Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 06, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Where Food Comes From, Inc. | ||
Entity Central Index Key | 1360565 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $32,270,971 | ||
Entity Common Stock, Shares Outstanding | 23,735,139 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets: | ||
Cash and cash equivalents | $2,583,058 | $1,067,537 |
Restricted cash | 250,000 | |
Accounts receivable, net | 979,532 | 683,800 |
Prepaid expenses and other current assets | 126,938 | 143,576 |
Deferred tax assets | 167,805 | 190,184 |
Total current assets | 4,107,333 | 2,085,097 |
Property and equipment, net | 231,886 | 253,206 |
Intangible and other assets, net | 1,952,678 | 1,716,115 |
Goodwill | 1,279,762 | 1,279,762 |
Long-term deferred tax assets | 361,797 | 480,294 |
Total assets | 7,933,456 | 5,814,474 |
Current liabilities: | ||
Accounts payable | 401,131 | 277,633 |
Accrued expenses and other current liabilities | 65,849 | 56,091 |
Customer deposits | 69,090 | 39,134 |
Deferred revenue | 178,724 | 149,660 |
Short-term debt and current portion of notes payable | 7,425 | 24,782 |
Current portion of capital lease obligations | 4,397 | 4,173 |
Total current liabilities | 726,616 | 551,473 |
Capital lease obligations, net of current portion | 6,410 | 10,808 |
Notes payable and other long-term debt, net of current portion | 16,245 | 165,755 |
Total liabilities | 749,271 | 728,036 |
Commitments and contingencies | ||
Contingently redeemable non-controlling interest | 974,019 | 1,018,396 |
Equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued or outstanding | ||
Common stock, $0.001 par value; 95,000,000 shares authorized; 24,266,827 (2014) and 23,233,483 (2013) shares issued, and 23,720,130 (2014) and 22,686,786 (2013) shares outstanding | 24,266 | 23,233 |
Additional paid-in-capital | 7,428,754 | 5,216,327 |
Treasury stock of 546,697 shares (2014 and 2013) | -150,849 | -150,849 |
Accumulated deficit | -1,092,005 | -1,321,100 |
Total Where Food Comes From, Inc. equity | 6,210,166 | 3,767,611 |
Non-controlling interest | 300,431 | |
Total equity | 6,210,166 | 4,068,042 |
Total liabilities and stockholders' equity | $7,933,456 | $5,814,474 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 24,266,827 | 23,233,483 |
Common stock, shares outstanding | 23,720,130 | 22,686,786 |
Treasury stock, shares | 546,697 | 546,697 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Loss) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | ||
Revenues: | |||
Service revenues | $7,564,585 | $4,947,430 | |
Product sales | 1,085,671 | 723,449 | |
Other revenue | 114,676 | 127,277 | |
Total revenues | 8,764,932 | 5,798,156 | |
Costs of revenues: | |||
Labor and other costs of services | 4,283,218 | 2,572,538 | |
Costs of products | 718,410 | 519,221 | |
Total costs of revenues | 5,001,628 | 3,091,759 | |
Gross profit | 3,763,304 | 2,706,397 | |
Selling, general and administrative expenses | 3,418,578 | 2,679,089 | |
Income (loss) from operations | 344,726 | 27,308 | |
Other expense (income): | |||
Interest expense | 9,818 | 33,588 | |
Other income, net | -3,204 | -1,469 | |
Income (loss) before income taxes | 338,112 | -4,811 | |
Income tax expense (benefit) | 140,876 | -1,778 | |
Net income (loss) | 197,236 | -3,033 | |
Net loss (income) attributable to non-controlling interest | 31,859 | -30,527 | |
Net Income (loss) attributable to Where Food Comes From, Inc. | $229,095 | ($33,560) | |
Net income (loss) per share: | |||
Basic (in dollars per share) | $0.01 | [1] | |
Diluted (in dollars per share) | $0.01 | [1] | |
Weighted average number of common shares outstanding: | |||
Basic (in share) | 23,170,074 | 21,893,794 | |
Diluted (in share) | 23,170,074 | 21,893,794 | |
[1] | less than a penny ($0.01) per share. |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities: | ||
Net income (loss) | $197,236 | ($3,033) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 225,638 | 119,696 |
Stock-based compensation expense | 88,060 | 70,152 |
Common stock issued for services rendered | 75,000 | 75,000 |
Common stock issued in connection with extinguishment of debt | 14,686 | |
Deferred tax expense (benefit) | 140,876 | -1,778 |
Bad debt expense | 5,185 | 3,000 |
Changes in operating assets and liabilities, net of effect from acquisitions: | ||
Accounts receivable | -300,917 | -159,729 |
Prepaid expenses and other assets | -33,362 | -63,387 |
Accounts payable | 123,498 | 142,720 |
Accrued expenses and other current liabilities | 39,714 | 8,939 |
Deferred revenue | 29,064 | 10,638 |
Net cash provided by operating activities | 589,992 | 216,904 |
Investing activities: | ||
Acquisition of International Certification Services, Inc. (remaining interest in 2014) | -195,926 | -565,000 |
Acquisition of Sterling Solutions, LLC | -150,000 | |
Purchase of other intangible assets | -65,000 | |
Purchases of property and equipment | -74,852 | -34,645 |
Net cash used in investing activities | -485,778 | -599,645 |
Financing activities: | ||
Repayments of notes payable | -166,867 | -23,442 |
Repayments of capital lease obligations | -4,174 | -5,506 |
Restricted cash for line of credit collateral | -250,000 | |
Proceeds from issuance of common stock | 1,800,000 | |
Proceeds from stock option exercise | 32,348 | 105,292 |
Stock repurchase under Buyback Program | -29,555 | |
Net cash provided by financing activities | 1,411,307 | 46,789 |
Net change in cash | 1,515,521 | -335,952 |
Cash and cash equivalents at beginning of year | 1,067,537 | 1,403,489 |
Cash and cash equivalents at end of year | $2,583,058 | $1,067,537 |
Consolidated_Statement_of_Equi
Consolidated Statement of Equity (USD $) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Total |
Balance, beginning at Dec. 31, 2012 | $21,837 | |||||
Balance, beginning, shares at Dec. 31, 2012 | 21,323,799 | 3,668,556 | -121,294 | -1,287,540 | 287,995 | 2,569,554 |
Stock-based compensation expense | 70,152 | 70,152 | ||||
Issuance of common shares upon exercise of options | 454 | |||||
Issuance of common shares upon exercise of options, shares | 454,966 | 104,838 | 105,292 | |||
Excess tax benefit from share based payments | 148,579 | 148,579 | ||||
Issuance of common shares in settlement of debt | 176 | 214,509 | 214,685 | |||
Issuance of common shares in settlement of debt, shares | 175,972 | |||||
Shares issued in acquisition | 709 | 934,750 | 935,459 | |||
Shares issued in acquisition, shares | 708,681 | |||||
Issuance of common shares for acquisition-related consulting fees | 57 | 74,943 | 75,000 | |||
Issuance of common shares for acquisition-related consulting fees, shares | 56,818 | |||||
Stock repurchase on the open market | -29,555 | -29,555 | ||||
Stock repurchase on the open market, shares | -33,450 | 33,450 | ||||
Net income | -33,560 | 12,436 | -21,124 | |||
Balance, ending at Dec. 31, 2013 | 23,233 | 5,216,327 | -150,849 | -1,321,100 | 300,431 | 4,068,042 |
Balance, ending, shares at Dec. 31, 2013 | 22,686,786 | 22,686,786 | ||||
Stock-based compensation expense | 88,060 | 88,060 | ||||
Issuance of common shares upon exercise of options | 60 | 32,288 | 32,288 | |||
Issuance of common shares upon exercise of options, shares | 59,998 | |||||
Acquisition of non-controlling interest of ICS | 117,022 | -312,948 | -195,926 | |||
Shares issued in acquisition | 42 | 100,988 | 101,030 | |||
Shares issued in acquisition, shares | 42,096 | |||||
Private placement of shares of common stock | 900 | 1,799,100 | 1,800,000 | |||
Private placement of shares of common stock, shares | 900,000 | 900,000 | ||||
Issuance of common shares for acquisition-related consulting fees | 31 | 74,969 | 75,000 | |||
Issuance of common shares for acquisition-related consulting fees, shares | 31,250 | |||||
Net income | 229,095 | 12,517 | 241,612 | |||
Balance, ending at Dec. 31, 2014 | $24,266 | $7,428,754 | ($150,849) | ($1,092,005) | $6,210,166 | |
Balance, ending, shares at Dec. 31, 2014 | 23,720,130 | 23,720,130 |
The_Company_and_Basis_of_Prese
The Company and Basis of Presentation | 12 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company and Basis of Presentation | Note 1 - The Company and Basis of Presentation |
Business Overview | |
Where Food Comes From, Inc. is a Colorado corporation based in Castle Rock, Colorado (“WFCF”, the “Company,” “our,” “we,” or “us”). We provide verification and certification solutions for the agriculture, livestock and food industry. Most of our customers are located throughout the United States. | |
On February 29, 2012, we completed an acquisition of a 60% ownership investment in a North Dakota company, International Certification Services, Inc. (“ICS”). On March 1, 2014, the Company exercised its call option to purchase the remaining 40% interest of the stock of ICS in exchange for cash consideration (Note 3). | |
On September 16, 2013, we acquired the auditing business of Praedium Ventures, LLC, (“Praedium”) previously known as Validus Ventures, LLC (Note 3). This acquisition has been accounted for using the acquisition method of accounting and, accordingly, its results are included in the Company’s consolidated financial statements from the date of acquisition. | |
On October 24, 2014, we acquired certain audit, assessment and verification business assets of Sterling Solutions, LLC (“Sterling”) (Note 3). | |
We operate in one segment. | |
Basis of Presentation | |
Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues, costs and expenses during the reporting period. Actual results could differ from the estimates. | |
The accompanying consolidated financial statements include the results of operations, financial position and cash flows of the Company and its subsidiaries. At December 31, 2014, our 100%-owned subsidiaries include ICS and our 60%-owned subsidiary is Validus Ventures, LLC. All intercompany balances have been eliminated in consolidation. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Summary Of Significant Accounting Policies | ||||||
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies | |||||
Cash and Cash Equivalents | ||||||
We place our cash with high quality financial institutions. At times, cash balances may exceed the FDIC insurance limit; however, we have not experienced any losses related to balances that exceed such FDIC insurance limits, and we believe our credit risk is minimal. At times, we may also invest in short-term investments with original maturities of three months or less, which we consider to be cash and cash equivalents, since they are readily convertible to cash. | ||||||
Restricted cash of $250,000 at December 31 2014 represents a certificate of deposit with a financial institution that is required as collateral under a revolving line of credit (Note 6). | ||||||
Revenue Recognition | ||||||
We offer a range of products and services to deploy and maintain identification, traceability, and verification systems and to facilitate customers’ participation in and compliance with the USDA’s Quality System Assessment, Process Verification and Export Verification Programs. We generate revenue primarily from the sale of our verification solutions, consulting services and hardware sales. We sell our products and services directly to customers at various levels in the livestock supply chain. | ||||||
Revenue is recognized when persuasive evidence of an agreement with the customer exists, delivery has occurred or services have been provided, the sales price is fixed or determinable, collectability is reasonably assured, and risk of loss and title have transferred to the customer. | ||||||
No single customer generated more than 10% of total net revenue in 2014 or 2013. | ||||||
Service revenues primarily consist of fees charged for verification audits and other verification services that the Company performs for customers. Revenue from verification audits is recognized upon completion of the audits. Contracts for these services are cancelable only for non-performance. | ||||||
In connection with certain arrangements, reimbursable expenses are incurred and billed to customers and such amounts are recognized as both revenue and cost of revenue. | ||||||
Deferred revenue represents payments received in advance from our customers for annual customer support services not yet performed as of December 31, and revenue is recognized as services are performed, generally over the one year contract term. | ||||||
Customer deposits represent down-payments made in advance of a verification audit to be performed for a customer and deposits are applied to the customer’s accounts when invoiced. | ||||||
Revenues under contracts for consulting services are recognized when completed (for short-term projects). On occasion, we may enter into long-term projects, for which we use the percentage of completion method. No such long-term projects occurred during 2014 and 2013. | ||||||
Product sales are primarily generated from the sale of cattle identification ear tags. Revenue is recognized when goods are shipped and after title has transferred to the customer. | ||||||
Other revenue primarily represents the fees earned from our “WhereFoodComesFrom®” labeling program. Revenue is recognized when our customer, who has been granted a right to use our WhereFoodComesFrom® label, places this label on their product and ships their product. Revenue is billed based on pounds of product shipped. | ||||||
Generally, we do not provide right of return or warranty on product sales or services performed. | ||||||
Accounts Receivable and Allowance for Doubtful Accounts | ||||||
Our receivables are generally due from trade customers. Credit is extended based on our evaluation of the customer’s financial condition and generally, collateral is not required. Accounts receivable are generally due approximately 30 days from the invoice date and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable that are outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss and payment history, the customer’s current ability to pay its obligations to us and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The allowance for doubtful accounts was approximately $25,800 and $20,700, at December 31, 2014 and 2013, respectively. | ||||||
No single customer accounted for greater than 10% of our accounts receivable balances at December 31, 2013 and 2014. | ||||||
Cost of Revenues | ||||||
Cost of revenues includes the cost of products sold, which consists of livestock ear tags used in connection with the US Verified Source and Age Verification programs. Salaries and related fringe benefits directly associated with our verification services are allocated to cost of revenues. | ||||||
Livestock identification ear tags sold in connection with our verification offerings are purchased primarily from one supplier. However, there are numerous other companies which manufacture and market such ear tags. | ||||||
Fair Value Measurements | ||||||
The carrying value of cash and restricted cash, accounts receivable, and accounts payable approximate fair value due to their short maturities. The amounts shown for debt and notes payable also approximate fair value because current interest rates and terms offered to us for similar debt are substantially the same. | ||||||
Fair value accounting guidance defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements, for both financial and non-financial assets. It also establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: | ||||||
· | Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. | |||||
· | Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data. | |||||
· | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. | |||||
Property and Equipment | ||||||
Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets. Land is not depreciated. Buildings are depreciated over 20 years. All other property and equipment have depreciable lives which range from one to seven years. | ||||||
Intangible Assets | ||||||
Our intangible assets consist of customer relationships, accreditations, a beneficial lease arrangement and tradename/trademarks related to our acquisitions, recorded at estimated fair value. Intangible assets also include certain trademark rights and the related costs incurred to obtain the trademark rights recorded at cost. Certain of these assets are subject to amortization using the straight-line method over the estimated useful lives of the respective assets (Note 5). | ||||||
In connection with the Validus acquisition, the Company allocated a portion of the purchase price to tradenames/trademarks. These tradenames/trademarks were determined to have an indefinite useful life and are not currently amortized. Authoritative guidance requires that intangible assets not subject to amortization (indefinite-lived assets) be tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. | ||||||
Impairment of Long-Lived Assets | ||||||
We review all of our long-lived assets (including intangible assets) for impairment at least annually or whenever impairment indicators are determined to be present. If an impairment exists, the amount of impairment is measured as the excess of the carrying amount of the asset over its fair value as determined utilizing estimated discounted future cash flows, or some other fair value measure, or the expected proceeds, net of costs to sell, upon sale of the asset. | ||||||
Significant judgments are required to estimate the fair value of intangible assets including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or impairment at future reporting dates. No impairment was identified on the Company’s long-lived assets through December 31, 2014. | ||||||
Goodwill and Other Non-Amortizable Intangible Assets | ||||||
Goodwill relates to our acquisitions of ICS and Validus. Both ICS and Validus are reporting units one level below our Certification and Verification Services segment. All other non-amortizable intangible assets relate to the trademarks/trade name acquired in the Validus acquisition and have an indefinite life. We review goodwill and non-amortizable intangible assets for impairment annually in the fourth quarter, or more frequently if impairment indicators arise. Impairment indicators include (i) a significant decrease in the market value of an asset (ii) a significant change in the extent or manner in which an asset is used or a significant physical change in an asset, (iii) a significant adverse change in legal factors or in the business climate that could affect the value of an asset or an adverse action by a regulator, and (iv) a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with an asset used for the purpose of producing revenue. | ||||||
We estimate a reporting unit’s fair value using a 6-year projection of discounted cash flows which incorporates planned growth rates, market-based discount rates and estimates of residual value. Additionally, we used a market-based, weighted-average cost of capital of approximately 15% to discount the projected cash flows of those operations. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, industry and economic conditions and our actual results and conditions may differ over time. If the carrying value of a reporting unit’s net assets exceeds its fair value, the second step is applied to measure the difference between the carrying value and implied fair value of goodwill. If the carrying value of goodwill exceeds its implied fair value, the goodwill is considered impaired and reduced to its implied fair value. | ||||||
In 2014 and 2013, there were no impairments of goodwill. In connection with our 2014 annual impairment testing, we noted that our Validus reporting unit was more sensitive to near-term changes in discounted cash flow assumptions: approximately $747,000 of goodwill is attributable to the Validus reporting unit as of December 31, 2014, and fair value in excess of its carrying value of net assets by approximately 4.0%. While the reporting unit passed the first step of the impairment test, if operating income or another valuation assumption were to deteriorate significantly in the future, it could adversely affect the estimated fair value. If we are unsuccessful in our plans to increase the profitability of the Validus reporting unit, the estimated fair value could decline and lead to potential goodwill impairment in the future. | ||||||
Research and Development, Software Development Costs, and Internal Use Software Development Costs | ||||||
Research and development costs are charged to operations as incurred. We did not incur any research and development expense in 2014 and 2013. | ||||||
Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. For products where proven technology exists, this may occur very early in the development cycle. Factors we consider in determining when technological feasibility has been established include (i) whether a proven technology exists; (ii) the quality and experience levels of the individuals developing the software; (iii) whether the software is similar to previously developed software which has used the same or similar technology; and (iv) whether the software is being developed with a proven underlying engine. Technological feasibility is evaluated on a product-by-product basis. Capitalized costs for those products that are cancelled or abandoned are charged immediately to cost of sales. The recoverability of capitalized software development costs is evaluated on the expected performance of the specific products for which the costs relate. | ||||||
Internal use software development costs represent the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. | ||||||
Website software development costs related to certain planning and training costs incurred in the development of website software are expensed as incurred, while application development stage costs are capitalized. | ||||||
Prior to 2011, we capitalized certain external and internal use software and website development costs totaling $183,385. The estimated useful lives of these pre-2011 costs capitalized was evaluated for each specific project and ranges from one to three years. In 2013, we acquired certain assets of Validus, which included internally- developed software with an estimated fair value of $129,000. During 2014 and 2013, the amortization of capitalized costs totaled approximately $43,000 and $12,800, respectively. Capitalized costs are included in property and equipment. | ||||||
Advertising Expenses | ||||||
Advertising costs are expensed as incurred. Total advertising expense for the years ended December 31, 2014 and 2013, were approximately $59,500 and $59,700, respectively. | ||||||
Income Taxes | ||||||
We compute income taxes using the asset and liability method. Under this method, deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income statement purposes using the enacted statutory rate in effect for the year these differences are expected to be taxable or deductible. Deferred income tax expense or benefit is based on the changes in the net deferred tax asset or liability from period to period. A deferred tax asset or liability is recognized whenever there are future tax effects from existing temporary differences and operating loss and tax credit carryforwards. If we determine that a deferred tax asset could be realized in a greater or lesser amount than recorded, the asset's recorded amount is adjusted and the income statement is either credited or charged, respectively, in the period during which the determination is made. | ||||||
We reduce our deferred tax assets by a valuation allowance if we determine that it is more likely than not that some portion or all of these tax assets will not be realized. In making this determination, we consider various qualitative and quantitative factors, such as: | ||||||
• | The level of historical taxable income and projections for future taxable income over periods in which the deferred tax assets would be deductible, | |||||
• | Accumulation of income (loss) before taxes utilizing a look-back period of three years. | |||||
• | Events within the industry, | |||||
• | The cyclical nature of our business, | |||||
• | The health of the economy, | |||||
• | Our future forecasts of taxable income, and | |||||
• | Historical trending. | |||||
The recognition of our net deferred income tax assets requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and our particular facts and circumstances. | ||||||
We recognize the tax benefit from an uncertain tax position when we determine that it is more-likely-than-not that the position would be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If we derecognize an uncertain tax position, our policy is to record any applicable interest and penalties within the provision for income tax. Management believes there are no current uncertain tax positions that would result in an asset or liability being recognized in the accompanying financial statements. Interest and penalties on unrecognized tax benefits, if any, are recognized as a component of income tax expense. | ||||||
We file income tax returns in the US federal jurisdiction and various state jurisdictions. We are no longer subject to US federal tax examination for years beginning before January 1, 2011, and the state tax returns that remain subject to examination include those for the years ended December 31, 2012 through the years ended December 31, 2014. | ||||||
Stock-Based Compensation | ||||||
The fair value of stock options is estimated using the Black-Scholes option-pricing model, which incorporates ranges of assumptions for inputs. Our assumptions are as follows: | ||||||
Dividend yield is based on our historical and anticipated policy of not paying cash dividends. | ||||||
Expected volatility assumptions were derived from our actual volatilities. | ||||||
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected life at the grant date. | ||||||
The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior. | ||||||
Our stock-based compensation cost for the years ended December 31, 2014 and 2013, was approximately $88,100 and $70,200, respectively, and has been included in income from operations. | ||||||
The fair value of stock options granted during 2014 and 2013 (Note 9) was estimated using the following assumptions: | ||||||
2014 | 2013 | |||||
Stock options granted | 30,334 shares | 82,500 shares | ||||
Expected life of options from the date of grant | 9 years | 8 years | ||||
Risk free interest rate | .11% - 1.59% | .71% - 1.52% | ||||
Expected volatility | 77% - 195% | 199% - 202% | ||||
Assumed dividend yield | 0% | 0% | ||||
Recently Issued Accounting Standards | ||||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early adoption not permitted. We do not expect this to have a material impact on our results of operations, financial condition, or liquidity in future periods. | ||||||
We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our consolidated financial statements. | ||||||
Reclassifications | ||||||
Certain prior year amounts have been reclassified to conform to the current year presentation. Net income and shareholders' equity were not affected by these reclassifications. |
Business_Acquisitions
Business Acquisitions | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Business Combinations [Abstract] | |||||
Business Acquisitions | Note 3 – Business Acquisitions | ||||
Sterling Acquisition | |||||
On October 24, 2014, an Asset Purchase Agreement (the “Purchase Agreement”) was entered into by and among Where Food Comes From, Inc. (“WFCF” or the “Company”), Sterling Solutions, LLC (“Sterling” or “the Seller”), and certain affiliates of the Seller. | |||||
Pursuant to the Purchase Agreement, WFCF purchased and acquired customer relationships and trademarks of the Seller as of October 24, 2014 for aggregate consideration of $251,000, which includes $150,000 in cash and 42,096 shares (the “Shares”) of common stock of WFCF valued at approximately $101,000 based upon the closing price of our stock on October 24, 2014, of $2.40 per share. This transaction was accounted for under the acquisition method of accounting and the purchase price has been allocated (on a provisional basis) primarily all to customer relationships, based on estimated fair value. This purchase price allocation is preliminary and subject to change, as we are still reviewing all of the underlying assumptions and calculations used in the allocation. | |||||
Based in Vale, OR, Sterling Solutions specializes in verification programs for the beef industry and has some of the leading calf ranch and feed yard customers in the western U.S., including a very strong presence in the Pacific Northwest. The Seller’s licenses and accreditations include Source and Age, Non-Hormone Treated Cattle (NHTC), Animal Well-being, Sterling Natural, High Quality Beef (HQB), Never Ever 3 (NE3), and other programs. The Seller serves large dairies, calf ranches and cattle operations, and has more than 10 years of on-farm auditing experience. | |||||
The pro forma effects of Sterling on the Company's consolidated results of operations for 2014 and 2013, as if the acquisition had occurred on January 1, 2013 and 2014 are not material. | |||||
Validus Acquisition | |||||
On September 16, 2013, we entered into an Asset Purchase and Contribution Agreement (the “Purchase Agreement”), by and among the Company, Validus Verification Services LLC (the “Buyer” or “Validus”), and Praedium Ventures, LLC (the “Seller”). | |||||
Pursuant to the Purchase Agreement, WFCF caused Validus to be organized to purchase and acquire certain audit, assessment and verification business assets of the Seller. Such assets acquired included, but were not limited to, verification tools used in the acquired business, including the processes, procedures, systems and documents, intellectual property, a database, contracts and licenses and accounts receivable. Validus acquired such assets in exchange for aggregate consideration of approximately $1.5 million, which included $565,000 in cash and 708,681 shares (the “Shares”) of common stock of WFCF valued at approximately $940,000, based upon the closing price of our common stock on September 16, 2013, of $1.32 per share. In connection with this transaction, the Seller was also issued a 40% interest in Validus, with the Company holding a 60% interest. The Company has the first right of refusal on the remaining 40% of the outstanding stock. | |||||
At any time following the thirty-month anniversary of the effective date of the Purchase Agreement, the Company shall have the option, but not the obligation, to purchase all the units (the 40% interest) of Validus held by Praedium, and Praedium shall have the option, but not the obligation, to require the Company to purchase all the units of Validus held by Praedium. The purchase price for the units shall be equal to the amount the selling holders of the units would be entitled to receive upon a liquidation of the Validus assuming all of the assets of Validus are sold for a purchase price equal to the product of eight and half times trailing twelve-month earnings before income taxes, depreciation and amortization, as defined. | |||||
Because Praedium, at its option, can require the Company to purchase its 40% interest in Validus, the Validus noncontrolling interest meets the definition of a contingently redeemable noncontrolling interest. | |||||
Redeemable noncontrolling interests are presented at the greater of their carrying amount or redemption value at the end of each reporting period and are shown as a separate caption between liabilities and equity (mezzanine section) in the accompanying balance sheet. | |||||
We believe that Validus is the leading egg, dairy, pork and poultry certifiers in the United States and represents an opportunity to extend the range of our existing programs and establish our capabilities in other major food groups. As a result of this acquisition, we believe we are now positioned to offer our customers new solutions across the verification and certification spectrum. We also believe it provides diversification for our company, enables us to better serve our customers, and provides another avenue for our WFCF program. | |||||
The following table summarizes the estimated fair values assigned to the assets and liabilities acquired in addition to the excess of the purchase price over the net assets acquired at the Validus acquisition date: | |||||
16-Sep-13 | |||||
Accounts receivable | $ | 150,000 | |||
Excess attributable to intangible assets | 2,350,765 | ||||
Total fair value | 2,500,765 | ||||
Fair value of non-controlling interest | 1,000,306 | ||||
Total consideration | $ | 1,500,459 | |||
The fair value of the non-controlling interest was based upon the gross consideration that would have been paid assuming 100% of the outstanding stock had been acquired. Excess attributable to intangible assets reflects the excess over the identifiable assets acquired to intangible assets based on the allocation of the purchase price. The fair value amounts of the components of intangible assets are as follows: | |||||
Customer relationships | $ | 935,000 | |||
Trademarks/trade names | 465,000 | ||||
Accreditations | 75,000 | ||||
Identifiable intangible assets | 1,475,000 | ||||
Goodwill | 746,765 | ||||
Total intangible assets | $ | 2,221,765 | |||
The following unaudited pro forma information presents the results of operations for the year ended December 31, 2013, as if the acquisition of Validus had occurred on January 1, 2013. | |||||
(Unaudited) | |||||
Total revenue | $ | 6,912,276 | |||
Net loss | $ | (20,685 | ) | ||
Basic and diluted earnings (loss) per share | $ | (0.00 | ) | ||
In December 31, 2013, we incurred a total of approximately $269,000 in advisory and legal fees related to the acquisition of Validus, of which, approximately $219,000 is reported in selling, general and administrative expenses in the accompanying consolidated statement of loss for the year ended December 31, 2013. | |||||
ICS Acquisition | |||||
On February 29, 2012, we entered into a Purchase and Exchange Agreement (the “Purchase Agreement”), by and among the Company and ICS, and other shareholders as individually named in the Agreement (collectively the “Sellers”). | |||||
Pursuant to the Purchase Agreement, on February 29, 2012 (the “Acquisition Date”), the Company acquired 60% of the issued and outstanding common stock of ICS. The Purchase Agreement also includes non-dilution provisions, and we had a right of first refusal on the remaining 40% of the outstanding stock. The transaction was accounted for using the acquisition method of accounting. | |||||
On March 1, 2014, the Company exercised its call option to purchase the remaining 40% interest of the stock of ICS in exchange for cash consideration of approximately $196,000, pursuant to the Purchase Agreement. The carrying amount of the non-controlling interest was adjusted to $0 to reflect the change in the Company’s ownership interest up to 100%. The difference between the fair value of the consideration paid and the carrying value of the non-controlling interest on the date of the transaction was adjusted to equity. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property And Equipment | |||||||||
Property and Equipment | Note 4 - Property and Equipment | ||||||||
The major categories of property and equipment are as follows as of December 31: | |||||||||
2014 | 2013 | ||||||||
Automobiles | $ | 47,397 | $ | 47,397 | |||||
Furniture and office equipment | 136,627 | 150,528 | |||||||
Software and tools | 381,713 | 350,944 | |||||||
Website development and other enhancements | 183,385 | 183,385 | |||||||
Building and leasehold improvements | 50,747 | 48,747 | |||||||
Land | 2,436 | 2,436 | |||||||
802,305 | 783,437 | ||||||||
Less accumulated depreciation | 570,419 | 530,231 | |||||||
Property and equipment, net | $ | 231,886 | $ | 253,206 | |||||
Depreciation expense for the years ended December 31, 2014 and 2013 was approximately $96,200 and $57,000, respectively. | |||||||||
Intangible_and_Other_Assets
Intangible and Other Assets | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||
Intangible and Other Assets | Note 5 – Intangible and Other Assets | ||||||||||
The following table summarizes our intangible assets as of December 31: | |||||||||||
Estimated | |||||||||||
2014 | 2013 | Useful life | |||||||||
Intangible assets subject to amortization: | |||||||||||
Tradenames and Trademarks | $ | 64,307 | $ | 64,307 | 2.5 - 8.0 years | ||||||
Accreditations | 88,663 | 88,663 | 5.0 years | ||||||||
Customer Relationships | 1,401,330 | 1,085,300 | 8.0 - 15.0 years | ||||||||
Beneficial Lease Arrangement | 120,200 | 120,200 | 11.0 years | ||||||||
1,674,500 | 1,358,470 | ||||||||||
Less accumulated amortization | 236,822 | 107,355 | |||||||||
1,437,678 | 1,251,115 | ||||||||||
Tradenames/trademarks (not subject to amortization) | 465,000 | 465,000 | |||||||||
1,902,678 | 1,716,115 | ||||||||||
Deposit | 50,000 | — | |||||||||
Intangible and other assets, net | $ | 1,952,678 | $ | 1,716,115 | |||||||
The deposit represents an advance payment to a third-party institution for laboratory verification and testing services. | |||||||||||
Amortization expense for the years ended December 31, 2014 and 2013 was approximately $129,500 and $62,700, respectively. Future scheduled amortization of intangible assets is as follows: | |||||||||||
Fiscal year ending December 31: | |||||||||||
2015 | $ | 156,023 | |||||||||
2016 | 155,072 | ||||||||||
2017 | 153,250 | ||||||||||
2018 | 148,589 | ||||||||||
2019 | 137,339 | ||||||||||
Thereafter | 687,405 | ||||||||||
$ | 1,437,678 | ||||||||||
Notes_Payable
Notes Payable | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Notes Payable | Note 6 - Notes Payable | ||||||||
Notes payable consist of the following: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Equipment Note Payable | $ | 23,670 | $ | 30,729 | |||||
Great Western Bank SBA Loan | — | 159,808 | |||||||
23,670 | 190,537 | ||||||||
Less current portion of notes payable and other long-term debt | 7,425 | 24,782 | |||||||
Notes payable and other long-term debt, net of current portion | $ | 16,245 | $ | 165,755 | |||||
Equipment Note Payable | |||||||||
In 2012, we purchased a vehicle and entered into a note payable for $37,407 with interest and principal payments due in equal monthly installments of $715 over five years beginning January 2013. This note bears an interest rate of 5.5% per annum and is collateralized by the vehicle. | |||||||||
Great Western Bank SBA Loan | |||||||||
In April 2011, we entered into a U.S. Small Business Administration (“SBA”) Note with Great Western Bank. This note, which was to mature on May 1, 2021, provided for $200,000 in additional working capital. The interest rate was at prime plus 2.5% and was adjusted quarterly. Principal and interest were payable monthly. The loan balance was paid in full during 2014. | |||||||||
ICS Revolving Line of Credit | |||||||||
ICS has a revolving line of credit (LOC) agreement which was renewed on April 1, 2014 and matures April 1, 2017. The LOC provides for $70,050 in working capital. The interest rate is at the New York prime rate plus 2.250% and is adjusted daily (5.5% at December 31, 2014). Principal and interest are payable upon demand, but if demand is not made, then annual payments of accrued interest only are due, with the principal balance due on maturity. The LOC is collateralized by all the business assets of ICS. As of December 31, 2014, ICS had no amounts outstanding under this LOC. | |||||||||
WFCF Revolving Line of Credit | |||||||||
On September 2, 2014, WFCF entered into a Business Loan Agreement (the “Agreement”) and a related promissory note (the “Note”) for a revolving line of credit with Castle Rock Bank. The term of the Agreement is until September 2, 2015, and it provides for advances up to $500,000. The interest rate on any amounts borrowed under the Agreement is 3.750% per annum, payable monthly. All amounts borrowed under the Agreement and the Note must be repaid by September 2, 2015 and can be prepaid without penalties. The Agreement contains certain customary affirmative and negative covenants. There were no amounts borrowed under this line of credit through December 31, 2014. Prior to entering into the Agreement with Castle Rock Bank, the Company paid the outstanding principal balance of its existing loan with Great Western Bank in the amount of approximately $150,000. | |||||||||
The Note is secured by a certificate of deposit in the amount of $250,000 and a security interest in 500,000 shares of WFCF common stock. The 500,000 shares are personally owned by John and Leann Saunders, significant shareholders, officers and members of the Company’s Board of Directors. | |||||||||
Scheduled maturities under notes payable for the next five years and thereafter, as of December 31, 2014, are as follows: | |||||||||
Year ending December 31: | |||||||||
2015 | $ | 7,425 | |||||||
2016 | 7,882 | ||||||||
2017 | 8,363 | ||||||||
$ | 23,670 | ||||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Income Taxes | Note 7 - Income Taxes | ||||||||
The reconciliation of income taxes calculated at the statutory rates to our effective tax rate is as follows: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Expected tax expense | $ | 114,960 | $ | (1,635 | ) | ||||
State tax provision, net | 11,475 | (144 | ) | ||||||
Permanent differences | 53,604 | 53,507 | |||||||
Stock-based compensation and other | (28,854 | ) | (56,058 | ) | |||||
Business tax credit applied | (37,622 | ) | — | ||||||
Other, net | 27,313 | 2,552 | |||||||
Total income tax expense (benefit) | $ | 140,876 | $ | (1,778 | ) | ||||
Deferred federal tax expense for 2014 was $136,650. Deferred federal tax benefit for 2013 was $1,678. Deferred state tax expense for 2014 was $4,226. Deferred state tax benefit for 2013 was $100. | |||||||||
At December 31, 2014, we had a charitable contribution carryforward of approximately $37,600, which will expire between 2017 and 2018. | |||||||||
The income tax effects of temporary differences that give rise to significant portions of deferred tax assets as of December 31, 2014 and 2013 are as follows: | |||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets, current: | |||||||||
Net operating loss carryforwards | $ | 146,751 | $ | 130,820 | |||||
Accruals, stock based compensation and other | 21,054 | 41,360 | |||||||
Other | — | 18,004 | |||||||
Deferred tax assets, current | 167,805 | 190,184 | |||||||
Deferred tax assets (liabilities), non-current: | |||||||||
Net operating loss carryforwards | 466,162 | 566,456 | |||||||
Property and equipment | (22,630 | ) | (39,923 | ) | |||||
Intangibles assets | (95,635 | ) | (92,156 | ) | |||||
Charitable contributions | 13,900 | 15,517 | |||||||
Business tax credits | — | 30,400 | |||||||
Deferred tax assets, non-current | 361,797 | 480,294 | |||||||
Net deferred tax assets | $ | 529,602 | $ | 670,478 | |||||
As of December 31, 2014, our net operating loss carryforwards for U.S. federal income tax purposes were approximately $1.66 million, and were subject to the following expiration schedule: | |||||||||
31-Dec-06 | $ | 947,685 | December 31, 2026 | ||||||
31-Dec-07 | 365,518 | 31-Dec-27 | |||||||
31-Dec-13 | 343,317 | 31-Dec-33 | |||||||
Total tax carryforwards | $ | 1,656,520 | |||||||
Our unused net operating loss carryforwards may be applied against future taxable income. |
Stock_Buyback_Plan
Stock Buyback Plan | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stock Buyback Plan | |||||||||||||
Stock Buyback Plan | Note 8 – Stock Buyback Plan | ||||||||||||
On January 7, 2008, we announced our intention to buy back up to one million shares of our common stock from the open market at the quoted market price on the date of repurchase. No shares were repurchased in 2014. Repurchased shares under the Stock Buyback Plan by year, prior to 2014, are as follows: | |||||||||||||
Number of | Cost of | Average | |||||||||||
Shares | Shares | Cost per | |||||||||||
Share | |||||||||||||
Years prior to 2013 | 513,247 | $ | 121,294 | $ | 0.24 | ||||||||
Year ended December 31, 2013 | 33,450 | 29,555 | $ | 0.88 | |||||||||
Total | 546,697 | $ | 150,849 | $ | 0.28 | ||||||||
The repurchased shares are recorded as part of treasury stock and are accounted for under the cost method. | |||||||||||||
Our stock buyback plan has been and will be used to return capital to shareholders and to minimize the dilutive impact of stock options and other share-based awards. In the future, we may consider additional share repurchases under our plan based on several factors, including our cash position, share price, operational liquidity, and planned investment and financing needs. |
Equity
Equity | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||
Equity | Note 9 - Equity | ||||||||||||||||||||||
Common Stock | |||||||||||||||||||||||
On July 1, 2014, the Company completed the sale of 900,000 shares of its common stock to two investors for aggregate gross proceeds to the Company of $1,800,000. No fees were paid in connection with the transaction. | |||||||||||||||||||||||
2006 Equity Incentive Plan | |||||||||||||||||||||||
The 2006 Equity Incentive Plan (the “Plan”) provides for the issuance of stock-based awards to employees, officers, directors and consultants. The Plan permits the granting of stock awards and stock options. The vesting of stock-based awards is generally subject to meeting certain performance based objectives, the passage of time or a combination of both, and continued employment through the vesting period. The Plan provides for the issuance of a maximum of 3,000,000 shares of our common stock, of which 369,834 shares were still available for issuance as of December 31, 2014. | |||||||||||||||||||||||
Stock Option Activity | |||||||||||||||||||||||
Stock option activity during 2014 and 2013 is summarized as follows: | |||||||||||||||||||||||
Weighted Avg. | |||||||||||||||||||||||
Weighted Avg. | Weighted Avg. | Weighted Avg. | Remaining | ||||||||||||||||||||
Number of | Number of | Exercise Price | Fair Value | Contractual Life | Aggregate | ||||||||||||||||||
Options/Warrants | Options/Warrants | per Share | per Share | (in years) | Intrinsic Value | ||||||||||||||||||
Outstanding, January 1, 2013 | 805,800 | $ | 0.25 | $ | 0.24 | 3.85 | $ | 561,723 | |||||||||||||||
Granted | 82,500 | $ | 1.16 | $ | 1.21 | 9.56 | |||||||||||||||||
Exercised | (454,966 | ) | $ | 0.23 | $ | 0.05 | 0.11 | ||||||||||||||||
Expired | (15,000 | ) | $ | 0.54 | $ | 0.54 | 7.74 | ||||||||||||||||
Outstanding, December 31, 2013 | 418,334 | $ | 0.66 | $ | 0.24 | 7.49 | $ | 560,443 | |||||||||||||||
Granted | 30,334 | $ | 1.68 | $ | 1.88 | 8.08 | |||||||||||||||||
Exercised | (59,998 | ) | $ | 0.54 | $ | 0.63 | 6.45 | ||||||||||||||||
Canceled | (29,502 | ) | $ | 0.75 | $ | 0.75 | 7.12 | ||||||||||||||||
Outstanding, December 31, 2014 | 359,168 | $ | 0.76 | $ | 0.71 | 6.58 | $ | 768,869 | |||||||||||||||
Exercisable, December 31, 2014 | 253,325 | $ | 0.53 | $ | 0.46 | 5.81 | $ | 599,677 | |||||||||||||||
Unvested, December 31, 2014 | 105,843 | $ | 1.33 | $ | 8.43 | ||||||||||||||||||
The aggregate intrinsic value of stock options represents the total pre-tax intrinsic value (the aggregate difference between the closing stock price of our common stock on December 31, 2014 and the exercise price for in-the-money options) that would have been received by the option holders if all in-the-money options had been exercised on December 31, 2014. | |||||||||||||||||||||||
During the year ended December 31, 2014, a total of 29,502 options issued under the Plan were forfeited, 18,334 of which were vested and 11,168 which were unvested. The options were exercisable at an average of $0.75 per share and were forfeited upon the employees’ termination from the Company. During the year ended December 31, 2013, a total of 15,000 options were forfeited, 6,666 of which were vested and 8,334 were unvested. The options were exercisable at an average of $0.54 per share and were forfeited upon the employees’ terminations from the Company. | |||||||||||||||||||||||
The following table summarizes the activity and value of non-vested options as of and for the fiscal year ended December 31, 2014: | |||||||||||||||||||||||
Weighted Avg | |||||||||||||||||||||||
Number of | Grant Date | ||||||||||||||||||||||
Options | Fair Value | ||||||||||||||||||||||
Non-vested options, December 31, 2013 | 215,857 | $ | 0.88 | ||||||||||||||||||||
Granted | 30,334 | $ | 1.88 | ||||||||||||||||||||
Vested | (129,180 | ) | $ | 0.68 | |||||||||||||||||||
Forfeited | (11,168 | ) | $ | 1.45 | |||||||||||||||||||
Non-vested options, December 31, 2014 | 105,843 | $ | 1.33 | ||||||||||||||||||||
At December 31, 2014, the Company had unrecognized expenses relating to options that are expected to vest totaling $98,051. The weighted average period over which these options are expected to vest is less than 2 years. The Company has not recorded any excess tax benefit to additional paid in capital in 2014. |
Basic_and_Diluted_Net_Income_L
Basic and Diluted Net Income (Loss) per Share | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Net income (loss) per share: | |||||||||
Basic and Diluted Net Income (Loss) per Share | Note 10 - Basic and Diluted Net Income (Loss) per Share | ||||||||
Basic net income (loss) per share was computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. | |||||||||
The following is a reconciliation of the share data used in the basic and diluted income per share computations: | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
Basic: | |||||||||
Weighted average shares outstanding | 23,170,074 | 21,893,794 | |||||||
Diluted: | |||||||||
Weighted average shares outstanding | 23,170,074 | 21,893,794 | |||||||
Weighted average effects of dilutive securities | 229,994 | — | |||||||
Total | 23,400,068 | 21,893,794 | |||||||
Antidilutive securities: | — | 418,334 | |||||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 11 - Related Party Transactions |
In 2014 and 2013, we recorded total net revenue of approximately $12,500 and $11,100, respectively, from related parties. The related parties consisted of a business owned by the father of Leann Saunders, our President, and a business owned by Pete Lapaseotes, a member of our Board of Directors. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
Commitments and Contingencies | Note 12 – Commitments and Contingencies | ||||||
Operating Leases | |||||||
The Company leases a building for our headquarters in Castle Rock, Colorado. This lease is for a period of three years with an expiration date of June 15, 2015. In addition to the primary rent, the lease requires additional payments for operating costs and other common area maintenance costs. | |||||||
In September 2013, as part of the Validus acquisition, Validus entered into a related-party lease agreement for its office space with Praedium (the non-controlling interest holder). The lease is for a period of three years, expiring October 31, 2016, and requires rental payments of approximately $2,600 per month. There is no renewal feature. In addition to primary rent, the lease requires additional payments for operating costs and other common area maintenance costs. | |||||||
We also own approximately ¾ acre on which a 2,300 square foot building is located in Medina, North Dakota. ICS leases space in this building under a 5-year lease with an expiration date of March 1, 2018. One additional option to renew for a 5-year term exists and is deemed to automatically renew unless written notice is provided 60 days before the end of the term. ICS is charged a monthly rental rate of approximately $150 plus all utilities, taxes and other expenses based on actual expenses to maintain the building. | |||||||
Rent expense for the years ended December 31, 2014 and 2013, was approximately $117,712 and $91,500, respectively, including related-party rent expense of $29,765 and $8,785. | |||||||
Future minimum lease payments are as follows: | |||||||
Years Ending December 31, | Amount | ||||||
2015 | $ | 63,071 | |||||
2016 | 27,598 | ||||||
2017 | 1,818 | ||||||
2018 | 303 | ||||||
Total lease commitments | $ | 92,790 | |||||
Sub-lease Agreement | |||||||
ICS sub-leases approximately 300 square feet of space located within its corporate office to a third party on a month-to-month basis. Monthly rent of approximately $300 includes utilities and other common area maintenance. The sub-lease agreement provides for 30 days’ notice to terminate the agreement. The sub-lease agreement was cancelled during the third quarter of 2014. | |||||||
Capital Leases | |||||||
The Company has a capital lease for certain office equipment with a base rent of $405 per month. This 63-month lease expires in April 2017. Approximately $22,300 in asset cost has been included in property and equipment and is being amortized over 63 months. Imputed interest of 5.25% was used in determining the minimum lease payments. | |||||||
ICS leased certain office equipment under a capital lease with a base rent of $521 per month. This lease expired in April 2013. Included in property and equipment is $7,100 in asset cost. Imputed interest of 6.25% was used in determining the minimum lease payments. | |||||||
As of December 31, 2014, future minimum lease payments for capital leases are as follows: | |||||||
Years Ending December 31, | Amount | ||||||
2015 | $ | 4,860 | |||||
2016 | 4,860 | ||||||
2017 | 1,796 | ||||||
Future minimum lease payments | 11,516 | ||||||
Less amount representing interest | (709 | ) | |||||
Present value of net minimum lease payments | 10,807 | ||||||
Less current portion | (4,397 | ) | |||||
Non-current lease obligation, net of current portion | $ | 6,410 | |||||
Legal proceedings | |||||||
From time to time, we may become involved in various legal actions, administrative proceedings and claims in the ordinary course of business. We generally record losses for claims in excess of the limits of purchased insurance in earnings at the time and to the extent they are probable and estimable. | |||||||
Employee Benefit Plan | |||||||
The Company has established a 401(K) plan for the benefit of our employees. The Plan covers substantially all of our employees who have attained age 21. We may make a discretionary matching contribution in an amount that is determined by our Board of Directors. If a matching contribution is made, the amount cannot exceed the elective deferral contributions. For the years ended December 31, 2014 and 2013, we made matching contributions of approximately $24,500 and $17,800, respectively. | |||||||
Redeemable Noncontrolling Interest | |||||||
Redeemable noncontrolling interest on our consolidated balance sheets represent the noncontrolling interest related to the Validus acquisition (see Note 3), in which Praedium, at its election, can require the Company to purchase its 40% investment in Validus. Below reflects the activity of the redeemable noncontrolling interest as of and for the years ended December 31, 2014 and 2013. | |||||||
Balance at acquistion date, September 16, 2013 | $ | 1,000,306 | |||||
Net income attributable to noncontrolling interest | |||||||
for the period September 16 - December 31, 2013 | 18,090 | ||||||
Balance, December 31, 2013 | 1,018,396 | ||||||
Net loss attributable to noncontrolling interest | |||||||
for the year ended December 31, 2014 | (44,377 | ) | |||||
Balance, December 31, 2014 | $ | 974,019 | |||||
Supplemental_Cash_Flow_Informa
Supplemental Cash Flow Information | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Supplemental Cash Flow Information [Abstract] | |||||||||
Supplemental Cash Flow Information | Note 13 – Supplemental Cash Flow Information | ||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
Cash paid during the year: | |||||||||
Interest on Lapaseotes Notes - related party | $ | — | $ | 5,918 | |||||
Other interest | $ | 6,970 | $ | 11,533 | |||||
Non-cash investing and financing activities: | |||||||||
Common stock issued in connection with Sterling Solutions LLC asset purchase | $ | 101,030 | $ | — | |||||
Common stock issued in connection with Validus acquisition | $ | — | $ | 1,010,459 | |||||
Common stock issued in connection with Lapeseotes debt settlement | $ | — | $ | 214,686 | |||||
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Summary Of Significant Accounting Policies | ||||||
Cash and Cash Equivalents | Cash and Cash Equivalents | |||||
We place our cash with high quality financial institutions. At times, cash balances may exceed the FDIC insurance limit; however, we have not experienced any losses related to balances that exceed such FDIC insurance limits, and we believe our credit risk is minimal. At times, we may also invest in short-term investments with original maturities of three months or less, which we consider to be cash and cash equivalents, since they are readily convertible to cash. | ||||||
Restricted cash of $250,000 at December 31 2014 represents a certificate of deposit with a financial institution that is required as collateral under a revolving line of credit (Note 6). | ||||||
Revenue Recognition | Revenue Recognition | |||||
We offer a range of products and services to deploy and maintain identification, traceability, and verification systems and to facilitate customers’ participation in and compliance with the USDA’s Quality System Assessment, Process Verification and Export Verification Programs. We generate revenue primarily from the sale of our verification solutions, consulting services and hardware sales. We sell our products and services directly to customers at various levels in the livestock supply chain. | ||||||
Revenue is recognized when persuasive evidence of an agreement with the customer exists, delivery has occurred or services have been provided, the sales price is fixed or determinable, collectability is reasonably assured, and risk of loss and title have transferred to the customer. | ||||||
No single customer generated more than 10% of total net revenue in 2014 or 2013. | ||||||
Service revenues primarily consist of fees charged for verification audits and other verification services that the Company performs for customers. Revenue from verification audits is recognized upon completion of the audits. Contracts for these services are cancelable only for non-performance. | ||||||
In connection with certain arrangements, reimbursable expenses are incurred and billed to customers and such amounts are recognized as both revenue and cost of revenue. | ||||||
Deferred revenue represents payments received in advance from our customers for annual customer support services not yet performed as of December 31, and revenue is recognized as services are performed, generally over the one year contract term. | ||||||
Customer deposits represent down-payments made in advance of a verification audit to be performed for a customer and deposits are applied to the customer’s accounts when invoiced. | ||||||
Revenues under contracts for consulting services are recognized when completed (for short-term projects). On occasion, we may enter into long-term projects, for which we use the percentage of completion method. No such long-term projects occurred during 2014 and 2013. | ||||||
Product sales are primarily generated from the sale of cattle identification ear tags. Revenue is recognized when goods are shipped and after title has transferred to the customer. | ||||||
Other revenue primarily represents the fees earned from our “WhereFoodComesFrom®” labeling program. Revenue is recognized when our customer, who has been granted a right to use our WhereFoodComesFrom® label, places this label on their product and ships their product. Revenue is billed based on pounds of product shipped. | ||||||
Generally, we do not provide right of return or warranty on product sales or services performed. | ||||||
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts | |||||
Our receivables are generally due from trade customers. Credit is extended based on our evaluation of the customer’s financial condition and generally, collateral is not required. Accounts receivable are generally due approximately 30 days from the invoice date and are stated at amounts due from customers, net of an allowance for doubtful accounts. Accounts receivable that are outstanding longer than the contractual payment terms are considered past due. We determine our allowance by considering a number of factors, including the length of time trade accounts receivable are past due, our previous loss and payment history, the customer’s current ability to pay its obligations to us and the condition of the general economy and the industry as a whole. We write off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The allowance for doubtful accounts was approximately $25,800 and $20,700, at December 31, 2014 and 2013, respectively. | ||||||
No single customer accounted for greater than 10% of our accounts receivable balances at December 31, 2013 and 2014. | ||||||
Cost of Revenues | Cost of Revenues | |||||
Cost of revenues includes the cost of products sold, which consists of livestock ear tags used in connection with the US Verified Source and Age Verification programs. Salaries and related fringe benefits directly associated with our verification services are allocated to cost of revenues. | ||||||
Livestock identification ear tags sold in connection with our verification offerings are purchased primarily from one supplier. However, there are numerous other companies which manufacture and market such ear tags. | ||||||
Fair Value Measurements | Fair Value Measurements | |||||
The carrying value of cash and restricted cash, accounts receivable, and accounts payable approximate fair value due to their short maturities. The amounts shown for debt and notes payable also approximate fair value because current interest rates and terms offered to us for similar debt are substantially the same. | ||||||
Fair value accounting guidance defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements, for both financial and non-financial assets. It also establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below: | ||||||
· | Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access. | |||||
· | Level 2: Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data. | |||||
· | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. | |||||
Property and Equipment | Property and Equipment | |||||
Property and equipment are recorded at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets. Land is not depreciated. Buildings are depreciated over 20 years. All other property and equipment have depreciable lives which range from one to seven years. | ||||||
Intangible Assets | Intangible Assets | |||||
Our intangible assets consist of customer relationships, accreditations, a beneficial lease arrangement and tradename/trademarks related to our acquisitions, recorded at estimated fair value. Intangible assets also include certain trademark rights and the related costs incurred to obtain the trademark rights recorded at cost. Certain of these assets are subject to amortization using the straight-line method over the estimated useful lives of the respective assets (Note 5). | ||||||
In connection with the Validus acquisition, the Company allocated a portion of the purchase price to tradenames/trademarks. These tradenames/trademarks were determined to have an indefinite useful life and are not currently amortized. Authoritative guidance requires that intangible assets not subject to amortization (indefinite-lived assets) be tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the asset might be impaired. | ||||||
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets | |||||
We review all of our long-lived assets (including intangible assets) for impairment at least annually or whenever impairment indicators are determined to be present. If an impairment exists, the amount of impairment is measured as the excess of the carrying amount of the asset over its fair value as determined utilizing estimated discounted future cash flows, or some other fair value measure, or the expected proceeds, net of costs to sell, upon sale of the asset. | ||||||
Significant judgments are required to estimate the fair value of intangible assets including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or impairment at future reporting dates. No impairment was identified on the Company’s long-lived assets through December 31, 2014. | ||||||
Goodwill and Other Non-Amortizable Intangible Asset | Goodwill and Other Non-Amortizable Intangible Asset | |||||
Goodwill relates to our acquisitions of ICS and Validus. Both ICS and Validus are reporting units one level below our Certification and Verification Services segment. All other non-amortizable intangible assets relate to the trademarks/trade name acquired in the Validus acquisition and have an indefinite life. We review goodwill and non-amortizable intangible assets for impairment annually in the fourth quarter, or more frequently if impairment indicators arise. Impairment indicators include (i) a significant decrease in the market value of an asset (ii) a significant change in the extent or manner in which an asset is used or a significant physical change in an asset, (iii) a significant adverse change in legal factors or in the business climate that could affect the value of an asset or an adverse action by a regulator, and (iv) a current period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with an asset used for the purpose of producing revenue. | ||||||
We estimate a reporting unit’s fair value using a 6-year projection of discounted cash flows which incorporates planned growth rates, market-based discount rates and estimates of residual value. Additionally, we used a market-based, weighted-average cost of capital of approximately 15% to discount the projected cash flows of those operations. Estimating the fair value of individual reporting units requires us to make assumptions and estimates regarding our future plans, industry and economic conditions and our actual results and conditions may differ over time. If the carrying value of a reporting unit’s net assets exceeds its fair value, the second step is applied to measure the difference between the carrying value and implied fair value of goodwill. If the carrying value of goodwill exceeds its implied fair value, the goodwill is considered impaired and reduced to its implied fair value. | ||||||
In 2014 and 2013, there were no impairments of goodwill. In connection with our 2014 annual impairment testing, we noted that our Validus reporting unit was more sensitive to near-term changes in discounted cash flow assumptions: approximately $747,000 of goodwill is attributable to the Validus reporting unit as of December 31, 2014, and fair value in excess of its carrying value of net assets by approximately 4.0%. While the reporting unit passed the first step of the impairment test, if operating income or another valuation assumption were to deteriorate significantly in the future, it could adversely affect the estimated fair value. If we are unsuccessful in our plans to increase the profitability of the Validus reporting unit, the estimated fair value could decline and lead to potential goodwill impairment in the future. | ||||||
Research and Development, Software Development Costs, and Internal Use Software Development Costs | Research and Development, Software Development Costs, and Internal Use Software Development Costs | |||||
Research and development costs are charged to operations as incurred. We did not incur any research and development expense in 2014 and 2013. | ||||||
Software development costs are capitalized once technological feasibility of a product is established and such costs are determined to be recoverable. For products where proven technology exists, this may occur very early in the development cycle. Factors we consider in determining when technological feasibility has been established include (i) whether a proven technology exists; (ii) the quality and experience levels of the individuals developing the software; (iii) whether the software is similar to previously developed software which has used the same or similar technology; and (iv) whether the software is being developed with a proven underlying engine. Technological feasibility is evaluated on a product-by-product basis. Capitalized costs for those products that are cancelled or abandoned are charged immediately to cost of sales. The recoverability of capitalized software development costs is evaluated on the expected performance of the specific products for which the costs relate. | ||||||
Internal use software development costs represent the capitalization of certain external and internal computer software costs incurred during the application development stage. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. | ||||||
Website software development costs related to certain planning and training costs incurred in the development of website software are expensed as incurred, while application development stage costs are capitalized. | ||||||
Prior to 2011, we capitalized certain external and internal use software and website development costs totaling $183,385. The estimated useful lives of these pre-2011 costs capitalized was evaluated for each specific project and ranges from one to three years. In 2013, we acquired certain assets of Validus, which included internally- developed software with an estimated fair value of $129,000. During 2014 and 2013, the amortization of capitalized costs totaled approximately $43,000 and $12,800, respectively. Capitalized costs are included in property and equipment. | ||||||
Advertising Expenses | Advertising Expenses | |||||
Advertising costs are expensed as incurred. Total advertising expense for the years ended December 31, 2014 and 2013, were approximately $59,500 and $59,700, respectively. | ||||||
Income Taxes | Income Taxes | |||||
We compute income taxes using the asset and liability method. Under this method, deferred income taxes are recognized for differences between the basis of assets and liabilities for financial statement and income statement purposes using the enacted statutory rate in effect for the year these differences are expected to be taxable or deductible. Deferred income tax expense or benefit is based on the changes in the net deferred tax asset or liability from period to period. A deferred tax asset or liability is recognized whenever there are future tax effects from existing temporary differences and operating loss and tax credit carryforwards. If we determine that a deferred tax asset could be realized in a greater or lesser amount than recorded, the asset's recorded amount is adjusted and the income statement is either credited or charged, respectively, in the period during which the determination is made. | ||||||
We reduce our deferred tax assets by a valuation allowance if we determine that it is more likely than not that some portion or all of these tax assets will not be realized. In making this determination, we consider various qualitative and quantitative factors, such as: | ||||||
• | The level of historical taxable income and projections for future taxable income over periods in which the deferred tax assets would be deductible, | |||||
• | Accumulation of income (loss) before taxes utilizing a look-back period of three years. | |||||
• | Events within the industry, | |||||
• | The cyclical nature of our business, | |||||
• | The health of the economy, | |||||
• | Our future forecasts of taxable income, and | |||||
• | Historical trending. | |||||
The recognition of our net deferred income tax assets requires significant management judgment regarding the interpretation of applicable statutes, the status of various income tax audits, and our particular facts and circumstances. | ||||||
We recognize the tax benefit from an uncertain tax position when we determine that it is more-likely-than-not that the position would be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. If we derecognize an uncertain tax position, our policy is to record any applicable interest and penalties within the provision for income tax. Management believes there are no current uncertain tax positions that would result in an asset or liability being recognized in the accompanying financial statements. Interest and penalties on unrecognized tax benefits, if any, are recognized as a component of income tax expense. | ||||||
We file income tax returns in the US federal jurisdiction and various state jurisdictions. We are no longer subject to US federal tax examination for years beginning before January 1, 2011, and the state tax returns that remain subject to examination include those for the years ended December 31, 2012 through the years ended December 31, 2014. | ||||||
Stock-Based Compensation | Stock-Based Compensation | |||||
The fair value of stock options is estimated using the Black-Scholes option-pricing model, which incorporates ranges of assumptions for inputs. Our assumptions are as follows: | ||||||
Dividend yield is based on our historical and anticipated policy of not paying cash dividends. | ||||||
Expected volatility assumptions were derived from our actual volatilities. | ||||||
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant with maturity dates approximately equal to the expected life at the grant date. | ||||||
The expected term of options represents the period of time that options granted are expected to be outstanding giving consideration to vesting schedules, based on historical exercise patterns, which we believe are representative of future behavior. | ||||||
Our stock-based compensation cost for the years ended December 31, 2014 and 2013, was approximately $88,100 and $70,200, respectively, and has been included in income from operations. | ||||||
The fair value of stock options granted during 2014 and 2013 (Note 9) was estimated using the following assumptions: | ||||||
2014 | 2013 | |||||
Stock options granted | 30,334 shares | 82,500 shares | ||||
Expected life of options from the date of grant | 9 years | 8 years | ||||
Risk free interest rate | .11% - 1.59% | .71% - 1.52% | ||||
Expected volatility | 77% - 195% | 199% - 202% | ||||
Assumed dividend yield | 0% | 0% | ||||
Recently Issued Accounting Standards | Recently Issued Accounting Standards | |||||
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts from Customers, which supersedes the revenue recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue in a way that depicts the transfer of potential goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and is to be applied retrospectively, with early adoption not permitted. We do not expect this to have a material impact on our results of operations, financial condition, or liquidity in future periods. | ||||||
We have considered all other recently issued accounting pronouncements and do not believe the adoption of such pronouncements will have a material impact on our consolidated financial statements. | ||||||
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | |||||
Dec. 31, 2014 | ||||||
Summary Of Significant Accounting Policies Tables | ||||||
Schedule of assumptions used in assessing fair value of stock options | The fair value of stock options granted during 2014 and 2013 (Note 9) was estimated using the following assumptions: | |||||
2014 | 2013 | |||||
Stock options granted | 30,334 shares | 82,500 shares | ||||
Expected life of options from the date of grant | 9 years | 8 years | ||||
Risk free interest rate | .11% - 1.59% | .71% - 1.52% | ||||
Expected volatility | 77% - 195% | 199% - 202% | ||||
Assumed dividend yield | 0% | 0% |
Business_Acquisitions_Tables
Business Acquisitions (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Business Combinations [Abstract] | |||||
Schedule of estimated fair value at acquisition - Validus acquisition | The following table summarizes the estimated fair values assigned to the assets and liabilities acquired in addition to the excess of the purchase price over the net assets acquired at the Validus acquisition date: | ||||
16-Sep-13 | |||||
Accounts receivable | $ | 150,000 | |||
Excess attributable to intangible assets | 2,350,765 | ||||
Total fair value | 2,500,765 | ||||
Fair value of non-controlling interest | 1,000,306 | ||||
Total consideration | $ | 1,500,459 | |||
Schedule of intangible assets acquired - Validus Acquisition | The fair value amounts of the components of intangible assets are as follows: | ||||
Customer relationships | $ | 935,000 | |||
Trademarks/trade names | 465,000 | ||||
Accreditations | 75,000 | ||||
Identifiable intangible assets | 1,475,000 | ||||
Goodwill | 746,765 | ||||
Total intangible assets | $ | 2,221,765 | |||
Schedule of proforma results of operations - Validus Acquisition | The following unaudited pro forma information presents the results of operations for the year ended December 31, 2013, as if the acquisition of Validus had occurred on January 1, 2013. | ||||
(Unaudited) | |||||
Total revenue | $ | 6,912,276 | |||
Net loss | $ | (20,685 | ) | ||
Basic and diluted earnings (loss) per share | $ | (0.00 | ) |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property And Equipment Tables | |||||||||
Schedule of property and equipment | The major categories of property and equipment are as follows as of December 31: | ||||||||
2014 | 2013 | ||||||||
Automobiles | $ | 47,397 | $ | 47,397 | |||||
Furniture and office equipment | 136,627 | 150,528 | |||||||
Software and tools | 381,713 | 350,944 | |||||||
Website development and other enhancements | 183,385 | 183,385 | |||||||
Building and leasehold improvements | 50,747 | 48,747 | |||||||
Land | 2,436 | 2,436 | |||||||
802,305 | 783,437 | ||||||||
Less accumulated depreciation | 570,419 | 530,231 | |||||||
Property and equipment, net | $ | 231,886 | $ | 253,206 |
Intangible_and_Other_Assets_Ta
Intangible and Other Assets (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2014 | |||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||
Schedule of intangible and other assets | The following table summarizes our intangible assets as of December 31: | ||||||||||
Estimated | |||||||||||
2014 | 2013 | Useful life | |||||||||
Intangible assets subject to amortization: | |||||||||||
Tradenames and Trademarks | $ | 64,307 | $ | 64,307 | 2.5 - 8.0 years | ||||||
Accreditations | 88,663 | 88,663 | 5.0 years | ||||||||
Customer Relationships | 1,401,330 | 1,085,300 | 8.0 - 15.0 years | ||||||||
Beneficial Lease Arrangement | 120,200 | 120,200 | 11.0 years | ||||||||
1,674,500 | 1,358,470 | ||||||||||
Less accumulated amortization | 236,822 | 107,355 | |||||||||
1,437,678 | 1,251,115 | ||||||||||
Tradenames/trademarks (not subject to amortization) | 465,000 | 465,000 | |||||||||
1,902,678 | 1,716,115 | ||||||||||
Deposit | 50,000 | — | |||||||||
Intangible and other assets, net | $ | 1,952,678 | $ | 1,716,115 | |||||||
Schedule of future scheduled amortization | Future scheduled amortization of intangible assets is as follows: | ||||||||||
Fiscal year ending December 31: | |||||||||||
2015 | $ | 156,023 | |||||||||
2016 | 155,072 | ||||||||||
2017 | 153,250 | ||||||||||
2018 | 148,589 | ||||||||||
2019 | 137,339 | ||||||||||
Thereafter | 687,405 | ||||||||||
$ | 1,437,678 | ||||||||||
Notes_Payable_Tables
Notes Payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Schedule of notes payable | Notes payable consist of the following: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Equipment Note Payable | $ | 23,670 | $ | 30,729 | |||||
Great Western Bank SBA Loan | — | 159,808 | |||||||
23,670 | 190,537 | ||||||||
Less current portion of notes payable and other long-term debt | 7,425 | 24,782 | |||||||
Notes payable and other long-term debt, net of current portion | $ | 16,245 | $ | 165,755 | |||||
Schedule of maturity of notes payable | Scheduled maturities under notes payable for the next five years and thereafter, as of December 31, 2014, are as follows: | ||||||||
Year ending December 31: | |||||||||
2015 | $ | 7,425 | |||||||
2016 | 7,882 | ||||||||
2017 | 8,363 | ||||||||
$ | 23,670 | ||||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Taxes Tables | |||||||||
Schedule of reconciliation of income taxes | The reconciliation of income taxes calculated at the statutory rates to our effective tax rate is as follows: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Expected tax expense | $ | 114,960 | $ | (1,635 | ) | ||||
State tax provision, net | 11,475 | (144 | ) | ||||||
Permanent differences | 53,604 | 53,507 | |||||||
Stock-based compensation and other | (28,854 | ) | (56,058 | ) | |||||
Business tax credit applied | (37,622 | ) | — | ||||||
Other, net | 27,313 | 2,552 | |||||||
Total income tax expense (benefit) | $ | 140,876 | $ | (1,778 | ) | ||||
Schedule of deferred tax assets | The income tax effects of temporary differences that give rise to significant portions of deferred tax assets as of December 31, 2014 and 2013 are as follows: | ||||||||
December 31, | |||||||||
2014 | 2013 | ||||||||
Deferred tax assets, current: | |||||||||
Net operating loss carryforwards | $ | 146,751 | $ | 130,820 | |||||
Accruals, stock based compensation and other | 21,054 | 41,360 | |||||||
Other | — | 18,004 | |||||||
Deferred tax assets, current | 167,805 | 190,184 | |||||||
Deferred tax assets (liabilities), non-current: | |||||||||
Net operating loss carryforwards | 466,162 | 566,456 | |||||||
Property and equipment | (22,630 | ) | (39,923 | ) | |||||
Intangibles assets | (95,635 | ) | (92,156 | ) | |||||
Charitable contributions | 13,900 | 15,517 | |||||||
Business tax credits | — | 30,400 | |||||||
Deferred tax assets, non-current | 361,797 | 480,294 | |||||||
Net deferred tax assets | $ | 529,602 | $ | 670,478 | |||||
Operating loss carry forward expiration schedule | As of December 31, 2014, our net operating loss carryforwards for U.S. federal income tax purposes were approximately $1.66 million, and were subject to the following expiration schedule: | ||||||||
31-Dec-06 | $ | 947,685 | December 31, 2026 | ||||||
31-Dec-07 | 365,518 | 31-Dec-27 | |||||||
31-Dec-13 | 343,317 | 31-Dec-33 | |||||||
Total tax carryforwards | $ | 1,656,520 | |||||||
Stock_Buyback_Plan_Tables
Stock Buyback Plan (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Stock Buyback Plan Tables | |||||||||||||
Repurchased shares under the Stock Buyback Plan by year | Repurchased shares under the Stock Buyback Plan by year, prior to 2014, are as follows: | ||||||||||||
Number of | Cost of | Average | |||||||||||
Shares | Shares | Cost per | |||||||||||
Share | |||||||||||||
Years prior to 2013 | 513,247 | $ | 121,294 | $ | 0.24 | ||||||||
Year ended December 31, 2013 | 33,450 | 29,555 | $ | 0.88 | |||||||||
Total | 546,697 | $ | 150,849 | $ | 0.28 | ||||||||
Equity_Tables
Equity (Tables) | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Equity Tables | |||||||||||||||||||||||
Schedule of stock option activity | Stock option activity during 2014 and 2013 is summarized as follows: | ||||||||||||||||||||||
Weighted Avg. | |||||||||||||||||||||||
Weighted Avg. | Weighted Avg. | Weighted Avg. | Remaining | ||||||||||||||||||||
Number of | Number of | Exercise Price | Fair Value | Contractual Life | Aggregate | ||||||||||||||||||
Options/Warrants | Options/Warrants | per Share | per Share | (in years) | Intrinsic Value | ||||||||||||||||||
Outstanding, January 1, 2013 | 805,800 | $ | 0.25 | $ | 0.24 | 3.85 | $ | 561,723 | |||||||||||||||
Granted | 82,500 | $ | 1.16 | $ | 1.21 | 9.56 | |||||||||||||||||
Exercised | (454,966 | ) | $ | 0.23 | $ | 0.05 | 0.11 | ||||||||||||||||
Expired | (15,000 | ) | $ | 0.54 | $ | 0.54 | 7.74 | ||||||||||||||||
Outstanding, December 31, 2013 | 418,334 | $ | 0.66 | $ | 0.24 | 7.49 | $ | 560,443 | |||||||||||||||
Granted | 30,334 | $ | 1.68 | $ | 1.88 | 8.08 | |||||||||||||||||
Exercised | (59,998 | ) | $ | 0.54 | $ | 0.63 | 6.45 | ||||||||||||||||
Canceled | (29,502 | ) | $ | 0.75 | $ | 0.75 | 7.12 | ||||||||||||||||
Outstanding, December 31, 2014 | 359,168 | $ | 0.76 | $ | 0.71 | 6.58 | $ | 768,869 | |||||||||||||||
Exercisable, December 31, 2014 | 253,325 | $ | 0.53 | $ | 0.46 | 5.81 | $ | 599,677 | |||||||||||||||
Unvested, December 31, 2014 | 105,843 | $ | 1.33 | $ | 8.43 | ||||||||||||||||||
Schedule of non-vested outstanding | The following table summarizes the activity and value of non-vested options as of and for the fiscal year ended December 31, 2014: | ||||||||||||||||||||||
Weighted Avg | |||||||||||||||||||||||
Number of | Grant Date | ||||||||||||||||||||||
Options | Fair Value | ||||||||||||||||||||||
Non-vested options, December 31, 2013 | 215,857 | $ | 0.88 | ||||||||||||||||||||
Granted | 30,334 | $ | 1.88 | ||||||||||||||||||||
Vested | (129,180 | ) | $ | 0.68 | |||||||||||||||||||
Forfeited | (11,168 | ) | $ | 1.45 | |||||||||||||||||||
Non-vested options, December 31, 2014 | 105,843 | $ | 1.33 |
Basic_and_Diluted_Net_Income_L1
Basic and Diluted Net Income (Loss) per Share (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Net income (loss) per share: | |||||||||
Schedule of reconciliation of basic and diluted income (loss) per share computations | The following is a reconciliation of the share data used in the basic and diluted income per share computations: | ||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
Basic: | |||||||||
Weighted average shares outstanding | 23,170,074 | 21,893,794 | |||||||
Diluted: | |||||||||
Weighted average shares outstanding | 23,170,074 | 21,893,794 | |||||||
Weighted average effects of dilutive securities | 229,994 | — | |||||||
Total | 23,400,068 | 21,893,794 | |||||||
Antidilutive securities: | — | 418,334 |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
Operating leases future minimum lease payments | Future minimum lease payments are as follows: | ||||||
Years Ending December 31, | Amount | ||||||
2015 | $ | 63,071 | |||||
2016 | 27,598 | ||||||
2017 | 1,818 | ||||||
2018 | 303 | ||||||
Total lease commitments | $ | 92,790 | |||||
Capital leases future minimum lease payments | As of December 31, 2014, future minimum lease payments for capital leases are as follows: | ||||||
Years Ending December 31, | Amount | ||||||
2015 | $ | 4,860 | |||||
2016 | 4,860 | ||||||
2017 | 1,796 | ||||||
Future minimum lease payments | 11,516 | ||||||
Less amount representing interest | (709 | ) | |||||
Present value of net minimum lease payments | 10,807 | ||||||
Less current portion | (4,397 | ) | |||||
Non-current lease obligation, net of current portion | $ | 6,410 | |||||
Schedule of redeemable noncontrolling interest | Below reflects the activity of the redeemable noncontrolling interest as of and for the years ended December 31, 2014 and 2013. | ||||||
Balance at acquistion date, September 16, 2013 | $ | 1,000,306 | |||||
Net income attributable to noncontrolling interest | |||||||
for the period September 16 - December 31, 2013 | 18,090 | ||||||
Balance, December 31, 2013 | 1,018,396 | ||||||
Net loss attributable to noncontrolling interest | |||||||
for the year ended December 31, 2014 | (44,377 | ) | |||||
Balance, December 31, 2014 | $ | 974,019 | |||||
Schedule of activity of the contingently redeemable noncontrolling interest | Below reflects the activity of the redeemable noncontrolling interest as of and for the years ended December 31, 2014 and 2013. | ||||||
Balance at acquistion date, September 16, 2013 | $ | 1,000,306 | |||||
Net income attributable to noncontrolling interest | |||||||
for the period September 16 - December 31, 2013 | 18,090 | ||||||
Balance, December 31, 2013 | 1,018,396 | ||||||
Net loss attributable to noncontrolling interest | |||||||
for the year ended December 31, 2014 | (44,377 | ) | |||||
Balance, December 31, 2014 | $ | 974,019 |
Supplemental_Cash_Flow_Informa1
Supplemental Cash Flow Information (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Supplemental Cash Flow Information Tables | |||||||||
Schedule of supplemental cash flow information | |||||||||
Year ended December 31, | |||||||||
2014 | 2013 | ||||||||
Cash paid during the year: | |||||||||
Interest on Lapaseotes Notes - related party | $ | — | $ | 5,918 | |||||
Other interest | $ | 6,970 | $ | 11,533 | |||||
Non-cash investing and financing activities: | |||||||||
Common stock issued in connection with Sterling Solutions LLC asset purchase | $ | 101,030 | $ | — | |||||
Common stock issued in connection with Validus acquisition | $ | — | $ | 1,010,459 | |||||
Common stock issued in connection with Lapeseotes debt settlement | $ | — | $ | 214,686 | |||||
The_Company_and_Basis_of_Prese1
The Company and Basis of Presentation (Details Narrative) | Dec. 31, 2014 | Mar. 01, 2014 | Feb. 29, 2012 |
ICS [Member] | |||
Ownership interest | 100.00% | ||
Validus Ventures, LLC. [Member] | |||
Ownership interest | 60.00% | ||
International Certification Services, Inc. [Member] | |||
Percentage of business acquired | 40.00% | 60.00% |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Restricted cash | $250,000 | ||
Allowance for doubtful accounts | 25,800 | 20,700 | |
Capitalized software costs | 183,385 | ||
Amortization of capitalized software costs | 43,000 | 12,800 | |
Internally developed software acquired | 129,000 | ||
Advertising Expense | 59,500 | 59,700 | |
Stock-based compensation expense | $88,060 | $70,152 | |
Other Property and Equipment [Member] | Upper Range [Member] | |||
Depreciable lives | 1 year | ||
Other Property and Equipment [Member] | Lower Range [Member] | |||
Depreciable lives | 7 years | ||
Building [Member] | |||
Depreciable lives | 20 years | ||
Revenue Concentration [Member] | |||
Threshold for significant customer identification | 10.00% | 10.00% | |
Accounts Receivable Concentration [Member] | |||
Threshold for significant customer identification | 10.00% | 10.00% |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stock options granted | 30,334 | 82,500 |
Expected life of options from date of grant | 9 years | 8 years |
Assumed dividend yield | 0.00% | 0.00% |
Upper Range [Member] | ||
Risk free interest rate | 0.11% | 0.71% |
Expected Volatility | 77.00% | 199.00% |
Lower Range [Member] | ||
Risk free interest rate | 1.59% | 1.52% |
Expected Volatility | 195.00% | 202.00% |
Business_Acquisitions_Details_
Business Acquisitions (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | 2 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Oct. 24, 2014 | Sep. 16, 2013 | Mar. 01, 2013 | Mar. 01, 2014 | Feb. 29, 2012 | |
Cash payments for acquisition | $150,000 | ||||||
Value of shares issued for acquisition | 101,030 | 935,459 | |||||
Sterling Solutions, LLC [Member] | |||||||
Total consideration for acquisition | 251,000 | ||||||
Cash payments for acquisition | 150,000 | ||||||
Shares issued for acquisition | 42,096 | ||||||
Value of shares issued for acquisition | 101,000 | ||||||
Closing price of common stock | $2.40 | ||||||
Validus Acquisition [Member] | |||||||
Total consideration for acquisition | 1,500,000 | ||||||
Cash payments for acquisition | 565,000 | ||||||
Shares issued for acquisition | 708,681 | ||||||
Value of shares issued for acquisition | 935,459 | ||||||
Closing price of common stock | $1.32 | ||||||
Percentage of business acquired | 60.00% | ||||||
Validus Acquisition [Member] | Praedium Ventures LLC [Member] | |||||||
Percentage of business acquired | 40.00% | ||||||
International Certification Services, Inc. [Member] | |||||||
Total consideration for acquisition | 196,000 | ||||||
Percentage of business acquired | 40.00% | 60.00% | |||||
Non-controlling interest | $0 | ||||||
Ownership percentage | 100.00% |
Business_Acquisitions_Details
Business Acquisitions (Details) (Validus Acquisition [Member], USD $) | Sep. 16, 2013 |
Validus Acquisition [Member] | |
Net Assets Acquired: | |
Accounts receivable | $150,000 |
Excess attributable to intangible assets | 2,350,765 |
Total fair value | 2,500,765 |
Fair value of non-controlling interest | 1,000,306 |
Total consideration | $1,500,459 |
Business_Acquisitions_Details_1
Business Acquisitions (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Sep. 16, 2013 |
Intangible Assets Acquired: | |||
Goodwill | $1,279,762 | $1,279,762 | |
Validus Acquisition [Member] | |||
Intangible Assets Acquired: | |||
Identifiable Intangible Assets | 1,475,000 | ||
Goodwill | 746,765 | ||
Excess attributable to intangible assets | 2,350,765 | ||
Validus Acquisition [Member] | Customer Relationships [Member] | |||
Intangible Assets Acquired: | |||
Identifiable Intangible Assets | 935,000 | ||
Validus Acquisition [Member] | Trademarks and Trade Names [Member] | |||
Intangible Assets Acquired: | |||
Identifiable Intangible Assets | 465,000 | ||
Validus Acquisition [Member] | Accreditations [Member] | |||
Intangible Assets Acquired: | |||
Identifiable Intangible Assets | $75,000 |
Business_Acquisitions_Unaudite
Business Acquisitions (Unaudited) (Details 2) (Validus Acquisition [Member], USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Validus Acquisition [Member] | |
Pro Forma Results of operations: | |
Total revenue | $6,912,276 |
Net income | ($20,685) |
Basic and diluted earnings (loss) per share | $0 |
Property_and_Equipment_Details
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property And Equipment Details Narrative | ||
Depreciation Expense | $96,200 | $57,000 |
Property_and_Equipment_Details1
Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property and equipment, gross | $802,305 | $783,437 |
Accumulated Depreciation | 570,419 | 530,231 |
Property and equipment, net | 231,886 | 253,206 |
Land [Member] | ||
Property and equipment, gross | 2,436 | 2,436 |
Website development and other enhancements [Member] | ||
Property and equipment, gross | 183,385 | 183,385 |
Software and tools [Member] | ||
Property and equipment, gross | 381,713 | 350,944 |
Furniture and office equipment [Member] | ||
Property and equipment, gross | 136,627 | 150,528 |
Automobiles [Member] | ||
Property and equipment, gross | 47,397 | 47,397 |
Building and Leasehold Improvements [Member] | ||
Property and equipment, gross | $50,747 | $48,747 |
Intangible_Assets_Details_Narr
Intangible Assets (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization Expense | $129,500 | $62,700 |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Intangible and other assets, gross | $1,674,500 | $1,358,470 |
Accumulated amortization | 236,822 | 107,355 |
Intangible and other assets, net | 1,437,678 | 1,251,115 |
Tradenames/trademarks (not subject to amortization) | 465,000 | 465,000 |
Intangible and other assets,Before deposit | 1,902,678 | 1,716,115 |
Deposit | 50,000 | |
Intangible and other assets, net | 1,952,678 | 1,716,115 |
Tradenames and Trademarks [Member] | ||
Intangible and other assets, gross | 64,307 | 64,307 |
Tradenames and Trademarks [Member] | Lower Range [Member] | ||
Estimated Useful Life | 2 years 6 months | |
Tradenames and Trademarks [Member] | Upper Range [Member] | ||
Estimated Useful Life | 8 years | |
Accreditations [Member] | ||
Intangible and other assets, gross | 88,663 | 88,663 |
Estimated Useful Life | 5 years | |
Customer Relationships [Member] | ||
Intangible and other assets, gross | 1,401,330 | 1,085,300 |
Customer Relationships [Member] | Lower Range [Member] | ||
Estimated Useful Life | 8 years | |
Customer Relationships [Member] | Upper Range [Member] | ||
Estimated Useful Life | 15 years | |
Beneficial lease arrangement [Member] | ||
Intangible and other assets, gross | $120,200 | $120,200 |
Estimated Useful Life | 11 years |
Intangible_Assets_Details_1
Intangible Assets (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Future scheduled amortization for the fiscal year ending December 31 | ||
2015 | $156,023 | |
2016 | 155,072 | |
2017 | 153,250 | |
2018 | 148,589 | |
2019 | 137,339 | |
Thereafter | 687,405 | |
Intangible and other assets, net | $1,437,678 | $1,251,115 |
Notes_Payable_Details_Narrativ
Notes Payable (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Repayments of notes payable | ($166,867) | ($23,442) |
WFCF Revolving Line of Credit [Member] | ||
Debt instrument, issuance date | 2-Sep-14 | |
Maturity date | 2-Sep-15 | |
Effective interest rate | 3.75% | |
Collateral description | Certificate of deposit and Security interest | |
Line of Credit, borrowing capacity | 500,000 | |
Certificate of deposit collateralized | 250,000 | |
Security interest personally owned shares of the Company's stock (shares) | 500,000 | |
ICS Revolving Line of Credit [Member] | ||
Debt instrument, face amount | 70,050 | |
Debt instrument, issuance date | 1-Apr-14 | |
Maturity date | 1-Apr-17 | |
Effective interest rate | 6.25% | |
Interest rate, basis spread | 2.25% | |
Interest rate description | NY Prime rate plus 2.250% | |
Collateral description | Collateralized by all the business assets of ICS | |
Great Western Bank SBA Loan [Member] | ||
Debt instrument, face amount | 200,000 | |
Debt instrument, issuance date | 22-Apr-11 | |
Maturity date | 1-May-21 | |
Interest rate, basis spread | 2.50% | |
Interest rate description | Prime plus 2.5% | |
Repayments of notes payable | 150,000 | |
Note Payable - Vehicle [Member] | ||
Debt instrument, face amount | 37,407 | |
Interest and principal payments | $715 | |
Interest rate | 5.50% | |
Debt instrument term | 5 years | |
Debt instrument, issuance date | 1-Dec-12 | |
Collateral description | Vehicle |
Notes_Payable_Details
Notes Payable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Notes payable | ||
Equipment Note Payable | $23,670 | $30,729 |
Great Western Bank SBA Loan | 159,808 | |
Notes Payable | 23,670 | 190,537 |
Less current portion of notes payable and other long-term debt | 7,425 | 24,782 |
Notes payable and other long-term debt, net of current portion | $16,245 | $165,755 |
Notes_Payable_Details_1
Notes Payable (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Maturities of Notes Payable for the years ending December 31 | ||
2015 | $7,425 | |
2016 | 7,882 | |
2017 | 8,363 | |
Notes Payable | $23,670 | $190,537 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
Deferred federal tax benefit | $136,650 | $1,678 |
Deferred state tax benefit | 4,226 | 100 |
Charitable contribution carryforward | $37,600 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ||
Expected tax expense | $114,960 | ($1,635) |
State tax provision, net | 11,475 | -144 |
Permanent differences | 53,604 | 53,507 |
Stock-based compensation and other | -28,854 | -56,058 |
Business tax credit applied | -37,622 | |
Other, net | 27,313 | 2,552 |
Total income tax expense (benefit) | $140,876 | ($1,778) |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred Tax assets current: | ||
Net operating loss carryforwards | $146,751 | $130,820 |
Accruals, stock based compensation | 21,054 | 41,360 |
Other | 18,004 | |
Deferred tax assets, current | 167,805 | 190,184 |
Deferred tax assets (liabilities) noncurrent: | ||
Net operating loss carryforwards | 466,162 | 566,456 |
Property and equipment | -22,630 | -39,923 |
Intangibles assets | -95,635 | -92,156 |
Charitable contributions | 13,900 | 15,517 |
Business tax credits | 30,400 | |
Deferred tax assets, non-current | 361,797 | 480,294 |
Net deferred tax assets | $529,602 | $670,478 |
Income_Taxes_Details_2
Income Taxes (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2007 | Dec. 31, 2006 | |
Operating loss carry forward expiration schedule | |||
Operating loss carryforwards amount | $1,656,520 | ||
U.S. Federal income tax [Member] | |||
Operating loss carry forward expiration schedule | |||
Operating loss carryforwards amount | $343,317 | $365,518 | $947,685 |
Expiration dates | 31-Dec-33 | 31-Dec-26 | 31-Dec-27 |
Stock_Buyback_Plan_Details
Stock Buyback Plan (Details) (USD $) | 12 Months Ended | 53 Months Ended | 65 Months Ended |
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | |
Stock Buyback Plan Details | |||
Number of shares | 33,450 | 513,247 | 546,697 |
Cost of shares | $29,555 | $121,294 | $150,849 |
Average cost per share | $0.88 | $0.24 | $0.28 |
Equity_Details_Narrative
Equity (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Equity Details Narrative | ||
Numbers of share issued | 900,000 | |
Numbers of shares issued,value | $1,800,000 | |
Shares authorized for issuance under incentive plan | 3,000,000 | |
Shares available for issuance | 369,834 | |
Numbers of forfeited option vested | 18,334 | 6,666 |
Numbers of forfeited option nonvested | -11,168 | 8,334 |
Unrecognized compensation expense | $98,051 | |
Unrecognized compensation expense period | 2 years |
Equity_Details
Equity (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Options | ||
Balance, beginning | 418,334 | 805,800 |
Granted | 30,334 | 82,500 |
Exercised | -59,998 | -454,966 |
Canceled | -29,502 | -15,000 |
Balance, ending | 359,168 | 418,334 |
Exercisable | 253,325 | |
Unvested Balance | 105,843 | 215,857 |
Weighted Average Exercise Price per Share | ||
Balance, beginning | $0.66 | $0.25 |
Granted | $1.68 | $1.16 |
Exercised | $0.54 | $0.23 |
Canceled | $0.75 | $0.54 |
Balance, ending | $0.76 | $0.66 |
Exercisable | $0.53 | |
Weighted Average Fair Value per Share | ||
Balance, beginning | $0.24 | $0.24 |
Granted | $1.88 | $1.21 |
Exercised | $0.63 | $0.05 |
Canceled | $0.75 | $0.54 |
Balance, ending | $0.71 | $0.24 |
Exercisable | $0.46 | |
Unvested Balance | $1.33 | $0.88 |
Weighted Average Remaining Contractual Life (in years) | ||
Balance, beginning | 7 years 5 months 26 days | 3 years 10 months 6 days |
Granted | 8 years 9 months 18 days | 9 years 6 months 22 days |
Exercised | 6 years 5 months 12 days | 1 month 10 days |
Canceled | 7 years 1 month 13 days | 7 years 8 months 26 days |
Balance ending | 6 years 6 months 29 days | 7 years 5 months 26 days |
Exercisable | 5 years 9 months 22 days | |
Unvested | 8 years 5 months 5 days | |
Aggregate Intrinsic Value | ||
Balance, beginning | $560,443 | $561,723 |
Balance, ending | 768,869 | 560,443 |
Exercisable | $599,677 |
Equity_Details_1
Equity (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Non-vested Options | ||
Unvested Balance | 215,857 | |
Grants | 30,334 | 82,500 |
Vested | -129,180 | |
Forfeited | -11,168 | 8,334 |
Unvested Balance | 105,843 | 215,857 |
Weighted Average Grant Date Fair Value | ||
Unvested Balance | $0.88 | |
Grants | $1.88 | $1.21 |
Vested | $0.68 | |
Forfeited | $1.45 | |
Unvested Balance | $1.33 | $0.88 |
Basic_and_Diluted_Net_Income_L2
Basic and Diluted Net Income (Loss) per Share (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Basic: | ||
Weighted average shares outstanding | 23,170,074 | 21,893,794 |
Diluted: | ||
Weighted average shares outstanding | 23,170,074 | 21,893,794 |
Weighted average effects of dilutive securities | 229,994 | |
Total Diluted | 23,400,068 | 21,893,794 |
Antidilutive securities: | $418,334 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transactions Details Narrative | ||
Revenue from related parties | $12,500 | $11,100 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Sep. 16, 2013 | |
Rent expenses | $117,712 | $91,500 | |
Related party rent expenses | 29,765 | 8,785 | |
Discretionary matching contribution | 24,500 | 17,800 | |
North Dakota Office [Member] | |||
Term of the operating lease | 5 years | ||
Corporate office, monthly rental rate | 150 | ||
Area of land owned on which building is lease | 0.75 | ||
Number of square foot of building leased | 2,300 | ||
ICS Office [Member] | |||
Sublease area | 300 | ||
Sublease monthly rent | 300 | ||
Validus Acquisition [Member] | Praedium Ventures LLC [Member] | |||
Term of the operating lease | 3 years | ||
Corporate office, monthly rental rate | 2,600 | ||
IMI Office Equipment [Member] | |||
Asset cost, included in property and equipment | 22,300 | ||
Office equipment, base rent | 405 | ||
Interest rate | 5.25% | ||
Amorization period of leased assets | 63 months | ||
ICS Office Equipment [Member] | |||
Asset cost, included in property and equipment | 7,100 | ||
Office equipment, base rent | $521 | ||
Interest rate | 6.25% |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 |
Operating leases future minimum lease payments year ending December 31, | |
2015 | $63,071 |
2016 | 27,598 |
2017 | 1,818 |
2018 | 303 |
Total lease commitments | $92,790 |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details 1) (USD $) | Dec. 31, 2014 |
Capital leases future minimum lease payments year ending December 31, | |
2015 | $4,860 |
2016 | 4,860 |
2017 | 1,796 |
Future minimum lease payments | 11,516 |
Less amount representing interest | -709 |
Present value of net minimum lease payments | 10,807 |
Less current portion | -4,397 |
Capital lease obligations | $6,410 |
Commitments_and_Contingencies_4
Commitments and Contingencies (Details 2) (USD $) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2013 | Dec. 31, 2014 | |
Redeemable noncontrolling interest, ending | $1,018,396 | $974,019 |
Validus Acquisition [Member] | ||
Redeemable noncontrolling interest, beginning | 1,000,306 | 1,018,396 |
Net income (loss) attributable to noncontrolling interest | 18,090 | -44,377 |
Redeemable noncontrolling interest, ending | $1,018,396 | $974,019 |
Supplemental_Cash_Flow_Informa2
Supplemental Cash Flow Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Supplemental Cash Flow Information | ||
Interest paid | $6,970 | $11,533 |
Non-cash investing and financing activities: | ||
Common stock issued in connection with Sterling Solutions LLC asset purchase | 101,030 | |
Common stock issued in connection with Validus acquisition | 1,010,459 | |
Common stock issued in connection with Lapeseotes debt settlement | 214,686 | |
Lapaseotes Notes Payable - Related Party [Member] | ||
Supplemental Cash Flow Information | ||
Interest paid | $5,918 |