facilities, employee relocation costs and ongoing benefit arrangements. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 2. Significant Accounting Policies Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company adopted ASC 606 effective January 1, 2018, and adoption of such standard had no effect on previously reported balances. Recognition of sales of the products sold by the Company since the adoption of the new standard has had no quantitative effect on the financial statements. However, the guidance requires additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The Company previously recognized and continues to recognize revenue when risk of loss transferred to our customers and collection of the receivable was 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. Under the new guidance, revenue is recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company does not have any significant contracts with customers requiring performance beyond delivery. All orders have a written purchase order that is reviewed for credit worthiness, pricing and other terms before fulfillment begins. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when placed under the customer’s control. Control of the products that we sell, transfers to the customer upon shipment from our facilities, and the Company’s performance obligations are satisfied at that time. All products sold by the Company are beverage products and ginger based candy products. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does not allow for returns, although we do for damaged products, if support for the damage that occurs pre-fulfillment is provided, returns are permitted. Damage product returns have been insignificant. Due to the insignificant amount of historical returns as well as the standalone nature of our products and assessment of performance obligations and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance at this time for obligations. We assess our contracts and the reasonableness of our conclusions on a quarterly basis Loss per Common Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. For the periods ended March 31, 2018 and 2017, 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: March 31, 2018 March 31, 2017 Convertible note 2,266,667 - Warrants 7,325,282 803,909 Series A Preferred Stock 37,644 37,644 Options 2,898,754 1,026,834 Total 12,528,347 1,868,387 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, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Recent Accounting Pronouncements 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 July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. Concentrations During the three months ended March 31, 2018, the Company had two customers that each accounted for 27% and 11% of gross sales, respectively. During the three months ended March 31, 2017, the Company had one customer that accounted for 21% of gross sales. No other customer exceeded 10% of sales for either period. As of March 31, 2018, the Company had accounts receivable from one customer which comprised 24% of its total accounts receivable. As of December 31, 2017, the Company had accounts receivable due from two customers which accounted for approximately 23% and 16% of total accounts receivable, respectively. During the three months ended March 31, 2018, the Company had two vendors which accounted for approximately 16.6% and 14.1% of all purchases, respectively. During the three months ended March 31, 2017, the Company had one vendor which accounted for approximately 18% of all purchases. No other vendor accounted for more than 10% of all purchases in either period. As of March 31, 2018, the Company had three vendors which accounted for 11.3%, 19.5%, and 40.7% of total accounts payable, respectively. As of December 31, 2017, the Company had one vendor which accounted for 20% of its total accounts payable. As of March 31, 2017, the Company had two vendors which accounted for approximately 10% each of the total accounts payable. 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 due to the fact that the interest rates on these obligations are based on prevailing market interest rates. As of March 31, 2018, and December 31, 2017, the Company’s balance sheets included the fair value of warrant liabilities of $41,000 and $36,000 respectively, which were based on Level 2 measurements. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | 3. Inventory Inventory is valued at the lower of cost (first-in, first-out or market) and, net of reserves, is comprised of the following as of: March 31, 2018 December 31, 2017 Raw Materials and Packaging $ 3,693,000 $ 2,670,000 Finished Goods 3,142,000 3,261,000 Total $ 6,835,000 $ 5,931,000 The Company has recorded an obsolescence reserve for potentially slow moving and obsolete inventory. The reserve at March 31, 2018 and December 31, 2017 was $451,000 and $509,000, respectively. |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment are comprised of the following as of: March 31, 2018 December 31, 2017 Land $ 1,107,000 $ 1,107,000 Building 2,360,000 2,360,000 Vehicles 612,000 568,000 Machinery and equipment 4,897,000 4,924,000 Equipment under capital leases 226,000 226,000 Office equipment 507,000 507,000 Book value 9,709,000 9,692,000 Accumulated depreciation (5,581,000 ) (5,414,000 ) Impairment reserve (3,925,000 ) (3,925,000 ) Net book value $ 203,000 $ 353,000 Depreciation expense for the three months ended March 31, 2018 and 2017 was $177,000 and $121,000, respectively. On March 24, 2018, the Company received a letter of intent from a party, partially owned by Chris Reed, one of the Company’s current officers and directors, for the purchase of substantially all of the assets of the Los Angeles plant. It is anticipated the Board of Directors will approve the offer and the sale will be completed in the summer of 2018. The letter of intent offers the Company $1,250,000 in cash for the LA plant buildings, equipment, and fixed assets. In addition, the Company will be relieved of the $1,400,000 long-term financing liability attached to the property. Based on the terms of the offer, during the year ended December 31, 2017, the Company recorded an impairment charge totaling $3,925,000, representing the difference between the offer terms and the net book value of the assets to be sold and the relief of the long-term liability. Equipment held for sale consists of the following: March 31, 2018 December 31, 2017 Equipment held for sale $ 4,184,000 $ 4,370,000 Reserve (2,000,000 ) (2,000,000 ) Net book value $ 2,184,000 $ 2,370,000 |
Intangible Assets and Impairmen
Intangible Assets and Impairment Policy | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Impairment Policy | 5. 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. Based on management’s measurement, there were no indications of impairment at March 31, 2018. March 31, 2018 December 31, 2017 Virgil’s $ 576,000 $ 576,000 Sonoma Sparkler 229,000 229,000 Brand names $ 805,000 $ 805,000 |
Advances from Officers
Advances from Officers | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Advances from Officers | 6. Advances from Officers In 2017, Chris Reed (the former CEO and current CIO), Robert Reed (the brother of Chris Reed, CIO), and Dan Miles (CFO), collectively advanced $571,000 to the Company for working capital uses. In 2017, the Company repaid $240,000 to Robert Reed and $277,000 of these advances were due as of December 31,2017. The amounts due as of December 31, 2017 were repaid during the quarter ended March 31, 2018 with a three percent fee. |
Line of Credit and Bank Notes
Line of Credit and Bank Notes | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Line of Credit and Bank Notes | 7. Line of Credit and Bank Notes 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 October 1, 2018. The notes are as follows: Revolving Line of Credit The agreement provides a $6,000,000 revolving line of credit. 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. At December 31, 2017, the aggregate amount outstanding under the line of credit was $3,301,000, which amount was paid off during the period ending March 31, 2018. As of March 31, 2018, there were no borrowings outstanding under the line, and the Company had $4,432,000 of borrowing availability under the line of credit agreement as of that date. 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 nd 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 unused cash availability exceeds $1,500,000 then the rate will be reduced to base rate plus prime. As of March 31, 2017, our effective rate under the revolving line was 9.5%. The monthly management fee is .45% of the average monthly loan balance. The line of credit matures on October 21, 2018. Bank Notes Bank notes consist of the following as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Term Loans $ 3,000,000 $ 3,000,000 CAPEX loan 3,440,000 3,947,000 Net $ 6,440,000 $ 6,947,000 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 October 1, 2018. The annual interest rate on the first loan was prime plus 5.75% (currently 10.5%), and the rate on the second loan was prime plus 11.60% (currently 16.35%) 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 unused cash availability exceeds $1,500,000 then the rate will be reduced to base rate plus prime. As of March 31, 2018, and December 31, 2017, the amount outstanding was $3,000,000 and $3,000,000 respectively. 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% (10.5% at March 31, 2018). The entire CAPEX loan is due on October 21, 2018. At March 31, 2018 and December 31, 2017, the balance on the CAPEX loan balance totaled $3,440,000 and $3,947,000, respectively. Since December 31, 2017, the Company has had no further borrowing availability under the loan. 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. In 2017, the Company agreed to pre-pay the CAPEX Loan by at least $300,000 from the proceeds of the sale of idle equipment, when the sale should occur. In January 2018, $312,000 of equipment that included the equipment at the co-packing facility was sold and the CAPEX Loan was repaid for this amount. 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 the additional interest rate for all loans will be eliminated. The following chart summarizes the loans as of March 31, 2018: Description Base Interest Rate Increase in Prime Current Original rate Additional Interest Current rate Line of Credit (Prime Plus) 3.60 % 1.55 % 5.15 % 0.00 % 5.15 % Term A 9.00 % 1.25 % 10.25 % 0.00 % 10.25 % Term B 11.60 % 1.25 % 12.85 % 0.00 % 12.85 % CAPEX Loan 9.00 % 1.25 % 10.25 % 0.00 % 10.25 % There is an additional monthly collateral monitoring fee of .45% added to the line of credit balance. |
Capital Leases Payable
Capital Leases Payable | 3 Months Ended |
Mar. 31, 2018 | |
Leases [Abstract] | |
Capital Leases Payable | 8. Capital Leases Payable The Company leases equipment for its brewery operations with an aggregate value of $944,000 under nine non-cancelable capital leases. Monthly payments range from $341 to $10,441 per month, including interest, at interest rates ranging from 6.51% to 17.31% per annum. The Company’s total payment obligation for the leases aggregates $19,000 per month at March 31, 2018. The leases expire at various dates through 2021. Future minimum lease payments under capital leases are as follows: Years Ending December 31, 2019 $ 209,000 2020 175,000 2021 47,000 2022 40,000 Total payments $ 471,000 Less: Amount representing interest (42,000 ) Present value of net minimum lease payments $ 429,000 Less: Current portion (186,000 ) Non-current portion $ 243,000 |
Long-Term Financing Obligation
Long-Term Financing Obligation | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Financing Obligation | 9. Long-term Financing Obligation Long term financing obligation is comprised of the following: March 31, 2018 December 31, 2017 Financing obligation $ 2,137,000 $ 2,186,000 Valuation discount (687,000 ) (714,000 ) Net long term financing obligation $ 1,450,000 $ 1,472,000 Less current portion (231,000 ) (222,000 ) Long term financing obligation $ 1,219,000 $ 1,250,000 On June 15, 2009, the Company closed escrow on the sale of its two buildings and its brewery equipment and concurrently entered into a long-term lease agreement for the same property and equipment. In connection with the lease the Company has the option to repurchase the buildings and brewery equipment from 12 months after the commencement date to the end of the lease term at the greater of the fair market value or an agreed upon amount. Since the lease contains a buyback provision and other related terms, the Company determined it had continuing involvement that did not warrant the recognition of a sale; therefore, the transaction has been accounted for as a long-term financing. The proceeds from the sale, net of transaction costs, have been recorded as a financing obligation in the amount of $3,056,000. Monthly payments of approximately $35,000 under the financing agreement are recorded as interest expense and a reduction in the financing obligation at an implicit rate of 9.9%. The financing obligation is personally guaranteed up to a limit of $150,000 by, Christopher J. Reed, one of the Company’s officers and directors. In connection with the financing obligation and subsequent amendments, the Company issued an aggregate of 600,000 warrants to purchase its common stock. The 600,000 warrants were valued at an aggregate amount of $1,336,000 and were recorded as a valuation discount at the date of issuance, and are being amortized over 15 years, the term of the purchase option. The balance of the unamortized valuation discount at March 31, 2018 and December 31, 2017 was $687,000 and $714,000, respectively. The aggregate amount due under the financing obligation at March 31, 2018 and December 31, 2017 was $2,137,000 and $2,186,000, respectively. |
Convertible Note to a Related P
Convertible Note to a Related Party | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Note to a Related Party | 10. Convertible Note to a Related Party The Convertible Note to a Related Party consists of the following: March 31, 2018 December 31, 2017 12% Convertible Note Payable $ 3,400,000 $ 3,400,000 Accrued Interest 402,000 290,000 Convertible Note Payable, Net $ 3,802,000 $ 3,690,000 On April 21, 2017 (“Closing Date”), pursuant to a Securities Purchase Agreement (“Purchase Agreement”), the Company sold and issued a secured, convertible, subordinated, non-redeemable note in the principal amount of $3,400,000 (“Note”) and a warrant to purchase 1,416,667 shares of common stock (“Warrant Shares”) to Raptor/Harbor Reeds SPV LLC (“Purchaser”). Raptor/Harbor Reeds owns 27.64% of the Company’s common stock at March 31, 2018 and December 31, 2017. The Note bears interest at a rate of 12% per annum, compounded monthly on a 360-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 (“PMC”). The Note may not be prepaid and originally matured on April 21, 2019. The maturity date was subsequently extended to April 21, 2021. The note may be converted, at any time and from time to time, into shares of common stock of the Company. The original conversion price of the note was $3.00, and this conversion price was subsequently reduced to $1.75, and again to $1.50. The warrant will expire on April 21, 2019 and had an original exercise price equal to $4.00 per share, which exercise price was subsequently reduced to $1.50. The note and warrant contain customary anti-dilution provisions and the shares of common stock issuable upon conversion of the note and exercise of the warrant have been registered on Form S-1. The investor was also granted a right to participate in future financing transactions of the Company for a term of two years. |
Warrant Liability
Warrant Liability | 3 Months Ended |
Mar. 31, 2018 | |
Warrant Liability | |
Warrant Liability | 11. Warrant Liability Various stock sales made by the Company to finance operations have been accompanied by the issuance of warrants. Some of these warrant agreements contain fundamental transaction provisions which may give rise to an obligation of the Company to pay cash to the warrant holders. For accounting purposes, in accordance with ASC 480, Distinguishing Liabilities from Equity, those warrants with fundamental transaction terms are accounted for as liabilities given the terms may give rise to an obligation of the Company to the warrant holders. These liabilities are measured at fair value at each reporting period and the change in the fair value is recognized in earnings in the accompanying Statements of Operations. The fair value of the warrant liability was determined using the Black-Scholes-Merton option pricing model at March 31, 2018 and December 31, 2017 using the following assumptions: March 31, 2018 December 31, 2017 Stock Price $ 1.70 $ 1.55 Risk free interest rate 1.91 % 1.74 % Expected volatility 56.31 % 56.06 % Expected life in years 3.18 3.42 Expected dividend yield 0 % 0 % Fair Value - Warrants $ 41,000 $ 36,000 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 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. |
Stock Based Activity
Stock Based Activity | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Based Activity | 12. Stock Based Activity Common stock issuable On January 10, 2018, the Company’s Board awarded certain independent directors 400,000 shares of common stock valued at $680,000 for past service subject to Reed’s 2017 Incentive Compensation Plan. Since the shares were for services provided during the year ended December 31, 2017, the Company recognized the expense in 2017 and reflected the fair value of the shares as common stock issuable at December 31, 2017 The shares were issued in 2018. Stock Awards During the period ended March 31, 2018 members of the Board of Directors were granted an aggregate of 70,588 shares of common stock with a fair value of $120,000 subject to Reed’s 2017 Incentive Compensation Plan to vest with each independent director in four equal installments during 2018. During the period ended March 31, 2018, the Company reflected compensation costs of $29,000 related to the amortization of this stock award. On January 10, 2018, pursuant to its employment agreement with Valentin Stalowir dated June 28, 2017, the Company’s board of directors granted to Mr. Stalowir 371,268 shares of common stock with a fair $631,000. which vest over 18 months and will be amortized through June 2019. During the period ended March 31, 2018, the Company reflected compensation costs of $70,000 related to the amortization of this stock award. The securities are to be issued subject to Reed’s 2017 Incentive Compensation Plan On March 28, 2018, the Company’s Board awarded Valentin Stalowir an additional 412,735 common shares with a fair value of $660,378 that which will be amortized through June 2019 when the shares vest. During the period ended March 31, 2018, the Company reflected compensation costs of $14,000 related to the amortization of this stock award. The shares will be issued pursuant to Reed’s 2017 Incentive Compensation Plan that are subject to shareholder approval to increase the number of shares underlying Reed’s 2017 Incentive Compensation Plan. These shares are not issuable until January 2019. As of March 31, 2018, the amount of unvested compensation related to issuances of restricted common stock was approximately $830,000, which will be recognized as an expense in future periods as the shares vest. Stock options Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 677,500 $ 4.35 4.14 - Granted 2,412,504 $ 1.62 4.00 Exercised - Unvested Forfeited or expired (111,300 ) $ 4.90 Vested Forfeited or expired (80,000 ) $ 4.00 Outstanding at March 31, 2018 2,898,704 $ 2.09 8.92 $ 88,000 Exercisable at March 31, 2018 491,998 $ 3.55 5.59 $ 10,000 On January 10, 2018, pursuant to its employment agreement with Valentin Stalowir dated June 28, 2017, the Company’s board of directors granted to Mr. Stalowir options to purchase 371,268 shares of stock. The securities are to be issued subject to Reed’s 2017 Incentive Compensation Plan. The options will have an exercise price of $1.70 vest over 18 months, and a 10 year life. The Company determined that the options had a fair value of $370,000 which will be amortized through June 2019. During the period ended March 31, 2018, the Company reflected compensation costs of $56,000 related to the amortization of this stock award. On March 28, 2018, the Company approved options to be issued pursuant to Reed’s 2017 Incentive Compensation Plan to certain current employees, officers and directors totaling 1,528,500. One half of these options vest annually over a four-year vesting period.; the other half of these options will vest based on performance criteria to be established by the Board. The performance goals are subject to the Board’s discretion. The Company determined that the options had a fair value of $1,441,000 which will be amortized in future periods through March 31, 2022. Also, on March 28, 2018, the Company approved the repricing and extension of current Chief Financial Officer Mr. Miles’ 2015 Plan options to the market price of $1.60 and an additional four years. During the period ended March 31, 2018, the Company reflected compensation costs of $57,000 related to the amortization of these stock awards. On March 28, 2018, the Company’s Board awarded Valentin Stalowir 412,736 common shares of performance-based options that are subject to shareholder approval to increase the number of shares underlying Reed’s 2017 Incentive Compensation Plan and are issuable until January 2019. One half of these options will vest in the same manner as the employee based performance awards described above; the other half of these options will vest based on performance criteria to be established by the Board. The Company determined that the options had a fair value of $389,00 which will be amortized in future periods through March 31, 2022. The aggregate intrinsic value was calculated as the difference between the closing market price, which was $1.70, and the exercise price of the Company’s stock options as of March 31, 2018. In addition to the stock compensation discussed above, the Company recognized stock-based compensation of $48,000 for the options granted prior to December 31, 2017. As of March 31, 2018, the amount of unvested compensation related to stock options was approximately $2.4 million which will be recorded as an expense in future periods as the options vest. Stock Warrants Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31,2017 7,325,282 $ 2.09 3.43 Granted Exercised 0 Forfeited or expired 0 Outstanding at March 31, 2018 7,325,282 $ 2.09 3.18 $ 163,000 Exercisable at March 31, 2018 6,575,282 $ 2.02 2.75 $ 13,000 The intrinsic value was calculated as the difference between the closing market price, which was $1.70, and the exercise price of the Company’s warrants common stock, as of March 31, 2018. |
Significant Accounting Polici19
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (ASC 606). The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contract(s), which includes (1) identifying the contract(s) or agreement(s) with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company adopted ASC 606 effective January 1, 2018, and adoption of such standard had no effect on previously reported balances. Recognition of sales of the products sold by the Company since the adoption of the new standard has had no quantitative effect on the financial statements. However, the guidance requires additional disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue that is recognized. The Company previously recognized and continues to recognize revenue when risk of loss transferred to our customers and collection of the receivable was 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. Under the new guidance, revenue is recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company does not have any significant contracts with customers requiring performance beyond delivery. All orders have a written purchase order that is reviewed for credit worthiness, pricing and other terms before fulfillment begins. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when placed under the customer’s control. Control of the products that we sell, transfers to the customer upon shipment from our facilities, and the Company’s performance obligations are satisfied at that time. All products sold by the Company are beverage products and ginger based candy products. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. The Company does not allow for returns, although we do for damaged products, if support for the damage that occurs pre-fulfillment is provided, returns are permitted. Damage product returns have been insignificant. Due to the insignificant amount of historical returns as well as the standalone nature of our products and assessment of performance obligations and transaction pricing for our sales contracts, we do not currently maintain a contract asset or liability balance at this time for obligations. We assess our contracts and the reasonableness of our conclusions on a quarterly basis |
Loss Per Common Share | Loss per Common Share Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to common stock holders by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. For the periods ended March 31, 2018 and 2017, 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: March 31, 2018 March 31, 2017 Convertible note 2,266,667 - Warrants 7,325,282 803,909 Series A Preferred Stock 37,644 37,644 Options 2,898,754 1,026,834 Total 12,528,347 1,868,387 |
Use of Estimates | 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, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 July 2017, the FASB issued ASU No. 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The guidance in ASU 2017-11 can be applied using a full or modified retrospective approach. The adoption of ASU 2017-11 is not expected to have a material impact on the Company’s financial position, results of operations, and cash flows. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Concentrations | Concentrations During the three months ended March 31, 2018, the Company had two customers that each accounted for 27% and 11% of gross sales, respectively. During the three months ended March 31, 2017, the Company had one customer that accounted for 21% of gross sales. No other customer exceeded 10% of sales for either period. As of March 31, 2018, the Company had accounts receivable from one customer which comprised 24% of its total accounts receivable. As of December 31, 2017, the Company had accounts receivable due from two customers which accounted for approximately 23% and 16% of total accounts receivable, respectively. During the three months ended March 31, 2018, the Company had two vendors which accounted for approximately 16.6% and 14.1% of all purchases, respectively. During the three months ended March 31, 2017, the Company had one vendor which accounted for approximately 18% of all purchases. No other vendor accounted for more than 10% of all purchases in either period. As of March 31, 2018, the Company had three vendors which accounted for 11.3%, 19.5%, and 40.7% of total accounts payable, respectively. As of December 31, 2017, the Company had one vendor which accounted for 20% of its total accounts payable. As of March 31, 2017, the Company had two vendors which accounted for approximately 10% each of the total accounts payable. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. Authoritative guidance provided by the FASB defines the following levels directly related to the amount of subjectivity associated with the inputs to fair valuation of these financial assets: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The 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 due to the fact that the interest rates on these obligations are based on prevailing market interest rates. As of March 31, 2018, and December 31, 2017, the Company’s balance sheets included the fair value of warrant liabilities of $41,000 and $36,000 respectively, which were based on Level 2 measurements. |
Significant Accounting Polici20
Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Potentially Dilutive Securities | The potentially dilutive securities consisted of the following: March 31, 2018 March 31, 2017 Convertible note 2,266,667 - Warrants 7,325,282 803,909 Series A Preferred Stock 37,644 37,644 Options 2,898,754 1,026,834 Total 12,528,347 1,868,387 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory is valued at the lower of cost (first-in, first-out or market) and, net of reserves, is comprised of the following as of: March 31, 2018 December 31, 2017 Raw Materials and Packaging $ 3,693,000 $ 2,670,000 Finished Goods 3,142,000 3,261,000 Total $ 6,835,000 $ 5,931,000 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment are comprised of the following as of: March 31, 2018 December 31, 2017 Land $ 1,107,000 $ 1,107,000 Building 2,360,000 2,360,000 Vehicles 612,000 568,000 Machinery and equipment 4,897,000 4,924,000 Equipment under capital leases 226,000 226,000 Office equipment 507,000 507,000 Book value 9,709,000 9,692,000 Accumulated depreciation (5,581,000 ) (5,414,000 ) Impairment reserve (3,925,000 ) (3,925,000 ) Net book value $ 203,000 $ 353,000 |
Schedule of Equipment Held for Sale | Equipment held for sale consists of the following: March 31, 2018 December 31, 2017 Equipment held for sale $ 4,184,000 $ 4,370,000 Reserve (2,000,000 ) (2,000,000 ) Net book value $ 2,184,000 $ 2,370,000 |
Intangible Assets and Impairm23
Intangible Assets and Impairment Policy (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets Trademarks | Based on management’s measurement, there were no indications of impairment at March 31, 2018. March 31, 2018 December 31, 2017 Virgil’s $ 576,000 $ 576,000 Sonoma Sparkler 229,000 229,000 Brand names $ 805,000 $ 805,000 |
Line of Credit and Bank Notes (
Line of Credit and Bank Notes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Bank Notes | Bank notes consist of the following as of March 31, 2018 and December 31, 2017: March 31, 2018 December 31, 2017 Term Loans $ 3,000,000 $ 3,000,000 CAPEX loan 3,440,000 3,947,000 Net $ 6,440,000 $ 6,947,000 |
Schedule of Interest Rates of Loans | The following chart summarizes the loans as of March 31, 2018: Description Base Interest Rate Increase in Prime Current Original rate Additional Interest Current rate Line of Credit (Prime Plus) 3.60 % 1.55 % 5.15 % 0.00 % 5.15 % Term A 9.00 % 1.25 % 10.25 % 0.00 % 10.25 % Term B 11.60 % 1.25 % 12.85 % 0.00 % 12.85 % CAPEX Loan 9.00 % 1.25 % 10.25 % 0.00 % 10.25 % |
Capital Leases Payable (Tables)
Capital Leases Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Future Minimum Lease Payments Under Capital Leases | Future minimum lease payments under capital leases are as follows: Years Ending December 31, 2019 $ 209,000 2020 175,000 2021 47,000 2022 40,000 Total payments $ 471,000 Less: Amount representing interest (42,000 ) Present value of net minimum lease payments $ 429,000 Less: Current portion (186,000 ) Non-current portion $ 243,000 |
Long-Term Financing Obligation
Long-Term Financing Obligation (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Financing Obligation | Long term financing obligation is comprised of the following: March 31, 2018 December 31, 2017 Financing obligation $ 2,137,000 $ 2,186,000 Valuation discount (687,000 ) (714,000 ) Net long term financing obligation $ 1,450,000 $ 1,472,000 Less current portion (231,000 ) (222,000 ) Long term financing obligation $ 1,219,000 $ 1,250,000 |
Convertible Note to a Related27
Convertible Note to a Related Party (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes | The Convertible Note to a Related Party consists of the following: March 31, 2018 December 31, 2017 12% Convertible Note Payable $ 3,400,000 $ 3,400,000 Accrued Interest 402,000 290,000 Convertible Note Payable, Net $ 3,802,000 $ 3,690,000 |
Warrant Liability (Tables)
Warrant Liability (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Warrant Liability | |
Schedule of Warrant Liability Using Assumptions | The fair value of the warrant liability was determined using the Black-Scholes-Merton option pricing model at March 31, 2018 and December 31, 2017 using the following assumptions: March 31, 2018 December 31, 2017 Stock Price $ 1.70 $ 1.55 Risk free interest rate 1.91 % 1.74 % Expected volatility 56.31 % 56.06 % Expected life in years 3.18 3.42 Expected dividend yield 0 % 0 % Fair Value - Warrants $ 41,000 $ 36,000 |
Stock Based Activity (Tables)
Stock Based Activity (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Stock Option Activity | Stock options Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31, 2017 677,500 $ 4.35 4.14 - Granted 2,412,504 $ 1.62 4.00 Exercised - Unvested Forfeited or expired (111,300 ) $ 4.90 Vested Forfeited or expired (80,000 ) $ 4.00 Outstanding at March 31, 2018 2,898,704 $ 2.09 8.92 $ 88,000 Exercisable at March 31, 2018 491,998 $ 3.55 5.59 $ 10,000 |
Schedule of Stock Warrants Activity | Stock Warrants Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Terms (Years) Aggregate Intrinsic Value Outstanding at December 31,2017 7,325,282 $ 2.09 3.43 Granted Exercised 0 Forfeited or expired 0 Outstanding at March 31, 2018 7,325,282 $ 2.09 3.18 $ 163,000 Exercisable at March 31, 2018 6,575,282 $ 2.02 2.75 $ 13,000 |
Basis of Presentation and Liq30
Basis of Presentation and Liquidity (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss | $ 1,615,000 | $ 1,993,000 | ||
Net cash provided by (used in) operating activities | 4,636,000 | (527,000) | ||
Stockholder’s deficit | (833,000) | $ 508,000 | ||
Working capital | 1,384,000 | 2,303,000 | ||
Cash balance | 3,376,000 | $ 197,000 | $ 12,127,000 | $ 451,000 |
Line of credit | 4,432,000 | |||
Net proceeds | 7,808,000 | |||
Notes payable to bank | $ 6,900,000 | |||
Maturity due date | Oct. 31, 2018 |
Significant Accounting Polici31
Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Warrant liabilities | $ 41,000 | $ 36,000 | |
Customer One [Member] | Sales Revenue, Net [Member] | |||
Percentage of sale accounted to customer | 27.00% | 21.00% | |
Customer One [Member] | Accounts Receivable [Member] | |||
Percentage of sale accounted to customer | 24.00% | 23.00% | |
Customer Two [Member] | Sales Revenue, Net [Member] | |||
Percentage of sale accounted to customer | 11.00% | ||
Customer Two [Member] | Accounts Receivable [Member] | |||
Percentage of sale accounted to customer | 16.00% | ||
No Other Customer [Member] | Sales Revenue, Net [Member] | |||
Percentage of sale accounted to customer | 10.00% | ||
Vendor One [Member] | |||
Percentage of sale accounted to customer | 16.60% | 18.00% | |
Vendor One [Member] | Accounts Payable [Member] | |||
Percentage of sale accounted to customer | 11.30% | 10.00% | 20.00% |
Vendor Two [Member] | |||
Percentage of sale accounted to customer | 14.10% | ||
Vendor Two [Member] | Accounts Payable [Member] | |||
Percentage of sale accounted to customer | 19.50% | ||
No Other Vendor [Member] | |||
Percentage of sale accounted to customer | 10.00% | ||
Vendor Three [Member] | Accounts Payable [Member] | |||
Percentage of sale accounted to customer | 40.70% |
Significant Accounting Polici32
Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Potentially dilutive securities | 12,528,347 | 1,868,387 |
Convertible Note [Member] | ||
Potentially dilutive securities | 2,266,667 | |
Warrants [Member] | ||
Potentially dilutive securities | 7,325,282 | 803,909 |
Series A Preferred Stock [Member] | ||
Potentially dilutive securities | 37,644 | 37,644 |
Options [Member] | ||
Potentially dilutive securities | 2,898,754 | 1,026,834 |
Inventory (Details Narrative)
Inventory (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | ||
Inventory reserve for obsolescence | $ 451,000 | $ 509,000 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Raw Materials and Packaging | $ 3,693,000 | $ 2,670,000 |
Finished Goods | 3,142,000 | 3,261,000 |
Inventory, total | $ 6,835,000 | $ 5,931,000 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Mar. 24, 2018 | |
Depreciation expense | $ 177,000 | $ 121,000 | ||
Impairment of assets | $ 3,925,000 | |||
Board of Directors [Member] | ||||
Letter of intent offers in cash | $ 1,250,000 | |||
Long-term liability | $ 1,400,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Land | $ 1,107,000 | $ 1,107,000 |
Building | 2,360,000 | 2,360,000 |
Vehicles | 612,000 | 568,000 |
Machinery and equipment | 4,897,000 | 4,924,000 |
Equipment under capital leases | 226,000 | 226,000 |
Office equipment | 507,000 | 507,000 |
Book value | 9,709,000 | 9,692,000 |
Accumulated depreciation | (5,581,000) | (5,414,000) |
Impairment reserve | (3,925,000) | (3,925,000) |
Net book value | $ 203,000 | $ 353,000 |
Property and Equipment - Sche37
Property and Equipment - Schedule of Equipment Held for Sale (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Abstract] | ||
Equipment held for sale | $ 4,184,000 | $ 4,370,000 |
Reserve | (2,000,000) | (2,000,000) |
Net book value | $ 2,184,000 | $ 2,370,000 |
Intangible Assets and Impairm38
Intangible Assets and Impairment Policy - Schedule of Intangible Assets Trademarks (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Brand names | $ 805,000 | $ 805,000 |
Virgil's [Member] | ||
Brand names | 576,000 | 576,000 |
Sonoma Sparkler [Member] | ||
Brand names | $ 229,000 | $ 229,000 |
Advances from Officers (Details
Advances from Officers (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Advance to affiliate | $ 571,000 |
Robert Reed [Member] | |
Repayments of related party | 240,000 |
Funds advanced by related party | $ 277,000 |
Line of Credit and Bank Notes40
Line of Credit and Bank Notes (Details Narrative) | 1 Months Ended | 3 Months Ended | 12 Months Ended |
Jan. 31, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Line of credit | $ 4,432,000 | ||
Loan maturity date | Oct. 31, 2018 | ||
Line of credit borrowing availability | $ 6,000,000 | ||
Percentage of borrowing based on accounts receivable | 85.00% | ||
Percentage of borrowing based on eligible inventory | 60.00% | ||
Line of credit current | $ 3,301,000 | ||
Loan maturity description | The line of credit matures on October 21, 2018 | ||
Loan interest rate | 13.25% | ||
Co-packing facility cost | $ 250,000 | ||
Monthly management fee percentage | 0.45 | ||
Revolving Line of Credit [Member] | |||
Line of credit borrowing availability | $ 6,000,000 | ||
Capex Loan [Member] | |||
Loan maturity date | Oct. 21, 2018 | ||
Loan interest rate | 9.50% | ||
Term loan outstanding principal balance | $ 3,440,000 | $ 3,947,000 | |
Repayments of Debt | $ 312,000 | ||
Prime Rate [Member] | Capex Loan [Member] | |||
Loan interest rate | 10.50% | 5.75% | |
Term Loans [Member] | |||
Term loan outstanding principal balance | $ 3,000,000 | $ 3,000,000 | |
Revolving Line of Credit [Member] | |||
Revolving loan description | 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 nd 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 unused cash availability exceeds $1,500,000 then the rate will be reduced to base rate plus prime. As of March 31, 2017, our effective rate under the revolving line was 9.5%. The monthly management fee is .45% of the average monthly loan balance. | ||
Minimum [Member] | Revolving Line of Credit [Member] | |||
Line of credit borrowing availability | $ 1,500,000 | ||
Minimum [Member] | Capex Loan [Member] | |||
Repayments of Debt | $ 300,000 | ||
PMC Financial Services Group, LLC [Member] | Two Term Loans [Member] | |||
Loan maturity date | Oct. 21, 2018 | ||
Line of credit borrowing availability | $ 3,000,000 | ||
Term loan amount | 1,500,000 | ||
Measured point value | $ 1,000,000 | ||
PMC Financial Services Group, LLC [Member] | First Loan [Member] | |||
Loan interest rate | 10.50% | ||
PMC Financial Services Group, LLC [Member] | First Loan [Member] | Prime Rate [Member] | |||
Loan interest rate | 5.75% | ||
PMC Financial Services Group, LLC [Member] | Second Loan [Member] | |||
Loan interest rate | 16.35% | ||
PMC Financial Services Group, LLC [Member] | Second Loan [Member] | Prime Rate [Member] | |||
Loan interest rate | 11.60% | ||
PMC Financial Services Group, LLC [Member] | Maximum [Member] | Two Term Loans [Member] | |||
Loan interest rate | 12.00% | ||
PMC Financial Services Group, LLC [Member] | Minimum [Member] | Two Term Loans [Member] | |||
Loan interest rate | 9.00% | ||
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 | Oct. 1, 2018 | ||
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 |
Line of Credit and Bank Notes -
Line of Credit and Bank Notes - Schedule of Bank Notes (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Net | $ 6,900,000 | |
Bank Notes [Member] | ||
Term Loans | 3,000,000 | $ 3,000,000 |
CAPEX loan | 3,440,000 | 3,947,000 |
Net | $ 6,440,000 | $ 6,947,000 |
Line of Credit and Bank Notes42
Line of Credit and Bank Notes - Schedule of Interest Rates of Loans (Details) | 3 Months Ended |
Mar. 31, 2018 | |
Line of Credit (Prime Plus) [Member] | |
Original Rate | 5.15% |
Additional Interest | 0.00% |
Current rate | 5.15% |
Term A [Member] | |
Original Rate | 10.25% |
Additional Interest | 0.00% |
Current rate | 10.25% |
Term B [Member] | |
Original Rate | 12.85% |
Additional Interest | 0.00% |
Current rate | 12.85% |
CAPEX Loan [Member] | |
Original Rate | 10.25% |
Additional Interest | 0.00% |
Current rate | 10.25% |
Base Interest Rate [Member] | Line of Credit (Prime Plus) [Member] | |
Original Rate | 3.60% |
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] | CAPEX Loan [Member] | |
Original Rate | 9.00% |
Increase in Prime [Member] | Line of Credit (Prime Plus) [Member] | |
Original Rate | 1.55% |
Increase in Prime [Member] | Term A [Member] | |
Original Rate | 1.25% |
Increase in Prime [Member] | Term B [Member] | |
Original Rate | 1.25% |
Increase in Prime [Member] | CAPEX Loan [Member] | |
Original Rate | 1.25% |
Capital Leases Payable (Details
Capital Leases Payable (Details Narrative) | 3 Months Ended |
Mar. 31, 2018USD ($)Installments | |
Equipment held under capital leases | $ 944,000 |
Number of non-cancelable capital leases | Installments | 9 |
Payment of lease amount | $ 19,000 |
Lease expire year | 2,021 |
Minimum [Member] | |
Payment of lease range per month | $ 341 |
Percentage of interest for lease amount | 6.51% |
Maximum [Member] | |
Payment of lease range per month | $ 10,441 |
Percentage of interest for lease amount | 17.31% |
Capital Leases Payable - Schedu
Capital Leases Payable - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Leases [Abstract] | ||
2,019 | $ 209,000 | |
2,020 | 175,000 | |
2,021 | 47,000 | |
2,022 | 40,000 | |
Total payments | 471,000 | |
Less: Amount representing interest | (42,000) | |
Present value of net minimum lease payments | 429,000 | |
Less: Current portion | (186,000) | $ (198,000) |
Non-current portion | $ 243,000 | $ 236,000 |
Long-Term Financing Obligatio45
Long-Term Financing Obligation (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Proceeds from sale of transaction cost | $ 3,056,000 | ||
Financing interest expenses | $ 35,000 | ||
Percentage of interest expense and reduction in the financing obligation at implicit rate | 9.90% | ||
Change in fair value of warrant liability | $ 5,000 | $ (9,000) | |
Aggregate amount due under financing obligation | 2,137,000 | $ 2,186,000 | |
Christopher J. Reed [Member] | |||
Proceeds financial obligation limit guaranteed by related party | $ 150,000 | ||
Warrants [Member] | Financing Obligation [Member] | |||
Number of warrants to purchase of common stock | 600,000 | ||
Change in fair value of warrant liability | $ 1,336,000 | ||
Valuation of discount amortized period | 15 years | ||
Unamortized valuation discount | $ 687,000 | $ 714,000 |
Long-Term Financing Obligatio46
Long-Term Financing Obligation - Schedule of Long-Term Financing Obligation (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Valuation discount | $ (687,000) | $ (714,000) |
Less current portion | 231,000 | 222,000 |
Long term financing obligation | 1,219,000 | 1,250,000 |
Long Term Financing Obligation [Member] | ||
Financing obligation | 2,137,000 | 2,186,000 |
Valuation discount | (687,000) | (714,000) |
Net long term financing obligation | 1,450,000 | 1,472,000 |
Less current portion | (231,000) | (222,000) |
Long term financing obligation | $ 1,219,000 | $ 1,250,000 |
Convertible Note to a Related47
Convertible Note to a Related Party (Details Narrative) - USD ($) | Apr. 21, 2017 | Mar. 31, 2018 |
Debt maturity date | Oct. 31, 2018 | |
Raptor/Harbor Reeds SPV LLC [Member] | ||
Ownership percentage | 27.64% | |
Conversion price | $ 3 | |
Raptor/Harbor Reeds SPV LLC [Member] | Reduced Price Per Share [Member] | ||
Conversion price | $ 1.50 | |
Securities Purchase Agreement [Member] | ||
Secured convertible debt principal amount | $ 3,400,000 | |
Number of warrants to purchase of common stock | 1,416,667 | |
Note bears interest rate | 12.00% | |
Debt maturity date | Apr. 21, 2019 | |
Debt description | The original conversion price of the note was $3.00, and this conversion price was subsequently reduced to $1.75, and again to $1.50. The warrant will expire on April 21, 2019 and had an original exercise price equal to $4.00 per share, which exercise price was subsequently reduced to $1.50 | |
Warrant exercise price | $ 4 | |
Securities Purchase Agreement [Member] | Reduced Price Per Share [Member] | ||
Warrant exercise price | $ 1.50 |
Convertible Note to a Related48
Convertible Note to a Related Party - Schedule of Convertible Notes (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Convertible Note Payable, Net | $ 3,802,000 | $ 3,690,000 |
Convertible Notes [Member] | ||
12% Convertible Note Payable | 3,400,000 | 3,400,000 |
Accrued Interest | 402,000 | 290,000 |
Convertible Note Payable, Net | $ 3,802,000 | $ 3,690,000 |
Convertible Note to a Related49
Convertible Note to a Related Party - Schedule of Convertible Notes (Details) (Parenthetical) | 3 Months Ended |
Mar. 31, 2018 | |
Convertible Notes [Member] | |
Percentage of convertible note | 12.00% |
Warrant Liability - Schedule of
Warrant Liability - Schedule of Warrant Liability Using Assumptions (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Fair Value - Warrants | $ 5,000 | $ (9,000) | |
Warrants [Member] | |||
Risk free interest rate | 1.91% | 1.74% | |
Expected Volatility | 56.31% | 56.06% | |
Expected life in years | 3 years 2 months 5 days | 3 years 5 months 1 day | |
Expected dividend yield | 0.00% | 0.00% | |
Fair Value - Warrants | $ 41,000 | $ 36,000 | |
Warrants [Member] | |||
Stock Price | $ 1.70 | $ 1.55 |
Stock Based Activity (Details N
Stock Based Activity (Details Narrative) - USD ($) | Mar. 28, 2018 | Jan. 10, 2018 | Mar. 31, 2018 |
Unvested compensation not yet recognized | $ 830,000 | ||
Market price per share | $ 1.70 | ||
Stock-based compensation | $ 48,000 | ||
Mr Valentin Stalowir [Member] | |||
Compensation cost of stock awards | $ 14,000 | 70,000 | |
Employment Agreement [Member] | Mr Valentin Stalowir [Member] | |||
Number of shares common stock, shares | 371,268 | ||
Number of shares common stock | $ 631,000 | ||
Stock Options [Member] | |||
Compensation cost of stock awards | 56,000 | ||
Unvested compensation not yet recognized | 2,400,000 | ||
Stock Options [Member] | Valentin Stalowir [Member] | |||
Number of shares common stock, shares | 412,736 | ||
Fair value of options | $ 38,900 | ||
Stock Options [Member] | Mr. Miles [Member] | |||
Compensation cost of stock awards | $ 57,000 | ||
Stock Options [Member] | Employment Agreement [Member] | |||
Options to purchase shares of common stock | 371,218 | ||
Number of option issued exercise price per share | $ 1.70 | ||
Stock option description | The options will have an exercise price of $1.70 vest over 18 months, and a 10 year life | ||
Fair value of options | $ 370,000 | ||
2017 Incentive Compensation Plan [Member] | |||
Number of shares common stock, shares | 400,000 | 70,588 | |
Number of shares common stock | $ 680,000 | $ 120,000 | |
Fair value of options | $ 1,441,000 | ||
Stock options for the officers and directors amount | 1,528,500 | ||
Stock options at market price per share | $ 1.60 | ||
2017 Incentive Compensation Plan [Member] | Board of Directors [Member] | |||
Compensation cost of stock awards | $ 29,000 | ||
2017 Incentive Compensation Plan [Member] | Valentin Stalowir [Member] | |||
Number of shares common stock, shares | 412,735 | ||
Number of shares common stock | $ 660,378 |
Stock Based Activity - Schedule
Stock Based Activity - Schedule of Stock Option Activity (Details) - Options [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Shares Outstanding, Beginning balance | 677,500 |
Shares, Granted | 2,412,504 |
Shares, Exercised | |
Unvested Forfeited or expired | (111,300) |
Shares,Vested Forfeited or expired | (80,000) |
Shares Outstanding, Ending balance | 2,898,704 |
Shares Exercisable | 491,998 |
Weighted-Average Exercise Price, Outstanding, Beginning | $ / shares | $ 4.35 |
Weighted-Average Exercise Price, Granted | $ / shares | 1.62 |
Weighted-Average Exercise Price, Unvested Forfeited or expired | $ / shares | 4.90 |
Weighted-Average Exercise Price, Vested Forfeited or expired | $ / shares | 4 |
Weighted-Average Exercise Price, Outstanding, Ending | $ / shares | 2.09 |
Weighted-Average Exercise Price, Exercisable | $ / shares | $ 3.55 |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning | 4 years 1 month 20 days |
Weighted-Average Remaining Contractual Terms (Years), Granted | 4 years |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending | 8 years 11 months 1 day |
Weighted-Average Remaining Contractual Terms (Years), Exercisable | 5 years 7 months 2 days |
Aggregate Intrinsic Value, Share Outstanding, Beginning | $ | |
Aggregate Intrinsic Value, Share Outstanding, Ending | $ | 88,000 |
Aggregate Intrinsic Value, Share Exercisable | $ | $ 10,000 |
Stock Based Activity - Schedu53
Stock Based Activity - Schedule of Stock Warrants Activity (Details) - Warrants [Member] | 3 Months Ended |
Mar. 31, 2018USD ($)$ / sharesshares | |
Shares Outstanding, Beginning Balance | 7,325,282 |
Shares, Granted | |
Shares, Exercised | 0 |
Shares, Forfeited or expired | 0 |
Shares Outstanding, Ending Balance | 7,325,282 |
Shares Exercisable, Ending Balance | 6,575,282 |
Weighted-Average Exercise Price, Outstanding Beginning Balance | $ / shares | $ 2.09 |
Weighted-Average Exercise Price, Outstanding Ending Balance | $ / shares | 2.09 |
Weighted-Average Exercise Price, Exercisable Ending Balance | $ / shares | $ 2.02 |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Beginning Balance | 3 years 5 months 5 days |
Weighted-Average Remaining Contractual Terms (Years), Outstanding Ending Balance | 3 years 2 months 5 days |
Weighted-Average Remaining Contractual Terms (Years), Exercisable Ending Balance | 2 years 9 months |
Aggregate Intrinsic Value Shares Outstanding Ending | $ | $ 163,000 |
Aggregate Intrinsic Value Shares Exercisable | $ | $ 13,000 |