Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 08, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Entia Biosciences, Inc. | ' |
Entity Central Index Key | '0001408299 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
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 | ' | 7,727,749 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current Assets: | ' | ' |
Cash | $45,355 | $13,081 |
Accounts receivable, net | 93,264 | 62,397 |
Inventory, net | 128,419 | 132,133 |
Interest income receivable | 4,595 | 4,083 |
Prepaid expenses | 13,515 | 32,542 |
Total Current Assets | 285,148 | 244,236 |
Property and Equipment, net | 72,094 | 35,627 |
Patents and license, net | 346,325 | 183,106 |
Total Assets | 703,567 | 462,969 |
Current Liabilities: | ' | ' |
Accounts payable and accrued expenses | 911,477 | 654,919 |
Short-term convertible notes payable, net of discount related-party | 0 | 63,493 |
Short-term convertible notes payable, net of discount | 324,645 | 365,416 |
Capital lease payable | 702 | 2,808 |
Notes payable | 144,237 | 22,521 |
Total Current Liabilities | 1,381,061 | 1,109,157 |
Long Term Liabilities: | ' | ' |
Capital lease payable | 2,105 | 2,105 |
Total Long Term Liabilities | 2,105 | 2,105 |
Total Liabilities | 1,383,166 | 1,111,262 |
Stockholders' Equity (Deficit): | ' | ' |
Preferred stock, $.001 par value, 5,000,000 shares authorized, Series A preferred stock, 350,000 shares designated, 241,194 and 109,900 shares issued and outstanding, resepecively, aggregate liquidation value of $1,205,970 and $549,500, respectively | 270 | 110 |
Common stock, $.001 par value, 150,000,000 shares authorized, 7,596,170 and 7,444,591 shares issued and outstanding | 7,833 | 7,444 |
Stock subscription receivable | -49,000 | -49,000 |
Additional paid-in capital | 6,962,900 | 5,115,587 |
Deferred compensation | -232,543 | -394,510 |
Accumulated deficit | -7,369,059 | -5,327,924 |
Total Stockholders' Equity (Deficit) | -679,599 | -648,293 |
Total Liabilities and Stockholders' Equity (Deficit) | $703,567 | $462,969 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Preferred Stock | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock Series A, designated | 350,000 | 350,000 |
Preferred stock, issued | 269,969 | 109,900 |
Preferred stock, aggregate liquidation value | $1,349,845 | $549,500 |
Common Stock | ' | ' |
Common Stock, par value | $0.00 | $0.00 |
Common stock, authorized | 150,000,000 | 150,000,000 |
Common stock, Issued | 7,832,999 | 7,444,591 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
REVENUES | ' | ' | ' | ' |
REVENUES | $92,102 | $72,604 | $262,245 | $263,255 |
COST OF GOODS SOLD | 33,560 | 23,611 | 91,547 | 61,738 |
GROSS PROFIT | 58,542 | 48,993 | 170,698 | 201,517 |
OPERATING EXPENSES | ' | ' | ' | ' |
Advertising and promotion | 23,399 | 13,259 | 151,672 | 26,026 |
Professional fees | 38,493 | 33,717 | 115,731 | 115,021 |
Consulting fees | 79,365 | 38,367 | 608,104 | 192,242 |
General and administrative | 396,337 | 193,676 | 1,202,148 | 667,240 |
Total Operating Expenses | 537,594 | 279,019 | 2,077,655 | 1,000,529 |
LOSS FROM OPERATIONS | -479,052 | -230,026 | -1,906,957 | -799,012 |
OTHER INCOME (EXPENSES) | ' | ' | ' | ' |
Interest income | 2,512 | 0 | 7,412 | 0 |
Interest expense | -34,188 | -50,743 | -101,790 | -250,905 |
Gain on extinguishment of debt | 0 | 0 | 0 | 75,315 |
Total Other Income (Expenses) | -31,676 | -50,743 | -94,378 | -175,590 |
NET LOSS | -510,728 | -280,769 | -2,001,335 | -974,602 |
DEEMED DIVIDEND RELATED TO BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE PREFERRED STOCK | -39,800 | 0 | -39,800 | -21,400 |
NET LOSS PER SHARE ALLOCABLE TO COMMON STOCKHOLDERS | ($550,528) | ($280,769) | ($2,041,135) | ($996,002) |
NET LOSS PER COMMON SHARE | ' | ' | ' | ' |
- BASIC AND DILUTED: | $ (0.07) | ($0.04) | ($0.28) | ($0.14) |
Weighted common shares outstanding | ' | ' | ' | ' |
- basic and diluted | 7,712,950 | 7,209,206 | 7,395,137 | 7,190,229 |
CONSOLIDATED_STATEMENT_OF_STOC
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Preferred Stock | Common Stock | Additional Paid In Capital | Deferred Compensation | Stock Subscriptions | Accumulated Deficit | Total |
Beginning Balance, Amount at Dec. 31, 2011 | $44 | $7,171 | $4,272,792 | ($497,383) | ' | ($4,042,476) | ($259,752) |
Beginning Balance, Shares at Dec. 31, 2011 | 43,500 | 7,171,175 | ' | ' | ' | ' | ' |
Issuance of preferred stock for cash, Shares | 57,400 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for cash, Amount | 57 | ' | 286,942 | ' | ' | ' | 286,999 |
Issuance of preferred stock for cancellation of debt, Shares | 2,000 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for cancellation of debt, Amount | 2 | ' | 9,998 | ' | ' | ' | 10,000 |
Issuance of preferred stock for services, Shares | 7,000 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for services, Amount | 7 | ' | 34,993 | ' | ' | ' | 35,000 |
Deemed dividend related to beneficial conversion feature of convertible preferred stock, Shares | ' | ' | 21,400 | ' | ' | -21,400 | ' |
Issuance of warrants in connection with convertible notes payable | ' | ' | 27,704 | ' | ' | ' | 27,704 |
Issuance of common stock for license agreement, Shares | ' | 50,000 | ' | ' | ' | ' | ' |
Issuance of common stock for license agreement, Amount | ' | 50 | 25,451 | ' | ' | ' | 25,501 |
Issuance of common stock and warrants for cash, Shares | ' | 100,000 | ' | ' | ' | ' | ' |
Issuance of common stock and warrants for cash, Amount | ' | 100 | 39,900 | ' | ' | ' | 40,000 |
Issuance of common stock for note receivable, Shares | ' | 122,500 | ' | ' | ' | ' | ' |
Issuance of common stock for note receivable, Amount | ' | 122 | 48,878 | ' | -49,000 | ' | ' |
Stock compensation, Amount | ' | 1 | 170,456 | ' | ' | ' | 170,456 |
Issuance of warrants for services | ' | ' | 128,540 | -128,540 | ' | ' | ' |
Issuance of warrants for extension on debt | ' | ' | 48,533 | ' | ' | ' | 48,533 |
Amortization of deferred compensation | ' | ' | ' | 231,413 | ' | ' | 231,413 |
Net loss | ' | ' | ' | ' | ' | -1,264,148 | -1,264,148 |
Ending Balance, amount at Dec. 31, 2012 | 110 | 7,444 | 5,115,587 | -394,510 | -49,000 | -5,327,924 | -648,293 |
Ending Balance, shares at Dec. 31, 2012 | 109,900 | 7,444,591 | ' | ' | ' | ' | ' |
Issuance of preferred stock for cash, Shares | 113,175 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for cash, Amount | 113 | ' | 565,762 | ' | ' | ' | 565,762 |
Issuance of preferred stock for cancellation of debt, Shares | 3,162 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for cancellation of debt, Amount | 3 | ' | 15,747 | ' | ' | ' | 15,750 |
Deemed dividend related to beneficial conversion feature of convertible preferred stock, Shares | ' | ' | 39,800 | ' | ' | ' | -39,800 |
Issuance of preferred stock for conversion of convertible notes payable, Shares | 23,332 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for conversion of convertible notes payable, Amount | 23 | ' | 116,629 | ' | ' | ' | 116,652 |
Issuance of preferred stock for conversion of accounts payable, Shares | 30,400 | ' | ' | ' | ' | ' | ' |
Issuance of preferred stock for conversion of accounts payable, Amount | 31 | ' | 151,970 | ' | ' | ' | 152,001 |
Issuance of common stock for conversion of preferred stock, Shares | -10,000 | 100,000 | ' | ' | ' | ' | ' |
Issuance of common stock for conversion of preferred stock, Amount | -10 | 100 | -90 | ' | ' | ' | ' |
Issuance of common stock for conversion of accrued compensation, Shares | ' | 273,158 | ' | ' | ' | ' | ' |
Issuance of common stock for conversion of accrued compensation, Amount | ' | 274 | 129,727 | ' | ' | ' | 130,001 |
Issuance of common stock for services, Shares | ' | 15,250 | ' | ' | ' | ' | ' |
Issuance of common stock for services, Amount | ' | 15 | 7,529 | ' | ' | ' | 7,544 |
Stock compensation, Amount | ' | ' | 345,391 | ' | ' | ' | 345,391 |
Issuance of warrants for services | ' | ' | 360,442 | -360,442 | ' | ' | ' |
Issuance of warrants for extension on debt | ' | ' | 98,006 | ' | ' | ' | 98,006 |
Amortization of deferred compensation | ' | ' | ' | 522,409 | ' | ' | 522,409 |
Net loss | ' | ' | ' | ' | ' | -2,001,335 | -2,001,335 |
Ending Balance, amount at Sep. 30, 2013 | $270 | $7,833 | $6,962,900 | ($232,543) | ($49,000) | ($7,369,059) | ($679,599) |
Ending Balance, shares at Sep. 30, 2013 | 269,969 | 7,832,999 | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($2,001,335) | ($974,602) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation/amortization | 25,104 | 16,290 |
Gain on extinguishment of note payable | 0 | -75,315 |
Amortization of discount on convertible notes | 78,142 | 179,110 |
Stock-based compensation | 875,343 | 420,801 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -30,867 | 9,693 |
Inventory | 3,714 | 14,915 |
Prepaid expenses | 19,027 | 21,924 |
Other current assets | -512 | 0 |
Accounts payable and accrued expenses | 541,569 | 217,395 |
NET CASH USED IN OPERATING ACTIVITIES | -489,815 | -169,789 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ' | ' |
Purchase of property and equipment | -55,448 | -14,906 |
Acquisition of patents and patents pending (net) | -20,044 | -57,315 |
NET CASH USED IN INVESTING ACTIVITIES | -75,492 | -72,221 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from issuance of common stock, preferred stock and warrants | 565,865 | 211,999 |
Proceeds from convertible notes payable short-term | 50,000 | 13,000 |
Net change in notes payable | -18,284 | -9,930 |
Proceeds from convertible note payable-related party | 0 | 25,000 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 597,581 | 240,069 |
NET CHANGE IN CASH | 32,274 | -1,941 |
Cash at beginning of period | 13,081 | 16,639 |
Cash at end of period | 45,355 | 14,698 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: | ' | ' |
Interest paid | 906 | 893 |
Taxes paid | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF NONCASH FLOWS FINANCING AND INVESTING ACTIVITIES: | ' | ' |
Deemed distribution | -39,800 | -21,400 |
Conversion of accounts payable, accrued compensation, notes payable and accrued interest to preferred stock and common stock | 414,404 | 10,000 |
Warrants issued for extinguishment of debt | 0 | 48,533 |
Stock issued for license | 0 | 25,501 |
Stock issued for note receivable | 0 | 59,000 |
Debt issued for license | $140,000 | $0 |
NOTE_1_ORGANIZATION_AND_OPERAT
NOTE 1 - ORGANIZATION AND OPERATIONS | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' |
NOTE 1 - ORGANIZATION AND OPERATIONS | ' |
NOTE 1 – ORGANIZATION AND OPERATIONS | |
On January 9, 2012, the Nevada Secretary of State accepted an amendment to our Articles of Incorporation to change the name to Entia Biosciences, Inc. (Entia, the Company, us, we or our) and to form a wholly owned subsidiary named Total Nutraceutical Solutions, Inc. (TNS). Entia is an emerging biotechnology company engaged in the discovery, formulation and marketing of natural compounds and whole foods that can be used in branded medical foods, nutraceuticals, cosmetics and other products sold by us, our TNS subsidiary and by third parties. | |
On May 15, 2012, Entia moved to its current location in order to increase its in-house research and manufacturing capability, increase its warehouse storage capacity, and accommodate anticipated increases in order fulfillment and staffing. By moving to the larger facility, Entia was able to vertically integrate its Vitamin D enhancement technology and the milling, blending, encapsulating, bottling, labeling, packaging and fulfillment of its products. This move resulted in a significant improvement in production efficiencies and the cost of its final products. During second quarter of 2013, we added five new clean rooms and integrated the production and manufacturing of our cosmetic products which will significantly increase efficiencies while reducing costs. | |
We have a history of incurring net losses and net operating cash flow deficits. We are continually researching and developing new technologies related to our organic nutraceutical products, including the production of medical foods for clinical studies in diabetes, anemia and Parkinson’s, which includes the completion of an ErgoD2 study on a diabetic population in Curacao. At September 30, 2013, we had cash and cash equivalents of $45,355. These conditions raise substantial doubt about our ability to continue as a going concern. As a result, we anticipate that our cash and cash equivalent balances, anticipated cash flows from operations and anticipated operating cash flows will be sufficient to meet our cash requirements through December 31, 2013. | |
In order for us to continue as a going concern beyond this point and ultimately to achieve profitability, we may be required to obtain capital from external sources, increase revenues and reduce operating costs. The issuance of equity securities will also cause dilution to our shareholders. If external sources of financing are not available or are inadequate to fund our operations, we will be required to reduce operating costs including personnel costs, which could jeopardize our future strategic initiatives and business plans. The accompanying consolidated financial statements have been prepared assuming that the company continues as a going concern. | |
The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein. | |
NOTE_2_SUMMARY_OF_SIGNIFICANT_
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Accounting Policies [Abstract] | ' | |||||||||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||||||||
Basis of presentation and principles of consolidation | ||||||||||
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 adjustments) 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, 2012 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC. | ||||||||||
All intercompany accounts have been eliminated for the purpose of the consolidated financial statement presentation. | ||||||||||
Use of estimates | ||||||||||
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 | ||||||||||
We consider all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. | ||||||||||
Accounts receivable | ||||||||||
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 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 $2,526 at both September 30, 2013 and December 31, 2012. | ||||||||||
Inventory | ||||||||||
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 and equipment | ||||||||||
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: | ||||||||||
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 | |||||||||
Patents | ||||||||||
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 of long-lived assets | ||||||||||
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. | ||||||||||
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. | ||||||||||
Discount on convertible notes payable | ||||||||||
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 | ||||||||||
The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable and accounts payable, approximate their fair values 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 measurements | ||||||||||
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: | ||||||||||
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |||||||||
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. | |||||||||
Level 3 | Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||
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 September 30, 2013 or December 31, 2012, 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 September 30, 2013 and September 30, 2012. | ||||||||||
Revenue recognition | ||||||||||
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. | ||||||||||
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. | ||||||||||
Shipping and handling costs | ||||||||||
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 and promotion costs | ||||||||||
Costs associated with the advertising and promotion of our products are expensed as incurred. | ||||||||||
Equity instruments issued to parties other than employees for acquiring goods or services | ||||||||||
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. | ||||||||||
The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. | ||||||||||
The assumptions used to determine the fair value of our warrants are as follows: | ||||||||||
- | The expected life of warrants issued represents the period of time the warrants are expected to be outstanding. | |||||||||
- | The expected volatility is generally based on the historical volatility of comparable companies’ stock over the contractual life of the warrant. | |||||||||
- | 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. | |||||||||
- | 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 taxes | ||||||||||
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. | ||||||||||
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. | ||||||||||
We did not record an income tax provision for the three and nine months ended September 30, 2013 and 2012 because we had a net taxable loss in the period. | ||||||||||
Net loss per common share | ||||||||||
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 are 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 September 30, 2013 and 2012 and the nine months ended September 30, 2013 and 2012. The following table presents a reconciliation of basic loss per share and excluded dilutive securities: | ||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Numerator: | ||||||||||
Net loss | ($550,528) | ($280,769) | ($2,041,135) | ($996,002) | ||||||
Denominator: | ||||||||||
Weighted-average common | 7,712,950 | 7,209,206 | 7,395,137 | 7,190,229 | ||||||
shares outstanding | ||||||||||
Basic and diluted net loss per share | ($0.07) | ($0.04) | ($0.28) | ($0.14) | ||||||
Common stock warrants | 3,987,744 | 2,758,266 | 3,987,744 | 2,464,471 | ||||||
Series A convertible preferred stock | 2,699,690 | 889,000 | 2,699,690 | 843,000 | ||||||
Stock options | 1,651,118 | 658,240 | 1,651,118 | 591,179 | ||||||
Convertible debt including interest | 856,030 | 400,025 | 856,030 | 395,624 | ||||||
Excluded dilutive securities | 9,194,582 | 4,705,531 | 9,194,582 | 4,294,274 | ||||||
Reclassifications | ||||||||||
Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation. | ||||||||||
Segments | ||||||||||
We have determined that we operate in one segment for financial reporting purposes. | ||||||||||
Recently issued accounting pronouncements | ||||||||||
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. | ||||||||||
NOTE_3_INVENTORY
NOTE 3 - INVENTORY | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Inventory Disclosure [Abstract] | ' | |||||
NOTE 3 - INVENTORY | ' | |||||
NOTE 3 – INVENTORY | ||||||
Inventory consists of the following: | ||||||
September 30, | December 31, | |||||
2013 | 2012 | |||||
Raw materials | $ 271,871 | $ 271,312 | ||||
Finished goods | 7,612 | 11,885 | ||||
279,483 | 283,197 | |||||
Less: reserve for excess and obsolete inventory | -151,064 | -151,064 | ||||
$ 128,419 | $ 132,133 | |||||
NOTE_4_PROPERTY_AND_EQUIPMENT
NOTE 4 - PROPERTY AND EQUIPMENT | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Property, Plant and Equipment [Abstract] | ' | |||||
NOTE 4 - PROPERTY AND EQUIPMENT | ' | |||||
NOTE 4 – PROPERTY AND EQUIPMENT | ||||||
Property and equipment, stated at cost, consists of the following: | ||||||
30-Sep-13 | 31-Dec-12 | |||||
Office equipment | $ 24,584 | $ 24,584 | ||||
Production equipment | 88,215 | 39,791 | ||||
Leasehold improvements | 20,267 | 13,946 | ||||
133,066 | 78,321 | |||||
Less: accumulated depreciation | -60,972 | -42,694 | ||||
$ 72,094 | $ 35,627 | |||||
NOTE_5_PATENTS_AND_LICENSES_NE
NOTE 5 - PATENTS AND LICENSES, NET | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Notes to Financial Statements | ' | |||||
NOTE 5 - PATENTS AND LICENSES, NET | ' | |||||
NOTE 5 - PATENTS AND LICENSES, NET | ||||||
Our identifiable long-lived intangible assets are patents and prepaid licenses. Patent and license amortization is $3,578 and $803 for the three months ended September 30, 2013 and 2012, respectively and $6,824 and $2,383 for the nine months ended September 30, 2013 and 2012, respectively. | ||||||
The licenses are being amortized over an economic useful life of 17 years. The gross carrying amounts and accumulated amortization related to these intangible assets consist of the following at: | ||||||
September 30, | December 31, | |||||
2013 | 2012 | |||||
Gross carrying amounts-patents and licenses | $ 358,614 | $ 188,570 | ||||
Accumulated amortization | -12,288 | -5,464 | ||||
Patents and Licenses, net | $ 346,325 | $ 183,106 | ||||
On July 23, 2013, we were issued a patent in the United States. We have begun amortizing this patent on this date for a period of 15 years. The amount capitalized and amortized is $31,325. | ||||||
On May 1, 2013, we entered into an exclusive license agreement with Penn State Research Foundation (PSRF) for 15 years to market and sell product under a patent issued to PSRF in the United States. We incurred a license fee of $150,000 for this agreement and we are amortizing it over the life of the agreement. | ||||||
NOTE_6_ACCRUED_EXPENSES
NOTE 6 - ACCRUED EXPENSES | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Accounting Policies [Abstract] | ' | |||
NOTE 6 - ACCRUED EXPENSES | ' | |||
NOTE 6 – ACCRUED EXPENSES | ||||
Accrued expenses (included with accounts payable) consists of the following at: | ||||
September 30, | December 31, | |||
2013 | 2012 | |||
Executive compensation | $384,177 | $192,552 | ||
Royalties | - | 4,760 | ||
Other accruals | 46,093 | 18,309 | ||
$430,270 | $215,621 | |||
NOTE_7_NOTES_PAYABLE
NOTE 7 - NOTES PAYABLE | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Debt Disclosure [Abstract] | ' | |||||
NOTE 7 - NOTES PAYABLE | ' | |||||
NOTE 7 – NOTES PAYABLE | ||||||
Notes payable consists of the following: | ||||||
September 30, | December 31, | |||||
2013 | 2012 | |||||
Notes payable - current | ||||||
7.85% unsecured, $781 due monthly | $4,237 | $1,426 | ||||
4.15% unsecured, $2,678 due monthly | - | 21,095 | ||||
0.00% unsecured, $70,000 due in November 2013 | 140,000 | - | ||||
and $70,000 due in May 2014 | ||||||
$144,237 | $22,521 | |||||
Convertible notes payable, net | ||||||
5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | $ - | $15,000 | ||||
8%, unsecured due June 2014 (net of discount related to beneficial conversion feature of $73,505 in 2013 and $35,807 in 2012), convertible into common stock at $0.45 per share | 238,995 | 276,693 | ||||
6% unsecured due June 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $4,277 in 2012), convertible into preferred stock at $5.00 per share | - | 8,723 | ||||
5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | - | 15,000 | ||||
8% secured due August 2014 (net of discount related to beneficial conversion feature of $14,350 in 2013 and $0 in 2012), convertible into preferred stock at $5.00 per share | 35,650 | - | ||||
6% unsecured, convertible into common stock at $2.00 per share, due December 2013 | 50,000 | 50,000 | ||||
$324,645 | $365,416 | |||||
Convertible notes payable related party, net | ||||||
6% unsecured due December 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $11,507 in 2012), convertible into common stock at $2.00 per share | $ - | $63,493 | ||||
Entia has debt in the principal amount of $412,500 in the form of three convertible notes payable; $50,000 is due on December 31, 2013, $312,500 that matures on June 30, 2014 and $50,000 that matures on August 13, 2014. | ||||||
On June 20, 2013, Entia entered into an Amendment and Transfer of Promissory Note agreement with Mark Wolf to extend the maturity date on a promissory note dated February 18, 2010 in the principal amount of $50,000 with interest accruing at 6% per annum from December 31, 2011 to December 31, 2013. Mr. Wolf also received consent from Entia to transfer ownership of the Promissory Note to Larry Johnson. | ||||||
On July 1, 2013, Entia was successful in negotiating an extension on the note for $312,500 at a rate of 8% due on June 30, 2014. This note had accrued interest in the amount of $41,010 as of June 30, 2013. In exchange for the extension, we issued 200,000 warrants with an exercise price of $0.45 per share with a 3-year term. All of the warrants vested on July 1, 2013 and were valued using the Black-Scholes valuation model. The fair value of the warrants was valued at $98,006 and is being amortized over the life of the loan as interest expense. | ||||||
During the second quarter of 2013, Entia negotiated a conversion of $28,000 of debt and $1,840 of accrued interest that was due on June 30, 2013 and $75,000 of its debt and $11,812 of accrued interest that was due to mature on December 31, 2013 into Series A Preferred stock at $5.00 per share. | ||||||
On August 13, 2013, Entia entered into a promissory note for one year at 8% in the principal amount of $50,000. The note is convertible into the Series A Preferred stock at $5.00 per share and the company granted the creditor warrants to purchase 50,000 shares of Entia’s common stock at $2.00 per share. We deemed there was no beneficial conversion feature related to the conversion option into the Series A Preferred stock but did post a discount for the value of the warrants and will amortize this expense to interest expense over the life of the note. The discount of $16,400 is classified as a reduction in the debt and is netted with the debt on the balance sheet. In addition, the note is secured by corporate property valued at $103,000. | ||||||
Entia entered into an exclusive license agreement with PSRF for 15 years to market and sell product under a patent issued to PSRF in the United States. We incurred a license fee of $150,000 for this agreement where we paid $10,000 upfront and we owe $70,000 during fourth quarter of 2013 and another $70,000 due during second quarter of 2014. This debt does not accrue interest and is classified as a short-term liability on the balance sheet. | ||||||
NOTE_8_RELATED_PARTY_TRANSACTI
NOTE 8 - RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
NOTE 8 - RELATED PARTY TRANSACTIONS | ' |
NOTE 8 – RELATED PARTY TRANSACTIONS | |
Debt agreements from board member | |
Entia issued 131,579 shares of common stock as payment for $50,000 of accrued compensation to its chief executive officer and board member. The shares were valued at $0.38 per share which resulted in a discount of $15,790 which was posted as a period expense. | |
Entia entered into a promissory note with a board member during 2012, for a 6% note for $75,000 maturing on December 31, 2013. These notes plus accrued interest of $11,812 were converted on June 4, 2013, into Series A preferred stock at $5.00 per share. | |
On June 11, 2013, a board member executed a convertible promissory note in the amount of $40,000. The note stated no interest and was due on July 1, 2013. We granted the board member a five year warrant to purchase 10,000 shares of common stock at $0.45. The warrants are to vest 100% on July 1, 2013. This note was paid off prior to June 30, 2013. | |
Preferred stock purchase from board member | |
During the first quarter 2013, a board member purchased 1,000 shares of Series A preferred stock for $5,000 cash. | |
NOTE_9_STOCKHOLDERS_EQUITY_DEF
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Equity [Abstract] | ' | ||||||||||
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) | ' | ||||||||||
NOTE 9 – STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
Preferred Stock | |||||||||||
On May 26, 2011, our board of directors designated 350,000 shares of preferred stock as Series A preferred stock, $0.001 par value. The Series A preferred stock is entitled to a liquidation preference in the amount of $5 per share, votes on an as converted basis with the common stock on all matters as to which holders of common stock shall be entitled to vote, and is currently convertible into common stock on a one-for-ten basis. | |||||||||||
During the third quarter 2013, we issued 38,775 shares of Series A preferred stock for $193,875 cash. One investor immediately converted 10,000 shares of the Series A preferred stock into 100,000 shares of common stock. | |||||||||||
During the second quarter 2013, we issued 90,732 shares of Series A preferred stock for the following: | |||||||||||
· | 37,000 shares for $185,000 cash | ||||||||||
· | 30,400 shares for converting of $152,001 of accounts payable | ||||||||||
· | 23,332 shares for converting $116,652 of debt and accrued interest | ||||||||||
During the first quarter of 2013, we issued 37,400 shares of Series A preferred stock for $187,000 cash and a note holder converted their $15,000 note along with $750 of accrued interest for 3,162 shares of Series A Preferred stock. The note was unsecured, accruing interest at 5% per annum and was due to mature on June 30, 2013. | |||||||||||
Common stock | |||||||||||
During the third quarter 2013, we issued shares of common stock per the following: | |||||||||||
· | 131,579 shares with a value of $65,790 in exchange for accrued payroll by one of our officers | ||||||||||
· | 100,000 shares as converted from 10,000 shares of Series A preferred stock | ||||||||||
· | 11,250 shares to a vendor in association with a consulting agreement signed May 1, 2013 | ||||||||||
· | We rescinded 10,000 shares with a value of $5,000 from an employee as part of her amended employment agreement that instead granted her stock options. | ||||||||||
· | 4,000 shares with a value of $1,920 in association with a consulting agreement signed August 1, 2013. | ||||||||||
During the second quarter 2013, we issued 131,579 shares of common stock with a value of $59,211 in exchange for accrued payroll by one of our officers. We also issued 10,000 shares with a value of $5,000 to an employee as part of her employment agreement and another 10,000 shares to a vendor in association with a consulting agreement signed May 1, 2013. | |||||||||||
Stock incentive plan | |||||||||||
On September 17, 2010, our Board of Directors adopted the 2010 Stock Incentive Plan (“Plan”). The Plan provides for the grant of options to purchase shares of our common stock, and stock awards consisting of shares of our common stock, to eligible participants, including directors, executive officers, employees and consultants of the Company. We have reserved 1,600,000 shares of common stock for issuance under the Plan with an annual increase in shares of 50,000 as of January 1 of each year; commencing January 1, 2012. On April 29, 2013, the stockholders of Entia approved an increase in the number of shares of common stock for issuance under the Plan by 1,500,000. This brought the number of options available under the Plan to 3,100,000 authorized. Stock options are granted at or below the closing price of our stock on the date of grant for terms ranging from four to fifteen years and generally vest over a five year period. The fair value of option grants were calculated at the date of the grants using the Black-Scholes option pricing model with the following assumptions: | |||||||||||
September 30, | December 31, | ||||||||||
2013 | 2012 | ||||||||||
Expected dividend yield | - | - | |||||||||
Expected stock price volatility | 229.66% - 236.55% | 183.17% - 187.30% | |||||||||
Risk-free interest rate | 0.95% - 2.47% | 1.27% - 2.80% | |||||||||
Expected term (in years) | 5 - 10 years | 4 - 10 years | |||||||||
Weighted-average granted date fair value | $0.47 | $0.51 | |||||||||
A summary of option activity under the stock option plan as of September 30, 2013 and changes during the quarter then ended is presented below: | |||||||||||
Weighted | |||||||||||
Weighted | Average | ||||||||||
Number of | Exercise Price | Average | Remaining | Aggregate | |||||||
Shares | Range | Exercise | Contractual Term | Intrinsic | |||||||
Price | (Years) | Value | |||||||||
Outstanding, December 31, 2011 | 659,242 | $ 0.47-$1.00 | $0.62 | 10 | - | ||||||
Granted | 542,857 | $ 0.40-$0.50 | $0.45 | 9 | - | ||||||
Exercised | - | - | - | - | - | ||||||
Expired | - | - | - | - | - | ||||||
Outstanding, December 31, 2012 | 1,202,099 | $ 0.40-$1.00 | $0.56 | 7.74 | - | ||||||
Exercisable, December 31, 2012 | 830,504 | $ 0.40-$1.00 | $0.57 | 8.19 | - | ||||||
Granted | 1,135,000 | $ 0.38-$0.50 | $0.47 | 8.03 | - | ||||||
Exercised | - | - | $ - | - | - | ||||||
Expired | - | - | $ - | - | - | ||||||
Outstanding, September 30, 2013 | 2,337,099 | $ 0.38-$1.00 | $0.51 | 7.88 | - | ||||||
Exercisable, September 30, 2013 | 1,651,118 | $ 0.38-$1.00 | $0.53 | 7.85 | - | ||||||
The range of exercise prices for options outstanding under the 2010 Stock Incentive Plan at September 30, 2013 are as follows: | |||||||||||
Number of | Exercise | ||||||||||
shares | Price | ||||||||||
55,000 | $0.38 | ||||||||||
135,000 | $0.40 | ||||||||||
20,000 | $0.44 | ||||||||||
540,000 | $0.45 | ||||||||||
247,242 | $0.47 | ||||||||||
247,857 | $0.49 | ||||||||||
854,000 | $0.50 | ||||||||||
200,000 | $0.85 | ||||||||||
38,000 | $1.00 | ||||||||||
2,337,099 | |||||||||||
At September 30, 2013, the Company had 762,901 unissued shares available under the Plan. Also, at September 30, 2013, the Company had $294,690 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted average period of 7 years. | |||||||||||
Warrants – Consulting Agreements | |||||||||||
Outstanding warrants to purchase common stock are as follows: | |||||||||||
Date of Issue | 30-Sep-13 | Exercise Price | Expiration | ||||||||
13-Sep | 21,118 | $0.50 | Sep-20 | ||||||||
13-Aug | 50,000 | $2.00 | Aug-18 | ||||||||
13-Jul | 212,400 | $0.50 | Jul-20 | ||||||||
13-Jun | 850,852 | $0.45 - $5.00 | 06/2016 - 06/2020 | ||||||||
13-Mar | 88 | $0.70 | Mar-17 | ||||||||
13-Feb | 35 | $5.00 | Feb-19 | ||||||||
13-Jan | 20,201 | $0.49 - $5.00 | 06/2017 - 01/2020 | ||||||||
As of December 2012 | 2,833,050 | $0.36 - $10.00 | 10/2013 - 10/2021 | ||||||||
Total | 3,987,744 | ||||||||||
We use the Black-Scholes option-pricing model to determine the fair value of warrants on the date of grant. In determining the fair value of warrants, we employed the following key assumptions: | |||||||||||
September 30, | September 30, | ||||||||||
2013 | 2012 | ||||||||||
Risk-Free interest rate | 0.84% - 1.66% | 0.84% - 1.08% | |||||||||
Expected dividend yield | 0% | 0% | |||||||||
Volatility | 230.04% - 248.63% | 202.65% - 264.48% | |||||||||
Expected life | 4 - 7 years | 5 - 7 years | |||||||||
At September 30, 2013 and 2012, the weighted-average Black-Scholes value of warrants granted was $1.52 and $0.56, respectively. | |||||||||||
NOTE_10_COMMITMENTS_AND_CONTIN
NOTE 10 - COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | ' |
NOTE 10 - COMMITMENTS AND CONTINGENCIES | |
Leases | |
On April 4, 2012, Entia Biosciences, Inc. entered into a Commercial Lease agreement with Lanz Properties, LLC for 13,081 square feet of office and warehouse space located at 13565 S.W. Tualatin-Sherwood Road, Suite 800, Sherwood, Oregon 97140. The new lease commenced May 15, 2012 and will terminate on July 31, 2015. No rent was payable until October 2012. The base monthly rental rate started at $3,160, increasing to $3,260 in October 2013, and then $3,343 in June 2014. | |
Management believes that the new facility offers a better location and configuration for its biotechnology activities and provides significantly more space for manufacturing, fulfillment, and administration over the next three years. | |
Entia calculated the deferred rent amount related to the long-term lease agreement and recorded additional rent expense of $3,197 and $0 for the three months ended September 30, 2013 and 2012, respectively and $10,283 and $0 for the nine months ended September 30, 2013, respectively and deferred rent accrual of $18,782 and $8,499 at September 30, 2013 and December 31, 2012, respectively. | |
NOTE_11_CONCENTRATIONS_AND_CRE
NOTE 11 - CONCENTRATIONS AND CREDIT RISK | 9 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
NOTE 11 - CONCENTRATIONS AND CREDIT RISK | ' |
NOTE 11 – CONCENTRATIONS AND CREDIT RISK | |
Customers and Credit Concentrations | |
For the three months ended September 30, 2013, approximately 68% of our net sales were to four customers compared to 46% for the three months ended September 30, 2012. For the nine months ended September 30, 2013, approximately 41% of our net sales were to four customers compared to approximately 53% for the nine months ended September 30, 2012. Accounts receivable at September 30, 2013 for these customers accounted for approximately 92% of total accounts receivable compared to 68% at September 30, 2012. | |
Vendor Concentrations | |
During the third quarter 2013, approximately 71% of our purchases were from three vendors as compared to 46% from four vendors during third quarter 2012. | |
NOTE_12_SUBSEQUENT_EVENTS
NOTE 12 - SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2013 | |
Subsequent Events [Abstract] | ' |
NOTE 12 - SUBSEQUENT EVENTS | ' |
NOTE 12 – SUBSEQUENT EVENTS | |
During the fourth quarter of 2013, Entia issued 19,500 shares of Series A preferred stock to four investors for $97,500 cash. 10,000 shares were immediately converted into 100,000 shares of common stock. | |
For consideration of waiving the anti-dilution feature of the Series A Preferred Stock, Entia’s board authorized and issued one warrant for one share of common stock for each 2 shares of Series A Preferred Stock issued and outstanding. This resulted in the issuance of 137,985 warrants to purchase common stock with a 3 year term vesting immediately. | |
We issued 12,000 shares of common stock in association with two consulting agreements. The agreements were signed on August 1, 2013 for 2,000 shares and 10,000 shares on October 2, 2013. | |
NOTE_2_SUMMARY_OF_SIGNIFICANT_1
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Accounting Policies [Abstract] | ' | |||||||||
Basis of presentation and principles of consolidation | ' | |||||||||
Basis of presentation and principles of consolidation | ||||||||||
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 adjustments) 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, 2012 and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC. | ||||||||||
All intercompany accounts have been eliminated for the purpose of the consolidated financial statement presentation. | ||||||||||
Use of estimates | ' | |||||||||
Use of estimates | ||||||||||
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 | ' | |||||||||
Cash | ||||||||||
We consider all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents. | ||||||||||
Accounts receivable | ' | |||||||||
Accounts receivable | ||||||||||
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 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 $2,526 at both September 30, 2013 and December 31, 2012. | ||||||||||
Inventory | ' | |||||||||
Inventory | ||||||||||
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 and equipment | ' | |||||||||
Property and equipment | ||||||||||
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: | ||||||||||
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 | |||||||||
Patents | ' | |||||||||
Patents | ||||||||||
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 of long-lived assets | ' | |||||||||
Impairment of long-lived assets | ||||||||||
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. | ||||||||||
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. | ||||||||||
Discount on convertible notes payable | ' | |||||||||
Discount on convertible notes payable | ||||||||||
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 | ' | |||||||||
Fair value of financial instruments | ||||||||||
The carrying amounts of our financial assets and liabilities, such as cash, accounts receivable and accounts payable, approximate their fair values 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 measurements | ' | |||||||||
Fair value measurements | ||||||||||
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: | ||||||||||
Level 1 | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |||||||||
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. | |||||||||
Level 3 | Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions. | |||||||||
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 September 30, 2013 or December 31, 2012, 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 September 30, 2013 and September 30, 2012. | ||||||||||
Revenue recognition | ' | |||||||||
Revenue recognition | ||||||||||
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. | ||||||||||
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. | ||||||||||
Amounts charged to customers for shipping products are included in revenues and the related costs are classified in cost of goods sold as incurred. In 2012 and 2011, we incurred $26,059 and $32,784, respectively, in shipping costs included in cost of goods sold. | ||||||||||
Shipping and handling costs | ' | |||||||||
Shipping and handling costs | ||||||||||
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 | ' | |||||||||
Advertising and promotion costs | ||||||||||
Costs associated with the advertising and promotion of our products are expensed as incurred. | ||||||||||
Equity instruments issued to parties other than employees for acquiring goods or services | ' | |||||||||
Equity instruments issued to parties other than employees for acquiring goods or services | ||||||||||
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. | ||||||||||
The fair value of each warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. | ||||||||||
The assumptions used to determine the fair value of our warrants are as follows: | ||||||||||
- | The expected life of warrants issued represents the period of time the warrants are expected to be outstanding. | |||||||||
- | The expected volatility is generally based on the historical volatility of comparable companies’ stock over the contractual life of the warrant. | |||||||||
- | 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. | |||||||||
- | 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 taxes | ' | |||||||||
Income taxes | ||||||||||
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. | ||||||||||
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. | ||||||||||
We did not record an income tax provision for the three and nine months ended September 30, 2013 and 2012 because we had a net taxable loss in the period. | ||||||||||
Net loss per common share | ' | |||||||||
Net loss per common share | ||||||||||
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 are 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 September 30, 2013 and 2012 and the nine months ended September 30, 2013 and 2012. The following table presents a reconciliation of basic loss per share and excluded dilutive securities: | ||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Numerator: | ||||||||||
Net loss | ($550,528) | ($280,769) | ($2,041,135) | ($996,002) | ||||||
Denominator: | ||||||||||
Weighted-average common | 7,712,950 | 7,209,206 | 7,395,137 | 7,190,229 | ||||||
shares outstanding | ||||||||||
Basic and diluted net loss per share | ($0.07) | ($0.04) | ($0.28) | ($0.14) | ||||||
Common stock warrants | 3,987,744 | 2,758,266 | 3,987,744 | 2,464,471 | ||||||
Series A convertible preferred stock | 2,699,690 | 889,000 | 2,699,690 | 843,000 | ||||||
Stock options | 1,651,118 | 658,240 | 1,651,118 | 591,179 | ||||||
Convertible debt including interest | 856,030 | 400,025 | 856,030 | 395,624 | ||||||
Excluded dilutive securities | 9,194,582 | 4,705,531 | 9,194,582 | 4,294,274 | ||||||
Reclassifications | ' | |||||||||
Reclassifications | ||||||||||
Certain reclassifications have been made to prior period financial statements and footnotes in order to conform to the current period's presentation. | ||||||||||
Segments | ' | |||||||||
Segments | ||||||||||
We have determined that we operate in one segment for financial reporting purposes. | ||||||||||
Recently issued accounting pronouncements | ' | |||||||||
Recently issued accounting pronouncements | ||||||||||
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements. | ||||||||||
NOTE_2_SUMMARY_OF_SIGNIFICANT_2
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | |||||||||
Sep. 30, 2013 | ||||||||||
Accounting Policies [Abstract] | ' | |||||||||
Estimated Useful Lives of the Assets | ' | |||||||||
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 | |||||||||
Net Loss Per Common Share | ' | |||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||
2013 | 2012 | 2013 | 2012 | |||||||
Numerator: | ||||||||||
Net loss | ($550,528) | ($280,769) | ($2,041,135) | ($996,002) | ||||||
Denominator: | ||||||||||
Weighted-average common | 7,712,950 | 7,209,206 | 7,395,137 | 7,190,229 | ||||||
shares outstanding | ||||||||||
Basic and diluted net loss per share | ($0.07) | ($0.04) | ($0.28) | ($0.14) | ||||||
Common stock warrants | 3,987,744 | 2,758,266 | 3,987,744 | 2,464,471 | ||||||
Series A convertible preferred stock | 2,699,690 | 889,000 | 2,699,690 | 843,000 | ||||||
Stock options | 1,651,118 | 658,240 | 1,651,118 | 591,179 | ||||||
Convertible debt including interest | 856,030 | 400,025 | 856,030 | 395,624 | ||||||
Excluded dilutive securities | 9,194,582 | 4,705,531 | 9,194,582 | 4,294,274 |
NOTE_3_INVENTORY_Tables
NOTE 3 - INVENTORY (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Inventory Disclosure [Abstract] | ' | |||||
Inventory | ' | |||||
September 30, | December 31, | |||||
2013 | 2012 | |||||
Raw materials | $ 271,871 | $ 271,312 | ||||
Finished goods | 7,612 | 11,885 | ||||
279,483 | 283,197 | |||||
Less: reserve for excess and obsolete inventory | -151,064 | -151,064 | ||||
$ 128,419 | $ 132,133 |
NOTE_4_PROPERTY_AND_EQUIPMENT_
NOTE 4 - PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Property, Plant and Equipment [Abstract] | ' | |||||
Property and Equipment | ' | |||||
30-Sep-13 | 31-Dec-12 | |||||
Office equipment | $ 24,584 | $ 24,584 | ||||
Production equipment | 88,215 | 39,791 | ||||
Leasehold improvements | 20,267 | 13,946 | ||||
133,066 | 78,321 | |||||
Less: accumulated depreciation | -60,972 | -42,694 | ||||
$ 72,094 | $ 35,627 |
NOTE_5_PATENTS_AND_LICENSES_NE1
NOTE 5 - PATENTS AND LICENSES, NET (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Notes to Financial Statements | ' | |||||
Patents and Licenses | ' | |||||
September 30, | December 31, | |||||
2013 | 2012 | |||||
Gross carrying amounts-patents and licenses | $ 358,614 | $ 188,570 | ||||
Accumulated amortization | -12,288 | -5,464 | ||||
Patents and Licenses, net | $ 346,325 | $ 183,106 |
NOTE_6_ACCRUED_EXPENSES_Tables
NOTE 6 - ACCRUED EXPENSES (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Accounting Policies [Abstract] | ' | |||
Accrued Expenses | ' | |||
September 30, | December 31, | |||
2013 | 2012 | |||
Executive compensation | $384,177 | $192,552 | ||
Royalties | - | 4,760 | ||
Other accruals | 46,093 | 18,309 | ||
$430,270 | $215,621 |
NOTE_7_NOTES_PAYABLE_Tables
NOTE 7 - NOTES PAYABLE (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Debt Disclosure [Abstract] | ' | |||||
Notes Payable | ' | |||||
September 30, | December 31, | |||||
2013 | 2012 | |||||
Notes payable - current | ||||||
7.85% unsecured, $781 due monthly | $4,237 | $1,426 | ||||
4.15% unsecured, $2,678 due monthly | - | 21,095 | ||||
0.00% unsecured, $70,000 due in November 2013 | 140,000 | - | ||||
and $70,000 due in May 2014 | ||||||
$144,237 | $22,521 | |||||
Convertible notes payable, net | ||||||
5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | $ - | $15,000 | ||||
8%, unsecured due June 2014 (net of discount related to beneficial conversion feature of $73,505 in 2013 and $35,807 in 2012), convertible into common stock at $0.45 per share | 238,995 | 276,693 | ||||
6% unsecured due June 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $4,277 in 2012), convertible into preferred stock at $5.00 per share | - | 8,723 | ||||
5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | - | 15,000 | ||||
8% secured due August 2014 (net of discount related to beneficial conversion feature of $14,350 in 2013 and $0 in 2012), convertible into preferred stock at $5.00 per share | 35,650 | - | ||||
6% unsecured, convertible into common stock at $2.00 per share, due December 2013 | 50,000 | 50,000 | ||||
$324,645 | $365,416 | |||||
Convertible notes payable related party, net | ||||||
6% unsecured due December 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $11,507 in 2012), convertible into common stock at $2.00 per share | $ - | $63,493 |
NOTE_9_STOCKHOLDERS_EQUITY_DEF1
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) (Tables) | 9 Months Ended | ||||||||||
Sep. 30, 2013 | |||||||||||
Option Activity | ' | ||||||||||
Weighted | |||||||||||
Weighted | Average | ||||||||||
Number of | Exercise Price | Average | Remaining | Aggregate | |||||||
Shares | Range | Exercise | Contractual Term | Intrinsic | |||||||
Price | (Years) | Value | |||||||||
Outstanding, December 31, 2011 | 659,242 | $ 0.47-$1.00 | $0.62 | 10 | - | ||||||
Granted | 542,857 | $ 0.40-$0.50 | $0.45 | 9 | - | ||||||
Exercised | - | - | - | - | - | ||||||
Expired | - | - | - | - | - | ||||||
Outstanding, December 31, 2012 | 1,202,099 | $ 0.40-$1.00 | $0.56 | 7.74 | - | ||||||
Exercisable, December 31, 2012 | 830,504 | $ 0.40-$1.00 | $0.57 | 8.19 | - | ||||||
Granted | 1,135,000 | $ 0.38-$0.50 | $0.47 | 8.03 | - | ||||||
Exercised | - | - | $ - | - | - | ||||||
Expired | - | - | $ - | - | - | ||||||
Outstanding, September 30, 2013 | 2,337,099 | $ 0.38-$1.00 | $0.51 | 7.88 | - | ||||||
Exercisable, September 30, 2013 | 1,651,118 | $ 0.38-$1.00 | $0.53 | 7.85 | - | ||||||
Range of Options Exercise Price | ' | ||||||||||
Number of | Exercise | ||||||||||
shares | Price | ||||||||||
55,000 | $0.38 | ||||||||||
135,000 | $0.40 | ||||||||||
20,000 | $0.44 | ||||||||||
540,000 | $0.45 | ||||||||||
247,242 | $0.47 | ||||||||||
247,857 | $0.49 | ||||||||||
854,000 | $0.50 | ||||||||||
200,000 | $0.85 | ||||||||||
38,000 | $1.00 | ||||||||||
2,337,099 | |||||||||||
Outstanding Warrants | ' | ||||||||||
Date of Issue | 30-Sep-13 | Exercise Price | Expiration | ||||||||
13-Sep | 21,118 | $0.50 | Sep-20 | ||||||||
13-Aug | 50,000 | $2.00 | Aug-18 | ||||||||
13-Jul | 212,400 | $0.50 | Jul-20 | ||||||||
13-Jun | 850,852 | $0.45 - $5.00 | 06/2016 - 06/2020 | ||||||||
13-Mar | 88 | $0.70 | Mar-17 | ||||||||
13-Feb | 35 | $5.00 | Feb-19 | ||||||||
13-Jan | 20,201 | $0.49 - $5.00 | 06/2017 - 01/2020 | ||||||||
As of December 2012 | 2,833,050 | $0.36 - $10.00 | 10/2013 - 10/2021 | ||||||||
Total | 3,987,744 | ||||||||||
Option Member | ' | ||||||||||
Black-Scholes Option-Pricing Model Assumptions | ' | ||||||||||
September 30, | December 31, | ||||||||||
2013 | 2012 | ||||||||||
Expected dividend yield | - | - | |||||||||
Expected stock price volatility | 229.66% - 236.55% | 183.17% - 187.30% | |||||||||
Risk-free interest rate | 0.95% - 2.47% | 1.27% - 2.80% | |||||||||
Expected term (in years) | 5 - 10 years | 4 - 10 years | |||||||||
Weighted-average granted date fair value | $0.47 | $0.51 | |||||||||
Warrant Member | ' | ||||||||||
Black-Scholes Option-Pricing Model Assumptions | ' | ||||||||||
September 30, | September 30, | ||||||||||
2013 | 2012 | ||||||||||
Risk-Free interest rate | 0.84% - 1.66% | 0.84% - 1.08% | |||||||||
Expected dividend yield | 0% | 0% | |||||||||
Volatility | 230.04% - 248.63% | 202.65% - 264.48% | |||||||||
Expected life | 4 - 7 years | 5 - 7 years | |||||||||
NOTE_1_ORGANIZATION_AND_OPERAT1
NOTE 1 - ORGANIZATION AND OPERATIONS (Details Narrative) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 31, 2011 |
Notes to Financial Statements | ' | ' | ' | ' |
Cash and cash equivalents | $45,355 | $13,081 | $14,698 | $16,639 |
NOTE_2_ESTIMATED_USEFUL_LIVES_
NOTE 2 - ESTIMATED USEFUL LIVES OF THE ASSETS (Details) | Sep. 30, 2013 |
Notes to Financial Statements | ' |
Estimated useful life of office equipment | '3 years |
Minimum estimated useful life of production equipment | '5 years |
Maximum estimated useful life of production equipment | '7 years |
Minimum estimated useful life of equipment under capital lease | '5 years |
Maximum estimated useful life of equipment under capital lease | '7 years |
Leasehold improvements | 'Lesser of lease term or useful life of improvement |
NOTE_2_SUMMARY_OF_SIGNIFICANT_3
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - NET LOSS PER COMMON SHARE (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Reconciliation Of Basic Loss Per Share And Excluded Dilutive Securities | ' | ' | ' | ' |
Numerator: Net loss applicable to common shareholders | ($550,528) | ($280,769) | ($2,041,135) | ($996,002) |
Denominator: Weighted-average common shares outstanding | 7,712,950 | 7,209,206 | 7,395,137 | 7,190,229 |
Basic and diluted net loss per share | ($0.07) | ($0.04) | ($0.28) | ($0.14) |
Common stock warrants | 3,987,744 | 2,758,266 | 3,987,744 | 2,464,471 |
Series A convertible preferred stock | 2,699,690 | 889,000 | 2,699,690 | 843,000 |
Stock options | 1,651,118 | 658,240 | 1,651,118 | 591,179 |
Convertible debt including interest | 856,030 | 400,025 | 856,030 | 395,624 |
Excluded dilutive securities | 9,194,582 | 4,705,531 | 9,194,582 | 4,294,274 |
NOTE_2_SUMMARY_OF_SIGNIFICANT_4
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' |
Allowance for doubtful accounts | $2,526 | $2,526 |
Accounts receivable past due period | '30 days | ' |
Domestic patent life minimum (in years) | ' | '15 years |
Domestic patent life maximum (in years) | ' | '20 years |
Foreign patent life minimum (in years) | ' | '5 years |
Foreign patent life maximum (in years) | ' | '20 years |
NOTE_3_INVENTORY_Details
NOTE 3 - INVENTORY (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Inventory | ' | ' |
Raw materials | $271,871 | $271,312 |
Finished goods | 7,612 | 11,885 |
Inventory gross | 279,483 | 283,197 |
Less: reserve for excess and obsolete inventory | -151,064 | -151,064 |
Inventory net | $128,419 | $132,133 |
NOTE_4_PROPERTY_AND_EQUIPMENT_1
NOTE 4 - PROPERTY AND EQUIPMENT - PROPERTY AND EQUIPMENT (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Property and Equipment | ' | ' |
Office equipment | $24,585 | $24,584 |
Production equipment | 88,215 | 39,791 |
Leasehold improvements | 20,267 | 13,946 |
Property and Equipment Gross | 133,066 | 78,321 |
Less: accumulated depreciation | -60,972 | -42,694 |
Property and Equipment Net | $72,094 | $35,627 |
NOTE_4_PROPERTY_AND_EQUIPMENT_2
NOTE 4 - PROPERTY AND EQUIPMENT (Details Narrative) (USD $) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Property and Equipment | ' | ' |
Depreciation expense | $25,104 | $16,290 |
NOTE_5_PATENTS_AND_LICENSES_NE2
NOTE 5 - PATENTS AND LICENSES, NET - PATENTS AND LICENSES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Long-Lived Intangible Assets | ' | ' |
Gross carrying amounts-patents and licenses | $358,614 | $188,570 |
Accumulated amortization | -12,288 | -5,464 |
Patents and Licenses, net | $346,325 | $183,106 |
NOTE_5_PATENTS_AND_LICENSES_NE3
NOTE 5 - PATENTS AND LICENSES, NET (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | Jul. 23, 2013 | 1-May-13 | |
Notes to Financial Statements | ' | ' | ' | ' | ' | ' | ' |
Patent and license amortization | $3,578 | $803 | $6,824 | $2,383 | ' | ' | ' |
Amortization of licenses over economic useful life | ' | ' | '17 years | ' | ' | ' | ' |
PSRF license agreement period | '15 years | ' | '15 years | ' | ' | ' | '15 years |
PSRF license fee | 150,000 | ' | 150,000 | ' | ' | ' | 150,000 |
License acquired for stock, fair value | ' | ' | ' | ' | 25,501 | ' | ' |
Patent amortization period | ' | ' | ' | ' | ' | '15 years | ' |
Patent amount capitalized and amortized | ' | ' | ' | ' | ' | $31,325 | ' |
NOTE_6_ACCRUED_EXPENSES_Detail
NOTE 6 - ACCRUED EXPENSES (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes to Financial Statements | ' | ' |
Executive compensation | $384,177 | $192,552 |
Royalties | 0 | 4,760 |
Other accruals | 46,093 | 18,309 |
Total accrued expenses | $430,270 | $215,621 |
NOTE_7_NOTES_PAYABLE_Details
NOTE 7 - NOTES PAYABLE (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Notes payable - current, 7.85% unsecured, $772 due monthly | ' | ' |
Notes payable | $4,237 | $1,426 |
Notes payable - current, 4.15% unsecured, $2,678 due monthly | ' | ' |
Notes payable | 0 | 21,095 |
Notes payable - current, 0.00% unsecured, $70,000 due in November 2013 and $70,000 due in May 2014 | ' | ' |
Notes payable | 140,000 | 0 |
Notes Payable Current Total | ' | ' |
Notes payable | 144,237 | 22,521 |
Convertible Notes payable, net - 5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | ' | ' |
Notes payable | 0 | 15,000 |
Convertible Notes payable, net - 8%, unsecured note due June 2014 (net of discount related to beneficial conversion feature of $73,505 in 2013 and $35,807 in 2012), convertible into common stock at $0.45 per share | ' | ' |
Notes payable | 238,995 | 276,693 |
Convertible Notes - 6% unsecured due June 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $4,277 in 2012), convertible into preferred stock at $5.00 per share | ' | ' |
Notes payable | 0 | 8,273 |
Convertible Notes payable, net - 5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | ' | ' |
Notes payable | 0 | 15,000 |
8% secured due August 2014 (net of discount related to beneficial conversion feature of $14,350 in 2013 and $0 in 2012), convertible into preferred stock at $5.00 per share | ' | ' |
Notes payable | 35,650 | 0 |
6% unsecured, convertible into common stock at $2.00 per share, due December 2013 | ' | ' |
Notes payable | 50,000 | 50,000 |
Convertible Notes Payable Net Total | ' | ' |
Notes payable | 324,645 | 365,416 |
Convertible Notes payable related party, net - 6% unsecured due December 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $11,507 in 2012), convertible into common stock at $2.00 per share | ' | ' |
Notes payable | $0 | $63,493 |
NOTE_7_NOTES_PAYABLE_Details_P
NOTE 7 - NOTES PAYABLE (Details) (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Due November 2013 on note payable | $70,000 | ' |
Due May 2014 on note payable | 70,000 | ' |
Notes payable - current, 7.85% unsecured, $772 due monthly | ' | ' |
Monthly due on note payable | 781 | 772 |
Interest percent of note payable | 7.85% | 7.85% |
Notes payable - current, 4.15% unsecured, $2,678 due monthly | ' | ' |
Monthly due on note payable | 2,678 | 2,678 |
Interest percent of note payable | 4.15% | 4.15% |
Notes payable - current, 0.00% unsecured, $70,000 due in November 2013 and $70,000 due in May 2014 | ' | ' |
Interest percent of note payable | 0.00% | 0.00% |
Due November 2013 on note payable | 70,000 | 70,000 |
Due May 2014 on note payable | 70,000 | 70,000 |
Convertible Notes payable, net - 5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | ' | ' |
Convertible to preferred stock, price per share | $5 | $5 |
Interest percent of note payable | 5.00% | 5.00% |
Convertible Notes payable, net - 8%, unsecured note due June 2014 (net of discount related to beneficial conversion feature of $73,505 in 2013 and $35,807 in 2012), convertible into common stock at $0.45 per share | ' | ' |
Discount related to beneficial conversion feature | 73,505 | 35,807 |
Convertible to common stock, price per share | $0.45 | $0.45 |
Interest percent of note payable | 8.00% | 6.00% |
Convertible Notes - 6% unsecured due June 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $4,277 in 2012), convertible into preferred stock at $5.00 per share | ' | ' |
Discount related to beneficial conversion feature | 0 | 4,277 |
Convertible to preferred stock, price per share | $5 | $5 |
Interest percent of note payable | 6.00% | 6.00% |
Convertible Notes payable, net - 5% unsecured due June 2013, convertible into preferred stock at $5.00 per share | ' | ' |
Convertible to preferred stock, price per share | $5 | $5 |
Interest percent of note payable | 5.00% | 5.00% |
8% secured due August 2014 (net of discount related to beneficial conversion feature of $14,350 in 2013 and $0 in 2012), convertible into preferred stock at $5.00 per share | ' | ' |
Discount related to beneficial conversion feature | 14,350 | 0 |
Convertible to preferred stock, price per share | $5 | $5 |
Interest percent of note payable | 8.00% | 8.00% |
6% unsecured, convertible into common stock at $2.00 per share, due December 2013 | ' | ' |
Convertible to common stock, price per share | $2 | $2 |
Interest percent of note payable | 6.00% | 6.00% |
Convertible Notes payable related party, net - 6% unsecured due December 2013 (net of discount related to beneficial conversion feature of $0 in 2013 and $11,507 in 2012), convertible into common stock at $2.00 per share | ' | ' |
Discount related to beneficial conversion feature | $0 | $11,507 |
Convertible to common stock, price per share | $2 | $2 |
Interest percent of note payable | 6.00% | 6.00% |
NOTE_7_NOTES_PAYABLE_Details_N
NOTE 7 - NOTES PAYABLE (Details Narrative) (USD $) | 3 Months Ended | |||||
Sep. 30, 2013 | Jun. 30, 2013 | Aug. 13, 2013 | Jul. 01, 2013 | Jun. 11, 2013 | 1-May-13 | |
Units | ||||||
Notes to Financial Statements | ' | ' | ' | ' | ' | ' |
Mature convertible notes payable in aggregate | $412,500 | ' | ' | ' | ' | ' |
Number of convertible notes payable outstanding | 3 | ' | ' | ' | ' | ' |
Amount of June 30, 2013 note payable | 312,500 | ' | ' | 312,500 | ' | ' |
Amount of August 13, 2014 note payable | 50,000 | ' | ' | ' | ' | ' |
Extension on note February 18, 2010, note due June 30, 2013 | '1 year | ' | ' | '1 year | ' | ' |
Interest rate on June 30, 2013 extended note | 8.00% | ' | ' | 8.00% | ' | ' |
Amount of February 18, 2012, notes payable due December 31, 2013 | 50,000 | ' | ' | ' | ' | ' |
Interest rate on February 18, 2010 note payable | 6.00% | ' | ' | ' | ' | ' |
Debt converted to Series A preferred stock, June 30, 2013 maturity | ' | 28,000 | ' | ' | ' | ' |
Debt converted to Series A preferred stock, December 31, 2013 maturity | ' | 75,000 | ' | ' | ' | ' |
Price per share of debt converted to Series A preferred stock | ' | $5 | ' | ' | ' | ' |
Accrued interest converted to Series A preferred stock, June 30, 2013 maturity | ' | 1,840 | ' | ' | ' | ' |
Accrued interest converted to Series A preferred stock, December 31, 2013 maturity | ' | 11,812 | ' | ' | ' | ' |
Price per share of accrued interest converted to Series A preferred stock | ' | $5 | ' | ' | ' | ' |
Amount of August 13, 2013, notes payable due August 13, 2014 | ' | ' | 50,000 | ' | ' | ' |
Interest rate on August 13, 2013 note | ' | ' | 8.00% | ' | ' | ' |
Convertible to Series A Preferred stock for August 13, 2013 lender, per share price | ' | ' | $5 | ' | ' | ' |
Warrants issued to August 13, 2013 lender | ' | ' | 50,000 | ' | ' | ' |
Exercise price of August 13, 2013 lender warrants per share | ' | ' | $2 | ' | ' | ' |
Discount on August 13, 2013 lender August 13, 2013 lender agreement classified as reduction in debt | ' | ' | 16,400 | ' | ' | ' |
August 13, 2013 lender note secured by property, value | ' | ' | 103,000 | ' | ' | ' |
PSRF license agreement period | '15 years | ' | ' | ' | ' | '15 years |
License fee owed to PSRF on exclusive license agreement | 150,000 | ' | ' | ' | ' | 150,000 |
Upfront payment on $150,000 license fee to PSRF | 10,000 | ' | ' | ' | ' | ' |
Due fourth quarter of 2013 on $150,000 license fee payable to PSRF | 70,000 | ' | ' | ' | ' | ' |
Due second quarter of 2014 on $150,000 license fee payable to PSRF | 70,000 | ' | ' | ' | ' | ' |
Interest rate of license fee payable to PSRF | 0.00% | ' | ' | ' | ' | ' |
Amount of note payable due on June 30, 2013 | 312,500 | ' | ' | 312,500 | ' | ' |
Amount of accrued interest on note payable that was due June 30, 2014 | ' | ' | ' | 41,010 | ' | ' |
Extension on note due June 30, 2013 | '1 year | ' | ' | '1 year | ' | ' |
Interest rate of June 30, 2013 extended note | 8.00% | ' | ' | 8.00% | ' | ' |
Warrant granted to note holder to extend note, amount | ' | ' | ' | 200,000 | 10,000 | ' |
Period of warrant | ' | ' | ' | '3 years | '5 years | ' |
Warrant exercise price per share | ' | ' | ' | $0.45 | $0.45 | ' |
Fair value of warrants granted to note holder | ' | ' | ' | $98,006 | ' | ' |
NOTE_8_RELATED_PARTY_TRANSACTI1
NOTE 8 - RELATED PARTY TRANSACTIONS (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2013 | Dec. 31, 2012 | Jul. 01, 2013 | Jun. 11, 2013 | |
Notes to Financial Statements | ' | ' | ' | ' |
Amount of accrued compensation owed to CEO converted to common stock | $50,000 | ' | ' | ' |
Common stock issued to CEO for conversion of accured compensation | 131,576 | ' | ' | ' |
Share price of common stock issued to CEO for conversion of accrued compensation | $0.38 | ' | ' | ' |
Discount on shares issued to CEO for conversion of accrued compensation, posted as period expense | 15,790 | ' | ' | ' |
Promissory note due to affiliate, amount, duration | ' | 75,000 | ' | ' |
Promissory note due to affiliate, interest percent, duration | ' | 6.00% | ' | ' |
Promissory note due to affiliate, amount, instant | ' | ' | ' | 40,000 |
Promissory note due to affiliate, interest percent, instant | ' | ' | ' | 0.00% |
Promissory note of $40,000 from a board member, maturation date | 1-Jul-13 | ' | ' | ' |
Promissory note of $40,000 from a board member, vesting date | '2013-07-01 | ' | ' | ' |
Warrant granted to $40,000 note holder to purchase shares, amount | ' | ' | 200,000 | 10,000 |
Period of warrant | ' | ' | '3 years | '5 years |
Warrant exercise price per share | ' | ' | $0.45 | $0.45 |
Affiliate purchase of Series A Preferred Stock, shares | 1,000 | ' | ' | ' |
Affiliate purchase of Series A Preferred Stock, total price | $5,000 | ' | ' | ' |
NOTE_9_STOCKHOLDERS_EQUITY_DEF2
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) - BLACK-SCHOLES OPTION-PRICING MODEL ASSUMPTIONS (Details) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | |
Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Option Member | Option Member | Warrant Member | Warrant Member | |
Risk-Free interest rate, minimum | 0.95% | 1.27% | 0.84% | 0.84% |
Risk-Free interest rate, maximum | 2.47% | 2.80% | 1.66% | 1.08% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Expected stock price volatility, minimum | 229.66% | 183.17% | 230.04% | 202.65% |
Expected stock price volatility, maximum | 236.55% | 187.30% | 248.63% | 264.48% |
Expected term (in years), minimum | '5 years | '4 years | '4 years | '5 years |
Expected term (in years), maximum | '10 years | '10 years | '7 years | '7 years |
Weighted-average granted date fair value | $0.47 | $0.51 | $0.45 | $0.56 |
NOTE_9_OPTION_ACTIVITY_Details
NOTE 9 - OPTION ACTIVITY (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Dec. 31, 2012 |
Outstanding | Outstanding | Outstanding | Granted | Granted | Exercised | Exercised | Expired | Expired | Exercisable | Exercisable | |
Number of Shares, instant | 2,337,099 | 1,202,099 | 659,242 | ' | ' | ' | ' | ' | ' | 1,651,118 | 830,504 |
Number of Shares, duration | ' | ' | ' | 1,135,000 | 542,857 | 0 | 0 | 0 | 0 | ' | ' |
Exercise Price Range, instant, minimum | $0.38 | $0.40 | $0.47 | ' | ' | ' | ' | ' | ' | $0.38 | $0.40 |
Exercise Price Range, instant, maximum | $1 | $1 | $1 | ' | ' | ' | ' | ' | ' | $1 | $1 |
Exercise Price Range, duration, minimum | ' | ' | ' | $0.38 | $0.40 | $0 | $0 | $0 | $0 | ' | ' |
Exercise Price Range, duration, maximum | ' | ' | ' | $0.50 | $0.50 | $0 | $0 | $0 | $0 | ' | ' |
Weighted Average Exercise Price, instant | $0.51 | $0.56 | $0.62 | ' | ' | ' | ' | ' | ' | $0.53 | $0.57 |
Weighted Average Exercise Price, duration | ' | ' | ' | $0.47 | $0.45 | $0 | $0 | $0 | $0 | ' | ' |
Weighted Average Remaining Contractual Life (in years), instant | '7 years 10 months | '7 years 9 months | '10 years | ' | ' | ' | ' | ' | ' | '7 years 10 months | '8 years 2 months |
Weighted Average Remaining Contractual Life (in years), duration | ' | ' | ' | '8 years | '9 years | '0 years | '0 years | '0 years | '0 years | ' | ' |
Aggregate Intrinsic Value, instant | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' | $0 | $0 |
Aggregate Intrinsic Value, duration | ' | ' | ' | $0 | $0 | $0 | $0 | $0 | $0 | ' | ' |
NOTE_9_RANGE_OF_OPTIONS_EXERCI
NOTE 9 - RANGE OF OPTIONS EXERCISE PRICE (Details) | Sep. 30, 2013 |
Total number of option shares outstanding | 2,337,099 |
Options $0.38 | ' |
Number of Shares underlying options | 55,000 |
Options $0.40 | ' |
Number of Shares underlying options | 135,000 |
Options $0.44 | ' |
Number of Shares underlying options | 20,000 |
Options $0.45 | ' |
Number of Shares underlying options | 540,000 |
Options $0.47 | ' |
Number of Shares underlying options | 247,242 |
Options $0.49 | ' |
Number of Shares underlying options | 247,857 |
Options $0.50 | ' |
Number of Shares underlying options | 634,000 |
Options $0.85 | ' |
Number of Shares underlying options | 200,000 |
Options $1.00 | ' |
Number of Shares underlying options | 38,000 |
NOTE_9_OUTSTANDING_WARRANTS_De
NOTE 9 - OUTSTANDING WARRANTS (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Aug. 31, 2013 | Jul. 31, 2013 | Jun. 30, 2013 | 30-May-13 | Apr. 30, 2013 | Mar. 31, 2013 | Feb. 28, 2013 | Jan. 31, 2013 |
Issued Warrants | Issued Warrants | Issued Warrants | Issued Warrants | Issued Warrants | Issued Warrants | Issued Warrants | Issued Warrants | Issued Warrants | |||
Warrants issued, shares | ' | ' | 21,118 | 50,000 | 212,400 | 850,852 | 0 | 0 | 88 | 35 | 20,201 |
Exercise price, per share, minimum | ' | ' | $0.50 | $2 | $0.50 | $0.45 | $0 | $0 | $0.70 | $5 | $0.49 |
Exercise price, per share, maximum | ' | ' | $0.50 | $2 | $0.50 | $5 | $0 | $0 | $0.70 | $5 | $5 |
Exercise price, per share, minimum, instant | ' | $0.36 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price, per share, maximum, instant | ' | $10 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expiration date, earliest | ' | ' | '2020-09 | '2018-08 | '2020-07 | '2016-06 | ' | ' | '2017-03 | '2019-02 | '2017-06 |
Expiration date, latest | ' | ' | ' | ' | ' | '2020-06 | ' | ' | '2017-03 | '2019-02 | '2020-01 |
Expiration date, earliest, instant | ' | '2013-10 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expiration date, latest, instant | ' | '2021-10 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants outstanding | 3,987,744 | 2,833,050 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
NOTE_9_STOCKHOLDERS_EQUITY_DEF3
NOTE 9 - STOCKHOLDERS' EQUITY (DEFICIT) (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Apr. 29, 2013 | Sep. 30, 2012 | Mar. 31, 2012 | 26-May-11 | Sep. 17, 2010 | |
Preferred Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of preferred stock designated as Series A preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | 350,000 | ' |
Series A preferred stock par value | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | ' |
Liquidation preference per Series A preferred share | ' | ' | ' | ' | ' | ' | ' | ' | $5 | ' |
Basis that Series A Preferred stock is convertible into common stock | ' | ' | ' | ' | ' | ' | ' | ' | '1:10 | ' |
Series A preferred stock issued for cash | 19,500 | 38,775 | 37,000 | 37,400 | ' | ' | ' | ' | ' | ' |
Cash proceeds from issuance of Series A preferred stock | $97,500 | $193,875 | $185,000 | $187,000 | ' | ' | ' | ' | ' | ' |
Series A preferred shares converted to common stock | 10,000 | 10,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for conversion of Series A preferred shares | 100,000 | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Series A preferred stock issued in exchange for conversion of note payable | ' | ' | 23,332 | 3,162 | ' | ' | ' | ' | ' | ' |
Note payable amount cancelled in exchange for Series A preferred shares | ' | ' | 116,652 | 15,000 | ' | ' | ' | ' | ' | ' |
Accrued interest amount of note payable cancelled in exchange for Series A preferred shares | ' | ' | ' | 750 | ' | ' | ' | ' | ' | ' |
Interest rate of note payable coverted into Series A preferrred shares | ' | ' | ' | 5.00% | ' | ' | ' | ' | ' | ' |
Maturity date of note payable coverted into Series A preferrred shares | ' | ' | ' | 30-Jun-13 | ' | ' | ' | ' | ' | ' |
Series A preferred stock issued in exchange for conversion of accounts payable | ' | ' | 30,400 | ' | ' | ' | ' | ' | ' | ' |
Accounts payable amount cancelled in exchange for Series A preferred shares | ' | ' | 152,001 | ' | ' | ' | ' | ' | ' | ' |
Series A preferred stock issued | ' | 90,732 | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued to affiliate in exchange for accured payroll | ' | 131,579 | 131,579 | ' | ' | ' | ' | ' | ' | ' |
Common stock issued to affiliate in exchange for accrued payroll, value | ' | 65,790 | 59,211 | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for employee agreement | ' | ' | 10,000 | ' | ' | ' | ' | ' | ' | ' |
Value of stock issued for employee agreement | ' | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for vendor consulting agreement signed May 1, 2013 | ' | 11,250 | 10,000 | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for conversion of Series A Preferred Shares | 100,000 | 100,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Number of common shares rescinded from employee and stock options granted instead | ' | 10,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Value of common shares rescinded from employee related to stock options granted instead | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued for consulting agreement | 12,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock incentive plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares reserved for the 2010 Stock Incentive Plan | ' | ' | ' | ' | ' | 3,100,000 | ' | ' | ' | 1,600,000 |
2010 Stock Incentive Plan increase in shares reserved | ' | ' | ' | ' | ' | 1,500,000 | ' | ' | ' | ' |
Annual increase in reserved shares of the 2010 Stock Incentive Plan | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' |
Unissued option shares available under the Plan | ' | 762,901 | ' | ' | ' | ' | ' | ' | ' | ' |
Total unrecognized compensation cost related to unvested stock options | ' | $294,690 | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average period to recognize compensation cost related to unvested stock options (in years) | ' | '7 years | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants - Consulting Agreements | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted-average Black-Scholes value of warrants granted | ' | $1.52 | ' | ' | ' | ' | $0.56 | $0.89 | ' | ' |
NOTE_10_COMMITMENTS_AND_CONTIN1
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | 3 Months Ended | 8 Months Ended | 9 Months Ended | 12 Months Ended | 14 Months Ended | ||||
Sep. 30, 2013 | Jun. 30, 2012 | 31-May-14 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Jul. 31, 2015 | Dec. 31, 2012 | 15-May-12 | |
sqft | |||||||||
Notes to Financial Statements | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Square feet of leased office and warehouse space | ' | ' | ' | ' | ' | ' | ' | ' | 13,081 |
Monthly rental rate of office space | ' | ' | $3,260 | ' | ' | $3,160 | $3,343 | ' | ' |
Period of office lease | ' | ' | ' | ' | ' | ' | ' | ' | '3 years |
Deferred rent accrual | 18,782 | ' | ' | 18,782 | ' | 18,782 | ' | 8,499 | ' |
Rent expense | $3,197 | $0 | ' | $10,283 | $0 | ' | ' | ' | ' |
NOTE_11_CONCENTRATIONS_AND_CRE1
NOTE 11 - CONCENTRATIONS AND CREDIT RISK (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Notes to Financial Statements | ' | ' | ' | ' |
Net sales to four customers | 68.00% | 46.00% | 41.00% | 53.00% |
Number of customers that made up customer concentration | 4 | 4 | 4 | 4 |
Accounts receivable percentage of two specific customers | 92.00% | 68.00% | 92.00% | 68.00% |
Percent of purchases from one vendor | 71.00% | 46.00% | ' | ' |
Number of vendors that made up vendor concentration | 3 | 4 | ' | ' |
NOTE_12_SUBSEQUENT_EVENTS_Deta
NOTE 12 - SUBSEQUENT EVENTS (Details Narrative) (USD $) | 3 Months Ended | |||||
Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Oct. 02, 2013 | Aug. 01, 2013 | |
Units | ||||||
Subsequent Events [Abstract] | ' | ' | ' | ' | ' | ' |
Series A preferred stock issued for cash | 19,500 | 38,775 | 37,000 | 37,400 | ' | ' |
Cash proceeds from issuance of Series A preferred shares | $97,500 | $193,875 | $185,000 | $187,000 | ' | ' |
Number of investors that bought Series A preferred stock for cash | 4 | ' | ' | ' | ' | ' |
Series A preferred shares converted to common stock | 10,000 | 10,000 | ' | ' | ' | ' |
Common stock issued for conversion of Series A preferred shares | 100,000 | 100,000 | ' | ' | ' | ' |
Common stock issued for consulting agreement | 12,000 | ' | ' | ' | ' | ' |
Common stock issued for consulting agreement, instant | ' | ' | ' | ' | 10,000 | 2,000 |
Warrants issued for a common share per share of Series A preferred stock owned related to anti-dilution feature of the Series A Preferred Stock | '1:2 | ' | ' | ' | ' | ' |
Warrants issued for anti-dilution feature of Series A Preferred Stock | 137,985 | ' | ' | ' | ' | ' |
Warrant term | '3 years | ' | ' | ' | ' | ' |
Common stock issued to affiliate in exchange for accured payroll | ' | 131,579 | 131,579 | ' | ' | ' |
Common stock issued to affiliate in exchange for accrued payroll, value | ' | $65,790 | $59,211 | ' | ' | ' |