Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 16, 2018 | Jun. 30, 2017 | |
Document And Entity Information | |||
Entity Registrant Name | FITLIFE BRANDS, INC. | ||
Entity Central Index Key | 1,374,328 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
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 | $ 4,377,710 | ||
Entity Common Stock, Shares Outstanding | 10,906,710 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,017 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 1,261,933 | $ 1,293,041 |
Accounts receivable, net of allowance for doubtful accounts of $1,263,674 and $166,901, respectively | 1,958,128 | 2,625,748 |
Inventories, net of allowance for obsolescence of $48,730 and $138,789 respectively | 2,873,831 | 3,756,716 |
Note receivable, current portion | 5,000 | 2,782 |
Prepaid income tax | 0 | 120,000 |
Prepaid expenses | 221,200 | 136,014 |
Total current assets | 6,320,092 | 7,934,301 |
PROPERTY AND EQUIPMENT, net | 295,187 | 171,004 |
Customer note receivable, net of current portion | 0 | 52,695 |
Deferred taxes | 0 | 689,000 |
Intangible assets, net | 225,000 | 6,507,505 |
Security deposits | 21,908 | 24,958 |
TOTAL ASSETS | 6,862,187 | 15,379,463 |
CURRENT LIABILITIES: | ||
Accounts payable | 2,974,165 | 1,596,749 |
Accrued expenses and other liabilities | 611,548 | 372,864 |
Line of credit | 1,950,000 | 1,950,000 |
Term loan agreement, current portion | 414,877 | 544,825 |
Notes payable | 0 | 12,700 |
Total current liabilities | 5,950,591 | 4,477,137 |
LONG-TERM DEBT, net of current portion | 0 | 369,177 |
TOTAL LIABILITIES | 5,950,591 | 4,846,315 |
STOCKHOLDERS' EQUITY: | ||
Common stock, $.01 par value, 150,000,000 shares authorized; 10,681,710 and 10,483,389 issued and outstanding as of December 31, 2017 and December 31, 2016, respectively | 106,819 | 104,836 |
Treasury Stock | 0 | (44,413) |
Additional paid-in capital | 31,013,043 | 30,919,284 |
Accumulated deficit | (30,208,265) | (20,446,559) |
Total stockholders' equity | 911,597 | 10,533,148 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 6,862,187 | 15,379,463 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of December 31, 2017 and 2016: | 0 | 0 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of December 31, 2017 and 2016: | 0 | 0 |
Series C Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred stock, $0.01 par value, 10,000,000 shares authorized as of December 31, 2017 and 2016: | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Allowance for doubtful accounts | $ 1,263,374 | $ 166,901 |
Allowance for inventory valuation | $ 48,730 | $ 138,789 |
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000,000 | 150,000,000 |
Common Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Issued | 10,681,710 | 10,475,494 |
Common Stock, Shares, Outstanding | 10,623,522 | 10,475,494 |
Common Stock; shares subscribed but not issued | 0 | 33,869 |
Series A Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
Series B Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 1,000 | 1,000 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
Series C Preferred Stock [Member] | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock, Par Value Per Share | $ 0.01 | $ 0.01 |
Preferred Stock, Shares Authorized | 500 | 500 |
Preferred Stock, Issued | 0 | 0 |
Preferred Stock, Outstanding | 0 | 0 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement [Abstract] | ||
Revenue | $ 17,799,345 | $ 25,313,601 |
Cost of Goods Sold | 12,708,460 | 15,242,537 |
Gross Profit | 5,090,885 | 10,071,064 |
OPERATING EXPENSES: | ||
General and administrative | 4,179,945 | 5,002,150 |
Selling and marketing | 3,525,202 | 4,118,414 |
Impairment of intangible assets and goodwill | 5,928,765 | 0 |
Depreciation and amortization | 409,476 | 478,235 |
Total operating expenses | 14,043,388 | 9,598,799 |
OPERATING INCOME (LOSS) | (8,952,503) | 472,265 |
OTHER (INCOME) AND EXPENSES | ||
Interest expense | 112,128 | 109,391 |
Other expense (income) | 8,075 | (5,204) |
Total other (income) expense | 120,203 | 104,187 |
INCOME (LOSS) BEFORE INCOME TAXES | (9,072,706) | 368,078 |
INCOME TAXES, deferred | 689,000 | 0 |
NET INCOME (LOSS) | $ (9,761,706) | $ 368,078 |
NET INCOME (LOSS) PER SHARE: | ||
Earnings (loss) Per Share - Basic | $ (0.93) | $ 0.04 |
Earnings (loss) Per Share - Diluted | $ (0.93) | $ .04 |
Weighted average shares - Basic | 10,518,239 | 10,340,162 |
Weighted average shares - Diluted | 10,518,239 | 10,340,162 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Cash Flows from Operating activities: | ||
Net income (loss) | $ (9,761,706) | $ 368,078 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 409,476 | 478,235 |
Increase (decrease) in allowance for sales returns and doubtful accounts | 1,096,733 | (261,541) |
Increase (decrease) in allowance for inventory obsolescence | (90,059) | 41,733 |
Loss on disposal of assets | 5,145 | 22,970 |
Common stock issued for services | 95,966 | 153,002 |
Fiar value of options issued for services | 44,189 | 58,178 |
Impairment of intangible assets and goodwill | 5,928,765 | 0 |
Write-off of note receivable | 43,727 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (429,153) | 320,360 |
Inventories | 972,944 | 991,852 |
Deferred taxes | 689,000 | 0 |
Prepaid income tax | 120,000 | 32,000 |
Prepaid expenses | (85,186) | 198,469 |
Customer note receivable | 6,750 | 13,735 |
Security deposits | 3,049 | 1,119 |
Accounts payable | 1,377,417 | (1,767,157) |
Accrued expenses and other liabilities | 238,684 | (602,864) |
Net cash used in operating activities | 665,781 | 48,169 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (185,064) | (23,405) |
Net cash provided by (used in) investing activities | (185,064) | (23,405) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from line of credit | 0 | 459,695 |
Repurchases of common stock | 0 | (156,907) |
Repayments of term loan and note payable | (511,825) | (567,061) |
Net cash provided by (used in) financing activities | (511,825) | (264,273) |
DECREASE IN CASH | (31,108) | (239,509) |
CASH, BEGINNING OF PERIOD | 1,293,041 | 1,532,550 |
CASH, END OF PERIOD | 1,261,933 | 1,293,041 |
Supplemental disclosure operating activities | ||
Cash paid for interest | $ 112,128 | $ 109,391 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 10,453,945 | ||||
Beginning Balance, Amount at Dec. 31, 2015 | $ 104,540 | $ 0 | $ 30,820,894 | $ (20,814,637) | $ 10,110,797 |
Common Stock issued for services, Shares | 116,722 | 116,722 | |||
Common Stock issued for services, Amount | $ 1,168 | 0 | 151,834 | 0 | $ 153,002 |
Common stock purchased and cancelled from officer, Shares | (86,534) | ||||
Common stock purchased and cancelled from officer, Amount | $ (865) | 0 | (111,629) | 0 | (112,494) |
Common stock cancelled, Shares | (85,833) | ||||
Common stock cancelled, Amount | $ (858) | 0 | 858 | 0 | 0 |
Treasury Stock | $ 0 | (44,413) | 0 | 0 | (44,413) |
Common stock issued upon cashless exercise of options, Shares | 85,089 | ||||
Common stock issued upon cashless exercise of options, Amount | $ 851 | 0 | (851) | 0 | 0 |
Fair value of options issued for services | 0 | 0 | 58,178 | 0 | 58,178 |
Net income (loss) | $ 0 | 0 | 0 | 368,078 | 368,078 |
Ending Balance, Shares at Dec. 31, 2016 | 10,483,389 | ||||
Ending Balance, Amount at Dec. 31, 2016 | $ 104,836 | (44,413) | 30,919,284 | (20,446,559) | $ 10,533,148 |
Common Stock issued for services, Shares | 240,241 | 240,241 | |||
Common Stock issued for services, Amount | $ 2,402 | 0 | 93,564 | 0 | $ 95,967 |
Cancellation of treasury stock, Shares | (41,920) | ||||
Cancellation of treasury stock, Amount | $ (419) | 44,413 | (43,994) | 0 | 0 |
Fair value of options issued for services | $ 0 | 0 | 44,189 | 0 | 44,189 |
Net income (loss) | (9,761,706) | ||||
Ending Balance, Shares at Dec. 31, 2017 | 10,681,710 | ||||
Ending Balance, Amount at Dec. 31, 2017 | $ 106,819 | $ 0 | $ 31,013,043 | $ (30,208,265) | $ 911,597 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | Summary FitLife Brands, Inc. (the “ Company NDS www.ndsnutrition.com www.pmdsports.com www.sirenlabs.com www.coreactivenutrition.com NDS Products iSatori www.isatori.com iSatori Products GNC The Company was incorporated in the State of Nevada on July 26, 2005. In October 2008, the Company acquired the assets of NDS Nutritional Products, Inc., a Nebraska corporation, and moved those assets into its wholly owned subsidiary NDS Nutrition Products, Inc., a Florida corporation (“ NDS The Company is headquartered in Omaha, Nebraska. For more information about the Company, please go to http://www.fitlifebrands.com Liquidity The accompanying financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the year ended December 31, 2017, the Company recorded a net loss of $9,761,706 and generated cash from operations of $665,781. As of December 31, 2017, we had cash on hand of $1,261,933 and working capital of $369,502. We estimate the Company currently has sufficient cash and liquidity to meet its anticipated working capital for the next twelve months. In December 2017, the Company, through its Subsidiaries, entered into the Merchant Agreement with BBVA Compass Bank (“ Compass The Company is dependent on cash flow from operations and the accumulation of additional receivables available to sell Compass under the terms of the Merchant Agreement to satisfy its working capital requirements. No assurances can be given that cash flow from operations and/or that the Company will have access to additional capital under the terms of the Merchant Agreement necessary to provide for the Company’s liquidity for the next twelve months. Should the Company be unable to generate sufficient revenue in the future to achieve positive cash flow from operations, and/or should capital be unavailable under the terms of the Merchant Agreement, additional working capital will be required. Management at present has no intention to raise additional working capital through the sale of equity or debt securities, and believes the agreement with Compass will provide sufficient capital necessary to operate the business over the next twelve months. In the event the Company fails to achieve positive cash flow from operations, additional capital is unavailable under the terms of the Merchant Agreement, and management is otherwise unable to secure additional working capital through the issuance of equity or debt securities, the Company’s business would be materially and adversely harmed. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | The Company prepares its financial statements in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are as follows: Principle of Consolidation The consolidated financial statements include the accounts of the Company and NDS Nutrition Products, Inc. Intercompany accounts and transactions have been eliminated in the consolidated financial statements. Use of Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“ GAAP These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term assets and intangibles, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. Revenue Recognition Revenue is derived from product sales. The Company recognizes revenue from product sales in accordance with Accounting Standards Codification (“ ASC Revenue Recognition in Financial Statements Revenue is recorded net of all discounts taken at the time of sale. Customer Concentration Total gross sales to GNC during 2017 and 2016 were $19,382,148 and $21,897,633, respectively, representing 80% and 82% of total revenue, respectively. Accounts receivable attributable to GNC before adjusting for product return reserves as of December 31, 2017 and 2016 were $2,625,003 and $2,327,689, respectively, representing 82% and 83% of the Company’s total accounts receivable balance, respectively. Accounts Receivable and Allowance for Doubtful Accounts All of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts, estimating losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped into categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. We maintain an insurance policy for iSatori Products for international shipments, which protects the Company in the event the international distributor does not or cannot remit payment. The Company recorded an expense of $169,188 related to bad debt and doubtful accounts during the year ended December 31, 2017, versus $3,553 for the year ended December 31, 2016. The difference was primarily attributable to losses related to the Vitamin World bankruptcy filing, and write-off of an outstanding note receivable that management determined was not collectible. As of December 31, 2017 and 2016, the Company has provided for reserves of $1,263,674 and $166,901 respectively, which have been included as part of the allowance for doubtful accounts Allowance for Product Returns, Sales Returns and Incentive Programs We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund, less a 20% restocking fee, for the return of unopened and undamaged products purchased from us online through one of our websites. Product sold to GNC may be returned from store shelves or the distribution center in the event product is damaged, short dated, expired or recalled. Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are special to each distribution channel. We monitor, among other things, remaining shelf life and sell through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available. Management determined the need to establish $1,151,573 of product return reserves (which are included in the allowance for doubtful accounts) as of December 31, 2017. As of December 31, 2016, the product return reserve was $166,901. GNC maintains a customer satisfaction program which allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Historically, with a few noted exceptions, product returns have been immaterial. However, despite the best efforts of management, product returns can and do occur from time to time and can be material. The Company currently does not establish reserve allowances against accounts receivable related to sales returns or incentive programs. Sales returns are captured on a weekly basis and accounts receivable are updated accordingly. Given the real-time nature of the information, an allowance account for sales returns is not necessary. Regarding incentives, the Company accrues an estimate of 8% for promotional expenses it calls “vendor funded discounts” at the time of sale. The expense is recorded as a contra-revenue account, and the expected incentive costs are never included in accounts receivable. As such, an allowance account for incentives is not required or necessary. Actual incentive costs are reconciled to the estimate on a regular basis. Vendor funded discounts for the years ended December 31, 2017 and 2016 were $3,521,556 and $3,618,436 respectively and are recorded as a reduction to gross sales. Cost of Goods Sold Cost of goods sold is comprised of the costs of products, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Expenses not related to the production of our products are classified as operating expenses. Delivery and Handling Expense Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution and are included as part of operating expenses. Cash and Cash Equivalents The Company maintains cash balances in several financial institutions that are insured by the Federal Deposit Insurance Corporation up to certain federal limitations. At times, the Company’s cash balance exceeds these federal limitations. The amount in excess was $1,011,933 and $1,043,041 as of December 31, 2017 and 2016, respectively. Inventory The Company’s inventory is carried at the lower of cost or net realizable value using the first-in, first-out (“ FIFO Property and Equipment Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follows: Asset Category Depreciation / Amortization Period Furniture and Fixture 3 Years Office equipment 3 Years Leasehold improvements 5 Years Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2017 or December 31, 2016. Goodwill and Intangible Assets The Company adopted FASB ASC Topic 350, Goodwill and Other Intangible Assets Identifiable intangible assets are stated at cost and accounted for based on whether the useful life of the asset is finite or indefinite. Identified intangible assets with finite useful lives are amortized using the straight-line methods over their estimated useful lives, which was originally ten years. Intangible assets with indefinite lives are not amortized to operations, but instead are reviewed for impairment at least annually, or more frequently if there is an indicator of impairment, the Company does not own any indefinite lived intangible assets. On September 30, 2015, the Company consummated the acquisition of iSatori. In connection with this acquisition, the Company recorded intangible assets of $1,965,000 and Goodwill of $4,197,448. As of December 31, 2016, the Company did not believe there were any indicators of impairment of its Goodwill and other intangible assets given that the recent acquisition had initially strong financial performance which included two profitable quarters and management had not yet had the time to implement its business plan. During the year ended December 31, 2017, the Company fully impaired Goodwill and other remaining finite-lived intangible assets related to the acquisition of iSatori and recorded an impairment charge equal to $5,928,765 due to the operating results of that unit. Income Taxes The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Concentration of Business and Credit Risk The Company maintains cash balances in several financial institutions that are insured by the Federal Deposit lnsurance Corporation up to certain federal limitations. At times, the Company’s cash balance exceeds these federal limitations. The amount in excess was $1,011,933 and $1,043,041 as of December 31, 2017 and 2016, respectively. The Company provides credit in the normal course of business to customers located throughout the U.S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. One customer compr ised 80% and 82% of the Company’s revenues for the years ended December 31, 2017 and 2016, respectively. The loss of this customer would have a material adverse effect on the Company’s business, financial condition, and results of operation. Net Income (Loss) Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2017 2016 Warrants 60,620 60,620 Options 870,284 969,924 Total 930,904 1,030,544 The following table represents the computation of basic and diluted losses per share at December 31, 2017 and 2016: December 31, 2017 2016 Net income (loss) available for common shareholders (9,761,706 ) $ 368,078 Weighted average common shares outstanding – Basic and diluted 10,518,239 10,340,162 Income (loss) per share – Basic and diluted (0.93 ) 0.04 Fair Value Measurements The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date: ● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable and long-term financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. Stock Compensation Expense The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. Segments The Company operates in one segment for the distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements. Recent Accounting Pronouncements Stock Compensation - Employee Share-Based Payments ● Prospectively for the recognition of excess tax benefits and deficiencies in the tax provision. ● Retrospectively or prospectively for the classification of excess tax benefits and deficiencies in the statement of cash flows. ● Retrospectively for the classification of cash paid for shares withheld to satisfy employee taxes in the statement of cash flows. Leases – ASU “Leases (Topic 842)” ASU 2016-02 Inventory Measurement “Inventory (Topic 330): Simplifying the Measurement of Inventory” ASU 2015-11 NRV Going Concern Disclosures “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern” ASU 2014-15 Revenue from Contracts with Customers – “FASB Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) Reclassification Certain prior year balances have been reclassified to conform to the current year presentation. In the consolidated balance sheets and the consolidated statement of stockholders’ equity certain prior year amounts previously recorded as current liabilities have been presented in a manner more representative of the Company’s current operations. These reclassifications have no effect on previously reported net income or stockholders’ equity. In addition, certain reclassifications have been made in the statements of cash flows with regards to the presentation of repurchases of common stock. The reclassification had no effect on previously reported decrease in cash. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | At December 31, 2017, the value of the Company’s inventory was $2,873,831, of which $2,066,108 and $807,723 was related to NDS Products and iSatori Products, respectively. At December 31, 2016, the value of the Company’s inventory was $3,756,716, of which $2,624,461 and $1,132,256 was related to NDS Products and iSatori Products, respectively. December 31, 2017 2016 Finished goods $ 2,462,530 $ 3,069,531 Components 411,301 687,185 Total $ 2,873,831 $ 3,756,716 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | The Company has fixed assets as of December 31, 2017 and 2016 as follows: December 31, 2017 2016 Equipment $ 971,820 $ 792,930 Accumulated depreciation $ (676,633 ) $ (621,926 ) Total $ 295,187 $ 171,004 Depreciation expense was $54,707 for December 31, 2017 compared to $56,236 for December 31, 2016. |
NOTE RECEIVABLE
NOTE RECEIVABLE | 12 Months Ended |
Dec. 31, 2017 | |
Receivables [Abstract] | |
NOTE RECEIVABLE | In connection with iSatori’s sale of its Living Orchard product line in 2010, the Company recorded a note receivable representing all or a portion of the purchase price. As of December 31, 2016, the balance of the Note Receivable was $55,477. During the year ended December 31, 2017, we received payments of $6,750 from Living Orchard, which had previously ceased operations, we wrote off $43,727 to bad debt and received the difference of $5,000 in February 2018. |
NOTE PAYABLES
NOTE PAYABLES | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLES | Notes payable consist of the following as of December 31, 2017 and 2016: December 31, 2017 December 31, 2016 Revolving line of credit of $3.0 million from U.S. Bank National Association (“ U.S. Bank , $ 1,950,000 $ 1,950,000 Term loan of $2,600,000 from US Bank, dated September 4, 2013, at a fixed interest rate of 3.6%. The term loan amortizes evenly on a monthly basis and matures August 15, 2018. 414,877 914,002 Notes payable for warehouse equipment - 12,700 Total of notes payable and advances 2,364,877 2,876,703 Less current portion (2,364,877 ) - (2,507,526 ) Long-term portion $ - $ 369,177 As of the fiscal year end, the Company was in violation of a loan covenant set forth in the Company’s revolving line of credit of $3.0 million from U.S. Bank, as modified by that certain loan modification agreement dated August 28, 2017, of which approximately $1.95 million was due and owing as of December 31, 2017. On October 27, 2017, the Company received a notice of default from U.S. Bank related to the line of credit and term loan. The maturity date of the line of credit was December 15, 2017. Subsequent to the year end, on January 22, 2018, the Company paid U.S. Bank all principal and accrued interest due and owed to U.S. Bank and as a result of such payment the notes, together with all other instruments and agreements executed by the Company and U.S. Bank providing for the extension of credit by U.S. Bank to the Company and the Subsidiaries, or otherwise, terminated, and are of no further force and effect (See Note 10 – Subsequent Events). |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
EQUITY | Year Ended December 31, 2017 During the year ended December 31, 2017, the Company issued 240,241 shares of common stock with a fair value of $95,966 to employees and directors for services rendered. The shares were valued at the respective date of issuance. During the year ended December 31, 2017, the Company retired 41,920 shares of common stock that was accounted a treasury stock at December 31, 2016. Year Ended December 31, 2016 During the year ended December 31, 2016, the Company issued 116,722 shares of common stock with a fair value of $153,002 to employees and directors for services rendered. The shares were valued at the respective date of issuance. In addition, the Company also issued 85,089 shares of common stock as a result of the cashless exercise of stock options. During the year ended December 31, 2016, the Company acquired 86,534 shares of common stock from an officer in exchange for cash of $112,494. At the date of acquisition, the fair value of the shares acquired approximates the cash paid to the officer. Concurrent with the acquisition, the entire 86,534 shares were cancelled. During the year ended December 31, 2016, pursuant to the Company’s stock buyback program, the Company paid $44,413 for the acquisition of 41,920 shares of common stock that was accounted as a Treasury Stock at December 31, 2016. In January 2017, the entire 41,920 shares of common stock were acquired and retired by the Company. During the year ended December 31, 2016, the Company retired 85,833 shares of common stock that was acquired in fiscal 2015 pursuant to the Company’s stock buyback program. Preferred Stock Subject to a limit of 10.0 million preferred shares in the aggregate, the Company is authorized to issue 10.0 million shares of Series A Convertible Preferred Stock, $0.01 par value, 1,000 shares of its 10% Cumulative Perpetual Series B Preferred Stock, $0.01 par value, and 500 shares of its Series C Convertible Preferred Stock, par value $0.01, none of which were issued and outstanding as of December 31, 2017 and 2016. Options The following table summarizes option activity: Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Outstanding, December 31, 2015 902,205 $ 2.80 6.34 Issued 219,000 $ 1.39 Exercised (90,064 ) $ 0.06 Forfeited (61,217 ) 1.62 Outstanding, December 31, 2016 969,924 $ 2.81 5.12 Issued - - Exercised - - Forfeited (99,640 ) 3.65 Outstanding, December 31, 2017 870,284 $ 2.71 4.16 As of December 31, 2017, 870,284 options to purchase common stock of the Company were issued and outstanding. Outstanding Exercise Price Issuance Date Expiration Date 50,000 $ 0.90 01/16/13 01/16/18 10,000 $ 1.00 03/04/13 03/04/18 212,074 $ 1.39 05/09/16 05/09/21 4,330 $ 1.44 09/29/15 09/29/25 40,000 $ 2.20 04/11/14 04/11/19 370,000 $ 2.30 02/23/15 02/23/20 93,503 $ 3.31 02/16/12 02/16/22 18,966 $ 4.62 05/13/15 05/13/25 4,330 $ 5.49 04/08/15 04/08/25 1,732 $ 5.81 03/05/15 03/05/25 32,331 $ 5.89 03/23/15 03/23/25 8,660 $ 12.13 09/17/13 09/17/23 7,038 $ 12.99 11/14/12 09/27/22 17,320 $ 14.43 01/16/13 11/30/22 870,284 The closing stock price for the Company’s stock on December 31 2017 was $0.24, as such, there was no intrinsic value. Stock compensation to be recognized in future periods based upon the vesting of these options is approximately $50,000. During the year ended December 31, 2016, the Company granted options to purchase 219,000 shares of common stock. The options vest over three years, exercisable at $1.39 per share and will expire in five years. At the date of grant, the fair value of these stock options amounted to $111,124 computed using the Black Scholes Option Pricing Model with the following assumptions: stock price and exercise price of $1.39 per share, expiration of five years, risk free of 1.20%, volatility rate of 40% and dividend yield of 0% During the year ended December 31, 2016, the Company recognized compensation expense of $58,179 based upon the vesting of these options. During the year ended December 31, 2017 and 2016, the Company recognized compensation expense of $44,189 based upon the vesting of options granted in prior periods. There were no stock options granted in 2017. Warrants As of December 31, 2017 and 2016, 60,620 warrants to purchase common stock of the Company were issued and outstanding, all of which were assumed by the Company in connection with the acquisition of iSatori. Additional information about the outstanding warrants is included in the following table: Outstanding Exercise Price Grant Date Expiration Date 17,320 $ 12.99 10/01/13 01/01/18 43,300 $ 12.99 07/16/13 07/16/18 60,620 The closing stock price for the Company’s stock on December 31, 2017 was $0.24, therefore there were no intrinsic value. The entire 60,620 warrants are fully vested as of December 31, 2017. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | At December 31, 2017 and 2016, the Company had available Federal net operating loss (NOL) carryforwards to reduce future taxable income. The amounts available were approximately $8.6 million and $6.6 million for Federal purposes, respectively. The Federal carryforward expires in 2036. The NOL is also subject to statutory limitations under Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carry forwards. ASC 740 requires the consideration of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining any valuation allowance recorded against deferred tax assets. In evaluating the ability to recover deferred tax assets, the Company considered available positive and negative evidence, giving greater weight to its recent cumulative losses and its ability to carry-back losses against prior taxable income and lesser weight to its projected financial results due to the challenges of forecasting future periods. The Company also considered, commensurate with its objective verifiability, the forecast of future taxable income including the reversal of temporary differences. At that time the Company continued to have sufficient positive evidence, including recent cumulative profits, a reduction in operating expenses, the ability to carry-back losses against prior taxable income and an expectation of improving operating results, showing a full valuation allowance was not required. As of December 31, 2016, expectations of taxable income allowed for $689,000 of deferred tax assets. During the year ended December 31, 2017, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards due to significant operating losses. Based on their evaluation, the Company determined that the net deferred tax assets of approximately 689,000 during 2017, do not meet the requirements to realize, and as such, the Company has provided a full valuation allowance against them. The Company has no provision for current income taxes during the year ended December 31, 2017 due to net loss incurred, and full valuation allowance on the net deferred tax assets. Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The components of deferred tax assets are comprised of the following: December 31, 2017 December 31, 2016 Net operating loss carryforward 2,236,000 2,585,515 Allowances for sales returns, bad debt and inventory 392,000 - Share based compensation 167,000 39,000 Other 76,000 (3,000 ) Valuation allowance 2,871,000 1,932,515 (2,871,000 ) (1,932,515 ) Net deferred tax asset $ - $ 689,000 Reconciliation of the effective income tax rate to the U.S. statutory rate is as follows: December 31, 2017 2016 Federal Statutory tax rate (34 %) 34 % State tax, net of federal benefit (4.9 %) 4.9 % (38.9 %) 38.9 % Effect of change in tax rate 13 % - Valuation allowance 25.9 % 38.9 Effective tax rate - % - % The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2017, and 2016, the Company did not have a liability for unrecognized tax benefits. The Company recognizes as income tax expense, interest and penalties on uncertain tax provisions. As of December 31, 2017, and 2016, the Company has not accrued interest or penalties related to uncertain tax positions. Tax years 2010 through 2017 remain open to examination by the major taxing jurisdictions to which the Company is subject. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Legal Proceedings On December 31, 2014, various plaintiffs, individually and on behalf of a purported nationwide and sub-class of purchasers, filed a lawsuit in the U.S. District Court for the Northern District of California, captioned Ryan et al. v. Gencor Nutrients, Inc. et al. Gencor On February 19, 2015 this matter was transferred to the Central District of California to the Honorable Manuel Real. Judge Real had previously issued an order dismissing a similar lawsuit that had been filed by the same lawyer who represents the plaintiffs in the Ryan matter. The United States Court of Appeals reversed part of the dismissal issued by Judge Real and remanded the case back down to the district court for further proceedings. As a result, the parties in the Ryan matter issued a joint status report and that matter is again active. On February 28, 2017, Kevin Fahey, through his attorney, and on behalf of himself and the citizens of the District of Columbia, file a Complaint in the Superior Court of the District of Columbia Civil Division captioned Fahey vs. BioGenetic Laboratories, Inc., et al. We are currently not involved in any litigation except noted above that we believe could have a material adverse effect on our financial condition or results of operations. Other than described above, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of its subsidiaries, threatened against or affecting the Company, our common stock, any of our subsidiaries or of the Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. Lease Commitments The Company is headquartered in Omaha, Nebraska and maintains a lease at a cost of approximately $7,500 per month, which lease is currently set to expire in May 2024. The Omaha facility is a total of 11,088 square feet inclusive of approximately 6,179 square feet of on-site warehouse space. iSatori currently leases 4,732 square feet of space at 15000 W. 6th Avenue, Suite 400, Golden, Colorado 80401, at a cost of $5,620 per month. The Company was in an active process to sublease its Golden property as of December 31, 2017. Prior to January 2, 2016, iSatori also leased 17,426 square feet of space at 6200 North Washington Street, Unit 10, Denver, Colorado 80216, for its distribution center, at a cost of $12,669 per month. The lease is currently sublet through December 31, 2018, and otherwise set to expire on December 31, 2018. The Company also leases some office equipment for an aggregate total cost of approximately $535 per month. Rent expense for the years ending December 31, 2017 and 2016 was $263,597 and $289,710 , respectively, and is included in operating expenses in the accompanying consolidated statement of operations. Minimum annual rental commitments under non-cancelable leases are as follows: Years ending December 31, Amount 2018 $ 209,299 2019 111,441 2020 61,509 2021 60,984 2022 and thereafter 167,706 TOTAL $ 610,939 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | Merchant Agreement and Repayment of U.S. Bank Notes In December 2017, the Company, through its Subsidiaries, entered into the Merchant Agreement with Compass. Under the terms of the Merchant Agreement, subject to the satisfaction of certain conditions to funding, the Subsidiaries agreed to sell to Compass, and Compass agreed to purchase from the Subsidiaries, certain accounts owing from customers of such Subsidiaries, including GNC. All amounts due under the terms of the Merchant Agreement, totaling up to $5.0 million, are guaranteed by the Company under the terms of a Continuing Guarantee. . The Company shall pay a fee of LIBOR plus 550 basis points calculated based upon the excess of the amount owing over cash collected from customers. Additionally, the Company will be charged a non-utilization fee by which the average outstanding amount of obligations is less than $3,000,000. The Company has pledged collateral of all present and future inventory, accounts, accounts receivable, general intangibles and returned goods, together with all reserves, balances, deposits, and property at any time owing to the credit of Merchant with Bank and any and all substitutions, accessions, additions, parts, accessories, attachments, replacements, proceeds and products of, for and to inventory, whether now or hereafter owned, existing, created, arising or acquired. The Merchant Agreement renews automatically unless either party terminates with a written notice with thirty days of the anniversary date. On January 22, 2018, the Subsidiaries sold to Compass accounts receivable under the Merchant Agreement aggregating approximately $2.0 million, the proceeds from which were used to pay USB all principal and accrued interest due and owing USB under the terms of the Notes previously issued to USB. As a result of such payment, together with a payment of approximately $360,000 from existing cash resources, the Notes, together with all other instruments and agreements executed by the Company and USB providing for the extension of credit by USB to the Company and the Subsidiaries, or otherwise, have terminated, and are of no further force and effect. In March 2018 the Company issued 225,000 shares of stock with a fair value of $67,500 to an officer of the company for services rendered. |
SUMMARY OF SIGNIFICANT ACCOUN17
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Options issued | |
Principle of Consolidation | The consolidated financial statements include the accounts of the Company and NDS Nutrition Products, Inc. Intercompany accounts and transactions have been eliminated in the consolidated financial statements. |
Use of Estimates and Assumptions | The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“ GAAP These estimates and assumptions also affect the reported amounts of revenues, costs and expenses during the reporting period. Management evaluates these estimates and assumptions on a regular basis. Actual results could differ from those estimates. Those estimates and assumptions include estimates for reserves of uncollectible accounts, inventory obsolescence, depreciable lives of property and equipment, analysis of impairments of recorded long-term assets and intangibles, realization of deferred tax assets, accruals for potential liabilities and assumptions made in valuing stock instruments issued for services. |
Revenue Recognition | Revenue is derived from product sales. The Company recognizes revenue from product sales in accordance with Accounting Standards Codification (“ ASC Revenue Recognition in Financial Statements Revenue is recorded net of all discounts taken at the time of sale. |
Customer Concentration | Total gross sales to GNC during 2017 and 2016 were $19,382,148 and $21,897,633, respectively, representing 80% and 82% of total revenue, respectively. Accounts receivable attributable to GNC before adjusting for product return reserves as of December 31, 2017 and 2016 were $2,625,003 and $2,327,689, respectively, representing 82% and 83% of the Company’s total accounts receivable balance, respectively. |
Accounts Receivable and Allowance for Doubtful Accounts | All of the Company’s accounts receivable balance is related to trade receivables. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company will maintain allowances for doubtful accounts, estimating losses resulting from the inability of its customers to make required payments for products. Accounts with known financial issues are first reviewed and specific estimates are recorded. The remaining accounts receivable balances are then grouped into categories by the amount of days the balance is past due, and the estimated loss is calculated as a percentage of the total category based upon past history. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. We maintain an insurance policy for iSatori Products for international shipments, which protects the Company in the event the international distributor does not or cannot remit payment. The Company recorded an expense of $169,188 related to bad debt and doubtful accounts during the year ended December 31, 2017.versus $3,553 for the year ended December 31, 2016. The difference was primarily attributable to losses related to the Vitamin World bankruptcy filing, and write-off of an outstanding note receivable that management determined was not collectible. As of December 31, 2017 and 2016, the Company has provided for reserves of $1,263,674 and $166,901 respectively, which have been included as part of the allowance for doubtful accounts |
Allowance for Product Returns, Sales Returns and Incentive Programs | We currently have a 30-day product return policy for NDS Products, which allows for a 100% sales price refund, less a 20% restocking fee, for the return of unopened and undamaged products purchased from us online through one of our websites. Product sold to GNC may be returned from store shelves or the distribution center in the event product is damaged, short dated, expired or recalled. Information for product returns is received on regular basis and adjusted for accordingly. Adjustments for returns are based on factual information and historical trends for both NDS products and iSatori products and are special to each distribution channel. We monitor, among other things, remaining shelf life and sell through data on a weekly basis. If we determine there are any risks or issues with any specific products, we accrue sales return allowances based on management’s assessment of the overall risk and likelihood of returns in light of all information available. Management determined the need to establish $1,151,573 of product return reserves (which are included in the allowance for doubtful accounts) as of December 31, 2017. As of December 31, 2016, the product return reserve was $166,901. GNC maintains a customer satisfaction program which allows customers to return product to the store for credit or refund. Subject to certain terms and restrictions, GNC may require reimbursement from vendors for unsaleable returned product through either direct payment or credit against a future invoice. We also support a product return policy for iSatori Products, whereby customers can return product for credit or refund. Historically, with a few noted exceptions, product returns have been immaterial. However, despite the best efforts of management, product returns can and do occur from time to time and can be material. The Company currently does not establish reserve allowances against accounts receivable related to sales returns or incentive programs. Sales returns are captured on a weekly basis and accounts receivable are updated accordingly. Given the real-time nature of the information, an allowance account for sales returns is not necessary. Regarding incentives, the Company accrues an estimate of 8% for promotional expenses it calls “vendor funded discounts” at the time of sale. The expense is recorded as a contra-revenue account, and the expected incentive costs are never included in accounts receivable. As such, an allowance account for incentives is not required or necessary. Actual incentive costs are reconciled to the estimate on a regular basis. Vendor funded discounts for the years ended December 31, 2017 and 2016 were $3,521,556 and $3,618,436 respectively and are recorded as a reduction to gross sales. |
Cost of Goods Sold | Cost of goods sold is comprised of the costs of products, repacking fees, in-bound freight charges, as well as certain internal transfer costs. Expenses not related to the production of our products are classified as operating expenses. |
Delivery and Handling Expense | Shipping and handling costs are comprised of purchasing and receiving costs, inspection costs, warehousing costs, transfer freight costs, and other costs associated with product distribution and are included as part of operating expenses. |
Cash and Cash Equivalents | The Company maintains cash balances in several financial institutions that are insured by the Federal Deposit Insurance Corporation up to certain federal limitations. At times, the Company’s cash balance exceeds these federal limitations. The amount in excess was $1,011,933 and $1,043,041 as of December 31, 2017 and 2016, respectively. |
Inventory | The Company’s inventory is carried at the lower of cost or net realizable value using the first-in, first-out (“ FIFO |
Property and Equipment | Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. The range of estimated useful lives used to calculate depreciation for principal items of property and equipment are as follows: Asset Category Depreciation / Amortization Period Furniture and Fixture 3 Years Office equipment 3 Years Leasehold improvements 5 Years Management regularly reviews property, equipment and other long-lived assets for possible impairment. This review occurs annually or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Based upon management’s annual assessment, there were no indicators of impairment of the Company’s property and equipment and other long-lived assets as of December 31, 2017 or December 31, 2016. |
Goodwill and Intangible Assets | The Company adopted FASB ASC Topic 350, Goodwill and Other Intangible Assets Identifiable intangible assets are stated at cost and accounted for based on whether the useful life of the asset is finite or indefinite. Identified intangible assets with finite useful lives are amortized using the straight-line methods over their estimated useful lives, which was originally ten years. Intangible assets with indefinite lives are not amortized to operations, but instead are reviewed for impairment at least annually, or more frequently if there is an indicator of impairment, the Company does not own any indefinite lived intangible assets. On September 30, 2015, the Company consummated the acquisition of iSatori. In connection with this acquisition, the Company recorded intangible assets of $1,965,000 and Goodwill of $4,197,448. As of December 31, 2016, the Company did not believe there were any indicators of impairment of its Goodwill and other intangible assets given that the recent acquisition had initially strong financial performance which included two profitable quarters and management had not yet had the time to implement its business plan. During the year ended December 31, 2017, the Company fully impaired Goodwill and other remaining finite-lived intangible assets related to the acquisition of iSatori and recorded an impairment charge equal to $5,928,765 due to the operating results of that unit. |
Income Taxes | The Company accounts for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized before the Company is able to realize their benefits, or that future deductibility is uncertain. Tax benefits from an uncertain tax position are recognized only if it more likely than not that the tax position will be sustained on examination by the taxing authorities based on technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has greater than 50 percent likelihood of being realized upon ultimate resolution. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. |
Concentration of Business and Credit Risk | The Company maintains cash balances in several financial institutions that are insured by the Federal Deposit lnsurance Corporation up to certain federal limitations. At times, the Company’s cash balance exceeds these federal limitations. The amount in excess was $1,011,933 and $1,043,041 as of December 31, 2017 and 2016, respectively. The Company provides credit in the normal course of business to customers located throughout the U.S. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information. One customer compr ised 80% and 82% of the Company’s revenues for the years ended December 31, 2017 and 2016, respectively. The loss of this customer would have a material adverse effect on the Company’s business, financial condition, and results of operation. |
Net Income (Loss) per Share | Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing the net income applicable to common stock holders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period. The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2017 2016 Warrants 60,620 60,620 Options 870,284 969,924 Total 930,904 1,030,544 The following table represents the computation of basic and diluted losses per share at December 31, 2017 and 2016: December 31, 2017 2016 Net income (loss) available for common shareholders (9,761,706 ) $ 368,078 Weighted average common shares outstanding – Basic and diluted 10,518,239 10,340,162 Income (loss) per share – Basic and diluted (0.93 ) 0.04 |
Fair Value measurements | The Company uses various inputs in determining the fair value of its investments and measures these assets on a recurring basis. Financial assets recorded at fair value in the balance sheets are categorized by the level of objectivity associated with the inputs used to measure their fair value. ASC 820 establishes a three-level valuation hierarchy for the use of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date: ● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. ● Level 3 - Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. The unobservable inputs are developed based on the best information available in the circumstances and may include the Company’s own data. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the short maturity of these instruments. The carrying values of the line of credit, notes payable and long-term financing obligations approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates. |
Stock Compensation Expense | The Company periodically issues stock options and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board (FASB) whereas the value of the award is measured on the date of grant and recognized as compensation expense on the straight-line basis over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Options granted to non-employees are revalued each reporting period to determine the amount to be recorded as an expense in the respective period. As the options vest, they are valued on each vesting date and an adjustment is recorded for the difference between the value already recorded and the then current value on the date of vesting. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the measurement date. The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. |
Segments | The Company operates in one segment for the distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements |
Recent Accounting Pronouncements | Stock Compensation - Employee Share-Based Payments ● Prospectively for the recognition of excess tax benefits and deficiencies in the tax provision. ● Retrospectively or prospectively for the classification of excess tax benefits and deficiencies in the statement of cash flows. ● Retrospectively for the classification of cash paid for shares withheld to satisfy employee taxes in the statement of cash flows. Leases – ASU “Leases (Topic 842)” ASU 2016-02 Inventory Measurement “Inventory (Topic 330): Simplifying the Measurement of Inventory” ASU 2015-11 NRV Going Concern Disclosures “Disclosure of Uncertainties About an Entity’s Ability to Continue as a Going Concern” ASU 2014-15 Revenue from Contracts with Customers – “FASB Revenue from Contracts with Customers In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) |
Reclassification | Certain prior year balances have been reclassified to conform to the current year presentation. In the consolidated balance sheets and the consolidated statement of stockholders’ equity certain prior year amounts previously recorded as current liabilities have been presented in a manner more representative of the Company’s current operations. These reclassifications have no effect on previously reported net income or stockholders’ equity. In addition, certain reclassifications have been made in the statements of cash flows with regards to the presentation of repurchases of common stock. The reclassification had no effect on previously reported decrease in cash. |
SUMMARY OF SIGNIFICANT ACCOUN18
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Property and Equipment, estimated useful lives | Asset Category Depreciation / Amortization Period Furniture and Fixture 3 Years Office equipment 3 Years Leasehold improvements 5 Years |
Dilutive shares included in EPS | The following potentially dilutive shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would be anti-dilutive: December 31, 2017 2016 Warrants 60,620 60,620 Options 870,284 969,924 Total 930,904 1,030,544 |
Net Income (Loss) per Share | The following table represents the computation of basic and diluted losses per share at December 31, 2017 and 2016: December 31, 2017 2016 Net income (loss) available for common shareholders (9,761,706 ) $ 368,078 Weighted average common shares outstanding – Basic and diluted 10,518,239 10,340,162 Income (loss) per share – Basic and diluted (0.93 ) 0.04 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventories Tables | |
Inventories | December 31, 2017 2016 Finished goods $ 2,462,530 $ 3,069,531 Components 411,301 687,185 Total $ 2,873,831 $ 3,756,716 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property And Equipment Tables | |
PROPERTY AND EQUIPMENT | December 31, 2017 2016 Equipment $ 971,820 $ 792,930 Accumulated depreciation $ (676,633 ) $ (621,926 ) Total $ 295,187 $ 171,004 |
NOTE PAYABLES (Tables)
NOTE PAYABLES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Note Payables Tables | |
Notes payable | December 31, 2017 December 31, 2016 Revolving line of credit of $3.0 million from U.S. Bank National Association (“ U.S. Bank , $ 1,950,000 $ 1,950,000 Term loan of $2,600,000 from US Bank, dated September 4, 2013, at a fixed interest rate of 3.6%. The term loan amortizes evenly on a monthly basis and matures August 15, 2018. 414,877 914,002 Notes payable for warehouse equipment - 12,700 Total of notes payable and advances 2,364,877 2,876,703 Less current portion (2,364,877) (2,507,526 ) Long-term portion $ - $ 369,177 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity Tables | |
Option activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Life (Years) Outstanding, December 31, 2015 902,205 $ 2.80 6.34 Issued 219,000 $ 1.39 Exercised (90,064 ) $ 0.06 Forfeited (61,217 ) 1.62 Outstanding, December 31, 2016 969,924 $ 2.81 5.12 Issued - - Exercised - - Forfeited (99,640 ) 3.65 Outstanding, December 31, 2017 870,284 $ 2.71 4.16 |
Options outstanding | Outstanding Exercise Price Issuance Date Expiration Date 50,000 $ 0.90 01/16/13 01/16/18 10,000 $ 1.00 03/04/13 03/04/18 212,074 $ 1.39 05/09/16 05/09/21 4,330 $ 1.44 09/29/15 09/29/25 40,000 $ 2.20 04/11/14 04/11/19 370,000 $ 2.30 02/23/15 02/23/20 93,503 $ 3.31 02/16/12 02/16/22 18,966 $ 4.62 05/13/15 05/13/25 4,330 $ 5.49 04/08/15 04/08/25 1,732 $ 5.81 03/05/15 03/05/25 32,331 $ 5.89 03/23/15 03/23/25 8,660 $ 12.13 09/17/13 09/17/23 7,038 $ 12.99 11/14/12 09/27/22 17,320 $ 14.43 01/16/13 11/30/22 870,284 |
Warrants issued and outstanding | Outstanding Exercise Price Grant Date Expiration Date 17,320 $ 12.99 10/01/13 01/01/18 43,300 $ 12.99 07/16/13 07/16/18 60,620 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes Tables | |
Deferred tax assets | December 31, 2017 December 31, 2016 Net operating loss carryforward 2,236,000 2,585,515 Allowances for sales returns, bad debt and inventory 392,000 - Share based compensation 167,000 39,000 Other 76,000 (3,000 ) Valuation allowance 2,871,000 1,932,515 (2,871,000 ) (1,932,515 ) Net deferred tax asset $ - $ 689,000 |
Reconciliation of effective income tax rate | December 31, 2017 2016 Federal Statutory tax rate (34 %) 34 % State tax, net of federal benefit (4.9 %) 4.9 % (38.9 %) 38.9 % Effect of change in tax rate 13 % - Valuation allowance 25.9 % 38.9 Effective tax rate - % - % |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Legal Proceedings On December 31, 2014, various plaintiffs, individually and on behalf of a purported nationwide and sub-class of purchasers, filed a lawsuit in the U.S. District Court for the Northern District of California, captioned Ryan et al. v. Gencor Nutrients, Inc. et al. Gencor On February 19, 2015 this matter was transferred to the Central District of California to the Honorable Manuel Real. Judge Real had previously issued an order dismissing a similar lawsuit that had been filed by the same lawyer who represents the plaintiffs in the Ryan matter. The United States Court of Appeals reversed part of the dismissal issued by Judge Real and remanded the case back down to the district court for further proceedings. As a result, the parties in the Ryan matter issued a joint status report and that matter is again active. On February 28, 2017, Kevin Fahey, through his attorney, and on behalf of himself and the citizens of the District of Columbia, file a Complaint in the Superior Court of the District of Columbia Civil Division captioned Fahey vs. BioGenetic Laboratories, Inc., et al. We are currently not involved in any litigation except noted above that we believe could have a material adverse effect on our financial condition or results of operations. Other than described above, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of the Company or any of its subsidiaries, threatened against or affecting the Company, our common stock, any of our subsidiaries or of the Company’s or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect. Lease Commitments The Company is headquartered in Omaha, Nebraska and maintains a lease at a cost of approximately $7,500 per month, which lease is currently set to expire in May 2024. The Omaha facility is a total of 11,088 square feet inclusive of approximately 6,179 square feet of on-site warehouse space. iSatori currently leases 4,732 square feet of space at 15000 W. 6th Avenue, Suite 400, Golden, Colorado 80401, at a cost of $5,620 per month. The Company was in an active process to sublease its Golden property as of December 31, 2017. Prior to January 2, 2016, iSatori also leased 17,426 square feet of space at 6200 North Washington Street, Unit 10, Denver, Colorado 80216, for its distribution center, at a cost of $12,669 per month. The lease is currently sublet through December 31, 2018, and otherwise set to expire on December 31, 2018. The Company also leases some office equipment for an aggregate total cost of approximately $535 per month. Rent expense for the years ending December 31, 2017 and 2016 was $263,597 and $289,710 , respectively, and is included in operating expenses in the accompanying consolidated statement of operations. Minimum annual rental commitments under non-cancelable leases are as follows: Years ending December 31, Amount 2018 $ 209,299 2019 111,441 2020 61,509 2021 60,984 2022 and thereafter 167,706 TOTAL $ 610,939 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Description of Business | |||
State of incorporation | Nevada | ||
Company incorporation date | Jul. 26, 2005 | ||
Cash | $ 1,261,933 | $ 1,293,041 | $ 1,532,550 |
Working capital | 369,502 | ||
NET INCOME (LOSS) | (9,761,706) | 368,078 | |
Net cash used in operating activities | $ 665,781 | $ 48,169 |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details 2 | ||
Revenue | $ 17,799,345 | $ 25,313,601 |
Gross Profit | 5,090,885 | 10,071,064 |
Selling and Marketing Expense | 3,525,202 | 4,118,414 |
Operating Income | $ (8,952,503) | $ 472,265 |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 12 Months Ended |
Dec. 31, 2017 | |
Office Equipment | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Depreciation/Amortization Period | 3 years |
Leasehold Improvements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Depreciation/Amortization Period | 5 years |
Furniture and Fixtures | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Depreciation/Amortization Period | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
NET INCOME PER SHARE | ||
Potential shares of common stock included in the number of shares outstanding | 930,904 | 1,030,544 |
Warrant [Member] | ||
NET INCOME PER SHARE | ||
Potential shares of common stock included in the number of shares outstanding | 60,620 | 60,620 |
Option [Member] | ||
NET INCOME PER SHARE | ||
Potential shares of common stock included in the number of shares outstanding | 870,284 | 696,924 |
SUMMARY OF SIGNIFICANT ACCOUN29
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
NET INCOME PER SHARE | ||
Net income (loss) available for common shareholders | $ (9,761,706) | $ (368,078) |
Basic weighted average common shares outstanding | 10,518,239 | 10,340,162 |
Basic income / (loss) per share | $ (0.93) | $ 0.04 |
Diluted weighted average common shares outstanding | 10,518,239 | 10,340,162 |
Diluted income / (loss) per share | $ (0.93) | $ .04 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 169,188 | |
Inventory | 2,873,831 | $ 3,756,716 |
Cash balance exceeds FDIC | $ 1,011,933 | $ 1,043,041 |
Sales Revenue, Net [Member] | ||
Summary of Significant Accounting Policies | ||
Concentration risk | 80.00% | 82.00% |
Accounts Receivable [Member] | ||
Summary of Significant Accounting Policies | ||
Concentration risk | 82.00% | 83.00% |
GNC [Member] | ||
Summary of Significant Accounting Policies | ||
Sales Revenue | $ 19,382,148 | $ 21,897,633 |
Accounts receivable | $ 2,625,003 | $ 2,327,689 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories | ||
Finished goods | $ 2,462,530 | $ 3,069,531 |
Components | 411,301 | 687,185 |
Total | $ 2,873,831 | $ 3,756,716 |
INVENTORIES (Details Narrative)
INVENTORIES (Details Narrative) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories | ||
Total | $ 2,873,831 | $ 3,756,716 |
I Satori Products [Member] | ||
Inventories | ||
Total | 2,624,461 | |
I Satori Products [Member] | ||
Inventories | ||
Total | 2,066,108 | |
NDS Products [Member] | ||
Inventories | ||
Total | $ 807,723 | $ 1,132,256 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
PROPERTY AND EQUIPMENT | ||
Equipment | $ 971,820 | $ 792,930 |
Accumulated depreciation | 676,633 | (621,926) |
Total | $ 295,187 | $ 171,004 |
PROPERTY AND EQUIPMENT (Detai34
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Property and Equipment | ||
Depreciation and amortization expense | $ 54,707 | $ 56,236 |
NOTE RECEIVABLE (Details Narrat
NOTE RECEIVABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Note Receivable | $ 5,000 | $ 2,782 |
I Satori Products [Member] | ||
Note Receivable | $ 55,477 | |
Proceeds from notes receivable | 6,750 | |
Write off of bed debt | $ 43,727 |
NOTE PAYABLES (Details)
NOTE PAYABLES (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Notes payable | ||
Revolving Line of Credit | $ 1,950,000 | $ 1,950,000 |
Term loan | 414,877 | 914,002 |
Notes payable for warehouse equipment | 0 | 12,700 |
Total of notes payable and advances | 2,364,877 | 2,876,703 |
Less current portion | (2,364,877) | (2,507,526) |
Long-term portion | $ 0 | $ 369,177 |
EQUITY (Details)
EQUITY (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Warrants1 [Member] | |
Warrants Issued | 17,320 |
Exercise price | $ / shares | $ 12.99 |
Issuance Date | Oct. 1, 2013 |
Expiration Date | Jan. 1, 2018 |
Warrants2Member | |
Warrants Issued | 43,300 |
Exercise price | $ / shares | $ 12.99 |
Issuance Date | Jul. 16, 2013 |
Expiration Date | Jul. 16, 2018 |
Warrant [Member] | |
Warrants Issued | 60,620 |
EQUITY (Details 1)
EQUITY (Details 1) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Options outstanding | 870,284 |
Option 1 [Member] | |
Options outstanding | 50,000 |
Exercise price | $ / shares | $ 0.9 |
Issuance date | Jan. 16, 2013 |
Expiration date | Jan. 16, 2018 |
Option 2 [Member] | |
Options outstanding | 10,000 |
Exercise price | $ / shares | $ 1 |
Issuance date | Mar. 4, 2013 |
Expiration date | Mar. 4, 2018 |
Option 3 [Member] | |
Options outstanding | 212,074 |
Exercise price | $ / shares | $ 1.39 |
Issuance date | May 9, 2016 |
Expiration date | May 9, 2021 |
Option 4 [Member] | |
Options outstanding | 4,330 |
Exercise price | $ / shares | $ 1.44 |
Issuance date | Sep. 29, 2015 |
Expiration date | Sep. 29, 2025 |
Option 5 [Member] | |
Options outstanding | 40,000 |
Exercise price | $ / shares | $ 2.2 |
Issuance date | Apr. 11, 2014 |
Expiration date | Apr. 11, 2019 |
Option 6 [Member] | |
Options outstanding | 370,000 |
Exercise price | $ / shares | $ 2.3 |
Issuance date | Feb. 23, 2015 |
Expiration date | Feb. 23, 2020 |
Option 7 [Member] | |
Options outstanding | 93,503 |
Exercise price | $ / shares | $ 3.31 |
Issuance date | Feb. 16, 2012 |
Expiration date | Feb. 16, 2022 |
Option 8 [Member] | |
Options outstanding | 18,966 |
Exercise price | $ / shares | $ 4.62 |
Issuance date | May 13, 2015 |
Expiration date | May 13, 2025 |
Option 9 [Member] | |
Options outstanding | 4,330 |
Exercise price | $ / shares | $ 5.49 |
Issuance date | Apr. 8, 2015 |
Expiration date | Apr. 8, 2025 |
Option 10 [Member] | |
Options outstanding | 1,732 |
Exercise price | $ / shares | $ 5.81 |
Issuance date | Mar. 5, 2015 |
Expiration date | Mar. 5, 2025 |
Option 11 [Member] | |
Options outstanding | 32,331 |
Exercise price | $ / shares | $ 5.89 |
Issuance date | Mar. 23, 2015 |
Expiration date | Mar. 23, 2025 |
Option 12 [Member] | |
Options outstanding | 8,660 |
Exercise price | $ / shares | $ 12.13 |
Issuance date | Sep. 17, 2013 |
Expiration date | Sep. 17, 2023 |
Option 13 [Member] | |
Options outstanding | 7,038 |
Exercise price | $ / shares | $ 12.99 |
Issuance date | Nov. 14, 2012 |
Expiration date | Sep. 27, 2022 |
Option 14 [Member] | |
Options outstanding | 17,320 |
Exercise price | $ / shares | $ 14.43 |
Issuance date | Jan. 16, 2013 |
Expiration date | Nov. 30, 2022 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
EQUITY | ||
Authorized to issue shares of common stock | 10,000,000 | 150,000,000 |
Share price, par value | $ 0.01 | $ 0.01 |
Common shares issued and outstanding | 10,623,522 | 10,475,494 |
Subscribed shares | 0 | 33,869 |
Shares issued of common stock for services | 240,241 | 116,722 |
Fair value expense of services rendered | $ 95,966 | $ 153,002 |
Warrant [Member] | ||
EQUITY | ||
Options and warrants issued and outstanding | 60,620 | |
Warrants1 [Member] | ||
EQUITY | ||
Options and warrants issued and outstanding | 17,320 | |
Exercise price | $ 12.99 | |
Warrants2Member | ||
EQUITY | ||
Options and warrants issued and outstanding | 43,300 | |
Exercise price | $ 12.99 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes Details | ||
Current income tax provision (benefit), federal | $ 0 | |
Current income tax provision (benefit), state | 2,417 | |
Total current income tax provision | 2,417 | |
Deferred income tax provision (benefit), federal | (139,279) | |
Deferred income tax provision (benefit), state | (15,475) | |
Total deferred income tax provision | (154,754) | |
Change in valuation allowance | 154,754 | |
Provision (benefit) for income taxes, net | $ 689,000 | $ 0 |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) | Dec. 31, 2016USD ($) |
Income Taxes Details 1 | |
Inventory | $ 54,000 |
Allowance for Doubtful Accounts | 0 |
Foreign tax credits | 30,000 |
Share Based Compensation | 39,000 |
Other | 8,000 |
Property and equipment | 0 |
Net operating loss carryforwards | 7,666,946 |
Valuation allowance | (7,013,946) |
Deferred income tax asset | 784,000 |
Deferred expenses | (63,000) |
Property and equipment | (32,000) |
Deferred income tax liability | (95,000) |
Net deferred tax asset | $ 689,000 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Income Taxes | |
Net operating loss carryforwards, Federal | $ 8,600,000 |
Net operating loss carryforwards, State | 6,600,000 |
Restored deferred tax assets related to net operating losses | $ 689,000 |
COMMITMENTS AND CONTINGENCIES43
COMMITMENTS AND CONTINGENCIES (Details) | Dec. 31, 2017USD ($) |
Minimum rent payment due: | |
2,018 | $ 209,299 |
2,019 | 111,441 |
2,020 | 61,509 |
2,021 | 60,984 |
2022 and thereafter | $ 167,706 |
COMMITMENTS AND CONTINGENCIES44
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 263,597 | $ 289,710 |
Monthly lease rate | $ 7,500 |