ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2013 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Nature Of Operations [Policy Text Block] | ' |
Organization |
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Innovus Pharmaceuticals, Inc., together with its subsidiaries (collectively referred to as “Innovus” or the “Company”) is an emerging pharmaceuticals company that delivers innovative and uniquely presented and packaged health solutions through its over-the-counter medicines and consumer and health products. Innovus is located in La Jolla, California. In its current state, the Company considers itself in a development stage but progressing into the commercial stage in the first quarter of 2014, based on the expected launch of two of its products for sexual dysfunction and arthritis pain relief in the US and other territories. |
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Corporate History [Policy Text Block] | ' |
Corporate History |
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Reverse Merger between North Horizon and FasTrack |
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Innovus Pharma was incorporated as North Horizon, Inc. in 1959 as a Utah corporation and changed its domicile in 2007 to the State of Nevada. In December 2011, North Horizon merged with FasTrack Pharmaceuticals, Inc. North Horizon had no ongoing business at the time of the merger, and FasTrack had a pipeline of one commercial stage product, Apeaz, and one pre-clinical product candidate, Semicarbazide-sensitive amine oxidase/vascular adhesion protein-1, or SSAO/VAP-1, antagonist intended for psoriasis and arthritis. A reverse merger occurred for financial reporting purposes, and the Company changed its name to Innovus Pharmaceuticals, Inc. |
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Merger with Semprae Laboratories, Inc. |
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On December 24, 2013, Innovus Pharma entered into an agreement and plan of merger (the “Merger Agreement”) with Innovus Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Innovus Pharma (“Merger Sub”), Semprae Laboratories, Inc., a Delaware corporation (“Semprae”), certain stockholders of Semprae and Quaker Bioventures II, L.P., a principal stockholder of Semprae, pursuant to which, on the same date, Merger Sub merged into Semprae with Semprae continuing as the surviving corporation and a wholly-owned subsidiary of Innovus Pharma. |
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Proprietary Product and Technology Portfolios |
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The Company is an emerging pharmaceutical company engaged in the commercialization, licensing, and development of non-prescription pharmaceutical products and consumer care health products backed with strong scientific and clinical evidence. The Company’s products are focused in the men’s and women’s health and vitality, and in the pain management therapeutic categories. |
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Pharmaceutical and Consumer Care Products |
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Our pharmaceutical and consumer care product business is currently made up of over-the-counter (OTC) and consumer care health products. We are in the process of marketing our products in the US and other countries. |
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EjectDelay |
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EjectDelay™ is an OTC monograph compliant benzocaine based topical gel for treating premature ejaculation by desensitizing the nerves in the penis, allowing a man to delay ejaculation time. |
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Apeaz™ |
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Apeaz™ is an OTC monograph compliant topical cream for the relief of arthritis pain among other inflammatory conditions which contains methylsulfonylmethane and glucosamine. |
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CIRCUMserum™ |
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We acquired the foreign distribution rights to CIRCUMserum™, a non-medicated cream which moisturizes the head of the penis for enhanced feelings of sensation and greater sexual satisfaction from Centric Research Institute (“CRI”). CIRCUMserum is a patent-pending blend of essential oils and ingredients generally recognized as safe that recently commenced marketing in the United States. |
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Zestra® and Zestra® Glide |
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We acquired Zestra® and Zestra® Glide, through the acquisition of Semprae Laboratories, Inc. Zestra® is a non-medicated patented natural product that helps with sexual dysfunction in women by increasing nerve conduction and vascular smooth muscle dilation, resulting in increasing desire, arousal in women. Zestra® Glide is a clinically tested water based lubricant. |
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Xyralid™ |
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Xyralid™ is an OTC monograph compliant lidocaine based spray in development for the relief of hemorrhoids pain among other inflammatory conditions. |
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Basis Of Presentation And Principles Of Consolidation [Policy Text Block] | ' |
Basis of Presentation and Principles of Consolidation |
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These condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), and include all assets, liabilities, revenues and expenses of the Company and its wholly-owned subsidiary: FasTrack Pharmaceuticals, Inc. All material intercompany transactions and balances have been eliminated. Certain items have been reclassified to conform to the current presentation. |
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Use of Estimates, Policy [Policy Text Block] | ' |
Use of Estimates |
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The preparation of these 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such management estimates include equity-based instruments, income taxes, realizability of deferred tax assets, and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. |
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Liquidity Disclosure [Policy Text Block] | ' |
Liquidity |
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Historically, we have funded losses from operations through the sale of equity and issuance of debt instruments, primarily to related parties including directors and officers. Combined with minimal revenue, these funds have provided us with the resources to operate our business, to begin to sell and support our products, attract and retain key personnel, and add new products to our portfolio. To date, we have experienced net losses and negative cash flows from operations each year since our inception. Through December 31, 2013, we had an accumulated deficit of $6,405,000. |
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As of December 31, 2013, we had $33,374 in cash and cash equivalents. We have raised funds through the issuance of convertible debentures and sale of common stock. We have also utilized equity instruments where possible to pay for services from vendors and consultants. Furthermore, we have an arrangement with our Chief Executive Officer which provides for a line of credit to us in the amount of up to $1,000,000 through the earlier of our successful completion of a financing of $4 million, or July 1, 2016 and permits the deferral of his salary payments as described below. Based upon these factors and arrangements, we believe our cash and cash equivalents will be sufficient to fund our operations until at least December 31, 2014. We expect that our short-term operating expenses will be primarily expenses to sell and support our products and attract and retain key personnel. |
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Other potential sources of liquidity in the short term include payments from our existing partners for license fees, entering into new collaborative, licensing or commercial agreements in additional territories, and revenues from the sale of our products. |
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In addition to payments from our current licensing and commercial agreements, as well as funds from public and private financial markets, potential sources of liquidity in the long term include milestone, royalty and other payments from any future commercial agreements or licensees and revenues from sales of our own products. If we determine it is advisable to raise additional funds, we do not know whether adequate funding will be available to us or, if available, that such funding will be available on acceptable terms. |
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Fair Value Measurement, Policy [Policy Text Block] | ' |
Fair Value Measurement |
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The Company’s financial instruments are cash, accounts receivable, accounts payable, accrued liabilities, convertible debentures and a convertible debt instrument. The recorded values of cash, trade accounts receivable, accounts payable and accrued liabilities approximate their fair values based on their short-term nature. We believe the recorded values of convertible debentures and convertible debt, net of the discount, approximate the fair value as the interest rate (stated or effective) approximates market rates for similar types of instruments. |
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The Company follows a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to measurements involving significant unobservable inputs (Level 3). The three levels of the fair value hierarchy are as follows: |
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| ⋅ | Level 1 measurements are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. | | | | | | | | | | |
| ⋅ | Level 2 measurements are inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. | | | | | | | | | | |
| ⋅ | Level 3 measurements are unobservable inputs. | | | | | | | | | | |
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Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Cash and Cash Equivalents |
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Cash and cash equivalents consist of cash and highly liquid investments with remaining maturities of three months or less when purchased. |
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Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' |
Concentration of Credit Risk and Major Customers |
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Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and trade accounts receivable. Cash held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation (“FDIC”) on such deposits. |
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Accounts receivable consist primarily amounts receivable from Ovation Pharma under our licensing agreement ( See note 4). The Company also requires a percentage of payment in advance for product orders with its larger partners. The Company has not yet recognized revenue under these arrangements. The Company also performs ongoing credit evaluations of its customers and generally does not require collateral. There have been no write-offs of trade accounts receivable during the periods presented. |
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The following table identifies customers with accounts receivable that individually exceed 10% of the Company’s total accounts receivable at December 31, 2013: |
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Ovation Pharma | | 135,035 | | 52 | % | | | | | | | |
Retail Customer A | | 37,963 | | 15 | % | | | | | | | |
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Concentration Of Suppliers, Policy [Policy Text Block] | ' |
Concentration of Suppliers |
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The Company has manufacturing relationships with a number of vendors or manufacturers for its products including: CIRCUMserum™, EjectDelay™, Zestra® and the ApeazTM line of products. Pursuant to these relationships, the Company purchases product through purchase orders with its manufacturers. The Company is in the process of entering into more formal agreements with certain of these manufacturers. |
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Business Combinations Policy [Policy Text Block] | ' |
Business Combinations |
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For business combinations the Company utilizes the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. These standards require that the total cost of an acquisition be allocated to the tangible and intangible assets acquired and liabilities assumed based on their respective fair values at the date of acquisition. The allocation of the purchase price is dependent upon certain valuations and other studies. Acquisition costs are expensed as incurred. |
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The Company recognizes separately from goodwill the fair value of assets acquired and the liabilities assumed. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the acquisition date fair values of the assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, the Company's estimates are subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may retroactively record adjustments to the fair value of the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the Company's consolidated statements of operations. |
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Inventory, Policy [Policy Text Block] | ' |
Inventory |
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Inventory, consisting primarily of finished goods, is valued at the lower of cost or market where cost is determined using the first-in, first-out method. The inventory balance at 2013 is primarily comprised of finished goods for Zestra® and Zestra® Glide from the acquisition of Semprae (See Note 3) . Inventory is shown net of obsolescence and allowance for reducing the inventory cost to market. Obsolescence of inventory is determined based on shelf life or potential product replacement. |
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Property, Plant and Equipment, Policy [Policy Text Block] | ' |
Property and Equipment |
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Property and equipment are recorded at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method over their estimated useful lives. The initial cost of property and equipment consists of its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. |
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Intangible Assets, Finite-Lived, Policy [Policy Text Block] | ' |
Intangible Assets |
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Intangible assets with finite lives are amortized on a straight-line basis over their estimated useful lives, which range in term from 7 to 14 years. The useful life of the intangible asset is evaluated each reporting period to determine whether events and circumstances warrant a revision to the remaining useful life. |
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Goodwill and Intangible Assets, Policy [Policy Text Block] | ' |
Goodwill |
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The Company tests its goodwill for impairment annually, or whenever events or changes in circumstances indicate an impairment may have occurred, by comparing its reporting unit's carrying value to its implied fair value. Impairment may result from, among other things, deterioration in the performance of the acquired business, adverse market conditions, adverse changes in applicable laws or regulations and a variety of other circumstances. If the Company determines that an impairment has occurred, it is required to record a write-down of the carrying value and charge the impairment as an operating expense in the period the determination is made. In evaluating the recoverability of the carrying value of goodwill the Company must make assumptions regarding estimated future cash flows and other factors to determine the fair value of the acquired assets. Changes in strategy or market conditions could significant!y i!npact those judgments in the future and require an adjustment to the recorded balances. The goodwill was recorded as part of the acquisition commenced on December 24, 2013. There was no impairment of goodwill for the year ended December 31, 2013. |
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The purchase price allocation was based upon an analysis of the fair value of the assets and liabilities acquired from Semprae. The final purchase price may be adjusted up to one year from the date of the acquisition. Identifying the fair value of the tangible and intangible assets and liabilities acquired required the use of estimates by management, and were based upon currently available data, as noted below. |
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| ⋅ | The fair value of current assets and liabilities approximated their book value. | | | | | | | | | | |
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The Company allocated the excess of purchase price over the identifiable intangible and net tangible assets to goodwill. Such goodwill is not deductible for tax purposes and represents the value placed on entering new markets and expanding market share. |
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Intangible assets consist of the following at December 31, 2013: |
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| | | | | Accumulated | | | | | Useful Lives | |
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Patents and trademarks | | $ | 264,320 | | $ | -722 | | $ | 263,598 | | 14-Jul | |
Customer contracts | | | 611,119 | | | -1,150 | | | 609,969 | | 10 | |
CIRCUMserum™ license | | | 250,000 | | | -16,736 | | | 233,264 | | 10 | |
Outstanding at December 31, 2013 | | | 1,125,439 | | | -18,608 | | | 1,106,831 | | | |
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Expected amortization is approximately $112,000 for each of the next five years, and $556,000 thereafter. |
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Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block] | ' |
Long-Lived Assets |
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The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company evaluates assets for potential impairment by comparing estimated future undiscounted net cash flows to the carrying amount of the asset. If the carrying amount of the assets exceeds the estimated future undiscounted cash flows, impairment is measured based on the difference between the carrying amount of the assets and fair value. |
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Beneficial Conversion Features and Debt Discounts [Policy Text Block] | ' |
Beneficial Conversion Features and Debt Discounts |
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If a conversion feature of conventional convertible debt is not accounted for separately as a derivative instrument and provides for a rate of conversion that is below market value, this feature is characterized as a beneficial conversion feature (“BCF”). A BCF is recorded by the Company as a debt discount. The Company amortizes the discount to interest expense over the life of the debt using the effective interest rate method. The Company’s 8% convertible debentures and convertible line of credit contain an embedded conversion feature of the notes. (See Note 5) |
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Income Tax, Policy [Policy Text Block] | ' |
Income Taxes |
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Income taxes are provided for using the asset and liability method whereby deferred tax assets and liabilities are recognized using current tax rates on the difference between the financial statement carrying amounts and the respective tax basis of the assets and liabilities. The Company provides a valuation allowance on deferred tax assets when it is more likely than not that such assets will not be realized. |
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The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting this standard, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognized interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying statements of operation. Accrued interest and penalties are included within the related tax liability in the consolidated balance sheets. |
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Revenue Recognition, Trade Receivables And Deferred Revenue, Policy [Policy Text Block] | ' |
Revenue Recognition and Deferred Revenue |
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The Company generates revenues from product sales and the licensing of the rights to market and commercialize its products. |
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Product Sales. The Company ships product to its customers pursuant to purchase agreements or orders. Revenue from sales transactions where the buyer has the right to return the product shall be recognized at the time of sale only if (1) the seller’s price to the buyer is substantially fixed or determinable at the date of sale, (2) the buyer has paid the seller, or the buyer is obligated to pay the seller and the obligation is not contingent on resale of the product, (3) the buyer’s obligation to the seller would not be changed in the event of theft or physical destruction or damage of the product, (4) the buyer acquiring the product for resale has economic substance apart from that provided by the seller, (5) the seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer and (6) the amount of future returns can be reasonably estimated. |
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License Arrangements. Payments received by the Company under license arrangements to market and commercialize its products may include non-refundable upfront fees, license fees, milestone payments for specific achievements designated in the agreements, and royalties on sales of products. The Company considers a variety of factors in determining the appropriate method of accounting under its license arrangements, including whether the various elements can be separated and accounted for individually as separate units of accounting. |
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Cost of Sales, Vendor Allowances, Policy [Policy Text Block] | ' |
Sales Allowances |
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The Company accrues for product returns, volume rebates and promotional discounts in the same period the related sale is recognized. |
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The Company’s product returns accrual is primarily based on estimates of future product returns over the period customers have a right of return, which is in turn based in part on estimates of the remaining shelf-life of products when sold to customers. Future product returns are estimated primarily based on historical sales and return rates. The Company estimates its volume rebates and promotional discounts accrual based on its estimates of the level of inventory of its products in the distribution channel that remain subject to these discounts. The estimate of the level of products in the distribution channel is based primarily on data provided by the Company’s customers. |
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In all cases, judgment is required in estimating these reserves, and actual claims for rebates, returns and promotional discounts could be materially different from the estimates. |
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The Company provides a customer satisfaction warranty on all of its products to customers for a specified amount of time after product delivery. Estimated return costs are based on historical experience and estimated and recorded when the related sales are recognized. Any additional costs are recorded when incurred or when they can reasonably be estimated. |
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The estimated reserve for sales returns and allowances, which is included in accounts payable and accrued liabilities, was insignificant at December 31, 2013 and December 31, 2012. |
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Cost of Sales, Policy [Policy Text Block] | ' |
Cost of Goods Sold |
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Cost of goods sold includes the cost of inventory, royalties and inventory reserves. The Company is required to make royalty payments based upon the net sales of its marketed products, Zestra® and CIRCUMserum ™. |
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Research and Development Expense, Policy [Policy Text Block] | ' |
Research and Development Costs |
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Research and development (“R&D”) costs, including research performed under contract by third parties, are expensed as incurred. Major components of R&D expenses consist of testing, clinical trials, material purchases and regulatory affairs. |
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Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | ' |
Stock-based Compensation |
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The Company accounts for stock based compensation in accordance with ASC 718, Stock Based Compensation, which requires the recognition of the fair value of stock compensation as an expense in the calculation of net income. ASC 718 requires that stock-based compensation expense be based on awards that are ultimately expected to vest. Stock-based compensation for the years ended December 31, 2013 and 2012 have been reduced for estimated forfeitures. When estimating forfeitures, voluntary termination behaviors, as well as trends of actual option forfeitures, are considered. To the extent actual forfeitures differ from the Company’s current estimates, cumulative adjustments to stock-based compensation expense are recorded. |
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Except for transactions with employees and directors that are within the scope of ASC 718, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. |
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Schedule of Share-based Compensation, Nonemployee Director Stock Award Plan, Activity [Table Text Block] | ' |
Equity Instruments Issued to Non-Employees for Services |
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Issuances of the Company’s common stock for services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants is determined at the earlier of (a) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) (b) the date at which performance is complete, and is based upon the quoted market price of the common stock at the date of issuance (See Note 7). |
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Comprehensive Loss, Policy [Policy Text Block] | ' |
Comprehensive Loss |
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Comprehensive loss consists of net loss and other gains and losses affecting stockholders’ equity (deficit) that, under U.S. GAAP, are excluded from net loss. Comprehensive loss was the same as net loss for the year ended December 31, 2013 and 2012 as the Company has no other comprehensive income. |
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Earnings Per Share, Policy [Policy Text Block] | ' |
Earnings per Share |
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Basic earnings per share are computed by dividing net loss by the weighted average number of common shares outstanding during the period presented. Diluted earnings per share are computed using the weighted average number of common shares outstanding during the periods plus the effect of dilutive securities outstanding during the periods. For the year ended December 31, 2013 and 2012, basic earnings per share are the same as diluted earnings per share as a result of the Company’s common stock equivalents being anti-dilutive. |
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The following reconciliation shows the anti-dilutive shares excluded from the calculation of basic and diluted loss per common share attributable to the Company for the year ended December 31, 2013 and 2012: |
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| | 2013 | | 2012 | | | | | | | | |
Gross number of shares excluded: | | | | | | | | | | | | |
Restricted stock units | | 6,300,000 | | - | | | | | | | | |
Stock options | | 21,000 | | | | | | | | | | |
Convertible notes payable | | 2,378,287 | | 2,853,360 | | | | | | | | |
Warrants | | 380,973 | | 380,973 | | | | | | | | |
Total | | 9,080,260 | | 3,234,333 | | | | | | | | |
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New Accounting Pronouncements, Policy [Policy Text Block] | ' |
New Accounting Pronouncements |
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In February 2013, the FASB issued ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“AOCI”). This standard requires reporting, in one place, information about reclassifications out of AOCI by component. An entity is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of AOCI by the respective line items of net income, but only if the amount is reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified to net income in their entirety, an entity is required to cross-reference to other currently required disclosures that provide additional detail about those amounts. The information required by this standard must be presented in one place, either parenthetically on the face of the financial statements by income statement line item or in a note. The adoption of ASU 2013-02 had no impact on the Company’s financial position or results of operations. |
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