Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Jun. 15, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | GYROTRON TECHNOLOGY INC | ||
Entity Central Index Key | 1,369,795 | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 3,392,000 | ||
Entity Common Stock, Shares Outstanding | 14,414,058 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Balance Sheets
Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $ 29,316 | |
Accounts receivable - net | $ 17,867 | 520 |
Prepaid expenses and other current assets | $ 1,580 | |
Contract receivable | $ 21,560 | |
Total current assets | 39,427 | $ 31,416 |
Machinery and equipment-net | 176,768 | 47,362 |
Patents-net | 53,356 | 51,353 |
Other assets | 12,253 | 12,253 |
Total assets | 281,804 | 142,384 |
Current Liabilities | ||
Loans - stockholders | 145,000 | $ 85,000 |
Advances from stockholders | 193,325 | |
Accounts payable | 241,874 | $ 70,145 |
Accrued expenses and other liabilities | 72,347 | 14,810 |
Accrued employee compensation | 481,872 | 364,105 |
Registration rights obligation | 558,872 | 404,800 |
Total current liabilities | 1,693,290 | $ 938,860 |
Non-current liabilities | $ 26,940 | |
Commitments and contingencies (Note 12) | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | $ 7,256,297 | $ 6,248,299 |
Stockholders' deficiency | ||
Common stock, 25,000,000 shares authorized, $0.001 par value, 15,222,024 shares issued and 14,414,058 shares outstanding | 15,222 | 15,222 |
Additional paid-in capital | 2,217,767 | 3,146,932 |
Accumulated deficit | (10,537,009) | (9,816,226) |
Total | (8,304,020) | (6,654,072) |
Treasury stock, 807,966 shares, at cost | (390,703) | (390,703) |
Total stockholders' deficiency | (8,694,723) | (7,044,775) |
Total liabilities, redeemable preferred stock and stockholders' deficiency | 281,804 | 142,384 |
Preferred A stock [Member] | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | 3,420,028 | 2,948,312 |
Preferred A-1 stock [Member] | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | 475,469 | $ 408,606 |
Preferred A-2 stock [Member] | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | 60,857 | |
Preferred B stock [Member] | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | 1,594,331 | $ 1,378,552 |
Preferred B-1 stock [Member] | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | 1,688,034 | $ 1,512,829 |
Preferred B-2 stock [Member] | ||
Redeemable preferred stock | ||
Total redeemable preferred stock | $ 17,578 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
Redeemable preferred stock | ||
Preferred stock, Par value | $ 0.001 | $ 0.001 |
Preferred stock, Shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, designated | 733,750 | |
Preferred stock, Shares outstanding | ||
Stockholders' deficiency | ||
Common Stock, Par value | $ 0.001 | $ 0.001 |
Common Stock, Shares authorized | 25,000,000 | 25,000,000 |
Common Stock, Shares issued | 15,222,024 | 15,222,024 |
Common Stock, Shares outstanding | 14,414,058 | 14,414,058 |
Treasury stock | 807,966 | 807,966 |
Preferred A stock [Member] | ||
Redeemable preferred stock | ||
Preferred stock, designated | 450,000 | 450,000 |
Preferred stock, Shares outstanding | 436,774 | 436,774 |
Preferred A-1 stock [Member] | ||
Redeemable preferred stock | ||
Preferred stock, designated | 125,000 | 125,000 |
Preferred stock, Shares outstanding | 61,910 | 61,910 |
Preferred A-2 stock [Member] | ||
Redeemable preferred stock | ||
Preferred stock, designated | 8,750 | 8,750 |
Preferred stock, Shares outstanding | 1,739 | 1,739 |
Preferred B stock [Member] | ||
Redeemable preferred stock | ||
Preferred stock, designated | 40,000 | 40,000 |
Preferred stock, Shares outstanding | 39,959 | 39,959 |
Preferred B-1 stock [Member] | ||
Redeemable preferred stock | ||
Preferred stock, designated | 80,000 | 80,000 |
Preferred stock, Shares outstanding | 40,650 | 40,650 |
Preferred B-2 stock [Member] | ||
Redeemable preferred stock | ||
Preferred stock, designated | 30,000 | |
Preferred stock, Shares outstanding | 500 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Statements Of Operations | ||
Revenues | $ 80,697 | $ 141,775 |
Cost of revenues | 43,840 | 40,110 |
Gross profit | 36,857 | 101,665 |
Operating expenses (income): | ||
Selling, general and administrative | 521,203 | 821,836 |
Research and development | 117,205 | $ 68,203 |
Funded research and development | (55,794) | |
Total operating expenses | 582,614 | $ 890,039 |
Operating loss | $ (545,757) | (788,374) |
Other income (expense): | ||
Gain on extinguishment of debt | $ 16,835 | |
Interest and penalties expense | $ (2,954) | |
Loss on fair value of warrant exchange | (18,000) | |
Registration rights obligation | (154,072) | $ (144,664) |
Net loss | (720,783) | (916,203) |
Redeemable preferred stock accretion and dividends | (958,752) | (705,826) |
Net loss attributable to common stockholders | $ (1,679,535) | $ (1,622,029) |
Loss per common share-basic and diluted | $ (0.12) | $ (0.12) |
Weighted average common shares outstanding-basic and diluted | 14,414,054 | 13,846,758 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (720,783) | $ (916,203) |
Adjustment to reconcile net loss to net cash used by operating activities: | ||
Depreciation and amortization | $ 22,101 | 92,303 |
Gain on extinguishment of note payable | (16,835) | |
Stock based compensation | $ 7,576 | 9,386 |
Loans receivable, officer, forgiven | 24,155 | |
(Increase) decrease in assets: | ||
Accounts receivable | $ (17,347) | $ (520) |
Customer contracts receivable | (21,560) | |
Prepaid expenses and other current assets | 1,580 | $ 23,767 |
Increase (decrease) in liabilities: | ||
Accounts payable | 104,379 | (3,795) |
Accrued expenses and other liabilities | 57,537 | 5,553 |
Accrued employee compensation | 117,767 | 241 |
Registration rights obligation | 154,072 | 144,664 |
Net cash used by operating activities | (294,678) | $ (637,284) |
Cash flows from investing activities: | ||
Payments for equipment | $ (41,602) | |
Deposit on capital lease | $ (40,000) | |
Payments for patents | $ (17,618) | (7,184) |
Cash flows used by investing activities | (59,220) | (47,184) |
Cash flows from financing activities: | ||
Proceeds from stockholder loans | $ 60,000 | 85,000 |
Repayments of note payable | (29,948) | |
Proceeds from sale of preferred stock, net of issuance costs | $ 71,257 | 650,590 |
Dividends paid on Series B Preferred | $ (59,940) | |
Proceeds from advances from stockholders | $ 193,325 | |
Proceeds from repayment of advance - director | $ 8,000 | |
Net cash provided by financing activities | $ 324,582 | 653,702 |
Net decrease in cash | (29,316) | (30,766) |
Cash - beginning of period | $ 29,316 | 60,082 |
Cash - end of period | 29,316 | |
Supplemental disclosure of non-cash financing activities: | ||
Common stock issued in payment of accumulated and declared dividends on Series A Preferred | 1,913,479 | |
Common stock issued in payment of accumulated and declared dividends on Series A-1 Preferred | 243,440 | |
Dividends on redeemable preferred stock paid by issuance of redeemable preferred stock | $ 3,632 | $ 21,625 |
Purchase of equipment in accounts payable and non-current liability | 94,290 | |
Allocation of redeemable preferred stock proceeds to beneficial conversion feature and warrants | 25,478 | $ 175,120 |
Accretion of redeemable preferred stock proceeds | 28,943 | 178,620 |
Redeemable preferred dividend accrual | $ 929,948 | $ 509,091 |
Statements of Changes In Stockh
Statements of Changes In Stockholder's Equity - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Treasury Stock | Total |
Beginning balance, shares at Dec. 31, 2013 | 11,903,664 | ||||
Beginning balance, amount at Dec. 31, 2013 | $ 11,904 | $ 1,518,264 | $ (8,900,023) | $ (390,703) | $ (7,760,558) |
Redeemable preferred stock accretion and dividends | (709,439) | (709,439) | |||
Warrants issued in connection with redeemable preferred stock | 73,722 | 73,722 | |||
Redeemable preferred stock beneficial conversion feature | 101,398 | 101,398 | |||
Issuance of common shares as settlement for dividend on Series A preferred, shares | 2,943,837 | ||||
Issuance of common shares as settlement for dividend on Series A preferred, amount | $ 2,943 | 1,910,536 | 1,913,479 | ||
Issuance of common shares as settlement for dividend on Series A-1 preferred, shares | 374,523 | ||||
Issuance of common shares as settlement for dividend on Series A-1 preferred, amount | $ 375 | 243,065 | 243,440 | ||
Stock based compensation | 9,386 | 9,386 | |||
Net loss | $ (916,203) | (916,203) | |||
Ending balance, shares at Dec. 31, 2014 | 15,222,024 | ||||
Ending balance, amount at Dec. 31, 2014 | $ 15,222 | 3,146,932 | (9,816,226) | $ (390,703) | (7,044,775) |
Redeemable preferred stock accretion and dividends | (962,219) | (962,219) | |||
Warrants issued in connection with redeemable preferred stock | 8,525 | 8,525 | |||
Redeemable preferred stock beneficial conversion feature | 16,953 | 16,953 | |||
Stock based compensation | 7,576 | 7,576 | |||
Net loss | (720,783) | (720,783) | |||
Ending balance, shares at Dec. 31, 2015 | 15,222,024 | ||||
Ending balance, amount at Dec. 31, 2015 | $ 15,222 | $ 2,217,767 | $ (10,537,009) | $ (390,703) | $ (8,694,723) |
Business Description And Summar
Business Description And Summary Of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 1 - Business Description And Summary Of Significant Accounting Policies | Business Description - Liquidity and Management Plans - The Company's business strategy is to overcome these losses through commercialization and continued development of (i) applications for the gyrotron beam which will be marketed and monetized through licensing, engineering consulting and servicing and (ii) the lamination system. The Company's management and Board of Directors have obtained additional funding of approximately $198,000 through stockholder advances and loans and the sale of equity securities (see Notes 6 and 13) and intends to obtain additional funding for general working capital needs and professional fees through private placement of its equity securities. The Company will continually evaluate funding options including additional offerings of its securities to investors. There can be no assurance as to the availability or terms upon which such financing alternatives might be available. Accounts Receivable - Machinery and Equipment - Patents - Impairment of Long-Lived Assets - Income Taxes - Share-Based Payments Treasury Stock - Revenue Recognition - Research and Development Expenses - Loss Per Common Share - As of December 31, 2015, after giving effect to the payment default on the Series B-1 redeemable convertible preferred described in Note 8, there were the following common shares underlying securities that could potentially dilute future earnings: Preferred A stock 1,637,903 Preferred A-1 stock 232,163 Preferred A-2 stock 86,938 Preferred B stock 1,410,315 Preferred B-1 stock 2,391,173 Preferred B-2 stock 25,000 Warrants expiring 3/31/16 1,938,950 Warrants expiring 12/15/16 65,875 Warrants expiring 10/01/18 60,000 Stock options 60,000 7,908,317 Accounting Estimates - Fair Value of Financial Instruments - Redeemable Convertible Preferred Stock The Company evaluated the detachable warrants in accordance with FASB ASC No. 470-20, "Debt with Conversion and Other Options" and FASB ASC 815, "Derivatives and Hedging" and determined they were not considered a liability. As a result, proceeds from the preferred stock are allocated to the detachable stock purchase warrants based on the relative fair value of the preferred stock and warrants at issuance and recorded as additional paid-in capital. The Company evaluated the conversion feature of the convertible preferred shares in accordance with FASB ASC No. 470-20, "Debt with Conversion and Other Options". A convertible financial instrument includes a Beneficial Conversion Feature ("BCF") when the fair market value of the preferred stock is lower than the value of common stock when the preferred stock converts to common stock at the issuance date. The BCF shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in capital. Redeemable securities initially are recorded at their fair value minus the detachable warrants, BCF and preferred stock issuance costs. The Company recognizes discounts from the redemption value of the preferred stock immediately as they occur and adjusts the carrying amount to equal redemption value at the end of each reporting period. The Company recognizes accumulated dividends as an increase to preferred stock in the mezzanine section of the balance sheet and increase of stockholders' deficiency. Recent Accounting Pronouncements Not Yet Adopted - In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures. In February 2016, the FASB issued an accounting standard update ASU 2016-02, "Leases", which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined the effect of the standard on its ongoing financial reporting. |
Loan Receivables, Officer
Loan Receivables, Officer | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 2 - Loan Receivables, Officer | The Company had a non-interest bearing loan to an officer that was due on demand in the amount of $24,155 which the Company forgave in 2014. The expense is included in selling, general and administrative expenses on the accompanying statements of operations for the year ended December 31, 2014. |
Machinery And Equipment
Machinery And Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 3 - Machinery And Equipment | The components of machinery and equipment are as follows: Estimated Useful Life December 31, 2015 December 31, 2014 Machinery and equipment 5 to 7 years $ 1,018,231 $ 882,338 Furniture and fixtures 5 to 7 years 25,874 25,874 Deposit on capital lease 40,000 40,000 1,084,105 948,212 Less accumulated depreciation 907,337 (900,850 ) $ 176,768 $ 47,362 Depreciation expense for the years ended December 31, 2015 and 2014 amounted to $6,486 and $82,114, respectively and is included within operating expenses in the accompanying statements of operations. |
Patents
Patents | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 4 - Patents | The components of patents are as follows: December 31, 2015 December 31, 2014 Patents $ 156,419 $ 153,607 Less accumulated amortization (103,063 ) (102,254 ) $ 53,356 $ 51,353 The Company amortizes patent costs on a straight-line basis over the expected period of benefit of the related capitalized expenditures. Amortization expense included in operating expenses on the statement of operations amounted to $15,615 and $10,189 for the years ended December 31, 2015 and 2014, respectively. Amortization expense for patents placed in service for the next five years is expected to be approximately $9,300 in 2016, approximately $5,700 in 2017, approximately $3,000 in 2018, 2019, and 2020 and approximately $11,000 in aggregate thereafter. |
Note Payable
Note Payable | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 5 - Note Payable | The Company had a note payable due to Ben Franklin Technology Center of Southeastern Pennsylvania (the Center). During the year ended December 31, 2014, the Company paid the Center $28,000 in full settlement of its obligation under the note and recognized a gain on extinguishment in the amount of $16,835, included in other income on the accompanying statement of operations. |
Stockholder Loans And Advances
Stockholder Loans And Advances From Stockholders | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 6 - Stockholder Loans And Advances From Stockholders | Gabriel Capital LP ("Gabriel"), a major stockholder of the Company, made two loans to the Company in 2014 in the amounts of $40,000 and $45,000, to purchase machinery and equipment. There is no interest on these informal loans. The $40,000 loan was to be repaid on July 1, 2015, or earlier to the extent the Company has cash in excess of $250,000. As of the date hereof, this loan has not been repaid. The $45,000 loan was to be repaid on October 1, 2015, or earlier to the extent the Company has cash in excess of $250,000. As of the date hereof, this loan has not been repaid. In May 2015, Gabriel loaned the Company an additional $60,000 interest free to be repaid from 50% of the net proceeds of any equity financing obtained by the Company, and, in any event, to be repaid by September 30, 2015. In October 2015, Gabriel agreed to extend the maturity of all of the above loans to January 4, 2016 and to waive the obligation to repay the May 2015 loan from equity proceeds. In April 2016 Gabriel loaned the Company an additional $25,000 interest free to be repaid by December 31, 2016, and extended the maturity date of all its loans to the Company to December 31, 2016. As of December 31, 2015, stockholders had advanced the Company approximately $30,500 to be repaid at a premium upon collection of the accounts receivable, of which $9,728 had been collected and had not been repaid. As of the date hereof, stockholders have loaned the Company approximately $45,000 for future accounts receivable to be repaid at premiums ranging from 1.25% - 3.25% upon collection of the accounts receivable. During the year ended December 31, 2015, a director and his affiliates advanced $162,800 to the Company that bears no interest. Subsequent to December 31, 2015, the director and his affiliates advanced $112,500 to the Company that bears no interest. The Company expects that a substantial portion of such advances will be converted into preferred stock units (see Note 8). |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 7 - Income Taxes | The components of the income tax provision (benefit) are as follows: December 31, 2015 December 31, 2014 Current: Federal $ - $ - State - - - - Deferred: Federal (179,119 ) (296,022 ) State (57,078 ) (97,018 ) (236,197 ) (393,040 ) Increase in valuation allowance 236,197 393,040 Provision for income taxes $ - $ - At December 31, 2015 and 2014, the Company recorded deferred income tax and liabilities, which were attributed to the following temporary differences: December 31, 2015 December 31, 2014 Deferred tax assets/(liabilities) Net operating loss carry-forwards $ 3,515,836 $ 3,340,056 Tax benefit carry-forwards 164,854 160,587 Depreciation and amortization 11,658 25,468 Accrued employee compensation 195,609 147,803 Other 26,982 7,902 Stock based compensation 75,621 72,546 Total gross deferred tax assets 3,990,560 3,754,362 Less valuation allowance (3,990,560 ) (3,754,362 ) Net deferred tax assets $ - $ - The Company has approximately $8,661,000 ($8,228,000 - 2014) in federal and state net operating loss carryforwards ("NOL's") as of December 31, 2015 available to reduce future taxable income which begin to expire in 2018. Due to the uncertainty of the Company's ability to generate sufficient taxable income in the future to utilize the NOL's before they expire, the Company has recorded a valuation allowance to reduce the gross deferred tax asset to zero. The Company also has approximately $165,000 ($161,000 – 2014) of tax benefit carryforwards as of December 31, 2015 related to research and development credits that expire at various dates through 2035. Internal Revenue Code Section 382 ("Section 382") imposes limitations on the utilization of a company's net operating losses and other corporate tax attributes as ownership changes occur. As a result of the historical equity instruments issued by the Company, a Section 382 ownership change may have occurred and a study will be required to determine the date of the ownership changes, if any. The amount of the Company's net operating losses and other tax attributes incurred prior to the ownership change may be limited based on the Company's value. A full valuation allowance has been established for the gross deferred tax asset related to the net operating losses and other corporate tax attributes available. Accordingly, any limitation resulting from Section 382 application is not expected to have a material effect on the balance sheets or statements of operations of the Company. The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying statements of operations are as follows: December 31, 2015 December 31, 2014 Statutory United States federal rate 34.0 % 34.0 % State taxes, net of federal effect 5.2 5.5 Permanent differences (6.9 ) (5.4 ) Change in valuation allowance (32.9 ) (42.9 ) Deferred tax true-up adjustments 0.5 8.7 Other 0.1 0.1 Effective tax rate -% -% During the years ended December 31, 2015 and 2014, the Company recognized no interest and penalties related to unrecognized tax benefits and has no unrecognized tax benefits. |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 8 - Redeemable Convertible Preferred Stock | The Board of Directors has designated six series of redeemable convertible par value $.001 preferred stock: Series A, Series A-1, Series A-2, Series B, Series B-1, and Series B-2. Series A, Series A-1, and Series A-2 rank equal for all purposes. Series B, Series B-1, and Series B-2 rank equal for all purposes. Series A, A-1 and A-2 each rank senior to each of Series B, B-1, and B-2. As further detailed below, holders of Series A, A-1, A-2, B, B-1, and B-2 redeemable convertible preferred stock can take control of the board of directors in the event the Company does not accept a redemption request or the Company fails to pay dividends. In addition, a majority of the current members of the board of directors own various classes of preferred shares. As a result, these instruments have conditions for their redemption that are not within the control of the Company. Accordingly, the fair value of the Series A, A-1, A-2, B, B-1, and B-2 redeemable convertible preferred stock are recorded outside of stockholders' deficiency as temporary equity in the mezzanine section of the balance sheet. The Company recognizes changes in the redemption value of the convertible preferred stock immediately as they occur, and the carrying amount of the instrument is adjusted to equal the redemption value at the end of each reporting period. The adjustment to record preferred stock at its redemption value was charged to the redeemable convertible preferred stock carrying value and additional paid in capital for the years ended December 31, 2015 and 2014 and is further detailed in the following schedule: Series A Series A-1 Series A-2 Series B Series B-1 Series B-2 Total Fair Value of Redeemable Preferred Stock as of December 31, 2013 $ 4,599,727 $ 614,900 - $ 1,318,613 $ 747,008 - $ 7,280,248 New issuances including dividends paid in kind - - - - $ 675,740 - $ 675,740 Dividends accumulated $ 262,152 $ 37,146 - $ 119,878 $ 111,706 - $ 530,882 Dividends satisfied $ (1,913,567 ) $ (243,440 ) - $ (59,939 ) $ (21,625 ) - $ (2,238,571 ) Fair Value of Redeemable Preferred Stock as of December 31, 2014 $ 2,948,312 $ 408,606 - $ 1,378,552 $ 1,512,829 - $ 6,248,299 New issuances including dividends paid in kind - - $ 60,857 - - $ 17,500 $ 78,357 Dividends accumulated $ 471,716 $ 66,863 - $ 215,779 $ 175,205 $ 78 $ 929,641 Fair Value of Redeemable Preferred Stock as of December 31, 2015 $ 3,420,028 $ 475,469 $ 60,857 $ 1,594,331 $ 1,688,034 $ 17,578 $ 7,256,297 The terms of these preferred shares are summarized in the table below. All series carry an initial dividend rate of 10% payable quarterly and are convertible in the common stock of the Company. The holders of preferred stock have the right to one vote for each share of common stock into which such share of preferred stock could then be converted. The conversion ratio and price are subject to adjustment when the Company declares or pays dividends, makes a distribution on common stock payable in common shares, or affects a subdivision, split, consolidation, combination, or reverse split of outstanding common shares into a greater or lesser number of common shares. The dividends accrue and accumulate whether or not they have been declared by the board of directors and whether or not there are profits or other funds legally available. As specified in the certificate of designation for each series, the Company may have the option to pay dividends in kind for a specified period of time. For each series any holder can request on the date specified for that series that the Company repurchase 30 calendar days thereafter (the "Repurchase Date"), all shares of that series held by the holder for cash equal to the liquidation preference per share plus accrued and unpaid dividends as of the Repurchase Date. The Company has the option whether or not to agree to the repurchase. In the event the Company fails to repurchase, or payment The Company, at its option, may require conversion of all or any pro-rata portion of shares of a series into common stock at the conversion price if at any time i) the common stock is listed for trading on a national securities exchange, an inter-dealer automated quotation system, or over the counter bulletin board (or for the series A-2 and B-2 the "OTC Pinks"), ii) the Company shall have prepared and filed with the Securities and Exchange Commission a registration statement covering the shares of common stock to be issued upon due conversion of preferred stock, and such registration statement shall have been declared effective under the Securities Act of 1933, as amended, and continues to be effective, iii) during any preceding period of twenty consecutive trading days (while i) and ii) are fulfilled) the closing price equals or exceeds a specified percentage ("Mandatory conversion percentage") of the conversion price, and iv) the Company is current on its dividends for that Series. Series A Series A-1 Series A-2 Series B Series B-1 Series B-2 Total Shares designated 450,000 125,000 8,750 40,000 80,000 30,000 733,750 Shares outstanding at December 31, 2015 436,774 61,910 1,739 39,959 40,650 500 - Liquidation preference per share $ 6 $ 6 $ 35 $ 30 $ 35 $ 35 - Number of shares of common issued upon conversion of one preferred 3.75 3.75 50.00 35.29 58.82 50.00 - Conversion price per common share $ 1.600 $ 1.600 $ 0.700 $ 0.850 $ 0.595 $ 0.700 - In default at December 31, 2015 YES YES NO YES YES NO - Number of quarters in arrears that triggers default rate 4 4 4 6 6 6 - Number of quarters in arrears 9 8 - 10 7 - - Repurchase date 6/30/2015 6/30/2015 6/30/2020 6/30/2016 9/30/2017 12/31/2019 - May be paid in kind through and including 9/30/2016 - Mandatory conversion percentage 150 % 150 % 150 % 196.1 % 184.9 % 150 % - Dividends accrued during the year ended December 31,2014 $ 262,064 $ 37,146 $ - $ 119,878 $ 111,706 $ - $ 530,794 Dividends accrued during the year ended December 31,2015 $ 471,716 $ 66,863 $ 3,632 $ 215,779 $ 175,205 $ 78 $ 933,273 Dividends paid during the year ended December 31,2014 $ - $ - $ - $ 59,939 $ - $ - $ 59,939 Dividends paid in kind during the year ended December 31,2014 $ - $ - $ - $ - $ 21,625 $ - $ 21,625 Dividends paid in kind during the year ended December 31,2015 $ - $ - $ 3,632 $ - $ - $ - $ 3,632 Cumulative unpaid dividends at December 31,2014 $ 327,668 $ 37,146 $ - $ 179,781 $ 90,081 $ - $ 634,676 Cumulative unpaid dividends at December 31,2015 $ 799,384 $ 104,009 $ - $ 395,560 $ 265,286 $ 78 $ 1,564,317 Dividend rate 18 % 18 % 10 % 18 % 18 % 10 % - In January 2014, the Company amended the certificate of designation of the Series A Preferred with the effect of satisfying cumulative unpaid dividends through September 30, 2013 with common stock at the rate of one common share per $0.65 of dividends, and reducing the dividend rate to 10% from 18% beginning October 1, 2013. As a result of the board of directors' declaration of dividends in February 2014, $1,913,479 of cumulative dividends were satisfied with 2,943,837 shares of common stock. These shares were issuable at December 31, 2015 and 2014, and a portion of them have not been issued for administrative reasons. Accordingly, the presentation in these financial statements considers these shares as effectively issued. In May 2014, the Company amended the certificate of designation of the Series A-1 Preferred with the effect of satisfying cumulative unpaid dividends through December 31, 2013 with common stock at the rate of one common share per $0.65 of dividends, and reducing the dividend rate to 10% from 18% beginning January 1, 2014. As a result of the board of directors' declaration of dividends in June 2014, $243,440 of cumulative dividends were satisfied with 374,523 shares of common stock. These shares were issuable at December 31, 2015 and 2014 and a portion of them had not been issued for administrative reasons. Accordingly, the presentation in these financial statements considers these shares as effectively issued. Under both the Series A and Series A-1 certificates of designation, as a result of a prior default, the holder had the right, at any time, to convert each share of preferred stock into 3.53 (the conversion ratio) shares of common stock , or a conversion price of $1.70. The amendment to the certificate of designation of the Series A preferred stock in the first quarter of 2014 and the amendment to the certificate of designation of the Series A-1 preferred stock in the second quarter of 2014 reduced the conversion price to $1.60, resulting in each share being convertible into 3.75 shares of common stock. Registration Rights - Sales of Equity Securities – A-2 units B-1 units B-2 units Warrants per unit 25 50 50 Warrant exercise price $ 1.00 $ 1.00 $ 1.00 Warrant expiration date 12/15/2016 3/31/2016 12/15/2016 Price/unit $ 35 $ 35 $ 35 Units sold during the year ended December 31, 2014 - 18,689 - Units sold during the year ended December 31, 2015 1,635 - 500 Proceeds net of offering expenses received during the year ended December 31, 2014 $ - $ 654,090 $ - Proceeds net of offering expenses received during the year ended December 31, 2015 $ 54,807 $ - $ 16,450 Warrants - The proceeds of the preferred stock unit offerings are allocated between the preferred stock and the warrants based on the relative fair value of each instrument. The assumed value of the preferred stock is determined based on the fair value of the underlying common shares and the fair value of the warrants was valued using a management estimate verified using the Black-Scholes option pricing model. During the years ended December 31, 2015 and 2014, $8,525 and $73,722 respectively was recognized as additional paid-in capital allocable to such warrants and immediately accreted to Fair Value of Redeemable Preferred Stock. |
Most Favored Nation Rights
Most Favored Nation Rights | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 9 - Most Favored Nation Rights | If, prior to December 31, 2016 for purchasers of Series A-2 and B-2 units and prior to December 31, 2015 for purchasers of 7,913 of Series B-1 units, the Company closes a financing or series of financing with gross proceeds in excess of $50,000 and terms and conditions more favorable than the terms and conditions provided for in the respective Series A-2 or B-1 subscription agreement, the holders of such units may exchange all or any part of the unit, at the purchase price per unit plus accrued dividends, for the securities issued in the subsequent financing on the same terms of such subsequent financing ("Most Favored Nation (or "MFN") right"). The Company analyzed units that have MFN rights for embedded derivatives that require bifurcation. In connection with this analysis, the Company's determined that such units are more akin to equity than debt and that the embedded features were clearly and closely related to the economic characteristics and risks of the unit. As a result, the Company concluded that the embedded features would not need to be bifurcated from the unit. Any benefit received by the holder related to the exercise of the MFN right would be recognized upon the occurrence of the contingent events based on its intrinsic value at the commitment date. |
Common Stock Warrants
Common Stock Warrants | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 10 - Common Stock | The following is a summary of warrants outstanding and exercisable at December 31, 2015 and 2014 and activity during the years then ended: 2015 2014 Weighted Weighted Average Average Exercise Exercise Warrants Price Warrants Price Outstanding January 1 3,043,814 $ 1.00 2,109,364 $ 1.00 Granted during the year 65,875 1.00 934,450 1.00 Exercised - - - - Expired (1,044,864 ) 1.00 - - Outstanding at December 31 2,064,825 $ 1.00 3,043,814 $ 1.00 Exercisable at December 31 2,064,825 $ 1.00 3,043,814 $ 1.00 Weighted average months remaining 4.16 11.47 See Note 9 regarding warrants granted during the years ended December 31, 2015 and 2014. During the year ended December 31, 2015, the 1,044,864 Series B warrants expired unexercised. The Company issued 60,000 warrants to a consultant in October 2013 vesting immediately with an expiration date in October 2018 and an exercise price of $0.75 per share of underlying common stock. At the time, the Company recorded $25,142 as a prepaid expense and additional paid-in capital based on the fair value of the warrants granted using the Black-Scholes option pricing model. During the year ended December 31, 2014, $9,428 was amortized into selling, general and administrative expenses as services were rendered. |
Stock Based Compensation
Stock Based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 11 - Stock Based Compensation | During 2006, the Board of Directors authorized the creation of a pool of 1,200,000 stock options to purchase shares of the Company's common stock for grant to officers and salaried employees of the Company, members of the Board of Directors, consultants, and any other key employees as determined by the Board of Directors as an incentive to remain in the service of the Company, enhance the long-term performance of the Company, and to acquire a proprietary interest in the success of the Company. Awards of these options shall be determined by the Board of Directors or an authorized committee thereof. The right to grant options under the plan expires in 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 12 - Commitments and Contingencies | Leases - In July 2014, the Company entered into an agreement to lease a new gyrotron and associated equipment from a vendor pursuant to a capital lease. As amended in May 2016, the lease requires four payments aggregating $220,000, $40,000 of which was paid up-front and is included in machinery and equipment in the accompanying balance sheet as of December 31, 2014, and $45,000, $75,000 and $60,000, are due on August 1, 2016, January 31, 2017, and January 31, 2018, respectively. Should the Company fail to timely make the $45,000 payment, it is required to return the gyrotron to the manufacturer by September 30, 2016. The lease contains a $1 bargain purchase option following the completion of payments made by the Company. In February 2015, the Company entered into an agreement to purchase a cryomagnet for $134,700 of which $40,410 was paid, $40,410 was due 30 days after delivery (which took place in the fourth quarter of 2015) and has not yet been paid, $26,940 will be due 6 months after successful provisional acceptance testing (which has not taken place), and $26,940 will be due 18 months after successful provisional acceptance testing. The Company recorded $67,350 in accounts payable and $26,940 in other non-current liability on the accompanying balance sheet as of December 31, 2015. Claims - Concentration |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 13 - Subsequent Events | Subsequent to December 31, 2015, the Company has sold 507 B-2 units at a price of $30 per unit for gross proceeds of $15,200. See also Note 6 regarding stockholder loans and advances subsequent to December 31, 2015, and Note 12 regarding the Company's lease of a gyrotron and purchase of a cryomagnet. |
Business Description And Summ20
Business Description And Summary Of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Business Description And Summary Of Significant Accounting Policies Policies | |
Business Description | Gyrotron Technology, Inc. (the "Company") is incorporated under the business laws of Delaware. The Company develops and seeks to license unique industrial technologies primarily to the glass, semiconductor, food, footwear, adhesives and plastics industries, providing a novel method for heating for industrial processing. It also develops, licenses, and sells autoclave-free laminating systems. The Company is organized and managed as a single operating segment. |
Liquidity and Management Plans | As shown in the accompanying financial statements, the Company incurred a net loss for the years ended December 31, 2015 and 2014 of $720,783 and $916,203 , respectively, had negative working capital of $1,653,863 and stockholders' deficiency of $8,694,723 at December 31, 2015. Further, cash used in operating activities during the year ended December 31, 2015 amounted to $294,678. The Company is expected to continue to incur losses throughout 2016. These factors raise substantial doubt as to the ability of the Company to continue as a going concern. The Company's business strategy is to overcome these losses through commercialization and continued development of (i) applications for the gyrotron beam which will be marketed and monetized through licensing, engineering consulting and servicing and (ii) the lamination system. The Company's management and Board of Directors have obtained additional funding of approximately $198,000 through stockholder advances and loans and the sale of equity securities (see Notes 6 and 13) and intends to obtain additional funding for general working capital needs and professional fees through private placement of its equity securities. The Company will continually evaluate funding options including additional offerings of its securities to investors. There can be no assurance as to the availability or terms upon which such financing alternatives might be available. |
Accounts Receivable | The Company grants credit to substantially all of its customers, and carries its accounts receivable at original invoice amount less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts based on history of past write-offs, collections, and current credit conditions. The allowance for doubtful accounts amounted to $3,218 at December 31, 2015 and 2014. |
Machinery and Equipment | Machinery and equipment are stated at cost net of accumulated depreciation. Depreciation is provided over the estimated useful lives of the assets using straight-line and accelerated methods for both financial statement and income tax reporting purposes. Maintenance and repairs are charged to operations as incurred; significant betterments are capitalized. |
Patents | The Company capitalizes costs relative to patent applications. Patents are recorded at acquired cost and amortized over their estimated useful economic life of 15 years, beginning at the date of issuance. Costs incurred to renew or extend the term of recognized patents, including annuities and fees, are expensed as incurred. |
Impairment of Long-Lived Assets | Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future cash flows of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is determined based on discounted cash flow or appraised values, depending on the nature of the assets. During the year ended December 31, 2015 there was an impairment of a patent in the amount of $6,168 included in operating expenses in the accompanying statement of operations. During the year ended December 31, 2014 there was no impairment of long-lived assets. |
Income Taxes | The Company recognizes estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income items is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized. The Company recognizes interest accrued and penalties related to unrecognized tax benefits in income tax expense. |
Share-Based Payments | The Company accounts for stock option awards granted in accordance with Share-Based Payments Topic of the FASB Accounting Standards Codification (ASC) 718. Under ASC 718, compensation expense related to stock based payments is recorded over the requisite service period based on the grant date fair value of the awards. The Corporation uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes model requires the use of assumptions which determine the fair value of stock-based awards, including the option's expected term and the price volatility of the underlying stock. |
Treasury Stock | The Company accounts for treasury stock under the cost method, which requires the Company to record the shares as a reduction to equity at the purchased amount. |
Revenue Recognition | In accordance with Revenue Recognition Topic of the FASB Accounting Standards Codification (ASC) 605, the Company recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the Company's price to the customer is fixed or determinate, and collectability is reasonably assured. |
Research and Development Expenses | Research and development expenses are charged to operations as incurred. Customer funded research and development is included within operating expenses in the accompanying statement of operations as a reduction of research and development expense. |
Loss Per Common Share | Basic loss per common share is computed using the weighted average number of common shares outstanding. Diluted loss per common share gives effect to dilutive convertible preferred stock, options and warrants outstanding during the period. Shares to be issued upon the exercise of these instruments have not been included in the computation of diluted loss per share as their effect is anti-dilutive based on the net loss incurred. As of December 31, 2015, after giving effect to the payment default on the Series B-1 redeemable convertible preferred described in Note 8, there were the following common shares underlying securities that could potentially dilute future earnings: Preferred A stock 1,637,903 Preferred A-1 stock 232,163 Preferred A-2 stock 86,938 Preferred B stock 1,410,315 Preferred B-1 stock 2,391,173 Preferred B-2 stock 25,000 Warrants expiring 3/31/16 1,938,950 Warrants expiring 12/15/16 65,875 Warrants expiring 10/01/18 60,000 Stock options 60,000 7,908,317 |
Accounting Estimates | The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from estimated amounts. |
Fair Value of Financial Instruments | The carrying amount of cash, receivables, loans, advances, accounts payable and accrued expenses and other liabilities are reasonable estimates of their fair value due to their short maturity. |
Redeemable Convertible Preferred Stock | The Company classifies conditionally redeemable convertible preferred shares, which includes preferred shares subject to redemption upon the occurrence of uncertain events not solely within control of the Company, as temporary equity in the mezzanine section of the balance sheet, in accordance with the guidance enumerated in FASB ASC No. 480-10 "Distinguishing Liabilities from Equity", FASB ASC No. 210-10 "Balance Sheet" and Rule 5-02.27 of Regulation S-X, when determining the classification and measurement of preferred stock. The Company evaluated the detachable warrants in accordance with FASB ASC No. 470-20, "Debt with Conversion and Other Options" and FASB ASC 815, "Derivatives and Hedging" and determined they were not considered a liability. As a result, proceeds from the preferred stock are allocated to the detachable stock purchase warrants based on the relative fair value of the preferred stock and warrants at issuance and recorded as additional paid-in capital. The Company evaluated the conversion feature of the convertible preferred shares in accordance with FASB ASC No. 470-20, "Debt with Conversion and Other Options". A convertible financial instrument includes a Beneficial Conversion Feature ("BCF") when the fair market value of the preferred stock is lower than the value of common stock when the preferred stock converts to common stock at the issuance date. The BCF shall be recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in capital. Redeemable securities initially are recorded at their fair value minus the detachable warrants, BCF and preferred stock issuance costs. The Company recognizes discounts from the redemption value of the preferred stock immediately as they occur and adjusts the carrying amount to equal redemption value at the end of each reporting period. The Company recognizes accumulated dividends as an increase to preferred stock in the mezzanine section of the balance sheet and increase of stockholders' deficiency. |
Recent Accounting Pronouncements Not Yet Adopted | In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers." The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated guidance will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a retrospective or cumulative effect transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, subsequently extended to December 15, 2017. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures. In August 2014, the FASB issued ASU No. 2014-15, "Presentation of Financial Statements - Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." The guidance requires an entity to evaluate whether there are conditions or events, in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures in certain circumstances. The guidance is effective for the annual period ending after December 15, 2016, and for annual and interim periods thereafter. Early application is permitted. The Company is currently evaluating the effect that the updated standard will have on its financial statements and related disclosures. In February 2016, the FASB issued an accounting standard update ASU 2016-02, "Leases", which requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, and early adoption is permitted. The Company has not yet evaluated nor has it determined the effect of the standard on its ongoing financial reporting. |
Business Description And Summ21
Business Description And Summary Of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Description And Summary Of Significant Accounting Policies Tables | |
Loss Per Common Share | As of December 31, 2015, after giving effect to the payment default on the Series B-1 redeemable convertible preferred described in Note 8, there were the following common shares underlying securities that could potentially dilute future earnings: Preferred A stock 1,637,903 Preferred A-1 stock 232,163 Preferred A-2 stock 86,938 Preferred B stock 1,410,315 Preferred B-1 stock 2,391,173 Preferred B-2 stock 25,000 Warrants expiring 3/31/16 1,938,950 Warrants expiring 12/15/16 65,875 Warrants expiring 10/01/18 60,000 Stock options 60,000 7,908,317 |
Machinery And Equipment (Tables
Machinery And Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Machinery And Equipment Tables | |
Components of machinery and equipment | The components of machinery and equipment are as follows: Estimated Useful Life December 31, 2015 December 31, 2014 Machinery and equipment 5 to 7 years $ 1,018,231 $ 882,338 Furniture and fixtures 5 to 7 years 25,874 25,874 Deposit on capital lease 40,000 40,000 1,084,105 948,212 Less accumulated depreciation 907,337 (900,850 ) $ 176,768 $ 47,362 |
Patents (Tables)
Patents (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Patents Tables | |
Components of patents | The components of patents are as follows: December 31, 2015 December 31, 2014 Patents $ 156,419 $ 153,607 Less accumulated amortization (103,063 ) (102,254 ) $ 53,356 $ 51,353 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Taxes Tables | |
Income tax provision (benefit | The components of the income tax provision (benefit) are as follows: December 31, 2015 December 31, 2014 Current: Federal $ - $ - State - - - - Deferred: Federal (179,119 ) (296,022 ) State (57,078 ) (97,018 ) (236,197 ) (393,040 ) Increase in valuation allowance 236,197 393,040 Provision for income taxes $ - $ - |
Deferred income tax and liabilities | At December 31, 2015 and 2014, the Company recorded deferred income tax and liabilities, which were attributed to the following temporary differences: December 31, 2015 December 31, 2014 Deferred tax assets/(liabilities) Net operating loss carry-forwards $ 3,515,836 $ 3,340,056 Tax benefit carry-forwards 164,854 160,587 Depreciation and amortization 11,658 25,468 Accrued employee compensation 195,609 147,803 Other 26,982 7,902 Stock based compensation 75,621 72,546 Total gross deferred tax assets 3,990,560 3,754,362 Less valuation allowance (3,990,560 ) (3,754,362 ) Net deferred tax assets $ - $ - |
Federal income tax rate | The differences between the United States statutory federal income tax rate and the effective income tax rate in the accompanying statements of operations are as follows: December 31, 2015 December 31, 2014 Statutory United States federal rate 34.0 % 34.0 % State taxes, net of federal effect 5.2 5.5 Permanent differences (6.9 ) (5.4 ) Change in valuation allowance (32.9 ) (42.9 ) Deferred tax true-up adjustments 0.5 8.7 Other 0.1 0.1 Effective tax rate -% -% |
Redeemable Convertible Prefer25
Redeemable Convertible Preferred Stock (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Redeemable Convertible Preferred Stock Tables | |
Summary of Redeemable Preferred Stock | Series A Series A-1 Series A-2 Series B Series B-1 Series B-2 Total Fair Value of Redeemable Preferred Stock as of December 31, 2013 $ 4,599,727 $ 614,900 - $ 1,318,613 $ 747,008 - $ 7,280,248 New issuances including dividends paid in kind - - - - $ 675,740 - $ 675,740 Dividends accumulated $ 262,152 $ 37,146 - $ 119,878 $ 111,706 - $ 530,882 Dividends satisfied $ (1,913,567 ) $ (243,440 ) - $ (59,939 ) $ (21,625 ) - $ (2,238,571 ) Fair Value of Redeemable Preferred Stock as of December 31, 2014 $ 2,948,312 $ 408,606 - $ 1,378,552 $ 1,512,829 - $ 6,248,299 New issuances including dividends paid in kind - - $ 60,857 - - $ 17,500 $ 78,357 Dividends accumulated $ 471,716 $ 66,863 - $ 215,779 $ 175,205 $ 78 $ 929,641 Fair Value of Redeemable Preferred Stock as of December 31, 2015 $ 3,420,028 $ 475,469 $ 60,857 $ 1,594,331 $ 1,688,034 $ 17,578 $ 7,256,297 |
Dividends series | Series A Series A-1 Series A-2 Series B Series B-1 Series B-2 Total Shares designated 450,000 125,000 8,750 40,000 80,000 30,000 733,750 Shares outstanding at December 31, 2015 436,774 61,910 1,739 39,959 40,650 500 - Liquidation preference per share $ 6 $ 6 $ 35 $ 30 $ 35 $ 35 - Number of shares of common issued upon conversion of one preferred 3.75 3.75 50.00 35.29 58.82 50.00 - Conversion price per common share $ 1.600 $ 1.600 $ 0.700 $ 0.850 $ 0.595 $ 0.700 - In default at December 31, 2015 YES YES NO YES YES NO - Number of quarters in arrears that triggers default rate 4 4 4 6 6 6 - Number of quarters in arrears 9 8 - 10 7 - - Repurchase date 6/30/2015 6/30/2015 6/30/2020 6/30/2016 9/30/2017 12/31/2019 - May be paid in kind through and including 9/30/2016 - Mandatory conversion percentage 150 % 150 % 150 % 196.1 % 184.9 % 150 % - Dividends accrued during the year ended December 31,2014 $ 262,064 $ 37,146 $ - $ 119,878 $ 111,706 $ - $ 530,794 Dividends accrued during the year ended December 31,2015 $ 471,716 $ 66,863 $ 3,632 $ 215,779 $ 175,205 $ 78 $ 933,273 Dividends paid during the year ended December 31,2014 $ - $ - $ - $ 59,939 $ - $ - $ 59,939 Dividends paid in kind during the year ended December 31,2014 $ - $ - $ - $ - $ 21,625 $ - $ 21,625 Dividends paid in kind during the year ended December 31,2015 $ - $ - $ 3,632 $ - $ - $ - $ 3,632 Cumulative unpaid dividends at December 31,2014 $ 327,668 $ 37,146 $ - $ 179,781 $ 90,081 $ - $ 634,676 Cumulative unpaid dividends at December 31,2015 $ 799,384 $ 104,009 $ - $ 395,560 $ 265,286 $ 78 $ 1,564,317 Dividend rate 18 % 18 % 10 % 18 % 18 % 10 % - |
Sales of Equity Securities | A-2 units B-1 units B-2 units Warrants per unit 25 50 50 Warrant exercise price $ 1.00 $ 1.00 $ 1.00 Warrant expiration date 12/15/2016 3/31/2016 12/15/2016 Price/unit $ 35 $ 35 $ 35 Units sold during the year ended December 31, 2014 - 18,689 - Units sold during the year ended December 31, 2015 1,635 - 500 Proceeds net of offering expenses received during the year ended December 31, 2014 $ - $ 654,090 $ - Proceeds net of offering expenses received during the year ended December 31, 2015 $ 54,807 $ - $ 16,450 |
Common Stock Warrants (Tables)
Common Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Common Stock Warrants Tables | |
Summary of warrants outstanding and exercisable | The following is a summary of warrants outstanding and exercisable at December 31, 2015 and 2014 and activity during the years then ended: 2015 2014 Weighted Weighted Average Average Exercise Exercise Warrants Price Warrants Price Outstanding January 1 3,043,814 $ 1.00 2,109,364 $ 1.00 Granted during the year 65,875 1.00 934,450 1.00 Exercised - - - - Expired (1,044,864 ) 1.00 - - Outstanding at December 31 2,064,825 $ 1.00 3,043,814 $ 1.00 Exercisable at December 31 2,064,825 $ 1.00 3,043,814 $ 1.00 Weighted average months remaining 4.16 11.47 |
Business Description And Summ27
Business Description And Summary Of Significant Accounting Policies (Details) | Dec. 31, 2015shares |
Common shares | 7,908,317 |
Warrants expiring 3/31/16 [Member] | |
Common shares | 1,938,950 |
Warrants expiring 10/01/18 [Member] | |
Common shares | 60,000 |
Stock options [Member] | |
Common shares | 60,000 |
Preferred A stock [Member] | |
Common shares | 1,637,903 |
Preferred A-1 stock [Member] | |
Common shares | 232,163 |
Preferred A-2 stock [Member] | |
Common shares | 86,938 |
Preferred B stock [Member] | |
Common shares | 1,410,315 |
Preferred B-1 stock [Member] | |
Common shares | 2,391,173 |
Preferred B-2 stock [Member] | |
Common shares | 25,000 |
Warrants expiring 12/15/16 [Member] | |
Common shares | 65,875 |
Business Description And Summ28
Business Description And Summary Of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Business Description And Summary Of Significant Accounting Policies Details Narrative | |||
Net loss | $ (720,783) | $ (916,203) | |
Negative working capital | (1,653,863) | ||
Stockholders' deficiency | (8,694,723) | (7,044,775) | $ (7,760,558) |
Cash used in operating activities | (294,678) | (637,284) | |
Accounts receivable, net of allowance for doubtful accounts | 3,218 | $ 3,218 | |
Patent impairment | $ 6,168 |
Loan Receivables, Officer And D
Loan Receivables, Officer And Director (Details Narratives) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Loan Receivables Officer And Director Details Narratives | ||
Loans receivable, officer, forgiven | $ 24,155 |
Machinery And Equipment (Detail
Machinery And Equipment (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Deposit on capital lease | $ 40,000 | $ 40,000 |
Property and Equipment,Gross | 1,084,105 | 948,212 |
Less Accumulated Depreciation | 907,337 | (900,850) |
Property and Equipment, Net | 176,768 | 47,362 |
Machinery and equipment | ||
Deposit on equipment | $ 1,018,231 | 882,338 |
Machinery and equipment | Minimum [Member] | ||
Estimated Useful Life | 5 years | |
Machinery and equipment | Maximum [Member] | ||
Estimated Useful Life | 7 years | |
Furniture and fixtures | ||
Deposit on equipment | $ 25,874 | $ 25,874 |
Furniture and fixtures | Minimum [Member] | ||
Estimated Useful Life | 5 years | |
Furniture and fixtures | Maximum [Member] | ||
Estimated Useful Life | 7 years |
Machinery And Equipment (Deta31
Machinery And Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Machinery And Equipment Details Narrative | ||
Depreciation expense | $ 6,486 | $ 82,114 |
Patents (Details)
Patents (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Patents Details | ||
Patents | $ 156,419 | $ 153,607 |
Less accumulated amortization | (103,063) | (102,254) |
Patents, Net | $ 53,356 | $ 51,353 |
Patents (Details Narrative)
Patents (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Patents Details Narrative | ||
Amortization expense | $ 15,615 | $ 10,189 |
Amortization expense for 2016 | 9,300 | |
Amortization expense for 2017 | 5,700 | |
Amortization expense for 2018 | 3,000 | |
Amortization expense for 2019 | 3,000 | |
Amortization expense for 2020 | 3,000 | |
Amortization expense for thereafter | $ 11,000 |
Stockholder Loans And Advance34
Stockholder Loans And Advances From Stockholders (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Stockholder Loans And Advances From Stockholders Details Narrative | |
Proceeds from advances from stockholders | $ 162,800 |
Proceed from stockholders loan for accounts receivable | 30,500 |
Accounts receivable | $ 9,728 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | ||
Federal | ||
State | ||
Deferred: | ||
Federal | $ (179,119) | $ (296,022) |
State | (57,078) | (97,018) |
Total | (236,197) | (393,040) |
Increase in valuation allowance | $ 236,197 | $ 393,040 |
Provision for income taxes |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax assets/(liabilities) | ||
Net operating loss carry forwards | $ 3,515,836 | $ 3,340,056 |
Tax benefit carry-forwards | 164,854 | 160,587 |
Depreciation and amortization | 11,658 | 25,468 |
Accrued employee compensation | 195,609 | 147,803 |
Other | 26,982 | 7,902 |
Stock based compensation | 75,621 | 72,546 |
Total gross deferred tax assets | 3,990,560 | 3,754,362 |
Less valuation allowance | $ (3,990,560) | $ (3,754,362) |
Net deferred tax asset |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Taxes Details 2 | ||
Statutory United States federal rate | 34.00% | 34.00% |
State taxes, net of federal effect | 5.20% | 5.50% |
Permanent differences | (6.90%) | (5.40%) |
Change in valuation allowance | (32.90%) | (42.90%) |
Deferred tax true-up adjustments | 0.50% | 8.70% |
Other | 0.10% | 0.10% |
Effective tax rate |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Taxes Details Narrative | ||
Federal and state net operating loss carryforwards | $ 8,661,000 | $ 8,228,000 |
Tax benefit carryforwards | $ 165,000 | $ 161,000 |
Redeemable Convertible Prefer39
Redeemable Convertible Preferred Stock (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value of Redeemable Preferred Stock at Beginning | $ 6,248,299 | $ 7,280,248 |
New Issuances | 78,357 | 675,740 |
Dividends accumulated | 929,641 | 530,882 |
Dividends satisfied | (2,238,571) | |
Fair Value of Redeemable Preferred Stock at Ending | 7,256,297 | 6,248,299 |
Preferred A stock [Member] | ||
Fair Value of Redeemable Preferred Stock at Beginning | $ 2,948,312 | $ 4,599,727 |
New Issuances | ||
Dividends accumulated | $ 471,716 | $ 262,152 |
Dividends satisfied | (1,913,567) | |
Fair Value of Redeemable Preferred Stock at Ending | 3,420,028 | 2,948,312 |
Preferred A-1 stock [Member] | ||
Fair Value of Redeemable Preferred Stock at Beginning | $ 408,606 | $ 614,900 |
New Issuances | ||
Dividends accumulated | $ 66,863 | $ 37,146 |
Dividends satisfied | (243,440) | |
Fair Value of Redeemable Preferred Stock at Ending | $ 475,469 | $ 408,606 |
Preferred A-2 stock [Member] | ||
Fair Value of Redeemable Preferred Stock at Beginning | ||
New Issuances | $ 60,857 | |
Dividends accumulated | ||
Dividends satisfied | ||
Fair Value of Redeemable Preferred Stock at Ending | $ 60,857 | |
Preferred B stock [Member] | ||
Fair Value of Redeemable Preferred Stock at Beginning | $ 1,378,552 | $ 1,318,613 |
New Issuances | ||
Dividends accumulated | $ 215,779 | $ 119,878 |
Dividends satisfied | (59,939) | |
Fair Value of Redeemable Preferred Stock at Ending | 1,594,331 | 1,378,552 |
Preferred B-1 stock [Member] | ||
Fair Value of Redeemable Preferred Stock at Beginning | $ 1,512,829 | 747,008 |
New Issuances | 675,740 | |
Dividends accumulated | $ 175,205 | 111,706 |
Dividends satisfied | (21,625) | |
Fair Value of Redeemable Preferred Stock at Ending | $ 1,688,034 | $ 1,512,829 |
Preferred B-2 stock [Member] | ||
Fair Value of Redeemable Preferred Stock at Beginning | ||
New Issuances | $ 17,500 | |
Dividends accumulated | 78 | |
Dividends satisfied | ||
Fair Value of Redeemable Preferred Stock at Ending | $ 17,578 |
Redeemable Convertible Prefer40
Redeemable Convertible Preferred Stock (Details 1) | 12 Months Ended | |
Dec. 31, 2015USD ($)Integer$ / sharesshares | Dec. 31, 2014USD ($)shares | |
Shares designated | shares | 733,750 | |
Shares outstanding | shares | ||
Liquidation preference per share | $ / shares | ||
Number of shares of common issued upon conversion of one preferred | $ / shares | ||
Conversion price per common share | $ / shares | ||
Mandatory conversion percentage | ||
Dividends accrued | $ 933,273 | $ 530,794 |
Dividends paid | 59,939 | |
Dividends paid in kind | 3,632 | 21,625 |
Cumulative unpaid dividends | $ 1,564,317 | $ 634,676 |
Dividend rate | ||
Preferred A stock [Member] | ||
Shares designated | shares | 450,000 | 450,000 |
Shares outstanding | shares | 436,774 | 436,774 |
Liquidation preference per share | $ / shares | $ 6 | |
Number of shares of common issued upon conversion of one preferred | $ / shares | 3.75 | |
Conversion price per common share | $ / shares | $ 1.6 | |
In default | YES | |
Number of quarters in arrears that triggers default rate | Integer | 4 | |
Number of quarters in arrears | Integer | 9 | |
Repurchase date | Jun. 30, 2015 | |
Mandatory conversion percentage | 150.00% | |
Dividends accrued | $ 471,716 | $ 262,064 |
Dividends paid | ||
Dividends paid in kind | ||
Cumulative unpaid dividends | $ 799,384 | $ 327,668 |
Dividend rate | 18.00% | |
Preferred A-1 stock [Member] | ||
Shares designated | shares | 125,000 | 125,000 |
Shares outstanding | shares | 61,910 | 61,910 |
Liquidation preference per share | $ / shares | $ 6 | |
Number of shares of common issued upon conversion of one preferred | $ / shares | 3.75 | |
Conversion price per common share | $ / shares | $ 1.6 | |
In default | YES | |
Number of quarters in arrears that triggers default rate | Integer | 4 | |
Number of quarters in arrears | Integer | 8 | |
Repurchase date | Jun. 30, 2015 | |
Mandatory conversion percentage | 150.00% | |
Dividends accrued | $ 66,863 | $ 37,146 |
Dividends paid | ||
Dividends paid in kind | ||
Cumulative unpaid dividends | $ 104,009 | $ 37,146 |
Dividend rate | 18.00% | |
Preferred A-2 stock [Member] | ||
Shares designated | shares | 8,750 | 8,750 |
Shares outstanding | shares | 1,739 | 1,739 |
Liquidation preference per share | $ / shares | $ 35 | |
Number of shares of common issued upon conversion of one preferred | $ / shares | 50 | |
Conversion price per common share | $ / shares | $ 0.7 | |
In default | NO | |
Number of quarters in arrears that triggers default rate | Integer | 4 | |
Repurchase date | Jun. 30, 2020 | |
May be paid in kind through and including | Sep. 30, 2016 | |
Mandatory conversion percentage | 150.00% | |
Dividends accrued | $ 3,632 | |
Dividends paid | ||
Dividends paid in kind | $ 3,632 | |
Cumulative unpaid dividends | ||
Dividend rate | 10.00% | |
Preferred B stock [Member] | ||
Shares designated | shares | 40,000 | 40,000 |
Shares outstanding | shares | 39,959 | 39,959 |
Liquidation preference per share | $ / shares | $ 30 | |
Number of shares of common issued upon conversion of one preferred | $ / shares | 35.29 | |
Conversion price per common share | $ / shares | $ 0.85 | |
In default | YES | |
Number of quarters in arrears that triggers default rate | Integer | 6 | |
Number of quarters in arrears | Integer | 10 | |
Repurchase date | Jun. 30, 2016 | |
Mandatory conversion percentage | 196.10% | |
Dividends accrued | $ 215,779 | $ 119,878 |
Dividends paid | $ 59,939 | |
Dividends paid in kind | ||
Cumulative unpaid dividends | $ 395,560 | $ 179,781 |
Dividend rate | 18.00% | |
Preferred B-1 stock [Member] | ||
Shares designated | shares | 80,000 | 80,000 |
Shares outstanding | shares | 40,650 | 40,650 |
Liquidation preference per share | $ / shares | $ 35 | |
Number of shares of common issued upon conversion of one preferred | $ / shares | 58.82 | |
Conversion price per common share | $ / shares | $ 0.595 | |
In default | YES | |
Number of quarters in arrears that triggers default rate | Integer | 6 | |
Number of quarters in arrears | Integer | 7 | |
Repurchase date | Sep. 30, 2017 | |
Mandatory conversion percentage | 184.90% | |
Dividends accrued | $ 175,205 | $ 111,706 |
Dividends paid | ||
Dividends paid in kind | $ 21,625 | |
Cumulative unpaid dividends | $ 265,286 | $ 90,081 |
Dividend rate | 18.00% | |
Preferred B-2 stock [Member] | ||
Shares designated | shares | 30,000 | |
Shares outstanding | shares | 500 | |
Liquidation preference per share | $ / shares | $ 35 | |
Number of shares of common issued upon conversion of one preferred | $ / shares | 50 | |
Conversion price per common share | $ / shares | $ 0.7 | |
In default | NO | |
Number of quarters in arrears that triggers default rate | Integer | 6 | |
Repurchase date | Dec. 31, 2019 | |
Mandatory conversion percentage | 150.00% | |
Dividends accrued | $ 78 | |
Dividends paid | ||
Dividends paid in kind | ||
Cumulative unpaid dividends | $ 78 | |
Dividend rate | 10.00% |
Redeemable Convertible Prefer41
Redeemable Convertible Preferred Stock (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Preferred A-2 stock [Member] | ||
Warrants per unit | $ 25 | |
Warrant exercise price | $ 1 | |
Warrant expiration date | Dec. 15, 2016 | |
Price/unit | $ 35 | |
Units sold | 1,635 | |
Proceeds net of offering expenses received | $ 54,807 | |
Preferred B-1 stock [Member] | ||
Warrants per unit | $ 50 | |
Warrant exercise price | $ 1 | |
Warrant expiration date | Mar. 31, 2016 | |
Price/unit | $ 35 | |
Units sold | 18,689 | |
Proceeds net of offering expenses received | $ 654,090 | |
Preferred B-2 stock [Member] | ||
Warrants per unit | $ 50 | |
Warrant exercise price | $ 1 | |
Warrant expiration date | Dec. 15, 2016 | |
Price/unit | $ 35 | |
Units sold | 500 | |
Proceeds net of offering expenses received | $ 16,450 |
Redeemable Convertible Prefer42
Redeemable Convertible Preferred Stock (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Redeemable Convertible Preferred Stock Details Narrative | ||
Registration rights payments | $ 2,110,886 | |
Additional paid-in capital | 8,525 | $ 73,722 |
Non-cash beneficial conversion feature | $ 16,953 | $ 101,398 |
Most Favored Nation Rights (Det
Most Favored Nation Rights (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Most Favored Nation Rights Details Narrative | |
Other expense | $ 18,000 |
Common Stock (Details)
Common Stock (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Common Stock Details | ||
Outstanding at beginning of period | 3,043,814 | 2,109,364 |
Granted | 65,875 | 934,450 |
Exercised | ||
Expired | (1,044,864) | |
Outstanding at end of period | 2,064,825 | 3,043,814 |
Exercisable at end of period | 2,064,825 | 3,043,814 |
Weighted Average Exercise Price | ||
Outstanding at beginning of period | $ 1 | $ 1 |
Granted | $ 1 | $ 1 |
Exercised | ||
Expired | $ 1 | |
Outstanding at end of period | 1 | $ 1 |
Exercisable at end of period | $ 1 | $ 1 |
Weighted average months remaining | 4 years 1 month 28 days | 11 years 5 months 19 days |
Common Stock Warrants (Details
Common Stock Warrants (Details Narrative) - shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Common Stock Warrants Details Narrative | ||
Expired | (1,044,864) |
Stock Based Compensation (Detai
Stock Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock Based Compensation Details Narrative | ||
Recognized | $ 7,576 | $ 9,386 |
Unrecognized stock based compensation expense | $ 0 | $ 0 |
Commitments And Contingencies (
Commitments And Contingencies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments And Contingencies Details Narrative | ||
Rent expense | $ 117,745 | $ 103,377 |
Other assets | 12,253 | $ 12,253 |
Accounts payable | 67,350 | |
Non-current liability | $ 26,940 |