Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2015 |
Accounting Policies [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Basis of presentation and principles of consolidation |
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The accompanying consolidated unaudited interim financial statements and related notes have been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full year. These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2014 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC. |
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All intercompany accounts have been eliminated for the purpose of the consolidated financial statement presentation. |
Use of Estimates, Policy [Policy Text Block] | Use of estimates |
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The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents, Policy [Policy Text Block] | Cash |
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We consider all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. |
Receivables, Policy [Policy Text Block] | Accounts receivable |
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Accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses based on specific identification of accounts in our existing accounts receivable. Outstanding account balances are reviewed individually for collectibility. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions. Bad debt expense is included in general and administrative expenses, if any. We generally consider all accounts greater than 30 days old to be past due. Account balances are charged off against allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts was $5,736 and $30,022 at March 31, 2015 and December 31, 2014, respectively. |
Inventory, Policy [Policy Text Block] | Inventory |
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Inventory, which consists primarily of raw materials to be used in the production of our dietary supplement products, is stated at the lower of cost or market using the first-in, first-out method. We regularly review our inventory on hand and, when necessary, record a provision for excess or obsolete inventory. |
Property, Plant and Equipment, Policy [Policy Text Block] | Property and equipment |
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Property and equipment are recorded at cost. Additions and improvements that increase the value or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Upon sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statement of operations. Depreciation is computed on a straight-line basis over the following estimated useful lives of the assets: |
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Office equipment | 3 years | | | | | | | |
Production equipment | 5 to 7 years | | | | | | | |
Equipment under capital lease | 5 to 7 years | | | | | | | |
Leasehold improvements | Lesser of lease term or useful life of improvement | | | | | | | |
Intangible Assets, Finite-Lived, Policy [Policy Text Block] | Patents |
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Patents, once issued or purchased, are amortized using the straight-line method over their economic remaining useful lives. All internally developed process costs incurred to the point when a patent application is to be filed are expensed as incurred and classified as research and development costs. Patent application costs, generally legal costs, are capitalized pending disposition of the individual patent application, and are subsequently either amortized based on the initial patent life granted, generally 15 to 20 years for domestic patents and 5 to 20 years for foreign patents, or expensed if the patent application is rejected. The costs of defending and maintaining patents are expensed as incurred. Upon becoming fully amortized, the related cost and accumulated amortization are removed from the accounts. |
Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | Impairment of long-lived assets |
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Our long-lived assets, which include property and equipment, patents and licenses of patents, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. |
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We assess the recoverability of our long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. |
Debt, Policy [Policy Text Block] | Discount on convertible notes payable |
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We allocate the proceeds received from convertible notes between convertible notes payable and warrants, if applicable. The resulting discount for warrants is amortized using the effective interest method over the life of the debt instrument. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible note payable can be determined. If the effective conversion price is lower than the market price at the date of issuance, a beneficial conversion feature is recorded as an additional discount to the convertible note payable. The beneficial conversion feature discount is amortized using the effective interest method over the life of the debt instrument. The amortization is recorded as interest expense on the consolidated statements of operations. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair value of financial instruments |
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The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable and accounts payable, approximate their fair values (determined based on level 1 inputs in the fair value hierarchy) because of the short maturity of these instruments. Due to conversion features and other terms, it is not practical to estimate the fair value of notes payable and convertible notes. |
Fair Value Measurement, Policy [Policy Text Block] | Fair value measurements |
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We measure fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: |
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Level 1 | | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | | | | | | |
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Level 2 | | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | | | | | | |
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Level 3 | | Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions. | | | | | | |
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We do not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis. Consequently, we did not have any fair value adjustments for assets and liabilities measured at fair value at March 31, 2015 or December 31, 2014, nor any gains or losses reported in the consolidated statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the periods ended March 31, 2015 and March 31, 2014. |
Revenue Recognition, Policy [Policy Text Block] | Revenue recognition |
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We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been performed, (iii) amounts are fixed or determinable and (iv) collectibility of amounts is reasonably assured. |
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Revenues from the sale of products, including shipping and handling fees but excluding statutory taxes collected from customers, as applicable, are recognized when shipment has occurred. We sell our products directly to customers. Persuasive evidence of an arrangement is demonstrated via order and invoice, product delivery is evidenced by a bill of lading from the third party carrier and title transfers upon shipment, the sales price to the customer is fixed upon acceptance of the order and there is no separate sales rebate, discount, or volume incentive. Allowances for product returns, primarily in connection with one distribution agreement, are provided at the time the sale is recorded. This allowance is based upon historical return rates for the Company and relevant industry patterns, which reflects anticipated returns of unopened product in its original packaging to be received over a period of 120 days following the original sale. |
Shipping and Handling Cost, Policy [Policy Text Block] | Shipping and handling costs |
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Amounts charged to customers for shipping products are included in revenues and the related costs are classified in cost of goods sold as incurred. |
Advertising Costs, Policy [Policy Text Block] | Advertising and promotion costs |
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Costs associated with the advertising and promotions of our products are expensed as incurred. |
Stockholders' Equity, Policy [Policy Text Block] | Equity instruments issued to parties other than employees for acquiring goods or services |
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We account for all transactions in which goods or services are the consideration received for the issuance of equity instruments based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. Currently such transactions are primarily awards of warrants to purchase common stock. |
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The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. |
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The assumptions used to determine the fair value of our warrants are as follows: |
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- | The expected life of warrants issued represents the period of time the warrants are expected to be outstanding. | | | | | | | |
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- | The expected volatility is generally based on the historical volatility of comparable companies’ stock over the contractual life of the warrant. | | | | | | | |
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- | The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the warrant. | | | | | | | |
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- | The expected dividend yield is based on our current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the warrant. | | | | | | | |
Income Tax, Policy [Policy Text Block] | Income taxes |
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We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in our consolidated statements of income in the period that includes the enactment date. |
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We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in our consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. |
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We did not record an income tax provision for the three months ended March 31, 2015 and 2014 as we had a net taxable loss (the benefit of which was fully reserved) in the periods. |
Earnings Per Share, Policy [Policy Text Block] | Net loss per common share |
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Basic and diluted net loss per share has been computed by dividing our net loss by the weighted average number of common shares issued and outstanding. Convertible preferred stock, options and warrants to purchase our common stock as well as debt which is convertible into common stock are anti-dilutive and therefore are not included in the determination of the diluted net loss per share for three months ended March 31, 2015 and 2014. The following table presents a reconciliation of basic loss per share and excluded dilutive securities: |
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| | For the Three Months Ended March 31, | |
| | 2015 | | | 2014 | |
Numerator: | | | | | | |
Net loss | | $ | (520,509 | ) | | $ | (535,388 | ) |
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Denominator: | | | | | | | | |
Weighted-average common shares outstanding | | | 10,272,422 | | | | 8,327,196 | |
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Basic and diluted net loss per share | | $ | (0.05 | ) | | $ | (0.06 | ) |
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Common stock warrants | | | 7,402,010 | | | | 4,202,818 | |
Series A convertible preferred stock | | | 2,008,070 | | | | 2,819,690 | |
Stock options | | | 2,866,470 | | | | 2,192,099 | |
Convertible debt including interest | | | 542,892 | | | | 885,557 | |
Excluded dilutive securities | | | 12,819,442 | | | | 10,100,164 | |
Reclassification, Policy [Policy Text Block] | Reclassifications |
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Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation. |
Segment Reporting, Policy [Policy Text Block] | Segments |
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We have determined that we operate in one segment for financial reporting purposes. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recently issued accounting pronouncements |
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In May 2014, the FASB issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for Entia beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are evaluating the impact of adopting this new accounting standard on our financial statements. |