Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 19, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | ForceField Energy Inc. | |
Entity Central Index Key | 1,407,268 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
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 Common Stock, Shares Outstanding | 17,828,189 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Accounts receivable, net | $ 1,445,550 | $ 1,925,846 |
Accounts receivable, net -- noncurrent | (14,522) | (33,093) |
Goodwill | 3,729,939 | |
Successor | ||
Current assets: | ||
Cash and cash equivalents | 724,208 | 598,281 |
Accounts receivable, net | 1,445,550 | 1,925,846 |
Other receivables | 900,000 | 0 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 53,424 | 126,575 |
Inventory, net | 222,920 | 383,033 |
Prepaid expenses and other current assets | 257,672 | 449,606 |
Current assets held for sale | 0 | 3,378,442 |
Total current assets | 3,603,774 | 6,861,783 |
Accounts receivable, net -- noncurrent | 14,522 | 33,093 |
Property and equipment, net | 18,510 | 30,203 |
Goodwill | 3,729,939 | 3,729,939 |
Intangible assets, net | 1,961,414 | 3,511,553 |
Other assets | 25,800 | 180,721 |
Noncurrent assets held for sale | 0 | 13,266,728 |
Total assets | 9,353,959 | 27,614,020 |
Current liabilities: | ||
Accounts payable | 360,735 | 852,809 |
Accrued liabilities | 763,423 | 914,916 |
Billings in excess of costs and estimated earnings on uncompleted contracts | 0 | 208,712 |
Convertible debentures, net — current | 3,260,000 | 50,000 |
Loans payable | 130,000 | 130,000 |
Senior, secured promissory notes | 1,000,000 | 1,988,003 |
Income taxes payable | 4,659 | 24,903 |
Current liabilities of discontinued operations | 0 | 3,382,704 |
Total current liabilities | 5,518,817 | 7,552,047 |
Convertible debentures, net of loan discounts | 508,863 | 2,949,666 |
Contingent purchase consideration | 641,000 | 641,000 |
Deferred tax liabilities, net - noncurrent | 554,000 | 811,248 |
Other noncurrent liabilities | 67,712 | 67,712 |
Noncurrent liabilities of discontinued operations | 0 | 6,262,463 |
Total liabilities | 7,290,392 | 18,284,136 |
ForceField Energy Inc. stockholders' equity: | ||
Preferred stock, $0.001 par value. 12,500,000 shares authorized; zero shares issued and outstanding | 0 | 0 |
Common stock, $0.001 par value. 37,500,000 shares authorized; 20,000,182 and 19,200,005 shares issued and 17,828,189 and 17,737,908 shares outstanding as of June 30, 2015 and December 31, 2014, respectively | 20,000 | 19,200 |
Common stock held in treasury, at cost, 2,171,993 and 1,462,097 shares held at June 30, 2015 and December 31, 2014 | (1,967,241) | (1,166,071) |
Additional paid-in capital | 31,821,548 | 27,132,299 |
Accumulated earnings (deficit) | (27,821,906) | (16,767,876) |
Accumulated other comprehensive income | 11,166 | 12,573 |
Total ForceField Energy Inc. stockholders' equity | 2,063,567 | 9,230,125 |
Noncontrolling interests | 0 | 99,759 |
Total equity | 2,063,567 | 9,329,884 |
Total liabilities and equity | $ 9,353,959 | $ 27,614,020 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares | Jun. 30, 2015 | Dec. 31, 2014 |
Equity: | ||
Preferred stock, par value | $ .001 | $ .001 |
Preferred stock, authorized shares | 12,500,000 | 12,500,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ .001 | $ .001 |
Common stock, authorized shares | 37,500,000 | 37,500,000 |
Common stock, issued shares | 20,000,182 | 19,200,005 |
Common stock, outstanding shares | 17,828,189 | 17,737,908 |
Treasury stock held at cost | 2,171,993 | 1,462,097 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended | 4 Months Ended | 6 Months Ended |
Apr. 25, 2014 | Jun. 30, 2014 | Jun. 30, 2015 | Apr. 25, 2014 | Jun. 30, 2015 | |
Successor | |||||
Sales | $ 1,291,973 | $ 1,210,644 | $ 2,561,436 | ||
Cost of goods sold | 934,296 | 1,011,883 | 1,865,708 | ||
Gross margin | 357,677 | 198,761 | 695,728 | ||
Operating expenses: | |||||
Depreciation and amortization | 46,155 | 47,917 | 143,950 | ||
Selling and marketing | 120,101 | 110,369 | 271,476 | ||
General and administrative | 647,545 | 693,818 | 1,605,414 | ||
Professional fees | 313,232 | 406,224 | 649,464 | ||
Impairment of goodwill and other intangible assets | 0 | 377,000 | 377,000 | ||
Total operating expenses | 1,127,033 | 1,635,328 | 3,047,304 | ||
Loss from continuing operations before other income (expense) and income taxes | (769,356) | (1,436,567) | (2,351,576) | ||
Other income (expense) | |||||
Interest expense, net | (61,375) | (479,776) | (1,091,413) | ||
Loss on settlement of debt | 0 | 0 | (733,414) | ||
Total other income (expense) | (61,375) | (479,776) | (1,824,827) | ||
Loss from continuing operations before income taxes | (830,731) | (1,916,343) | (4,176,403) | ||
Provision for income taxes (benefit) | 0 | 1,850 | (20,194) | ||
Net loss from continuing operations | (830,731) | (1,918,193) | (4,156,209) | ||
Discontinued Operations: | |||||
Loss from discontinued operations, net of income taxes | 0 | (1,358,298) | (7,964,638) | ||
Gain on sale of discontinued operations, net of taxes | 0 | 1,060,430 | 1,060,430 | ||
Total discontinued operations | 0 | (297,868) | (6,904,208) | ||
Net loss | (830,731) | (1,918,193) | (4,156,209) | ||
Less: Accretion of preferred stock | 0 | 0 | 0 | ||
Less: Net loss attributable to noncontrolling interests | (16,619) | 0 | (6,387) | ||
Net loss attributable to ForceField Energy Inc. stockholders | $ (814,112) | $ (2,216,061) | $ (11,054,030) | ||
Basic and diluted loss per share | |||||
Continuing operations | $ (.05) | $ (.10) | $ (.23) | ||
Discontinued operations | 0 | (.02) | (.38) | ||
Net loss attributable to ForceField Energy Inc. common stockholders | $ (.05) | $ (0.12) | $ (.61) | ||
Weighted-average number of common shares outstanding: | |||||
Basic and diluted | 16,071,282 | 18,277,382 | 18,102,909 | ||
Comprehensive loss: | |||||
Net loss | $ (830,731) | $ (1,918,193) | $ (4,156,209) | ||
Foreign currency translation adjustment | (7,850) | (2,710) | (1,407) | ||
Comprehensive loss | (838,581) | (1,920,903) | (4,157,616) | ||
Comprehensive loss attributable to noncontrolling interests | (16,916) | 0 | (6,387) | ||
Comprehensive loss attributable to ForceField Energy Inc. common stockholders | $ (821,665) | $ (1,920,903) | $ (4,151,229) | ||
Predecessor | |||||
Sales | $ 310,438 | $ 1,611,213 | |||
Cost of goods sold | 263,191 | 1,138,827 | |||
Gross margin | 47,247 | 472,386 | |||
Operating expenses: | |||||
Depreciation and amortization | 813 | 3,334 | |||
Selling and marketing | 38,656 | 193,148 | |||
General and administrative | 135,222 | 485,670 | |||
Professional fees | 37,072 | 37,317 | |||
Impairment of goodwill and other intangible assets | 0 | 0 | |||
Total operating expenses | 211,763 | 719,469 | |||
Loss from continuing operations before other income (expense) and income taxes | (164,516) | (247,083) | |||
Other income (expense) | |||||
Interest expense, net | 513 | 5,567 | |||
Loss on settlement of debt | 0 | 0 | |||
Total other income (expense) | 513 | 5,567 | |||
Loss from continuing operations before income taxes | (164,003) | (241,516) | |||
Provision for income taxes (benefit) | 325 | 2,100 | |||
Net loss from continuing operations | (164,328) | $ (243,616) | |||
Discontinued Operations: | |||||
Loss from discontinued operations, net of income taxes | 0 | ||||
Gain on sale of discontinued operations, net of taxes | 0 | $ 0 | |||
Total discontinued operations | 0 | 0 | |||
Net loss | (164,328) | (243,616) | |||
Less: Accretion of preferred stock | 6,857 | 31,054 | |||
Less: Net loss attributable to noncontrolling interests | 0 | 0 | |||
Net loss attributable to ForceField Energy Inc. stockholders | $ (171,185) | $ (274,670) | |||
Basic and diluted loss per share | |||||
Continuing operations | $ (0.13) | $ (0.19) | |||
Discontinued operations | 0 | 0 | |||
Net loss attributable to ForceField Energy Inc. common stockholders | $ (0.14) | $ (.22) | |||
Weighted-average number of common shares outstanding: | |||||
Basic and diluted | 1,252,403 | 1,252,403 | |||
Comprehensive loss: | |||||
Net loss | $ (164,328) | $ (243,616) | |||
Foreign currency translation adjustment | 0 | 0 | |||
Comprehensive loss | (164,328) | (243,616) | |||
Comprehensive loss attributable to noncontrolling interests | 0 | 0 | |||
Comprehensive loss attributable to ForceField Energy Inc. common stockholders | $ (164,328) | $ (243,616) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 2 Months Ended | 4 Months Ended | 6 Months Ended |
Jun. 30, 2014 | Apr. 25, 2014 | Jun. 30, 2015 | |
Successor | |||
Cash flows from operating activities: | |||
Net Loss | $ (830,731) | $ (11,060,417) | |
Net loss from discontinued operations | 0 | 6,904,208 | |
Adjustments to reconcile net income (loss) to cash used in operating activities: | |||
Depreciation and amortization | 46,155 | 143,950 | |
Amortization of debt discount | 17,838 | 557,501 | |
Amortization of deferred financing costs | 0 | 132,583 | |
Provision for (recovery of) doubtful accounts | 6,430 | (12,469) | |
Common stock issued for financing costs | 0 | 116,659 | |
Common stock issued in exchange for services | 10,680 | 12,880 | |
Deferred taxes | 0 | (7,006) | |
Impairment of goodwill and intangible assets | 0 | 377,000 | |
Loss on settlement of debt | 0 | 733,414 | |
Changes in operating assets and liabililites: | |||
Accounts receivable | (114,815) | 511,513 | |
Costs and earnings in excess of billings | (88,184) | 73,151 | |
Inventory | (354,994) | 161,867 | |
Prepaid expenses and other current assets | 105,914 | (87,424) | |
Other assets | 5,921 | (27,658) | |
Accounts payable | 520,623 | (475,787) | |
Accrued liabilities | (297,536) | (87,239) | |
Billings in excess of costs and earnings | 0 | (22,886) | |
Income taxes payable and other noncurrent liabilities | 4,097 | (19,444) | |
Net cash provided by (used in) operating activities -- continuing operations | (968,602) | (2,075,604) | |
Net cash used in operating activities -- discontinued operations | 0 | (769,738) | |
Net cash provided by (used in) operating activities | (968,602) | (2,845,342) | |
Cash flows from investing activities: | |||
Cash consideration for acquisition of business, net of cash acquired | (2,359,313) | 0 | |
Cash forfeited in divestment of business | (838) | (67,053) | |
Cash received in divestment of business | 0 | 50,000 | |
Purchase of fixed assets | 0 | 5,724 | |
Net cash used in financing activities -- continuing operations | (2,360,151) | (11,329) | |
Net cash used in financing activities -- discontinued operations | 0 | (145,618) | |
Net cash used in investing activities | (2,360,151) | (156,947) | |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock, net of issuance costs | 135,000 | 1,755,311 | |
Proceeds from the exercise of common stock purchase warrants, net of issuance costs | 0 | 936,000 | |
Proceeds from the issuance of convertible debentures | 0 | 400,000 | |
Proceeds from loans payable | 75,000 | 0 | |
Dividend and redemption payments on preferred stock | 0 | 0 | |
Repayments of senior, secured promissory notes | 0 | (100,000) | |
Net cash provided by financing activities -- continuing operations | 210,000 | 2,991,311 | |
Net cash used in financing activities -- discontinued operations | 0 | (32,569) | |
Net cash provided by (used in) financing activities | 210,000 | 2,958,742 | |
Effect of exchange rates on cash and cash equivalents | (1,917) | (3,451) | |
Net increase (decrease) in cash and cash equivalents | (3,120,670) | (46,998) | |
Cash and cash equivalents at beginning of period | 3,345,675 | 598,281 | |
Cash and cash equivalents at end of period | 225,005 | $ 3,345,675 | 724,208 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 14,597 | 156,670 | |
Cash paid for income taxes | 0 | 61,344 | |
Supplemental disclosure of non-cash investing and financing activities: | |||
Accretion of preferred stock | 0 | 0 | |
Common stock issued related to acquisition of business | 1,656,106 | 0 | |
Common stock issued for financing costs incurred in connection with convertible and promissory notes | 0 | 32,150 | |
Common stock issued to reduce convertible and promissory notes payable | 0 | 1,000,000 | |
Common stock issued to reduce accounts payable and other accrued liabilities | 0 | 36,000 | |
Contingent purchase consideration | 2,000,000 | 0 | |
Debt issued related to acquisition of a business | 1,000,000 | 0 | |
Discount for beneficial conversion features on convertible debentures | 0 | 67,636 | |
Reallocation of amounts prepaid towards the acquisition of a business to consideration for an intangible asset — licensing rights | 0 | 279,500 | |
Working capital adjustment payable related to acquisition of business | 1,329,528 | $ 0 | |
Predecessor | |||
Cash flows from operating activities: | |||
Net Loss | (243,616) | ||
Net loss from discontinued operations | 0 | ||
Adjustments to reconcile net income (loss) to cash used in operating activities: | |||
Depreciation and amortization | 3,334 | ||
Amortization of debt discount | 0 | ||
Amortization of deferred financing costs | 0 | ||
Provision for (recovery of) doubtful accounts | (32,967) | ||
Common stock issued for financing costs | 0 | ||
Common stock issued in exchange for services | 0 | ||
Deferred taxes | 0 | ||
Impairment of goodwill and intangible assets | 0 | ||
Loss on settlement of debt | 0 | ||
Changes in operating assets and liabililites: | |||
Accounts receivable | 1,275,004 | ||
Costs and earnings in excess of billings | 0 | ||
Inventory | 9,307 | ||
Prepaid expenses and other current assets | (42,637) | ||
Other assets | 0 | ||
Accounts payable | (487,915) | ||
Accrued liabilities | (120,270) | ||
Billings in excess of costs and earnings | 0 | ||
Income taxes payable and other noncurrent liabilities | (5,571) | ||
Net cash provided by (used in) operating activities -- continuing operations | 354,669 | ||
Net cash used in operating activities -- discontinued operations | 0 | ||
Net cash provided by (used in) operating activities | 354,669 | ||
Cash flows from investing activities: | |||
Cash consideration for acquisition of business, net of cash acquired | 0 | ||
Cash forfeited in divestment of business | 0 | ||
Cash received in divestment of business | 0 | ||
Purchase of fixed assets | (2,768) | ||
Net cash used in financing activities -- continuing operations | (2,768) | ||
Net cash used in financing activities -- discontinued operations | 0 | ||
Net cash used in investing activities | (2,768) | ||
Cash flows from financing activities: | |||
Proceeds from issuance of common stock, net of issuance costs | 0 | ||
Proceeds from the exercise of common stock purchase warrants, net of issuance costs | 0 | ||
Proceeds from the issuance of convertible debentures | 0 | ||
Proceeds from loans payable | 0 | ||
Dividend and redemption payments on preferred stock | (283,000) | ||
Repayments of senior, secured promissory notes | 0 | ||
Net cash provided by financing activities -- continuing operations | (283,000) | ||
Net cash used in financing activities -- discontinued operations | 0 | ||
Net cash provided by (used in) financing activities | (283,000) | ||
Effect of exchange rates on cash and cash equivalents | 0 | ||
Net increase (decrease) in cash and cash equivalents | 68,901 | ||
Cash and cash equivalents at beginning of period | $ 407,912 | 339,011 | |
Cash and cash equivalents at end of period | 407,912 | ||
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 2,187 | ||
Cash paid for income taxes | 6,371 | ||
Supplemental disclosure of non-cash investing and financing activities: | |||
Accretion of preferred stock | 31,054 | ||
Common stock issued related to acquisition of business | 0 | ||
Common stock issued for financing costs incurred in connection with convertible and promissory notes | 0 | ||
Common stock issued to reduce convertible and promissory notes payable | 0 | ||
Common stock issued to reduce accounts payable and other accrued liabilities | 0 | ||
Contingent purchase consideration | 0 | ||
Debt issued related to acquisition of a business | 0 | ||
Discount for beneficial conversion features on convertible debentures | 0 | ||
Reallocation of amounts prepaid towards the acquisition of a business to consideration for an intangible asset — licensing rights | 0 | ||
Working capital adjustment payable related to acquisition of business | $ 0 |
1. NATURE OF OPERATIONS
1. NATURE OF OPERATIONS | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | ForceField Energy Inc. and its wholly-owned subsidiaries (ForceField or the Company) is a contractor that distributes and installs light emitting diode (LED) and traditional lighting products for both indoor and outdoor commercial applications. The Company generates revenue by selling commercial grade lighting products and its installation services for use in both commercial and municipal markets. The marketing and distribution of such products and services occurs primarily through internal sales resources. On March 5, 2015, the Company completed a sale of its 50.3% equity interest in TransPacific Energy, Inc. (TPE) back to certain current and former TPE shareholders. As a result of the transaction, the Companys operations are now comprised of only one reportable segment for financial reporting purposes. On May 1, 2015, the Company closed its offices in Costa Rica and Mexico. The process of winding down all business operations at each of these locations is substantially complete. Pursuant to a stock purchase agreement dated June 30, 2015, ESCO Energy Services, LLC purchased from the Company all of the issued and outstanding capital stock of ESCO Energy Services Company (ESCO). See Note 5 Business Divestitures for additional information. |
2. SUMMARY OF SIGNIFICANT ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2015 | |
Summary Of Significant Accounting Policies | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information. All amounts are expressed in United States dollars. Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements include all of the adjustments which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes and other information included in the Companys Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (SEC). The results of operations for the three and six-month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015 or for any other future period. Going Concern These unaudited consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has generated significant operating losses which have been funded primarily from debt and equity financings. In addition, the Company is in default of, or past due on, certain payments related to principal and interest due on notes payable, vendor payables and other accrued liabilities. The Company is addressing its delinquencies on a case-by-case basis; however, it can offer no assurance that the cooperation it has received thus far will continue. The continuing operations of the Company and the recoverability of the carrying value of assets is dependent upon the ability of the Company to obtain necessary financing to fund its working capital requirements, and upon achieving future profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. There can be no assurance that new capital will be available as necessary to meet the Company's working capital requirements or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in significant dilution in the equity interests of its current stockholders. Obtaining new debt capital, assuming such debt capital would be available, will increase the Company's liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success may be adversely affected and the Company may cease operations. These factors raise substantial doubt regarding its ability to continue as a going concern. Predecessor and Successor Reporting On April 25, 2014, the Company acquired 17th Street ALD Management Corp (ALD, or, American Lighting), a leading commercial lighting specialist based in San Diego, California. The transaction was accounted for under the acquisition method of accounting, which requires that the assets purchased and the liabilities assumed all be reported in the acquirer's financial statements at their fair value, with any excess purchase price over the net assets being reported as goodwill. The application of the acquisition method of accounting represented a change in accounting basis. Accordingly, the financial statements and certain note presentations separate the Companys presentations into two distinct periods, the period before the consummation of the transaction (labeled Predecessor) and the period after that date (labeled Successor), to indicate the application of the different basis of accounting between the periods presented. For financial reporting purposes, ALD was deemed to be the predecessor company and ForceField was deemed to be the successor company in accordance with the rules and regulations issued by the SEC. This change in accounting basis is represented in the unaudited consolidated financial statements by a vertical black line which appears between the columns entitled "Predecessor" and "Successor" on the statements and in the relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the acquisition may not be comparable. The predecessor account balances and results of operations are effective through April 30, 2014, as the impact of transactions recorded from April 26, 2014 through April 30, 2014 was not material. Principles of Consolidation These unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. Discontinued Operations In May 2015, the Companys board of directors authorized its management to pursue the sale of ESCO. A sale was completed on June 30, 2015. As a result, ESCOs results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. See Note 6 Discontinued Operations for additional information. Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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. The most significant estimates relate to revenue recognition, valuation of accounts receivable and inventories, purchase price allocation of acquired businesses, impairment of long lived assets and goodwill, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Change in Accounting Policy In 2014, the Company changed its accounting policy related to revenue recognition from the completed contracts method to the percentage-of-completion method. Under the new policy, revenue is measured by evaluating the percentage of total costs incurred to date against the estimated total costs for each contract. The impact of the change in accounting policy on the June 30, 2014 financial statements resulted in an increase to sales of $299,032 and an increase to cost of goods sold of $210,848. Revenue Recognition The Company recognizes revenue on the percentage-of-completion method, measured by the percentage of total costs incurred to date against the estimated total costs for each contract. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Profit incentives are included in revenue when their realization is reasonably assured. An amount equal to contract costs attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated. The asset, costs and estimated earnings in excess of billings on uncompleted contracts, represents revenue recognized in excess of amounts billed. The liability, billings in excess of costs and estimated earnings on uncompleted contracts, represents billings in excess of revenue recognized. Revenue from rebates from utilities may be recognized on eligible energy-efficient lighting retrofit projects. These rebates are simultaneously credited against the quoted contract price and assigned to the Company by the customer. The Company is responsible for the application of the rebate, and bears the risk of any loss from the verification and collection of the rebate. Revenue from rebates from utilities totaled $53,366 and $187,177, respectively for the three month and six month periods ended June 30, 2015, compared to $366,392 and $1,077,856, respectively, for the same three and six month periods ended June 30, 2014. Certain rebates from utility companies are subject to refund rights in the event that specified energy savings are not met. The Company assesses each retrofit project subject to refund rights to determine if the estimated energy savings are likely to be met. As of June 30, 2015 and December 31, 2014, there were no retrofit projects subject to this refund right that were not expected to meet the specified energy savings. The utility companys providing the retrofit rebate, at their discretion, can audit the Company's customer installations prior to payment. These audits often result in an adjustment to the rebate, which is netted against revenues. A reserve for adjustments is recorded based upon current period sales and the Companys historical experience factor in recording such rebate adjustments. During the three and six-month periods ended June 30, 2015, the adjustments to rebates from utilities totaled ($85) and ($5,693), respectively, as compared to ($50,118) and ($62,146), respectively, during the corresponding periods in the prior year. These amounts are netted in the Companys accounts receivable and revenue. Fair Value Measurements The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ● Level 1 ● Level 2 ● Level 3 Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2015. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, trade receivables, related party payables, accounts payable, accrued liabilities and short-term borrowings. Fair values were estimated to approximate carrying values for these financial instruments since they are short term in nature and they are receivable or payable on demand. The estimated fair value of assets and liabilities acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs classified as Level 3 in the fair value hierarchy. The Company determines the fair value of contingent consideration based on a probability-weighted discounted cash flow analysis. The fair value remeasurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, the Company reassesses its current estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments are included as a component of Other Income (Expense) in the Consolidated Statements of Operations and Comprehensive Loss. The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2015: Level 1 Level 2 Level 3 Earnout liability $ $ $ 641,000 The following table summarizes the change in the Companys financial assets and liabilities measured at fair value as of June 30, 2015: 2015 Fair value, January 1, 2015 $ 641,000 Fair value of contingent consideration issued during the period Change in fair value Fair value, June 30, 2015 $ 641,000 Goodwill and Intangible Assets Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Companys acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Companys amortizable intangible assets consist of customer relationships, distribution and licensing agreements, non-compete agreements and technology. Their useful lives range from 0.5 to 15 years. The Companys indefinite-lived intangible assets consist of trade names. Goodwill and indefinite-lived assets are not amortized, but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Companys risk relative to the overall market, the Companys size and industry and other Company specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting units carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting units assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans and future market conditions, among others. There can be no assurance that the Companys estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform impairment test prior to scheduled annual impairment tests scheduled in the fourth quarter. Long-Lived Assets The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. Reclassifications Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. Recent accounting pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
3. ACCOUNTS RECEIVABLE, NET
3. ACCOUNTS RECEIVABLE, NET | 6 Months Ended |
Jun. 30, 2015 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | The following table sets forth the components of the Companys accounts receivable, net at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Accounts and contracts receivable $ 1,530,367 $ 2,056,647 Allowance for doubtful accounts (70,295 ) (97,708 ) Total accounts receivable, net 1,460,072 1,958,939 Less: Noncurrent portion of accounts receivable, net 14,522 33,093 Current portion of accounts receivable, net $ 1,445,550 $ 1,925,846 Accounts receivable are customer obligations due under normal trade terms. The Company performs periodic credit evaluations of its customers financial condition. The Company records an allowance for doubtful accounts based upon factors surrounding the credit risk of certain customers and specifically identified amounts that it believes to be uncollectible. During the six-month period ended June 30, 2015, the Company recorded a decrease of $12,469 to its provision for bad debts and recorded nil in write offs. During the six-month period ended June 30, 2014, the Company recorded a decrease of $26,537 to its provision for bad debts and recorded nil in write-offs. The Company's long-term receivables are considered financing receivables. The difference between the present value and face value of these receivables is recorded as an unamortized discount which is amortized over the term of the payment plan. The Company recorded $4,780 and $6,078, respectively, of interest income from deferred payment plan accounts receivable during the three and six-month periods ended June 30, 2015 and $3,051 and $6,436, respectively, of interest income from deferred payment plan accounts receivable during the three and six-month periods ended June 30, 2014. Customer concentrations During the six-month period ended June 30, 2015, the Company had two customers that accounted for 56.0% of accounts receivable and two customers that accounted for 36.7% of sales. During the successor period of April 26, 2014 through June 30, 2014, the Company had one customer that accounted for 11.6% of accounts receivable and two customers that accounted for 30.7% of sales. During the predecessor period of January 1, 2014 through April 25, 2014, the Company had one customer that accounted for 25.1% of accounts receivable and two customers that accounted for 21.6% of sales. Geographic information During the six month period ended June 30, 2015, all of the Companys sales were generated within the United States with the exception of $89,257 in sales that were produced in Costa Rica. During the same six-month period ended June 30, 2014, all of the Companys sales were generated within the United States with the exception of $5,141 in sales that were recorded in Costa Rica. |
4. PROPERTY AND EQUIPMENT
4. PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2015 | |
Property And Equipment | |
Property and equipment | The following table sets forth the components of the Companys property and equipment at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Computers and equipment $ 20,802 $ (11,778 ) $ 9,024 $ 18,402 $ (7,285 ) $ 11,117 Furniture and fixtures 11,763 (2,277 ) 9,486 22,295 (3,209 ) 19,086 Leasehold improvements 457 (457 ) 457 (457 ) Total $ 33,022 $ (14,512 ) $ 18,510 $ 41,154 $ (10,951 ) $ 30,203 Property and equipment are stated at cost or at fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. The Company recorded depreciation expense of $2,373 and $6,080 during the three and six-month periods ended June 30, 2015 and $3,379 and $5,900, respectively, during the three and six-month periods ended June 30, 2014. Differences may arise in the amount of depreciation expense reported in the Company's operating results as compared to the corresponding change in accumulated depreciation due to foreign currency translation. These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's stockholders' equity. |
5. Business Divestitures
5. Business Divestitures | 6 Months Ended |
Jun. 30, 2015 | |
Business Divestitures | |
Business divestitures | TransPacific Energy, Inc. In February 2015, the Companys Board of Directors authorized the sale of its waste heat recovery (Organic Rankine Cycle or ORC) business due to its lack of operating performance and as part of a settlement of certain lawsuits filed by and against both TPE and the Company. On March 5, 2015, the Company completed such sale of its 50.3% equity interest in TPE back to certain current and former TPE shareholders. In exchange for its equity interest, ForceField received $50,000 in cash proceeds and the return of 255,351 shares of the Companys common stock originally issued in May 2012 when it acquired the equity interest in TPE. The Company analyzed the divestment of its ORC business for discontinued operations reporting consideration. As the divestment did not represent a strategic shift expected to have a major effect on the Companys operations and financial results, the Company determined that discontinued operations reporting was not applicable. Additionally, the Company analyzed the results of its ORC business for segment reporting consideration. ASC 280 Segment Reporting establishes that an operating segment is considered a reportable segment if: (i) it engages in business activities from which it may recognize revenues and generate expenses, its operating results are regularly reviewed by the Companys chief operating decision maker, and discrete financial information is available; and (ii) it exceeds certain quantitative thresholds. At the time of the divestment, the Companys ORC business did not exceed any of the prescribed quantitative thresholds. As such, the Company determined that segment reporting was not applicable. As a result of the transaction, the Companys operations are now comprised of only one reportable segment for financial reporting purposes. The operating results of the Companys ORC business for the six-month periods ended June 30, 2015 and 2014 are summarized below: Successor Six Months Ended June 30, Period from April 26 through June 30, 2015 2014 Sales $ - $ - Cost of goods sold - - Gross margin - - Operating expenses: Depreciation and amortization 17,589 17,589 Selling and marketing 752 - General and administrative (2,816 ) 11,885 Professional fees 4,340 3,998 Total operating expenses 19,865 33,472 Loss from continuing operations before other income (expense) and income taxes (19,865 ) (33,472 ) Other income (expense) Interest income (expense), net 8 31 Total other income (expense) 8 31 Loss from continuing operations before income taxes (19,857 ) (33,441 ) Provision for income taxes (benefit) (7,006 ) - Net loss from continuing operations (12,851 ) (33,441 ) Discontinued operations, net of income taxes - - Net loss from continuing operations (12,851 ) (33,441 ) Less: Accretion of preferred stock - - Less: Net loss attributable to noncontrolling interests - (16,619 ) Net loss attributable to ForceField Energy Inc. stockholders $ (12,851 ) $ (16,822 ) No results of operations for the Companys ORC segment were reported in the period January 1 through April 25, 2014 as those results pertain solely to ALD as the predecessor entity. ESCO Energy Services Company Pursuant to a stock purchase agreement dated as of June 30, 2015 (the Agreement) by and among the Company, ESCO Energy Services, LLC (the Buyer), Mitchell Barack and ESCO Energy Services Company (ESCO), the Companys wholly owned subsidiary, the Buyer purchased from the Company all of the issued and outstanding capital stock of ESCO. Mr. Barack is sole owner of all of the issued and outstanding member interests of the Buyer. Prior to the Agreement, Mr. Barack served as a director and the chief executive officer of ESCO. In connection with the Buyers acquisition of ESCO from the Company, the following occurred: ● Mr. Barack paid $900,000 in cash to the Company, which was received on July 2, 2015 (this amount was recorded to Other Receivables on the Companys Consolidated Balance Sheets as of June 30, 2015); ● Mr. Barack and certain employees of ESCO returned to the Company 366,845 and 87,700 shares of restricted common stock of the Company, respectively, which shares were issued to such persons by the Registrant pursuant to the October 17, 2014 stock purchase agreement (these shares valued at their fair market value $31,818, or $0.07 per share, and recorded to Common Stock Held in Treasury, at Cost on the Companys Consolidated Balance Sheets as of June 30, 2015); ● Mr. Barack cancelled two promissory notes in the aggregate principal amount of $2,230,355 issued to him by the Company in connection with the October 17, 2014 stock purchase agreement. Additionally, Mr. Barack and certain employees of ESCO returned 8,216 and 9,200 shares, respectively, that had been issued to them by the Company post-acquisition, in return for extending the post-closing due dates on the two promissory notes; ● Mr. Barack returned to the Company 687,500 shares of restricted common stock of the Company, which secured the Companys obligations under one of the two notes; ● Certain ESCO employees cancelled $750,000 in unpaid purchase consideration obligations due from the Company relating to October 17, 2014 stock purchase agreement; and ● The Company cancelled a $1,250,000 intercompany loan due from ESCO. As a result of the divestment, the Company realized a net gain of $1,060,430. ESCOs results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented (see Note 6 Discontinued Operations for additional information). |
6. Discontinued Operations
6. Discontinued Operations | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations: | |
Discontinued Operations | In May 2015, the Companys board of directors authorized its management to pursue the sale of its ESCO subsidiary. A sale was effectively completed on June 30, 2015 (see Note 5 Business Divestments for additional information). ASC 205-20 Discontinued Operations establishes that the disposal of a component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entitys operations and financial results. As a result, ESCOs results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this component are separately reported as assets and liabilities of discontinued operations held for sale as of December 31, 2014. The results of operations of this component, for all periods, are separately reported as discontinued operations. A reconciliation of the major classes of line items constituting the loss from discontinued operations, net of income taxes as is presented in the Consolidated Statements of Operations and Comprehensive Loss for the three and six-month periods ended June 30, 2015 are summarized below: Successor Three Months Ended June 30, Six Months Ended June 30, 2015 2015 Sales $ 373,605 $ 1,875,670 Cost of goods sold 1,023,418 2,276,007 Gross margin (649,813 ) (400,337 ) Operating expenses: Depreciation and amortization 126,438 374,543 Selling and marketing 6,688 13,444 General and administrative 530,837 1,055,554 Professional fees 44,293 57,911 Impairment of goodwill and other intangible assets - 9,156,190 Total operating expenses 708,256 10,657,642 Loss from operations before other income (expense) and income taxes (1,358,069 ) (11,057,979 ) Other income (expense) Interest income (expense), net (229 ) (859 ) Other gains (losses) - 2,685,000 Total other income (expense) (229 ) 2,684,141 Loss from continuing operations before income taxes (1,358,298 ) (8,373,838 ) Provision for income taxes (benefit) - (409,200 ) Loss from discontinued operations, net of income taxes as presented in the Consolidated Statements of Operations $ (1,358,298 ) $ (7,964,638 ) At March 31, 2015, as a result of deteriorating business conditions and significant delays associated with new business opportunities, the Company performed the impairment test as prescribed by ASC 350 on the carrying value of its goodwill and recorded an impairment charge totaling $6,993,784. Additionally, at March 31, 2015, the Company performed an interim impairment test for long-lived assets and determined that the carrying amount of certain intangible assets were not recoverable as its undiscounted cash flows were less than its carrying amount. The Company further determined that the fair value of the asset group was less than its carrying value and therefore impairment must be recorded. The Company used the discounted cash flow method under the income approach to determine the fair value of the asset group. The impairment amount was determined by allocating the shortfall of fair value as compared to the carrying amount to each long-lived asset in the asset group on a pro rata basis using the relative carrying amount of the assets, except the carrying amount of each asset cannot be reduced below its fair value. To determine the fair value of each long-lived asset, the Company used the relief from royalty method for its trade names and estimated the fair value for its customer relationships using the multi-period excess earnings method. As a result, the Company recorded impairment charges totaling $2,162,406 for these intangible assets. No results of operations for ESCO were reported in the period from April 26 through June 30, 2014 as ESCO was acquired on October 17, 2014 or in the period from January 1 through April 25, 2014 as those results pertain solely to ALD as the predecessor entity. The following table presents the reconciliation of carrying amounts of major classes of assets and liabilities of ESCO classified as held for sale in the consolidated balance sheets at December 31, 2014: Successor December 31, 2014 Carrying amounts of major classes of assets included as part of discontinued operations Current assets: Cash and cash equivalents $ 172,925 Accounts receivable, net 2,593,743 Costs and earnings in excess of billings 525,432 Inventory, net 48,552 Prepaid expenses and other current assets 37,790 Total current assets included in the disposal group classified as held for sale 3,378,442 Property and equipment, net 137,628 Goodwill 8,658,492 Intangible assets, net 4,465,427 Other assets 5,181 Total noncurrent assets included in the disposal group classified as held for sale 13,266,728 Total assets of the disposal group classified as held for sale in the Consolidated Balance Sheets $ 16,645,170 Carrying amounts of major classes of liabilities included as part of discontinued operations Current liabilities: Accounts payable $ 1,164,889 Accrued liabilities 602,342 Billings in excess of costs and earnings 836,975 Loans payable -- current 12,644 Senior secured promissory notes, net current 255,355 Related party payables 507,500 Income taxes payable 2,999 Total current liabilities included in the disposal group classified as held for sale 3,382,704 Loans payable 10,384 Senior secured promissory notes, net of loan discounts 1,998,479 Deferred tax liabilities, net -- noncurrent 1,143,600 Contingent purchase consideration 2,685,000 Other noncurrent liabilities 425,000 Total noncurrent liabilities included in the disposal group classified as held for sale 6,262,463 Total liabilities of the disposal group classified as held for sale in the Consolidated Balance Sheets 9,645,167 Net assets held available for sale $ 7,000,003 On October 17, 2014, the Company issued two secured promissory notes to the former stockholder of ESCO in connection with its acquisition. The first note totaled $2,075,000, bears interest at 6.02% per annum and is due in April 17, 2016. The note is collateralized by 687,500 restricted shares of the Companys common stock which under no circumstances can become free trading prior to its maturity date. In determining the fair value of the promissory notes issued, the Company considered, among other factors, the market yields on debt securities depending on the time horizon and level of perceived risk of the specific investment. The Company arrived at an estimated market rate of 9% and calculated the present value of the $2,075,000 promissory note and its related interest to be $1,989,539. As a result, the Company recorded a discount against the promissory notes of $85,461. The discount is being amortized using the effective interest method over the life of the notes. For the three-month period ended March 31, 2015, the Company recorded $13,661 in interest expense related to the note discount. The remaining discount balance at March 31, 2015 was $62,859. The second note totaled $1,075,000 and was due on November 16, 2014 along with an interest payment of $45,000. The note is collateralized by all of the assets of ESCO. On April 3, 2015, the Company entered into a note amendment and security interest termination agreement with the stockholder to amend and extend the original terms. At that time, all but $155,355 of the principal balance was repaid. Pursuant to the stock purchase agreement, dated as of June 30, 2015, by and among the Company, ESCO Energy Services, LLC, Mitchell Barack and ESCO, the Companys wholly owned subsidiary, Mr. Barack cancelled the two promissory notes, plus all accrued interest, in the aggregate principal amount of $2,230,355 issued to him by the Company. |
7. GOODWILL AND INTANGIBLE ASSE
7. GOODWILL AND INTANGIBLE ASSETS, NET | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS, NET | The following table sets forth the changes in the carrying amount of the Companys goodwill for the six-month period ended June 30, 2015: 2015 Balance, January 1, 2015 $ 3,729,939 Impairment charge Balance, June 30, 2015 $ 3,729,939 The following table sets forth the components of the Companys intangible assets at June 30, 2015: Amortization Period (Years) Cost Accumulated Amortization and Impairment Charges Net Book Value Intangible assets subject to amortization: Distribution and license rights 5.0 1,234,500 (820,031 ) 414,469 Production backlog 0.5 108,000 (108,000 ) Non-compete agreements 3.0 265,000 (103,055 ) 161,945 Subtotal 1,607,500 (1,031,086 ) 576,414 Intangible assets not subject to amortization: Trade names 1,385,000 1,385,000 Total $ 2,992,500 $ (1,031,086 ) $ 1,961,414 The Company recorded amortization expense for intangible assets subject to amortization of $45,544 and $137,870, respectively, during the three and six-month periods ended June 30, 2015. On March 5, 2015, the Company and Noveda agreed to amend the terms of a license agreement entered into on December 1, 2014 which granted the Company exclusive rights over a five year period to sell, market and distribute Novedas technology on LED applications in North America. During 2014, the Company made payments to Noveda of $142,500 in cash and 25,000 shares of restricted common stock valued at $137,000 under the provisions of a non-binding letter of intent entered into by the Company to acquire Noveda. During 2015, by mutual agreement, the acquisition discussions were discontinued, and $279,500 in consideration described above, was applied as payment towards, and in full satisfaction of, the remaining fees payable to Noveda under the terms of the license agreement. At June 30, 2015, the Company performed an interim impairment test for long-lived assets and determined that the carrying amount of its exclusive distribution rights with Shanghai Lightsky Optoelectronics Technology Co., Ltd. was not recoverable as its undiscounted cash flows were less than its carrying amount. The Company further determined that the fair value of the asset group was less than its carrying value and therefore impairment must be recorded. As a result, the Company recorded an impairment charge totaling $377,000. The following table sets forth the components of the Companys intangible assets at December 31, 2014: Amortization Period (Years) Cost Accumulated Amortization Net Book Value Intangible assets subject to amortization: Distribution and license rights 5.0 955,000 (366,916 ) 588,084 Production backlog 0.5 108,000 (108,000 ) Non-compete agreements 3.0 265,000 (58,889 ) 206,111 Technology 15.0 1,583,000 (250,642 ) 1,332,358 Subtotal 2,911,000 (784,447 ) 2,126,553 Intangible assets not subject to amortization: Trade names 1,385,000 1,385,000 Total $ 4,296,000 (784,447 ) $ 3,511,553 The Company recorded amortization expense of $43,589 and nil, respectively, during the three and six-month periods ended June 30, 2014. |
8. DEBT
8. DEBT | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | Convertible Debentures The following table sets forth the components of the Companys convertible debentures at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 7% Convertible debentures $ 200,000 $ 200,000 9% Convertible debentures 3,610,000 3,210,000 Loan discounts (41,137 ) (410,334 ) Total convertible debentures, net 3,768,863 2,999,666 Less: Current portion of convertible debentures, net 3,260,000 50,000 Noncurrent portion of convertible debentures net $ 508,863 $ 2,949,666 During the year ended December 31, 2014, the Company privately placed a series of unsecured, convertible debentures with accredited investors for gross proceeds of $900,000 (of which $300,000 was raised during the predecessor period of January 1 through April 25, 2014). The debentures carry interest rates ranging between 7% and 9% per annum, payable semiannually in cash, for a three-year terms with fixed conversion prices ranging from $5.00 to $7.00 per share if converted within the first year of issuance or fixed conversion prices ranging from $6.00 to $9.00 if converted during the second or third year following issuance. On October 15, 2014, the Company converted, upon receiving formal notice from a noteholder, $50,000 in note principal, plus accrued interest, into 10,450 shares of restricted common stock. On October 31, 2014, the Company issued an unsecured, convertible debenture for $610,000 to an accredited investor. The debenture carries an interest rate of 9% per annum for a seventeen-month term with a fixed conversion price of $5.50 per share. The principal and interest are payable in twelve equal installments commencing April 30, 2015. The investor received 15,000 shares of the Companys common stock valued at $95,100 as consideration for entering into the debenture agreement. On January 12, 2015, the Company issued an unsecured, convertible debenture for $400,000 to an accredited investor. The cost of this issuance was $28,000. The debenture carries an interest rate of 9% per annum, payable semiannually in cash, for an eighteen-month term with a fixed conversion price of $5.50 per share. The investor received 5,000 shares of the Companys common stock valued at $32,150 as consideration for entering into the debenture agreement. All of the convertible debentures were analyzed at the time of their issuance for beneficial conversion features. In some instances, the Company concluded that a beneficial conversion feature existed. The beneficial conversion features were measured using the commitment-date stock price and aggregated $624,140. This amount was recorded as a debt discount and is being amortized as interest expense over the terms of the related convertible debentures. The debt discount associated with these beneficial conversion features amounted to $41,137 and $410,334 as of June 30, 2015 and December 31, 2014, respectively. The related amortization expense totaled $33,754 and $96,564, respectively, for the three and six-month periods ended June 30, 2015, as compared to $17,838 for both the three and six-month periods ended June 30, 2014. In addition, the Company analyzed its convertible debentures for derivative accounting consideration and determined that derivative accounting was not applicable. On April 30, 2015, the Company was required to pay $50,833 in principal, along with accrued interest of approximately $28,000, per the terms of a convertible note. The Company failed to make this payment. On May 13, 2015, the Company received a letter from the noteholders counsel alleging certain breaches and declaring the note to be in default. The interest rate on the convertible note increased from 9.0% to 22.0% per annum as a result of the default. The noteholder has made a demand for payment and is seeking to enforce all of its contractual, legal and equitable rights under the convertible note and related agreements. The original principal balance outstanding on the convertible note is $610,000 and is presented as a current liability on the Companys Consolidated Balance Sheets. The note is unsecured. On July 12, 2015, the Company was required to pay $18,000 in interest per the terms of a $400,000 convertible note dated January 12, 2015. The Company failed to make this payment. On July 27, 2015, the Company received a notice of default. The interest rate on the convertible note increased from 9.0% to 15.0% per annum as a result of the default and the noteholder is entitled to $20,000 in legal fees. The noteholder advised the Company that it reserves any and all rights and remedies to protect its interests under the terms of the convertible note. The Company is in default for failure to pay interest on twelve additional convertible notes during the current year period with an aggregate principal balance of $2,250,000. The interest rate on these notes ranges between 7% and 9% per annum, and does not increase in the event of a default. The principal amounts on these unsecured notes are presented as current liabilities on the Companys Consolidated Balance Sheets. As a result of the defaults noted above, the Company accelerated the amortization of all deferred financing costs and beneficial conversion features associated with these convertible notes. These charges totaled $461,982 and were recorded to interest expense in the Companys Consolidated Statements of Operations. At June 30, 2015, the underlying shares of the Companys common stock related to these convertible debentures totaled 687,208 shares. Senior, Secured Promissory Notes The following table sets forth the components of the Companys promissory notes at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Promissory notes $ 1,000,000 $ 2,000,000 Loan discounts (11,997) Total promissory notes, net 1,000,000 1,988,003 Less: Current portion of convertible debentures, net 1,000,000 1,988,003 Noncurrent portion of convertible debentures net $ $ On April 25, 2014, the Company issued a series of promissory notes aggregating in $1,000,000 principal to the former stockholders of ALD in connection with its acquisition. The promissory notes carry an interest rate of 5% per annum, payable at maturity, for a one year term and are secured by the assets of ALD. In determining the fair value of the promissory notes issued, the Company considered, among other factors, the market yields on debt securities depending on the time horizon and level of perceived risk of the specific investment. The Company arrived at an estimated market rate of 9% and calculated the present value of the $1,000,000 promissory note and its related interest to be $965,019. As a result, the Company recorded a discount against the promissory notes of $34,981. The discount is being amortized using the effective interest method over the life of the notes. For the six-month period ended June 30, 2015, the Company recorded $11,997 in interest expense related to the note discount. No discount balance remained unamortized at June 30, 2015. On April 24, 2015, the Company was informed by the counsel of the former ALD stockholders that the failure to pay all of the principal and accrued interest on the outstanding promissory notes would result in the declaration of default, and that absent full payment of the notes by the maturity date, the former stockholders would commence collection proceedings and seek to enforce all of their contractual, legal and equitable rights under the note and related agreements. The notes were not repaid at their maturity date and are currently in default. See Note 11 Subsequent Events for additional information. On October 13, 2014, the Company received $1,000,000 in loan proceeds from an accredited investor pursuant to the terms of a secured promissory note. The promissory note was due and payable in full by the Company on December 5, 2014. As consideration for loaning these proceeds to the Company, the investor was entitled to receive a $40,000 interest payment along with the principal at maturity. This loan was secured by 1,000,000 shares of the Companys common stock owned by its former executive chairman. On December 26, 2014, the Company repaid all principal and accrued interest amounts associated with this promissory note. On December 21, 2014, the Company received $1,000,000 in loan proceeds from an accredited investor pursuant to the terms of a secured promissory note. The promissory note was due and payable in full by the Company on March 5, 2015 and was secured by 1,000,000 shares of the Companys common stock owned by its former executive chairman, Richard St Julien. As consideration for loaning these proceeds to the Company, the investor was entitled to receive a $50,000 interest payment along with the principal at maturity. On March 5, 2015, the Company paid $50,000 to satisfy the accrued interest due on the promissory note. On March 31, 2015, the Company issued 181,818 shares of its common stock along with an equal number of common stock purchase warrants in lieu of cash to satisfy the $1,000,000 principal payment owed to the noteholder. The fair value of the common stock was $1,363,635. The stock purchase warrants have been accounted for as equity in accordance with ASC 480. Using the Black-Scholes model, the Company calculated a relative fair value of $369,779 for these stock purchase warrants. The difference between the fair value of the equity and the settled liability totaled $733,414 and was recorded as a loss on settlement of debt. Loans Payable On September 5, 2014, the Company received $130,000 from a third party in the form of a demand loan bearing interest at a rate of 9% per annum. The entire principal amount, plus accrued interest totaling $9,263, was outstanding at June 30, 2015. |
9. STOCKHOLDERS' EQUITY
9. STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | Preferred Stock ForceField is authorized to issue 12,500,000 shares of preferred stock at a par value of $0.001. No shares of preferred stock were issued and outstanding as of either June 30, 2015 or December 31, 2014. Common Stock ForceField is authorized to issue 37,500,000 shares of common stock at a par value of $0.001 and had 20,000,182 shares of common stock issued and 17,828,189 shares of common stock, net of shares held in treasury, outstanding as of June 30, 2015. Common Stock Held in Treasury at Cost On March 5, 2015, the Company reacquired 255,351 shares of its common stock in the divestiture of the 50.3% equity investment in TPE. On June 30, 2015, the Company reacquired 454,545 shares of its common stock in the divestiture of ESCO. These shares of common stock are held in treasury by the Company. At June 30, 2015, a total of 2,171,993 shares of the Companys common stock were held in treasury at a cost of $1,967,241. Common Stock Issued in Private Placements During the six-month period ended June 30, 2015, the Company accepted subscription agreements from investors and issued 357,634 shares of its common stock along with an equal number of stock purchase warrants for gross proceeds totaling $1,929,511. The cost of these issuances was $174,200. Common Stock Issued in Exchange for Services During the six-month period ended June 30, 2015, the Company issued 5,208 shares of its common stock valued at $36,000 to its three independent directors in accordance with their board compensation agreements and issued another 2,000 shares of its common stock valued at $12,880 for investor relations services. Common Stock Issued in Lieu of Cash for Loans Payable and Other Accrued Obligations On March 31, 2015, the Company agreed to exchange 181,818 shares with an equal number of common stock purchase warrants in lieu of cash to satisfy a $1.0 million promissory note payment owed to an investor. The conversion price granted to the investor for the share exchange was in accord with the terms offered under the Companys current equity private placement memorandum. The fair value of the common stock was $1,363,635. The stock purchase warrants have been accounted for as equity in accordance with ASC 480 by using the Black-Scholes model. The Company calculated a relative fair value of $369,779 for these stock purchase warrants. The difference between the fair value of the equity and the settled liability totaled $733,414 and was recorded as a loss on settlement of debt. Common Stock Issued for Financing Costs On January 9, 2015, the Company issued 17,416 shares of its common stock valued at $6.44 per share, or $112,159, to extend the terms of a promissory note and other purchase obligations due to the former stockholder and certain employees of ESCO. Additionally, on March 31, 2015, the Company issued 601 shares of its common stock valued at $7.49, or $4,500, in connection with the placement of a convertible promissory note with an accredited investor. Stock Purchase Warrants The following table reflects all outstanding and exercisable warrants at June 30, 2015: Number of Warrants Outstanding Weighted Average Exercise Price Average Remaining Contractual Life (Years) Balance, January 1, 2015 796,000 $ 4.73 0.57 Warrants issued 539,452 $ 5.45 0.70 Warrants exercised (230,500 ) $ Warrants expired (90,000) $ Balance June 30, 2015 1,014,952 $ 5.23 0.50 All stock warrants are exercisable for a period of one year from the date of issuance. The remaining contractual life of the warrants outstanding as of June 30, 2015 ranges from .03 to .80 years. During the six-month period ended June 30, 2015, the Company issued 230,500 shares of its common stock for gross proceeds totaling $1,040,000 following the exercise of an equal amount of stock purchase warrants. The cost of these issuances was $104,000. |
10. COMMITMENTS AND CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | TransPacific Energy Litigation On April 28, 2014, TransPacific Energy Inc., Karen Kahn, Alexander Goldberg, John Howard, Audrey Boston, Anne Howard (Howard), ACME Energy, Inc. (Acme), and Samuel Sami (Sami) (collectively, the Plaintiffs) filed suit against ForceField Energy, Inc. in the Superior Court of the State of California for the County of San Diego, in a case styled TransPacific Energy, Inc. et al. v. ForceField Energy, Inc., Case No. 37-2014-00013110-CU-BC-CTL (Cal. Super. Ct. filed April 28, 2014) (the Lawsuit). In the Lawsuit, Plaintiffs claimed various breaches by ForceField of the share exchange agreement dated May 10, 2012 between ForceField, Acme, Apela Holdings, and ABH Holdings, and sought unspecified damages in excess of $25,000. ForceField filed a motion to compel the Lawsuit to arbitration. On July 14, 2014, ForceField commenced an arbitration proceeding against TPE, Howard, Sami, and Acme (collectively, the Respondents) before the American Arbitration Association in New York City styled ForceField Energy, Inc. v. TransPacific Energy, Inc., et al v. ForceField Energy, Inc., et al, AAA Case No. 01-14-0000-9289 (the Arbitration). In the Arbitration, ForceField asserted various claims for breach of the share exchange agreement, which materially harmed the value of ForceFields investments in TPE. Respondents filed counterclaims in the Arbitration similar in substance to the claims they asserted in the Lawsuit. On March 5, 2015, the parties entered into a written settlement agreement (Agreement) that resolved all claims and counterclaims asserted in both the Lawsuit and the Arbitration. Pursuant to the Agreement, both the Lawsuit and the Arbitration have each been dismissed with prejudice. Class Action and Derivative Actions On April 17, 2015, a class action lawsuit against the Company and its officers, Messrs. St-Julien (who as indicated below in Note 11 Subsequent Events, resigned as Chairman and from all other positions he held with the Company), Natan and Williams (Mr. Natan and Mr. Williams are collectively referred to as the Individual Defendants), and certain other third parties, was filed in the United States District Court, Southern District of New York. Since the filing of this class action, additional complaints have been filed seeking class status on behalf of all persons who purchased the Company s securities between September 16, 2013 and April 15, 2015 (together, the Class Actions). The Class Actions allege the Company and the other persons named therein violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The Class Actions seek an unspecified amount of damages. On May 13, 2015, a derivative lawsuit on behalf of the Company was filed in the United States District Court for the Eastern District of New York against the Company s officers, directors and former director Messrs. St-Julien, Natan, Williams, Kebir Ratnani, Adrian Auman, and David Vanderhorst (Messrs. Ratnani, Auman and Vanderhorst are collectively referred to as the Director Defendants ). This lawsuit seeks unspecified damages against these individuals for breaches of their fiduciary duties and unjust enrichment. On May 29, 2015, another derivative lawsuit (together with the prior derivative lawsuit, the Derivative Actions) on behalf of the Company was filed in the United States District Court for the Southern District of New York against the Company s officers, directors and former director Messrs. St-Julien, Natan, Williams, Ratnani, Auman, and Vanderhorst. This lawsuit seeks unspecified damages against these individuals for breaches of their fiduciary duties, abuse of control, violations of Section 14 of the Securities Exchange Act of 1934, as amended, and unjust enrichment. On or about July 13, 2015, this suit was voluntarily withdrawn and re-filed in the Eastern District of New York. On June 26, 2015, a motion pursuant to 28 U.S.C. § 1407 was made to the Judicial Panel for Multidistrict Litigation (the Panel) by a lead plaintiff movant in the Class Actions to transfer the Class Actions and the Derivative Actions to the United States District Court for the Eastern District of New York and to have all actions coordinated or consolidated before a single judge. The Panel will hear argument on the motion in October 2015. On July 22, 2015, pursuant to various motions seeking consolidation and appointment of lead plaintiff and lead counsel, the Class Actions were consolidated before the Honorable Naomi Reice Buchwald in the United States District Court for the Southern District of New York, who appointed a lead plaintiff and lead counsel for the putative class. Although the ultimate outcome of the Class Actions and Derivative Actions cannot be determined with certainty, the Company believes that the allegations stated in the Class Actions and Derivative Actions are without merit against the Company, Individual Defendants and Director Defendants, and the Company, Individual Defendants and Director Defendants intend to defend themselves vigorously against all allegations set forth in the Class Actions and Derivative Actions. American Lighting Sellers Litigation Pursuant to the terms of the ALD stock purchase agreement dated as of April 25, 2014, by and among the Company and ALD and the then stockholders of the ALD (collectively, the Sellers) and the Sellers representative, as amended to date (the SPA), the Company acquired all of the issued and outstanding capital stock of ALD Sellers. On April 24, 2015, the Company failed to pay any portion of the aggregate balance of $1,050,000 then due under the terms of Seller Notes, which resulted in the Sellers representative declaring an event of default under each of the notes. On May 11, 2015 the Sellers representative foreclosed pursuant to Article 9 of Uniform Commercial Code, as in effect in the State of Nevada pursuant to Nevada Revised Statutes Sections 104.9101 commenced a process of foreclosing on certain portions of the collateral. On June 24, 2015, the Sellers representative, acting for and on behalf of the Sellers, filed a complaint in the Superior Court of the State of California for the County of San Diego, captioned Jeffrey J. Brown, in his capacity as Seller Representative vs. ForceField Energy, Inc., et al., On July 21, 2015, the Company entered into an amendment to the SPA with the Sellers representative whereby payment, compliance and certain other terms were amended (see Note 11 Subsequent Events for additional information). On August 3, 2015, the complaint was dismissed without prejudice. Consulting Services ForceField has entered into various engagement agreements for advisory and consulting services on a non-exclusive basis to obtain equity capital. In the event that the Company completes a financing from a funding source provided by one of the consultants, then such consultant will receive a finders or referral fee at closing ranging from five percent (5%) to ten percent (10%) of the amount received by the Company. The terms and condition of financing are subject to Company approval. The Company has not raised in capital since April 15, 2015. |
11. SUBSEQUENT EVENTS
11. SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | The following events occurred subsequent to June 30, 2015: On July 12, 2015, the Company was required to pay $18,000 in interest per the terms of a $400,000 convertible note dated January 12, 2015. The Company failed to make this payment. On July 27, 2015, the Company received a notice of default. The interest rate on the convertible note increased from 9.0% to 15.0% per annum as a result of the default and the noteholder is entitled to $20,000 in legal fees. The noteholder advised the Company that it reserves any and all rights and remedies to protect its interests under the terms of the convertible note. On July 21, 2015, the Company and ALD entered into Amendment No. 3 (the Amendment) with the sellers representative of ALD (the Sellers) related to a past due principal and interest payment of $1,062,688, plus $50,000 in legal fees due to the Sellers and their legal counsel. Under the terms of the Amendment, the Sellers agreed to discontinue its collection and collateral foreclosure efforts against the Company and restructure the maturity dates of the obligation in return for the following payments from the Company: ● A payment of $650,000 by the Company against the past due loan balance of $1,062,688. ● A payment of $50,000 by the Company for legal fees incurred by the Sellers. Going forward, the Company agreed to pay monthly installments of $25,000 against the remaining principal and interest balance of $412,688 due to the Sellers. The outstanding obligation will accrue interest at 5% per annum. Under the Amendment, the Seller, among other terms, retained a security interest in all of the assets of ALD until the remaining obligation is fully satisfied. The above description of the Amendment is a summary description only and is qualified in its entirety. It should be read in connection with the Amendment which is attached as Exhibit 10.1 to the Companys Quarterly Report on Form 10-Q for the period ended June 30, 2015. |
2. SUMMARY OF SIGNIFICANT ACC17
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Predecessor and Successor Reporting | On April 25, 2014, the Company acquired 17th Street ALD Management Corp (ALD, or, American Lighting), a leading commercial lighting specialist based in San Diego, California. The transaction was accounted for under the acquisition method of accounting, which requires that the assets purchased and the liabilities assumed all be reported in the acquirer's financial statements at their fair value, with any excess purchase price over the net assets being reported as goodwill. The application of the acquisition method of accounting represented a change in accounting basis. Accordingly, the financial statements and certain note presentations separate the Companys presentations into two distinct periods, the period before the consummation of the transaction (labeled Predecessor) and the period after that date (labeled Successor), to indicate the application of the different basis of accounting between the periods presented. For financial reporting purposes, ALD was deemed to be the predecessor company and ForceField was deemed to be the successor company in accordance with the rules and regulations issued by the SEC. This change in accounting basis is represented in the unaudited consolidated financial statements by a vertical black line which appears between the columns entitled "Predecessor" and "Successor" on the statements and in the relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the acquisition may not be comparable. The predecessor account balances and results of operations are effective through April 30, 2014, as the impact of transactions recorded from April 26, 2014 through April 30, 2014 was not material. |
Basis of Presentation | The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (US GAAP) for interim financial information. All amounts are expressed in United States dollars. Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements include all of the adjustments which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes and other information included in the Companys Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (SEC). The results of operations for the three and six-month periods ended June 30, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015 or for any other future period. |
Principles of Consolidation | These unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. |
Use of Estimates | The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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. The most significant estimates relate to revenue recognition, valuation of accounts receivable and inventories, purchase price allocation of acquired businesses, impairment of long lived assets and goodwill, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. |
Revenue recognition | The Company recognizes revenue on the percentage-of-completion method, measured by the percentage of total costs incurred to date against the estimated total costs for each contract. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs and depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. Profit incentives are included in revenue when their realization is reasonably assured. An amount equal to contract costs attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated. The asset, costs and estimated earnings in excess of billings on uncompleted contracts, represents revenue recognized in excess of amounts billed. The liability, billings in excess of costs and estimated earnings on uncompleted contracts, represents billings in excess of revenue recognized. Revenue from rebates from utilities may be recognized on eligible energy-efficient lighting retrofit projects. These rebates are simultaneously credited against the quoted contract price and assigned to the Company by the customer. The Company is responsible for the application of the rebate, and bears the risk of any loss from the verification and collection of the rebate. Revenue from rebates from utilities totaled $53,366 and $187,177, respectively for the three month and six month periods ended June 30, 2015, compared to $366,392 and $1,077,856, respectively, for the same three and six month periods ended June 30, 2014. Certain rebates from utility companies are subject to refund rights in the event that specified energy savings are not met. The Company assesses each retrofit project subject to refund rights to determine if the estimated energy savings are likely to be met. As of June 30, 2015 and December 31, 2014, there were no retrofit projects subject to this refund right that were not expected to meet the specified energy savings. The utility companys providing the retrofit rebate, at their discretion, can audit the Company's customer installations prior to payment. These audits often result in an adjustment to the rebate, which is netted against revenues. A reserve for adjustments is recorded based upon current period sales and the Companys historical experience factor in recording such rebate adjustments. During the three and six-month periods ended June 30, 2015, the adjustments to rebates from utilities totaled ($85) and ($5,693), respectively, as compared to ($50,118) and ($62,146), respectively, during the corresponding periods in the prior year. These amounts are netted in the Companys accounts receivable and revenue. |
Impairment of long-lived assets | The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value. |
Goodwill and Intangible Assets | Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the Companys acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Companys amortizable intangible assets consist of customer relationships, distribution and licensing agreements, non-compete agreements and technology. Their useful lives range from 0.5 to 15 years. The Companys indefinite-lived intangible assets consist of trade names. Goodwill and indefinite-lived assets are not amortized, but are subject to annual impairment testing unless circumstances dictate more frequent assessments. The Company performs an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Companys risk relative to the overall market, the Companys size and industry and other Company specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting units carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting units assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans and future market conditions, among others. There can be no assurance that the Companys estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform impairment test prior to scheduled annual impairment tests scheduled in the fourth quarter. |
Fair value measurements | The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 Fair Value Measurements and Disclosures (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ● Level 1 ● Level 2 ● Level 3 Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2015. The Company uses the market approach to measure fair value for its Level 1 financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The respective carrying value of certain balance sheet financial instruments approximates its fair value. These financial instruments include cash, trade receivables, related party payables, accounts payable, accrued liabilities and short-term borrowings. Fair values were estimated to approximate carrying values for these financial instruments since they are short term in nature and they are receivable or payable on demand. The estimated fair value of assets and liabilities acquired in business combinations and reporting units and long-lived assets used in the related asset impairment tests utilize inputs classified as Level 3 in the fair value hierarchy. The Company determines the fair value of contingent consideration based on a probability-weighted discounted cash flow analysis. The fair value remeasurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, the Company reassesses its current estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments are included as a component of Other Income (Expense) in the Consolidated Statements of Operations and Comprehensive Loss. The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2015: Level 1 Level 2 Level 3 Earnout liability $ $ $ 641,000 The following table summarizes the change in the Companys financial assets and liabilities measured at fair value as of June 30, 2015: 2015 Fair value, January 1, 2015 $ 3,326,000 Fair value of contingent consideration issued during the period Change in fair value (2,685,000 ) Fair value, June 30, 2015 $ 641,000 |
Reclassifications | Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position. |
Recent accounting pronouncements | The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Going Concern | These unaudited consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has generated significant operating losses which have been funded primarily from debt and equity financings. In addition, the Company is in default of, or past due on, certain payments related to principal and interest due on notes payable, vendor payables and other accrued liabilities. The Company is addressing its delinquencies on a case-by-case basis; however, it can offer no assurance that the cooperation it has received thus far will continue. The continuing operations of the Company and the recoverability of the carrying value of assets is dependent upon the ability of the Company to obtain necessary financing to fund its working capital requirements, and upon achieving future profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty. There can be no assurance that new capital will be available as necessary to meet the Company's working capital requirements or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in significant dilution in the equity interests of its current stockholders. Obtaining new debt capital, assuming such debt capital would be available, will increase the Company's liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success may be adversely affected and the Company may cease operations. These factors raise substantial doubt regarding its ability to continue as a going concern. |
Discontinued Operations | In May 2015, the Companys board of directors authorized its management to pursue the sale of ESCO. A sale was completed on June 30, 2015. As a result, ESCOs results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. See Note 6 Discontinued Operations for additional information. |
Change in Accounting Policy | In 2014, the Company changed its accounting policy related to revenue recognition from the completed contracts method to the percentage-of-completion method. Under the new policy, revenue is measured by evaluating the percentage of total costs incurred to date against the estimated total costs for each contract. The impact of the change in accounting policy on the June 30, 2014 financial statements resulted in an increase to sales of $299,032 and an increase to cost of goods sold of $210,848. |
2. SUMMARY OF SIGNIFICANT ACC18
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary Of Significant Accounting Policies Tables | |
Fair value measurements | The following table summarizes the Companys financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2015: Level 1 Level 2 Level 3 Earnout liability $ $ $ 641,000 The following table summarizes the change in the Companys financial assets and liabilities measured at fair value as of June 30, 2015: 2015 Fair value, January 1, 2015 $ 641,000 Fair value of contingent consideration issued during the period Change in fair value Fair value, June 30, 2015 $ 641,000 |
3. ACCOUNTS RECEIVABLE, NET (Ta
3. ACCOUNTS RECEIVABLE, NET (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounts Receivable Net Tables | |
Accounts receivable | June 30, 2015 December 31, 2014 Accounts and contracts receivable $ 1,530,367 $ 2,056,647 Allowance for doubtful accounts (70,295 ) (97,708 ) Total accounts receivable, net 1,460,072 1,958,939 Less: Noncurrent portion of accounts receivable, net 14,522 33,093 Current portion of accounts receivable, net $ 1,445,550 $ 1,925,846 |
4. PROPERTY AND EQUIPMENT (Tabl
4. PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment | June 30, 2015 December 31, 2014 Cost Accumulated Depreciation Net Book Value Cost Accumulated Depreciation Net Book Value Computers and equipment $ 20,802 $ (11,778 ) $ 9,024 $ 18,402 $ (7,285 ) $ 11,117 Furniture and fixtures 11,763 (2,277 ) 9,486 22,295 (3,209 ) 19,086 Leasehold improvements 457 (457 ) 457 (457 ) Total $ 33,022 $ (14,512 ) $ 18,510 $ 41,154 $ (10,951 ) $ 30,203 |
5. Business Divestitures (Table
5. Business Divestitures (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Business Divestitures Tables | |
Business Divestitures | Successor Six Months Ended June 30, Period from April 26 through June 30, 2015 2014 Sales $ - $ - Cost of goods sold - - Gross margin - - Operating expenses: Depreciation and amortization 17,589 17,589 Selling and marketing 752 - General and administrative (2,816 ) 11,885 Professional fees 4,340 3,998 Total operating expenses 19,865 33,472 Loss from continuing operations before other income (expense) and income taxes (19,865 ) (33,472 ) Other income (expense) Interest income (expense), net 8 31 Total other income (expense) 8 31 Loss from continuing operations before income taxes (19,857 ) (33,441 ) Provision for income taxes (benefit) (7,006 ) - Net loss from continuing operations (12,851 ) (33,441 ) Discontinued operations, net of income taxes - - Net loss from continuing operations (12,851 ) (33,441 ) Less: Accretion of preferred stock - - Less: Net loss attributable to noncontrolling interests - (16,619 ) Net loss attributable to ForceField Energy Inc. stockholders $ (12,851 ) $ (16,822 ) |
6. Discontinued Operations (Tab
6. Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations Tables | |
Schedule of Discontinued operations | Successor Three Months Ended June 30, Six Months Ended June 30, 2015 2015 Sales $ 373,605 $ 1,875,670 Cost of goods sold 1,023,418 2,276,007 Gross margin (649,813 ) (400,337 ) Operating expenses: Depreciation and amortization 126,438 374,543 Selling and marketing 6,688 13,444 General and administrative 530,837 1,055,554 Professional fees 44,293 57,911 Impairment of goodwill and other intangible assets - 9,156,190 Total operating expenses 708,256 10,657,642 Loss from operations before other income (expense) and income taxes (1,358,069 ) (11,057,979 ) Other income (expense) Interest income (expense), net (229 ) (859 ) Other gains (losses) - 2,685,000 Total other income (expense) (229 ) 2,684,141 Loss from continuing operations before income taxes (1,358,298 ) (8,373,838 ) Provision for income taxes (benefit) - (409,200 ) Net loss $ (1,358,298 ) $ (7,964,638 ) |
Schedule of liabilities and assets of ESCO | Successor December 31, 2014 Carrying amounts of major classes of assets included as part of discontinued operations Current assets: Cash and cash equivalents $ 172,925 Accounts receivable, net 2,593,743 Costs and earnings in excess of billings 525,432 Inventory, net 48,552 Prepaid expenses and other current assets 37,790 Total current assets included in the disposal group classified as held for sale 3,378,442 Property and equipment, net 137,628 Goodwill 8,658,492 Intangible assets, net 4,465,427 Other assets 5,181 Total noncurrent assets included in the disposal group classified as held for sale 13,266,728 Total assets of the disposal group classified as held for sale in the Consolidated Balance Sheets $ 16,645,170 Carrying amounts of major classes of liabilities included as part of discontinued operations Current liabilities: Accounts payable $ 1,164,889 Accrued liabilities 602,342 Billings in excess of costs and earnings 836,975 Loans payable -- current 12,644 Senior secured promissory notes, net current 255,355 Related party payables 507,500 Income taxes payable 2,999 Total current liabilities included in the disposal group classified as held for sale 3,382,704 Loans payable 10,384 Senior secured promissory notes, net of loan discounts 1,998,479 Deferred tax liabilities, net -- noncurrent 1,143,600 Contingent purchase consideration 2,685,000 Other noncurrent liabilities 425,000 Total noncurrent liabilities included in the disposal group classified as held for sale 6,262,463 Total liabilities of the disposal group classified as held for sale in the Consolidated Balance Sheets 9,645,167 Net assets held available for sale $ 7,000,003 |
7. GOODWILL AND INTANGIBLE AS23
7. GOODWILL AND INTANGIBLE ASSETS, NET (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Carrying amount of goodwill | 2015 Balance, January 1, 2015 $ 3,729,939 Impairment charge Balance, June 30, 2015 $ 3,729,939 |
Intangible assets | The following table sets forth the components of the Companys intangible assets at June 30, 2015: Amortization Period (Years) Cost Accumulated Amortization and Impairment Charges Net Book Value Intangible assets subject to amortization: Distribution and license rights 5.0 1,234,500 (820,031 ) 414,469 Production backlog 0.5 108,000 (108,000 ) Non-compete agreements 3.0 265,000 (103,055 ) 161,945 Subtotal 1,607,500 (1,031,086 ) 576,414 Intangible assets not subject to amortization: Trade names 1,385,000 1,385,000 Total $ 2,992,500 $ (1,031,086 ) $ 1,961,414 The following table sets forth the components of the Companys intangible assets at December 31, 2014: Amortization Period (Years) Cost Accumulated Amortization Net Book Value Intangible assets subject to amortization: Distribution and license rights 5.0 955,000 (366,916 ) 588,084 Production backlog 0.5 108,000 (108,000 ) Non-compete agreements 3.0 265,000 (58,889 ) 206,111 Technology 15.0 1,583,000 (250,642 ) 1,332,358 Subtotal 2,911,000 (784,447 ) 2,126,553 Intangible assets not subject to amortization: Trade names 1,385,000 1,385,000 Total $ 4,296,000 (784,447 ) $ 3,511,553 |
8. DEBT (Tables)
8. DEBT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Convertible debentures | June 30, 2015 December 31, 2014 7% Convertible debentures $ 200,000 $ 200,000 9% Convertible debentures 3,610,000 3,210,000 Loan discounts (41,137 ) (410,334 ) Total convertible debentures, net 3,768,863 2,999,666 Less: Current portion of convertible debentures, net 3,260,000 50,000 Noncurrent portion of convertible debentures net $ 508,863 $ 2,949,666 |
Promissory Notes | June 30, 2015 December 31, 2014 Promissory notes $ 1,000,000 $ 2,000,000 Loan discounts (11,997) Total promissory notes, net 1,000,000 1,988,003 Less: Current portion of convertible debentures, net 1,000,000 1,988,003 Noncurrent portion of convertible debentures net $ $ |
9. STOCKHOLDERS' EQUITY (Tables
9. STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
Outstanding and exercisable warrants | Number of Warrants Outstanding Weighted Average Exercise Price Average Remaining Contractual Life (Years) Balance, January 1, 2015 796,000 $ 4.73 0.57 Warrants issued 539,452 $ 5.45 0.70 Warrants exercised (230,500 ) $ Warrants expired (90,000) $ Balance June 30, 2015 1,014,952 $ 5.23 0.50 |
2. SUMMARY OF SIGNIFICANT ACC26
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair value (Details) | Jun. 30, 2015USD ($) |
Level 1 | |
Earnout liability | $ 0 |
Level 2 | |
Earnout liability | 0 |
Level 3 | |
Earnout liability | $ 641,000 |
2. SUMMARY OF SIGNIFICANT ACC27
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Jun. 30, 2015USD ($) |
Summary Of Significant Accounting Policies Details Narrative | |
Fair value, January 1, 2015 | $ 641,000 |
Fair value of contingent consideration issued during the period | 0 |
Change in fair value | 0 |
Fair value, June 30, 2015 | $ 641,000 |
3. ACCOUNTS RECEIVABLE, NET (De
3. ACCOUNTS RECEIVABLE, NET (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Accounts Receivable Net Details | ||
Accounts receivable | $ 1,530,367 | $ 2,056,647 |
Allowance for doubtful accounts | (70,295) | (97,708) |
Net accounts receivable | 1,460,072 | 1,958,939 |
Less: Noncurrent portion of accounts receivable, net | 14,522 | 33,093 |
Current portion of accounts receivable, net | $ 1,445,550 | $ 1,925,846 |
4. PROPERTY, PLANT AND EQUIPMEN
4. PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Cost | ||
Computers and equipment | $ 20,802 | $ 18,402 |
Furniture and fixtures | 11,763 | 22,295 |
Leasehold improvments | 457 | 457 |
Total property and equipment, gross | 33,022 | 183,728 |
Accumulated Depreciation | ||
Computers and equipment | (11,778) | (7,285) |
Furniture and fixtures | (2,277) | (3,209) |
Leasehold improvments | (457) | (457) |
Total property and equipment, gross | (14,512) | (10,951) |
Net Book Value | ||
Computers and equipment | 9,024 | 11,117 |
Furniture and fixtures | 9,486 | 19,086 |
Leasehold improvments | 0 | 0 |
Total property and equipment, gross | $ 18,510 | $ 30,203 |
4. PROPERTY, PLANT AND EQUIPM30
4. PROPERTY, PLANT AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Property Plant And Equipment Details Narrative | ||||
Depreciation expense | $ 2,373 | $ 5,900 | $ 6,080 | $ 3,379 |
5. Business Divestitures (Detai
5. Business Divestitures (Details) - Successor - USD ($) | 2 Months Ended | 6 Months Ended |
Jun. 30, 2014 | Jun. 30, 2015 | |
Sales | $ 0 | $ 0 |
Cost of goods sold | 0 | 0 |
Gross margin | 0 | 0 |
Operating expenses: | ||
Depreciation and amortization | 17,589 | 17,589 |
Selling and marketing | 0 | 752 |
General and administrative | 11,885 | (2,816) |
Professional fees | 3,998 | 4,340 |
Total operating expenses | 33,472 | 19,865 |
Loss from continuing operations before other income (expense) and income taxes | (33,472) | (19,865) |
Other income (expense) | ||
Interest income (expense), net | 31 | 8 |
Total other income (expense) | 31 | 8 |
Loss from continuing operations before income taxes | (33,441) | (19,857) |
Provision for income taxes (benefit) | 0 | (7,006) |
Net loss from continuing operations | (33,441) | (12,851) |
Discontinued operations, net of income taxes | 0 | 0 |
Net loss from continuing operations | (33,441) | (12,851) |
Less: Accretion of preferred stock | 0 | 0 |
Less: Net loss attributable to noncontrolling interests | (16,619) | 0 |
Net loss attributable to ForceField Energy Inc. stockholders | $ (16,822) | $ (12,851) |
6. Discontinued Operations (Det
6. Discontinued Operations (Details) - Jun. 30, 2015 - Successor - USD ($) | Total | Total |
Sales | $ 373,605 | $ 1,875,670 |
Cost of goods sold | 1,023,418 | 2,276,007 |
Gross margin | (649,813) | (400,337) |
Operating expenses: | ||
Depreciation and amortization | 126,438 | 374,543 |
Selling and marketing | 6,688 | 13,444 |
General and administrative | 530,837 | 1,055,554 |
Professional fees | 44,293 | 57,911 |
Impairment of goodwill and other intangible assets | 0 | 9,156,190 |
Total operating expenses | 708,256 | 10,657,642 |
Loss from operations before other income (expense) and income taxes | (1,358,069) | (11,057,979) |
Other income (expense) | ||
Interest income (expense), net | (229) | (859) |
Other gains (losses) | 0 | 2,685,000 |
Total other income (expense) | (229) | 2,684,141 |
Loss from continuing operations before income taxes | (1,358,298) | (8,373,838) |
Provision for income taxes (benefit) | 0 | (409,200) |
Net loss | $ (1,358,298) | $ (7,964,638) |
6. Discontinued Operations (D33
6. Discontinued Operations (Details1) - Successor | Dec. 31, 2014USD ($) |
Current assets: | |
Cash and cash equivalents | $ 172,925 |
Accounts receivable, net | 2,593,743 |
Costs and earnings in excess of billings | 525,432 |
Inventory, net | 48,552 |
Prepaid expenses and other current assets | 37,790 |
Total current assets | 3,378,442 |
Property and equipment, net | 137,628 |
Goodwill | 8,658,492 |
Intangible assets, net | 4,465,427 |
Other assets | 5,181 |
Total noncurrent assets included in the disposal group classified as held for sale | 13,266,728 |
Total assets | 16,645,170 |
Current liabilities: | |
Accounts payable | 1,164,889 |
Accrued liabilities | 603,342 |
Billings in excess of costs and earnings | 836,975 |
Loans payable -- current | 12,644 |
Senior secured promissory notes, net -- current | 255,355 |
Related party payables | 507,500 |
Income taxes payable | 2,999 |
Total current liabilities | 3,382,704 |
Loans payable | 10,384 |
Senior secured promissory notes, net of loan discounts | 1,998,479 |
Deferred tax liabilities, net -- noncurrent | 1,143,600 |
Contingent purchase consideration | 2,685,000 |
Other noncurrent liabilities | 425,000 |
Total liabilities of the disposal group classified as held for sale in the Consolidated Balance Sheets | (6,262,463) |
Total liabilities | 9,645,167 |
Net assets held available for sale | $ 7,000,003 |
7. GOODWILL AND INTANGIBLE AS34
7. GOODWILL AND INTANGIBLE ASSETS, NET (Details) | Jun. 30, 2015USD ($) |
Goodwill And Intangible Assets Net Details | |
Balance January 1, 2015 | $ 3,729,939 |
Impairment Charge | 0 |
Balance June 30, 2015 | $ 3,729,939 |
7. GOODWILL AND INTANGIBLE AS35
7. GOODWILL AND INTANGIBLE ASSETS, NET (Details 1) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Net Book Value | ||
Intangible assets subject to amortization: | ||
Distribution and license rights (5 years) | $ 414,469 | |
Production backlog (6 months) | 0 | |
Non-compete agreements (3 years) | 161,945 | |
Total | 576,414 | |
Intangible assets not subject to amortization: | ||
Trade names | 1,385,000 | |
Total | 1,961,414 | |
Gross Carrying Amount | ||
Intangible assets subject to amortization: | ||
Distribution and license rights (5 years) | 1,234,500 | $ 955,000 |
Production backlog (6 months) | 108,000 | 108,000 |
Non-compete agreements (3 years) | 265,000 | 265,000 |
Technology (15 years) | 1,583,000 | |
Total | 1,607,500 | 2,911,000 |
Intangible assets not subject to amortization: | ||
Trade names | 1,385,000 | 1,385,000 |
Total | 2,992,500 | 4,296,000 |
Accumulated Amortization | ||
Intangible assets subject to amortization: | ||
Distribution and license rights (5 years) | (820,031) | (366,916) |
Production backlog (6 months) | (108,000) | (108,000) |
Non-compete agreements (3 years) | 103,055 | (58,889) |
Technology (15 years) | (250,642) | |
Total | (1,031,086) | (784,447) |
Intangible assets not subject to amortization: | ||
Trade names | 0 | 0 |
Total | $ (1,031,086) | (784,447) |
Net Book Value | ||
Intangible assets subject to amortization: | ||
Distribution and license rights (5 years) | 588,084 | |
Production backlog (6 months) | 0 | |
Non-compete agreements (3 years) | 206,111 | |
Technology (15 years) | 1,332,358 | |
Total | 2,126,553 | |
Intangible assets not subject to amortization: | ||
Trade names | 1,385,000 | |
Total | $ 3,511,553 |
7. GOODWILL AND INTANGIBLE AS36
7. GOODWILL AND INTANGIBLE ASSETS, NET (Details Narrative) - Jun. 30, 2014 - USD ($) | Total | Total |
Goodwill And Intangible Assets Net Details Narrative | ||
Amortization expense for intangible assets | $ 45,544 | $ 137,870 |
8. DEBT (Details)
8. DEBT (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Details | ||
7% Convertible debentures | $ 200,000 | $ 200,000 |
9% Unsecured, convertible debenture | 3,610,000 | 3,210,000 |
Less: Loan discounts | (41,137) | (410,334) |
Convertible debentures, net of loan discounts | 3,768,863 | 2,999,666 |
Less: Current portion of convertible debentures, net | $ 3,260,000 | $ 50,000 |
8. Debt (Details 1)
8. Debt (Details 1) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Debt Details 1 | ||
Promissory notes | $ 1,000,000 | $ 2,000,000 |
Loan discounts | 0 | (11,997) |
Total Promissory notes, net | 1,000,000 | 1,988,003 |
Less: Current portion of convertible debentures, net | 1,000,000 | 1,988,003 |
Noncurrent portion of convertible debentures net | $ 0 | $ 0 |
9. STOCKHOLDERS' EQUITY (Detail
9. STOCKHOLDERS' EQUITY (Details) - 6 months ended Jun. 30, 2015 - $ / shares | Total |
Equity [Abstract] | |
Shares outstanding | 796,000 |
Warrants issued | 539,452 |
Warrants exercised | (230,500) |
Warrants expired | (90,000) |
Shares outstanding | 1,014,952 |
Warrants outstanding weighted average exercise price | $ 4.73 |
Warrants issued weighted average exercise price | 5.45 |
Warrants exercised weighted average exercise price | 0 |
Warrants expired weighted average exercise price | 0 |
Warrants outstanding weighted average exercise price | $ 5.23 |
Warrants outstanding remaining contractual life beginning | 6 months 25 days |
Warrants issued remaining contractual life | 8 months 12 days |
Warrants exercized remaining contractual life | |
Warrants expired remaining contractual life | |
Warrants outstanding remaining contractual life ending | 6 months |
Uncategorized Items - ssie-2015
Label | Element | Value |
Predecessor | ||
Depreciation and amortization | us-gaap_DepreciationAndAmortization | $ 813 |
Less: Accretion of preferred stock | us-gaap_PreferredStockDividendsAndOtherAdjustments | $ 6,857 |