Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 13, 2013 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'OxySure Systems Inc | ' |
Entity Central Index Key | '0001413797 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 24,217,806 |
Condensed_Balance_Sheets
Condensed Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current assets | ' | ' |
Cash and cash equivalents | $4,753 | $13,514 |
Accounts receivable, net | 53,979 | 18,487 |
Inventories | 271,361 | 221,345 |
Prepaid expenses and other current assets | 286 | ' |
Total current assets | 330,379 | 253,346 |
Total property and equipment, net | 24,308 | 27,599 |
Intangible assets, net | 399,954 | 418,479 |
Other assets | 446,662 | 516,373 |
TOTAL ASSETS | 1,201,302 | 1,215,797 |
Current liabilities | ' | ' |
Accounts payable and accrued expenses | 469,481 | 388,183 |
Related party payable | 108,483 | 207,472 |
Capital leases - current | 308,238 | 296,116 |
Notes payable - current | 40,897 | 31,588 |
Convertible notes payable | 503,303 | 367,001 |
Deferred revenue | 2,976 | 499,225 |
Total current liabilities | 1,433,377 | 1,789,585 |
Long-term liabilities | ' | ' |
Capital leases | 2,304 | 2,265 |
Notes payable | 76,072 | 76,072 |
Total long-term liabilities | 78,376 | 78,337 |
TOTAL LIABILITIES | 1,511,753 | 1,867,922 |
COMMITMENTS AND CONTINGENCY | ' | ' |
STOCKHOLDERS' EQUITY | ' | ' |
Preferred stock, par value $0.0005 per share; 25,000,000 shares authorized; 743,750 Series A convertible preferred shares issued and outstanding as of September 30, 2013 and 818,750 shares issued and outstanding as of December 31, 2012. | 371 | 409 |
Common stock, par value $0.0004 per share; 100,000,000 shares authorized; 24,217,806 shares of voting common stock issued and outstanding as of September 30, 2013 and 22,548,678 shares issued and outstanding as of December 31, 2012. | 9,683 | 9,016 |
197,779 shares of voting common stock subscribed but not issued as of September 30, 2013 and 0 shares subscribed but not issued as of December 31, 2012. | 79 | ' |
Additional paid-in capital | 14,383,110 | 13,597,117 |
Accumulated deficit | -14,703,693 | -14,258,667 |
TOTAL STOCKHOLDERS' DEFICIT | -310,451 | -652,125 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $1,201,302 | $1,215,797 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Balance Sheets [Abstract] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Series A convertible preferred stock, shares issued | 743,750 | 818,750 |
Series A convertible preferred stock, shares outstanding | 743,750 | 818,750 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Voting common stock, shares issued | 24,217,806 | 22,548,678 |
Voting common stock, shares outstanding | 24,217,806 | 22,548,678 |
Common stock subscribed but not issued, shares | 197,779 | 0 |
Condensed_Statements_of_Operat
Condensed Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Income Statement [Abstract] | ' | ' | ' | ' |
Revenues, net | $545,820 | $103,327 | $1,262,311 | $194,102 |
Cost of goods sold | 111,110 | 50,472 | 316,763 | 88,331 |
Gross profit | 434,710 | 52,855 | 945,548 | 105,771 |
Operating expenses | ' | ' | ' | ' |
Research and development | 134,357 | 579 | 354,515 | 1,814 |
Sales and marketing | 77,841 | 7,234 | 269,918 | 27,798 |
Other general and administrative | 266,320 | 198,997 | 697,417 | 717,735 |
Loss from operating expenses | -43,808 | -153,955 | -376,302 | -641,576 |
Other income (expense) | ' | ' | ' | ' |
Other income (expense) | 8,375 | 75,637 | 27,400 | 134,353 |
Interest expense | -47,180 | -55,461 | -95,669 | -170,778 |
Total other income (expense) | -38,805 | 20,176 | 68,269 | -36,425 |
Net loss | ($82,613) | ($133,779) | ($444,571) | ($678,001) |
Basic net loss per common share | $0 | ($0.01) | ($0.02) | ($0.03) |
Diluted net loss per common share | $0 | ($0.01) | ($0.02) | ($0.03) |
Weighted average common shares outstanding: | ' | ' | ' | ' |
Basic | 24,076,789 | 20,761,595 | 23,308,417 | 19,475,873 |
Diluted | 24,076,789 | 20,761,595 | 23,308,417 | 19,475,873 |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ' | ' |
Net loss | ($444,571) | ($678,001) |
Adjustments to reconcile net loss to net cash used in operating activities | ' | ' |
Depreciation | 14,147 | 122,718 |
Amortization of intangible assets | 22,487 | 22,372 |
Prior period adjustment | -455 | ' |
Amortization of debt discount and warrant fair values related to convertible loans | 67,683 | 156,916 |
Amortization of original issuance and other discounts on notes payable | 5,143 | ' |
Amortization of other assets | 69,711 | ' |
Changes in deferred rent and leasehold improvement allowance | 30,938 | 86,271 |
Issuance of common stock options to employees as compensation | 12,498 | 14,037 |
Issuance of common stock for compensation | 1,525 | ' |
Issuance of common stock in exchange for services | 39,190 | ' |
Issuance of common stock in connection with research & development arrangements | -14,147 | ' |
Changes in current assets and liabilities: | ' | ' |
Accounts receivable | -35,493 | -25,417 |
Inventory | -50,016 | 37,515 |
Prepaid expenses and other current assets | -286 | ' |
Accounts payable and accrued liabilities | -48,629 | 124,522 |
Deferred revenue | -496,250 | 113,733 |
NET CASH USED IN OPERATING ACTIVITIES | -834,526 | -25,334 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Purchases of intangible assets | -3,961 | -3,172 |
Purchases of property and equipment | -10,856 | -44,003 |
NET CASH USED IN INVESTING ACTIVITIES | -14,817 | -47,175 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Loan proceeds, net | 265,857 | 47,847 |
Payment of capital leases | -12,161 | -19,207 |
Issuance of preferred stock | ' | -27 |
Issuance of common stock for cash | 558,731 | ' |
Proceeds from exercise of common stock options and warrants | 3,833 | 95,225 |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 840,582 | 123,837 |
Net change in cash and cash equivalents | -8,761 | 51,328 |
Cash and cash equivalents, at beginning of period | 13,514 | 65,118 |
Cash and cash equivalents, at end of period | 4,753 | 116,447 |
Cash paid during the period for: | ' | ' |
Interest | 9,817 | 773 |
Income taxes | ' | ' |
Supplemental non-cash investing and financing activities: | ' | ' |
Conversion of convertible notes issued in connection with rent agreements to common stock | ' | $251,407 |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||
A summary of significant accounting policies of OxySure® Systems, Inc. (“OxySure” or the “Company”) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity. | |||||||||
OxySure Systems, Inc. (OXYS: OTCQB) (the “Company,” “OxySure,” “we,” “us,” or “our”) was incorporated on January 15, 2004 as a Delaware corporation. The Company is located in Frisco, Texas and is a medical technology company that focuses on the design, manufacture and distribution of specialty respiratory and emergency medical solutions. The company pioneered a safe and easy to use solution to produce medically pure (USP) oxygen from inert powders. The company owns nine (9) issued patents and patents pending on this technology which makes the provision of emergency duration or short duration oxygen safer, more accessible and easier to use than traditional oxygen provision systems. OxySure's products improve access to emergency oxygen that affects the survival, recovery and safety of individuals in several areas of need: (1) Public and private places and settings where medical emergencies can occur; (2) Individuals at risk for cardiac, respiratory or general medical distress needing immediate help prior to emergency medical care arrival; and (3) Those requiring immediate protection and escape from exposure situations or oxygen-deficient situations in industrial, mining, military, or other "Immediately Dangerous to Life or Health" (IDLH) environments. | |||||||||
In 2008 the Company launched its first product utilizing this technology – a portable emergency oxygen system for lay person use, called the OxySure Model 615. On December 9, 2005, the Company received approval from the Food and Drug Administration (510K, Class II) for Model 615. The FDA approval is for over-the-counter purchase, without the need of a prescription. | |||||||||
The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors. | |||||||||
While the Company has effectively managed its working capital deficit the going concern risk remains an issue for the company to manage. The Company has implemented, and plans to further implement several different strategies in order to help the Company ease the going concern issue. Refer to Note 10, “Going concern” of the Notes to Financial Statements for a partial list of the Company’s plans to mitigate the going concern issue. | |||||||||
Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded; and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition of the Company. The interim financial statements include all adjustments which, in the opinion of management, are necessary in order to make the financial statements not misleading. | |||||||||
The accompanying Condensed Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2012 in the Company's Condensed Balance Sheet included in this quarterly report was derived from the audited Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on April 2, 2013. Where applicable, the Company's 2012 Annual Report on Form 10-K is referred to in this quarterly report as the “2012 Annual Report.” This quarterly report should be read in conjunction with the 2012 Annual Report. | |||||||||
Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimated. | |||||||||
Revenue Recognition - We recognize revenue when persuasive evidence of an arrangement exists, shipment has occurred, the price is fixed or determinable, and collectability is reasonably assured. Revenues are recognized from product sales, net of discounts and rebates. This revenue recognition policy is applied to both customers and distributors. | |||||||||
Fees from licensees desiring to manufacture and distribute our products or derivative products using our intellectual property include initial license fees and royalties. Initial license fees are generally recognized upon granting of the license to the licensee. Royalties are recognized in the period earned. | |||||||||
Deferred Revenue and Income - We defer revenue and income when we invoice a customer or a customer makes a payment and the requirements of revenue recognition have not been met (i.e. persuasive evidence of an arrangement exists, shipment from a company warehouse has occurred, the price is fixed or determinable and collectability is reasonably assured). Deferred Revenue was $2,976 and $499,225 as at September 30, 2013 and December 31, 2012, respectively. | |||||||||
Cash and Cash Equivalents - Cash consists of all highly liquid investments purchased with maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed Federally-insured limits. To minimize this risk, the Company places its cash and cash equivalents with high credit quality institutions. | |||||||||
Inventory – Our inventory consists of raw material and components for our portable oxygen systems as well as completed products and accessories. Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in first-out basis. Inventory components are parts, work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer. We write down our inventory value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values. Management has established inventory reserves to cover estimated inventory losses for all work-in-process and finished goods related to products we manufactured, as well as raw material and components for those products that had no potential use in products to be manufactured in the future. Management is required to make judgments about the future benefit of our raw materials and components. Actual reserve requirements could differ significantly from Management’s estimates, which could have a significant unfavorable impact on our future gross margins. | |||||||||
At September 30, 2013 inventories consisted of the following: | |||||||||
September 30, | |||||||||
2013 | |||||||||
Parts inventory | $ | 169,880 | |||||||
Work in process | 73,200 | ||||||||
Finished goods | $ | 28,282 | |||||||
Total inventories | $ | 271,361 | |||||||
Concentration of Credit Risk – We sell our products throughout the United States as well as in certain other countries. Sales to its recurring customers in the United States are generally granted on net 30-day credit terms. We perform periodic credit evaluations of our recurring customers and generally do not require collateral. In general, we require prepayment on all sales to customers outside the United States. An allowance for doubtful accounts is maintained for potential credit losses, which losses historically have not been significant. | |||||||||
We invest our cash in deposits and money market funds with major financial institutions. We place our cash investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument. | |||||||||
Fair Value of Financial Instruments - Our financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable. We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and respective maturity dates or durations. The fair value of our long-term debt is determined by using estimated market prices. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows: | |||||||||
Level 1: Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date. | |||||||||
Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date. | |||||||||
Level 3: Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. | |||||||||
The fair value of the majority of our cash equivalents was determined based on “Level 1” inputs. We do not have any marketable securities in the “Level 2” and “Level 3” category. We believe that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. | |||||||||
Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years. Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms. Depreciation expense was $4,593 and $40,899 for the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Other Long-Lived Assets – We have two types of intangible assets – patents and trademarks. Intangible assets are carried at cost, net of accumulated amortization. Amortization expense for patents and trademarks was $7,508 and $7,489 for the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified. Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Certain events and circumstances the Company considered in determining whether the carrying value of identifiable intangible assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in its business strategy. In determining if impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Impairment charges for patents were $0 for each of the three month periods ended September 30, 2013 and 2012. | |||||||||
Other Assets– We record Other Assets net of accumulated amortization. Amortization expense for Other Assets was $23,237 and $0 for the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Capitalization of software: The Company accounts for internal-use software and website development costs, including the development of its partner marketplaces in accordance with ASC 350-50 (Intangibles – Website cost). The Company capitalizes internal costs consisting of payroll and direct payroll-related costs of employees who devote time to the development of internal-use software, as well as any external direct costs. It amortizes these costs over their estimated useful lives, which typically range between three to five years. The Company’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The estimated life is based on management’s judgment as to the product life cycle. | |||||||||
Allowance for Doubtful Accounts - We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make payments. We periodically review these allowances, including an analysis of the customers’ payment history and information regarding the customers’ creditworthiness. Actual write-offs have not been materially different from the estimated allowance. We recorded bad debt expense of $0 for each of the three month periods ended September 30, 2013 and 2012. | |||||||||
Research and Development Costs – Costs associated with the development of our products are charged to expense as incurred. $134,357 and $579 were incurred in the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Income Taxes - In accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”), we account for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our Consolidated Financial Statements, but have not been reflected in our taxable income. A valuation allowance has been established to reduce deferred tax assets to their estimated realizable value. Therefore, we provide a valuation allowance to the extent that we do not believe it is more likely than not that we will generate sufficient taxable income in future periods to realize the benefit of our deferred tax assets. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. | |||||||||
Equity Warrants - We issued warrants to purchase shares of our common stock in connection with convertible notes. In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the notes were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We record the fair value of the warrants at the time of issuance as additional paid in capital and as a debt discount to the notes. We amortize this debt discount as interest expense over the life of the note. Additionally, as a result of issuing the warrants with the convertible notes, a beneficial conversion option is recorded as a debt discount reflecting the incremental conversion option intrinsic value of the conversion option provided to the holders of the notes. We also amortize this debt discount as interest expense over the life of the notes. The intrinsic value of each conversion option was calculated as the difference between the effective conversion price and the fair value of the common stock, multiplied by the number of shares into which the note is convertible. | |||||||||
Stock-Based Compensation – We account for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, we issue warrants to the consultants and related parties. We are required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. We have estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model. | |||||||||
The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by employees. Upon the adoption of the accounting guidance, we continued to use historical volatility in deriving its expected volatility assumption as allowed under GAAP because we believe that future volatility over the expected term of the stock options is not likely to differ materially from the past. The risk-free interest rate assumption is based on 5-year U.S Treasury zero-coupon rates appropriate for the expected term of the stock options. The expected dividend assumption is based on the history and expectation of dividend payouts. The fair values generated by the Black-Scholes model may not be indicative of the actual fair values of the equity awards, as we do not consider other factors important to those awards to employees, such as continued employment, periodic vesting requirements and limited transferability. The amount of stock based compensation expenses is net of an estimated forfeiture rate, which is also based on historical data. For the three month periods ended September 30, 2013 and 2012, stock based compensation expense was approximately $22,038 and $(3,200), respectively, which consisted primarily of stock-based compensation expense related to stock options issued to the employees and recognized under GAAP. | |||||||||
The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services to be provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The Company recognizes this expense over the period in which the services are provided. For each of the three month periods ended September 30, 2013 and 2012, stock based compensation expense was approximately $0 which consisted primarily of stock-based compensation expense related to stock options and warrants recognized under GAAP issued to consultants and other non-employees. | |||||||||
The following table shows the components of the Company’s stock based compensation expense for employees, consultants and other non-employees: | |||||||||
Three months ended | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Common Stock options issued for compensation | $ | 22,038 | $ | (3,200 | ) | ||||
Common Stock options and warrants issued for services | - | - | |||||||
Total | $ | 22,038 | $ | (3,200 | ) | ||||
Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues. | |||||||||
Advertising Costs - Advertising costs are charged to operations when incurred. We incurred $77,841 and $7,234 in advertising and promotion costs during the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Litigation and Settlement Costs - Legal costs are expensed as incurred. The Company records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) accrue the best estimate within a range of loss if there is a loss or, when there is no amount within a range that forms a better estimate, the Company will accrue the minimum amount in the range. The Company was not involved in any legal proceedings, litigation or other legal actions during the three months ended September 30, 2013. | |||||||||
Net Income (Loss) Per Share - Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding. However, basic loss per share excludes anti-dilutive securities. Diluted earnings per share is computed based on the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include stock options and other stock-based awards granted under stock-based compensation plans and shares committed to be purchased under the employee stock purchase plan. | |||||||||
The table below sets forth the computation of basic and diluted earnings (loss) per share: | |||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Historical net loss per share: | |||||||||
Numerator | |||||||||
Net loss, as reported | (82,613 | ) | (133,779 | ) | |||||
Less: Effect of amortization of interest expense on convertible notes | - | - | |||||||
Net loss attributed to common stockholders (diluted) | (82,613 | ) | (133,779 | ) | |||||
Denominator | |||||||||
Weighted-average common shares outstanding | 24,076,789 | 20,761,595 | |||||||
Effect of dilutive securities | - | - | |||||||
Denominator for diluted net loss per share | 24,076,789 | 20,761,595 | |||||||
Basic and diluted net loss per share | $ | (0.00 | ) | $ | (0.01 | ) | |||
The following outstanding options, warrants, convertible preferred shares and convertible note shares were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect: | |||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Options to purchase common stock | 1,570,891 | 1,532,430 | |||||||
Warrants to purchase common stock | 1,894,534 | 1,822,034 | |||||||
Common shares issuable upon conversion of convertible preferred stock | 907,375 | 1,059,875 | |||||||
Convertible note shares outstanding | 810,147 | 1,696,331 | |||||||
Restatements and Reclassifications - Certain financial statement items have been reclassified to conform to the current periods’ presentation. These reclassifications had no impact on previously reported net loss. | |||||||||
Recent Accounting Pronouncements | |||||||||
In February 2013, the Financial Accounting Standards Board (“FASB”) issued guidance and disclosure requirements for reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires that an entity provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP. The guidance became effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. This standard was adopted in the first quarter of 2013. |
Intangible_Assets
Intangible Assets | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||
INTANGIBLE ASSETS | ' | ||||||||||||
NOTE 2 – INTANGIBLE ASSETS | |||||||||||||
We have two types of intangible assets: patents and trademarks. We capitalize expenditures associated with patents and trademarks related to our various technologies. Capitalized costs include amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications. These assets are amortized on a straight-line method over their legal life. | |||||||||||||
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable in accordance with applicable accounting guidance. Impairment charges for patents were $0 for each of the three month periods ended September 30, 2013 and 2012. | |||||||||||||
The carrying values of our amortized acquired intangible assets as of September 30, 2013 are as follows: | |||||||||||||
30-Sep-13 | |||||||||||||
Gross | Accumulated | Net | |||||||||||
Amortization | |||||||||||||
and write off | |||||||||||||
Patents | $ | 617,651 | $ | (253,335 | ) | $ | 364,316 | ||||||
Trademarks | $ | 45,723 | $ | (10,086 | ) | $ | 35,637 | ||||||
$ | 663,374 | $ | (263,421 | ) | $ | 399,953 | |||||||
Of the net amount of $399,953 in intangible assets as of September 30, 2013, approximately 91% is in patents and approximately 9% is in trademarks. Included in the $663,374 gross amount for patents and trademarks is $157,000 acquired from entities controlled by the founder of the Company in January 2004. The remaining $506,374 represents amounts paid to third parties for legal fees, application fees and other direct costs incurred in the filing and prosecution of patent and trademark applications. |
Notes_Payable
Notes Payable | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes Payable [Abstract] | ' | ||||||||||||||||
NOTES PAYABLE | ' | ||||||||||||||||
NOTE 3 – NOTES PAYABLE | |||||||||||||||||
We have issued warrants for the purchase of shares of our restricted common stock in connection with raising equity and debt financing and for other professional services. The fair value of warrants issued is determined in accordance with Codification topic 470-20. | |||||||||||||||||
Frisco Promissory Note On April 3, 2007 we entered into a note agreement with the City of Frisco, Texas for $243,000 (the “Frisco Note”) pursuant to an economic incentive package provided through the Frisco Economic Development Corporation (“FEDC”). The note required varying annual principal payments through August 2012. The note was non-interest bearing; however, interest has been imputed at 12.18% per annum. On March 22, 2011 we entered into an Amended and Restated Performance Agreement with the FEDC. In terms of the Amended and Restated Performance Agreement, the FEDC provided us with economic assistance in the form of the renewal and extension of the outstanding forgivable loan of $213,000 together with revised performance credits over 5 years, commencing on March 22, 2011 and ending on the earlier to occur of: (i) the full payment of the economic incentives; or (ii) March 31, 2016. | |||||||||||||||||
The renewed Frisco Note requires varying annual principal payments through December 2015. The face value of the renewed note is $213,000, and the note is non-interest bearing; however, interest has been imputed at 12.34% per annum. | |||||||||||||||||
On December 1, 2011 we received the first performance credit from the FEDC in the amount of $26,000 pursuant to the Amended and Restated Performance Agreement. Effective December 1, 2012 we received the performance credit from the FEDC in the amount of $39,000 pursuant to the Amended and Restated Performance Agreement. | |||||||||||||||||
The unamortized discount at September 30, 2013 was $31,031, and the net amount of the Frisco Note as at September 30, 2013 was $116,969. | |||||||||||||||||
Future principal payments of this note payable are as follows: | |||||||||||||||||
2013 | $ | 44,000 | |||||||||||||||
2014 | 52,000 | ||||||||||||||||
2015 | 52,000 | ||||||||||||||||
$ | 148,000 | ||||||||||||||||
Sinacola Subordinated, Convertible Notes. | |||||||||||||||||
Fifth Landlord Note; Sixth Landlord Note: | |||||||||||||||||
On March 23, 2011 we entered into a third rent satisfaction agreement (the “2011 RSA”) with our landlord, Sinacola. In terms of the 2011 RSA, certain of our rent obligations for the period January 1, 2011 through September 30, 2011 under our lease agreement, including base rent and deferred rent, are satisfied in full. | |||||||||||||||||
We issued Sinacola two Promissory Notes pursuant to the 2011 RSA, as follows: | |||||||||||||||||
Fifth Landlord Note: The first note (the “Fifth Landlord Note”) is a subordinated convertible note in the principal amount of $50,000. The Fifth Landlord Note carries no interest and is convertible, at Sinacola’s option, into the common stock of the Company at an exercise price of $1.00 per common share on the maturity date. | |||||||||||||||||
Sixth Landlord Note: The second note (the “Sixth Landlord Note”) is a subordinated convertible note in the principal amount of $50,000. The Sixth Landlord Note carries no interest and is convertible into the common stock of the Company at an exercise price of $1.50 per common share on the maturity date. However, if the common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Sixth Landlord Note is convertible at the Company’s option. | |||||||||||||||||
Maturity Date – Each of the Fifth Landlord Note and the Sixth Landlord Note has a maturity date of September 30, 2013. | |||||||||||||||||
We also issued Sinacola with 65,000 penny warrants pursuant to the 2011 RSA (the “2011 Landlord Warrant”). The 2011 Landlord Warrant is convertible into 65,000 shares of our common stock, and is exercisable in whole or in part at any time on or before March 23, 2016 at an exercise price of $.01 per share. | |||||||||||||||||
In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the Fifth Landlord Note and the Sixth Landlord Note were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We recorded the relative fair value of the warrant issued to Fifth Landlord Note in the amount of $32,207 as a debt discount upon issuance, and amortized this debt discount as interest expense over the life of the note. Additionally, as a result of issuing the warrant with the subordinated convertible promissory note, a beneficial conversion option was recorded as a debt discount reflecting the incremental conversion option intrinsic value benefit of $17,793, at the time of issuance provided to the holder of the note, which we also amortize as interest expense over the life of the note. We recorded interest expense in the amount of $0 for each of the three month periods ended September 30, 2013 and September 30, 2012 in connection with the Fifth Landlord Note. We recorded the relative fair value of the warrant issued to Sixth Landlord Note in the amount of $32,207 as a debt discount upon issuance, and amortized this debt discount as interest expense over the life of the note. Additionally, as a result of issuing the warrant with the subordinated convertible promissory note, a beneficial conversion option was recorded as a debt discount reflecting the incremental conversion option intrinsic value benefit of $15,540, at the time of issuance provided to the holder of the note, which we also amortize as interest expense over the life of the note. We recorded interest expense in the amount of $0 for the each of the three month periods ended September 30, 2013 and September 30, 2012 in connection with the Sixth Landlord Note. | |||||||||||||||||
Seventh Landlord Note; Eighth Landlord Note: | |||||||||||||||||
On August 15, 2011 we entered into a fourth rent satisfaction agreement (the “Second 2011 RSA”) with our landlord, Sinacola. In terms of the Second 2011 RSA, certain of our rent obligations for the period July 1, 2011 through December 31, 2011 under our lease agreement, including base rent and deferred rent, are satisfied in full. | |||||||||||||||||
We issued Sinacola two Promissory Notes pursuant to the Second 2011 RSA, as follows: | |||||||||||||||||
Seventh Landlord Note: The first note (the “Seventh Landlord Note”) is a subordinated convertible note in the principal amount of $50,050. The Fifth Landlord Note carries no interest and is convertible, at Sinacola’s option, into the common stock of the Company at an exercise price of $1.00 per common share on the maturity date. | |||||||||||||||||
Eighth Landlord Note: The second note (the “Eighth Landlord Note”) is a subordinated convertible note in the principal amount of $50,050. The Eighth Landlord Note carries no interest and is convertible into the common stock of the Company at an exercise price of $1.50 per common share on the maturity date. However, if the common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Sixth Landlord Note is convertible at the Company’s option. | |||||||||||||||||
Maturity Date – Each of the Seventh Landlord Note and the Eighth Landlord Note has a maturity date of November 30, 2013. | |||||||||||||||||
We also issued Sinacola with 65,065 penny warrants pursuant to the Second 2011 RSA (the “Second 2011 Landlord Warrant”). The Second 2011 Landlord Warrant is convertible into 65,065 shares of our common stock, and is exercisable in whole or in part at any time on or before August 15, 2016 at an exercise price of $.01 per share. | |||||||||||||||||
In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the Seventh Landlord Note and the Eighth Landlord Note were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We recorded the relative fair value of the warrant issued to Seventh Landlord Note in the amount of $32,223 as a debt discount upon issuance, and we amortize this debt discount as interest expense over the life of the note. Additionally, as a result of issuing the warrant with the subordinated convertible promissory note, a beneficial conversion option was recorded as a debt discount reflecting the incremental conversion option intrinsic value benefit of $17,827, at the time of issuance provided to the holder of the note, which we also amortize as interest expense over the life of the note. We recorded interest expense in the amounts of $5,460 and $5,460 for the three months ended September 30, 2013 and September 30, 2012, respectively in connection with the Seventh Landlord Note. We recorded the relative fair value of the warrant issued to Eighth Landlord Note in the amount of $32,223 as a debt discount upon issuance, and we amortize this debt discount as interest expense over the life of the note. Additionally, as a result of issuing the warrant with the subordinated convertible promissory note, a beneficial conversion option was recorded as a debt discount reflecting the incremental conversion option intrinsic value benefit of $15,540, at the time of issuance provided to the holder of the note, which we also amortize as interest expense over the life of the note. We recorded interest expense in the amounts of $5,210 and $5,210 for the three months ended September 30, 2013 and September 30, 2012, respectively in connection with the Eighth Landlord Note. | |||||||||||||||||
The Company issued four additional convertible notes with a face value totaling $245,000 during the three months ended September 30, 2013. The following table reflects the carrying values of our short-term and long-term notes payable as of September 30, 2013: | |||||||||||||||||
Effective Interest Rate | Principal | Discount | 30-Sep-13 | ||||||||||||||
Current notes payable | |||||||||||||||||
Sinacola, Third Landlord Note | 0 | % | $ | 110,000 | - | $ | 110,000 | ||||||||||
Sinacola, Fourth Landlord Note | 0 | % | 110,715 | - | 110,715 | ||||||||||||
Sinacola, Fifth Landlord Note | 0 | % | 50,000 | - | 50,000 | ||||||||||||
Sinacola, Sixth Landlord Note | 0 | % | 50,000 | - | 50,000 | ||||||||||||
Sinacola, Seventh Landlord Note | 44 | % | 50,050 | 5,460 | 44,590 | ||||||||||||
Sinacola, Eighth Landlord Note | 42 | % | 50,050 | 5,210 | 44,840 | ||||||||||||
JMJ Financial Note1 | 78 | % | 50,834 | 31,643 | 19,191 | ||||||||||||
JMJ Financial Note2 | 113 | % | 25,000 | 18,600 | 6,400 | ||||||||||||
Tonaquint, Inc. Note | 96 | % | 106,925 | 52,444 | 54,481 | ||||||||||||
LG Capital | 112 | % | 51,998 | 38,912 | 13,086 | ||||||||||||
Frisco EDC | 12.3 | % | 44,000 | 3,103 | 40,897 | ||||||||||||
Total short-term notes payable | $ | 699,572 | 155,372 | $ | 544,200 | ||||||||||||
Long-term notes payable | |||||||||||||||||
Frisco EDC | 12.34 | % | $ | 104,000 | 27,928 | $ | 76,072 | ||||||||||
Total long-term notes payable | $ | 104,000 | $ | 27,928 | $ | 76,072 | |||||||||||
Total short-term and long-term notes payable | $ | 803,572 | $ | 183,300 | $ | 620,272 | |||||||||||
The following table summarizes our outstanding notes payable as of September 30, 2013 and December 31, 2012: | |||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||
Current portion of notes payable | $ | 40,897 | $ | 31,588 | |||||||||||||
Current portion of convertible notes payable | 503,303 | 367,001 | |||||||||||||||
Current portion of notes payable, net | $ | 544,200 | $ | 398,589 | |||||||||||||
Long-term portion of notes payable | $ | 104,000 | $ | 104,000 | |||||||||||||
Less: Unamortized discount | (27,928 | ) | (27,928 | ) | |||||||||||||
76,072 | 76,072 | ||||||||||||||||
Long-term portion of convertible notes payable | $ | $ | - | ||||||||||||||
Less: Unamortized discount | - | ||||||||||||||||
- | |||||||||||||||||
Long-term portion of notes payable, net | $ | 76,072 | $ | 76,072 | |||||||||||||
Shareholders_Equity
Shareholders' Equity | 9 Months Ended |
Sep. 30, 2013 | |
Shareholders' Equity [Abstract] | ' |
SHAREHOLDERS' EQUITY | ' |
NOTE 4 - SHAREHOLDERS’ EQUITY | |
Preferred Shares Rights | |
On December 31, 2005, the Company’s Board of Directors adopted a Preferred Shares Rights Agreement (the “Original Rights Agreement”). Pursuant to the Agreement, the Board authorized the issuance of up to 5,000,000 shares of preferred stock, par value $0.0005 per share. As of July 2, 2008, the Company had authorized the issuance of 3,143,237 shares of preferred stock designated as Series A Convertible Preferred Stock (“Series A Preferred”). The original issue price of the Series A Preferred is $1.00 per share. There were 743,750 and 818,750 Series A Preferred shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively. | |
During the three months ended September 30, 2013 the Company did not issue any shares of the Series A Preferred. During the three months ended September 30, 2013 25,000 shares of the Series A Preferred have been converted into our common stock at a conversion ratio of 1.22:1. | |
A summary of the designations and preferences of its Series A Preferred stock is as follows: | |
Ranking – The Series A Preferred ranks senior to common stock. | |
Dividends – Series A Preferred may be entitled to receive a quarterly non-cumulative dividend in the amount of $.01 per share upon approval from the Board of Directors. | |
Liquidation Preference – In the event of any liquidation, dissolution, or winding up of the Company, the holders of Series A Preferred are entitled to receive 100% of the original issue price of $1.00 per share. | |
Conversion Rights – Each share of Series A Preferred is convertible at any time, at the option of the holder into 1.22 shares of common stock, subject to adjustment. Series A Preferred are subject to automatic conversion upon consummation of underwritten offering by the Company of shares of common stock to the public, in which the aggregate cash proceeds are at least $3 million and the price paid per share is at least $5.00. | |
Redemption Rights – All of the Series A Preferred may be called at any time by the Company within ten years, but not prior to two years after issuance. The redemption value is $1.00 per share, plus an amount equal to all unpaid dividends thereon. | |
Voting Rights – The holder of each share of Series A Preferred has the right to one vote for each share of common stock into which such share of Series A Preferred could be converted. | |
Common Stock | |
The Company has authorized 100,000,000 shares of $0.0004 par value common stock. | |
During the three months ended September 30, 2013 we issued approximately 340,000 shares of common stock valued at approximately $170,000 pursuant to common stock subscribed but not issued in a prior period. | |
As of September 30, 2013 we had approximately $107,827 in Other stockholder equity recorded pursuant to approximately 197,779 shares of common stock subscribed for but not issued, in accordance with ASC Topic 210-10. | |
As of September 30, 2013 we had approximately 24,217,806 shares of common stock issued and outstanding. |
Stock_Options_and_Warrants
Stock Options and Warrants | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Stock Options and Warrants [Abstract] | ' | ||||||||||||||||||||
STOCK OPTIONS AND WARRANTS | ' | ||||||||||||||||||||
NOTE 5 - STOCK OPTIONS AND WARRANTS | |||||||||||||||||||||
Equity Incentive Plans | |||||||||||||||||||||
In April 2004, our Board of Directors and the stockholders at that time approved the adoption of a Voting Stock Option Plan (“the Plan”), which provides for the issuance of stock options to eligible employees, consultants, Board members and Advisory Board members of the Company to acquire up to a maximum of 5,000,000 shares of common stock. | |||||||||||||||||||||
Our Board of Directors, which determines the number of options that will be granted, the effective dates of the grants, the option process and the vesting schedules, administers the Plan. In the absence of an established market for the common stock of the Company, the Board of Directors determines the fair market value of our common stock. Options generally expire between five and ten years from the date of grant and automatically terminate 90 days after such optionee ceases to be an eligible individual under the Plan other than by reason of death or disability. | |||||||||||||||||||||
The portion of options granted that is not exercisable on the date the optionee ceases to be an eligible individual under the Plan by reason other than death, shall terminate and be forfeited to the Company on the date of such cessation. An optionee has no right as a stockholder with respect to any shares covered by the options granted to him until a certificate representing such shares is issued to them. | |||||||||||||||||||||
Stock Options | |||||||||||||||||||||
The following table summarizes information about the number and weighted average of the options that were forfeited or expired under the Plan as at September 30, 2013: | |||||||||||||||||||||
Employee | Non-Employee | ||||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||||
Number | Average | Number | Average | Combined | |||||||||||||||||
Of | Exercise | Of | Exercise | Total | |||||||||||||||||
Options | Price | Options | Price | Options | |||||||||||||||||
Outstanding at June 30, 2013 | 1,579,921 | * | $ | 0.36 | 18,180 | $ | 1.15 | 1,579,921 | |||||||||||||
Granted | - | $ | - | - | $ | - | - | ||||||||||||||
Exercised | - | $ | - | - | $ | - | - | ||||||||||||||
Forfeited/Cancelled | (6,750 | ) | $ | 2 | (2,280 | ) | $ | 2.5 | (9,030 | ) | |||||||||||
Outstanding at September 30, 2013 | 1,573,171 | $ | 0.36 | 15,900 | $ | 0.96 | 1,570,891 | ||||||||||||||
*Corrected from our June 30, 2013 financial statement footnotes. | |||||||||||||||||||||
We used the following assumptions to estimate the fair value of options granted under the Plan for the three months ended September 30, 2013 and 2012: | |||||||||||||||||||||
Equity Incentive Plans for Quarter | |||||||||||||||||||||
Ended September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Expected terms (in years) | 10-May | 10-May | |||||||||||||||||||
Volatility (weighted ave.) | 38 | % | 26 | % | |||||||||||||||||
Risk-free interest rate (weighted ave.) | 1.39 | % | 1.04 | % | |||||||||||||||||
Expected dividend rate | 0 | % | 0 | % | |||||||||||||||||
Risk-Free Interest Rate | The risk-free interest rate assumption was based on U.S. Treasury instruments with a term that is consistent with the expected term of our stock options. | ||||||||||||||||||||
Expected Volatility | We use historical volatility in deriving our expected volatility assumption because we believe that future volatility over the expected term of the stock options is not likely to differ from the past. | ||||||||||||||||||||
Expected Term | The expected term of stock options represents the weighted average period the stock options are expected to remain outstanding. The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by optionees. We use historical volatility in deriving our expected volatility assumption because it believes that future volatility over the expected term of the stock options is not likely to differ from the past. | ||||||||||||||||||||
Expected Dividend Yield | The expected dividend yield of 0% is based on our history and expectation of dividend payouts. We have not paid and do not anticipate paying any dividends in the near future. | ||||||||||||||||||||
Forfeitures | FASB ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We only records stock-based compensation expense for awards that are expected to vest. While we generally consider historical forfeitures in its estimates, judgment is also required in estimating the amount of stock-based awards that are expected to be forfeited. Our estimate for forfeitures may differ from actual forfeitures. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted when we record a true-up for the difference in the period that the awards vest. We adjust stock-based compensation expense based on our actual forfeitures on an annual basis, if necessary. | ||||||||||||||||||||
As of September 30, 2013, there were unrecognized compensation costs of approximately $44,142 related to non-vested stock option awards granted after April 2004 that will be recognized on a straight-line basis over the weighted average remaining vesting period of 0.37 years. | |||||||||||||||||||||
Stock compensation cost, using the graded vesting attribute method in accordance with Codification topic 718, is recognized over the requisite service period, generally 5 years, during which each tranche (one fifth) of shares is earned (zero, one, two, three, and four years). The value of each tranche is amortized on a straight-line basis. For the three months ended September 30, 2013, stock based compensation expense was approximately $22,038, which consisted primarily of stock-based compensation expense related to stock options recognized under GAAP issued to employees. For the three months ended September 30, 2013, there were no options exercised. | |||||||||||||||||||||
Warrants. | |||||||||||||||||||||
The following table summarizes our warrant activities for the three months ended September 30, 2013: | |||||||||||||||||||||
Weighted | |||||||||||||||||||||
Number | Average | ||||||||||||||||||||
Of | Exercise | ||||||||||||||||||||
Warrants | Price | ||||||||||||||||||||
Outstanding at June 30, 2013 | 1,519,534 | $ | 0.8 | ||||||||||||||||||
Granted | 375,000 | $ | 1.5 | ||||||||||||||||||
Exercised | - | $ | - | ||||||||||||||||||
Forfeited/Cancelled | - | $ | - | ||||||||||||||||||
Outstanding at September 30, 2013 | 1,894,534 | $ | 0.94 |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Related Party Transactions [Abstract] | ' | |||||
RELATED PARTY TRANSACTIONS | ' | |||||
NOTE 6 – RELATED PARTY TRANSACTIONS | ||||||
A summary of the related party financings and notes as at September 30, 2013 is as follows: | ||||||
Related party | Julian Ross (1) | |||||
Amount | $ | 108,483 | ||||
Stated interest rate | 0 | % | ||||
Maturity | n/a | |||||
(1) Our CEO, Mr. Ross provides us shareholder cash advances and other consideration from time to time to fund working capital. | ||||||
During the quarter we purchased a truck from Pearl Ross for an amount of $2,600. We use the truck for local deliveries and other operational purposes. Pearl Ross is the spouse of our CEO, Mr. Julian Ross. Mr. Ross disclaims any ownership in the truck or the proceeds from the sale. | ||||||
Fair_Value_Measurements
Fair Value Measurements | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||
FAIR VALUE MEASUREMENTS | ' | ||||||||||||||||
NOTE 7 – FAIR VALUE MEASUREMENTS | |||||||||||||||||
Effective January 1, 2009, the Company adopted new fair value accounting guidance. The adoption of the guidance was limited to financial assets and liabilities and did not have a material effect on the Company’s financial condition or results of operations. | |||||||||||||||||
The guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact business and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. The guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The guidance establishes three levels of inputs that may be used to measure fair value: | |||||||||||||||||
Level 1 — Quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. | |||||||||||||||||
Level 3 — Unobservable inputs to the valuation methodology that is significant to the measurement of fair value of assets or liabilities. | |||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | |||||||||||||||||
The following table presents the Company’s financial assets and liabilities that are measured at fair value on a recurring basis which were comprised of the following types of instruments as of September 30, 2013: | |||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Cash (1) | $ | 4,753 | $ | 4,753 | - | - | |||||||||||
Total cash equivalents as of September 30, 2013 | $ | 4,753 | $ | 4,753 | $ | - | $ | - | |||||||||
(1) Included in cash and cash equivalents on the Company's Balance Sheet. |
Off_Balance_Sheet_Arrangements
Off Balance Sheet Arrangements and Contractual Obligations | 9 Months Ended |
Sep. 30, 2013 | |
Off Balance Sheet Arrangements and Contractual Obligations [Abstract] | ' |
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS | ' |
NOTE 8 – OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS | |
We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us. |
Segment_Information
Segment Information | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Segment Information [Abstract] | ' | ||||||||
SEGMENT INFORMATION | ' | ||||||||
NOTE 9 – SEGMENT INFORMATION | |||||||||
We are organized as, and operate in, one reportable segment: the development, distribution and sale of specialty respiratory products and related medical products, accessories, and services. Our chief operating decision-maker is our Chief Executive Officer. Our Chief Executive Officer reviews financial information presented for purposes of evaluating financial performance and allocating resources, accompanied by information about revenue by geographic regions. Our assets are primarily located in the United States of America and not allocated to any specific region and we do not measure the performance of our geographic regions based upon asset-based metrics. Therefore, geographic information is presented only for revenue. Revenue by geographic region is based on the ship to address on our customer orders. | |||||||||
The following presents total revenue by geographic region for the three month periods ended September 30, 2013 and 2012: | |||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Product Revenue: | |||||||||
United States - product sales | $ | 284,540 | $ | 60,296 | |||||
ROW - product sales | 2,530 | 41,880 | |||||||
ROW - license fees/service revenue | 258,750 | - | |||||||
Totals | $ | 545,820 | $ | 102,176 | |||||
Going_Concern
Going Concern | 9 Months Ended |
Sep. 30, 2013 | |
Going Concern [Abstract] | ' |
GOING CONCERN | ' |
NOTE 10 – GOING CONCERN | |
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. While we have turned a profit during the three months ended September 30, 2013, historically we have been suffering from recurring loss from operations. We have an accumulated deficit of $14,703,693 and $14,258,667 at September 30, 2013 and December 31, 2012, respectively, and stockholders’ deficits of $310,451 and $652,125 as of September 30, 2013 and December 31, 2012, respectively. We require substantial additional funds to manufacture and commercialize our products. Our management is actively seeking additional sources of equity and/or debt financing; however, there is no assurance that any additional funding will be available. | |
In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying September 30, 2013 balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to generate cash from future operations. These factors, among others, raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Basis of Presentation | ' | ||||||||
Basis of Presentation - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded; and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition of the Company. The interim financial statements include all adjustments which, in the opinion of management, are necessary in order to make the financial statements not misleading. | |||||||||
The accompanying Condensed Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2012 in the Company's Condensed Balance Sheet included in this quarterly report was derived from the audited Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on April 2, 2013. Where applicable, the Company's 2012 Annual Report on Form 10-K is referred to in this quarterly report as the “2012 Annual Report.” This quarterly report should be read in conjunction with the 2012 Annual Report. | |||||||||
Use of estimates | ' | ||||||||
Use of estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimated. | |||||||||
Revenue Recognition | ' | ||||||||
Revenue Recognition - We recognize revenue when persuasive evidence of an arrangement exists, shipment has occurred, the price is fixed or determinable, and collectability is reasonably assured. Revenues are recognized from product sales, net of discounts and rebates. This revenue recognition policy is applied to both customers and distributors. | |||||||||
Fees from licensees desiring to manufacture and distribute our products or derivative products using our intellectual property include initial license fees and royalties. Initial license fees are generally recognized upon granting of the license to the licensee. Royalties are recognized in the period earned. | |||||||||
Deferred Revenue and Income | ' | ||||||||
Deferred Revenue and Income - We defer revenue and income when we invoice a customer or a customer makes a payment and the requirements of revenue recognition have not been met (i.e. persuasive evidence of an arrangement exists, shipment from a company warehouse has occurred, the price is fixed or determinable and collectability is reasonably assured). Deferred Revenue was $2,976 and $499,225 as at September 30, 2013 and December 31, 2012, respectively. | |||||||||
Cash and Cash Equivalents | ' | ||||||||
Cash and Cash Equivalents - Cash consists of all highly liquid investments purchased with maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed Federally-insured limits. To minimize this risk, the Company places its cash and cash equivalents with high credit quality institutions. | |||||||||
Inventory | ' | ||||||||
Inventory – Our inventory consists of raw material and components for our portable oxygen systems as well as completed products and accessories. Inventories are computed using the lower of cost or market, which approximates actual cost on a first-in first-out basis. Inventory components are parts, work-in-process and finished goods. Finished goods are reported as inventories until the point of title transfer to the customer. We write down our inventory value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. These factors are impacted by market and economic conditions, technology changes, new product introductions and changes in strategic direction and require estimates that may include uncertain elements. Actual demand may differ from forecasted demand, and such differences may have a material effect on recorded inventory values. Management has established inventory reserves to cover estimated inventory losses for all work-in-process and finished goods related to products we manufactured, as well as raw material and components for those products that had no potential use in products to be manufactured in the future. Management is required to make judgments about the future benefit of our raw materials and components. Actual reserve requirements could differ significantly from Management’s estimates, which could have a significant unfavorable impact on our future gross margins. | |||||||||
At September 30, 2013 inventories consisted of the following: | |||||||||
September 30, | |||||||||
2013 | |||||||||
Parts inventory | $ | 169,880 | |||||||
Work in process | 73,200 | ||||||||
Finished goods | $ | 28,282 | |||||||
Total inventories | $ | 271,361 | |||||||
Concentration of Credit Risk | ' | ||||||||
Concentration of Credit Risk – We sell our products throughout the United States as well as in certain other countries. Sales to its recurring customers in the United States are generally granted on net 30-day credit terms. We perform periodic credit evaluations of our recurring customers and generally do not require collateral. In general, we require prepayment on all sales to customers outside the United States. An allowance for doubtful accounts is maintained for potential credit losses, which losses historically have not been significant. | |||||||||
We invest our cash in deposits and money market funds with major financial institutions. We place our cash investments in instruments that meet high credit quality standards, as specified in our investment policy guidelines. These guidelines also limit the amount of credit exposure to any one issue, issuer or type of instrument. | |||||||||
Fair Value of Financial Instruments | ' | ||||||||
Fair Value of Financial Instruments - Our financial instruments consist principally of cash and cash equivalents, accounts receivable and accounts payable. We believe that the recorded values of all of our other financial instruments approximate their fair values because of their nature and respective maturity dates or durations. The fair value of our long-term debt is determined by using estimated market prices. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree that the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows: | |||||||||
Level 1: Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date. | |||||||||
Level 2: Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date. | |||||||||
Level 3: Inputs include management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument’s valuation. | |||||||||
The fair value of the majority of our cash equivalents was determined based on “Level 1” inputs. We do not have any marketable securities in the “Level 2” and “Level 3” category. We believe that the recorded values of all our other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations. | |||||||||
Property and Equipment | ' | ||||||||
Property and Equipment – Property and equipment are recorded at cost with depreciation and amortization provided over the shorter of the remaining lease term or the estimated useful life of the improvement ranging from three to seven years. Renewals and betterments that materially extend the life of an asset are capitalized. Expenditures for maintenance and repairs are charged to expense when incurred. Furniture and fixtures are depreciated over five years. Machinery and equipments are depreciated over five to seven years. Software is depreciated over three years. Leasehold improvements are computed using the shorter of the estimated useful lives of the assets or the lease terms. Depreciation expense was $4,593 and $40,899 for the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Other Long-Lived Assets | ' | ||||||||
Other Long-Lived Assets – We have two types of intangible assets – patents and trademarks. Intangible assets are carried at cost, net of accumulated amortization. Amortization expense for patents and trademarks was $7,508 and $7,489 for the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Intangible assets with definite useful lives and other long-lived assets are tested for impairment if certain impairment indicators are identified. Management evaluates the recoverability of its identifiable intangible assets in accordance with applicable accounting guidance, which requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Certain events and circumstances the Company considered in determining whether the carrying value of identifiable intangible assets may not be recoverable include, but are not limited to: significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; and changes in its business strategy. In determining if impairment exists, we estimate the undiscounted cash flows to be generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. Impairment charges for patents were $0 for each of the three month periods ended September 30, 2013 and 2012. | |||||||||
Other Assets | ' | ||||||||
Other Assets – We record Other Assets net of accumulated amortization. Amortization expense for Other Assets was $23,237 and $0 for the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Capitalization of software: The Company accounts for internal-use software and website development costs, including the development of its partner marketplaces in accordance with ASC 350-50 (Intangibles – Website cost). The Company capitalizes internal costs consisting of payroll and direct payroll-related costs of employees who devote time to the development of internal-use software, as well as any external direct costs. It amortizes these costs over their estimated useful lives, which typically range between three to five years. The Company’s judgment is required in determining the point at which various projects enter the stages at which costs may be capitalized, in assessing the ongoing value of the capitalized costs, and in determining the estimated useful lives over which the costs are amortized. The estimated life is based on management’s judgment as to the product life cycle. | |||||||||
Allowance for Doubtful Accounts | ' | ||||||||
Allowance for Doubtful Accounts - We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make payments. We periodically review these allowances, including an analysis of the customers’ payment history and information regarding the customers’ creditworthiness. Actual write-offs have not been materially different from the estimated allowance. We recorded bad debt expense of $0 for each of the three month periods ended September 30, 2013 and 2012. | |||||||||
Research and Development Costs | ' | ||||||||
Research and Development Costs – Costs associated with the development of our products are charged to expense as incurred. $134,357 and $579 were incurred in the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Income Taxes | ' | ||||||||
Income Taxes - In accordance with Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes” (“ASC 740”), we account for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our Consolidated Financial Statements, but have not been reflected in our taxable income. A valuation allowance has been established to reduce deferred tax assets to their estimated realizable value. Therefore, we provide a valuation allowance to the extent that we do not believe it is more likely than not that we will generate sufficient taxable income in future periods to realize the benefit of our deferred tax assets. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. | |||||||||
Equity Warrants | ' | ||||||||
Equity Warrants - We issued warrants to purchase shares of our common stock in connection with convertible notes. In accordance with ASC 470-20, Debt with conversions and other options, the proceeds from the notes were allocated based on the relative fair values of the notes without the warrants issued in conjunction with the notes and of the warrants themselves at the time of issuance. We record the fair value of the warrants at the time of issuance as additional paid in capital and as a debt discount to the notes. We amortize this debt discount as interest expense over the life of the note. Additionally, as a result of issuing the warrants with the convertible notes, a beneficial conversion option is recorded as a debt discount reflecting the incremental conversion option intrinsic value of the conversion option provided to the holders of the notes. We also amortize this debt discount as interest expense over the life of the notes. The intrinsic value of each conversion option was calculated as the difference between the effective conversion price and the fair value of the common stock, multiplied by the number of shares into which the note is convertible. | |||||||||
Stock-Based Compensation | ' | ||||||||
Stock-Based Compensation – We account for share-based payments, including grants of stock options to employees, consultants and non-employees; moreover, we issue warrants to the consultants and related parties. We are required to estimate the fair value of share-based awards and warrants on the date of grant. The value of the award is principally recognized as expense ratably over the requisite service periods. We have estimated the fair value of stock options and warrants as of the date of grant or assumption using the Black-Scholes option pricing model. | |||||||||
The expected term is based on the observed and expected time to exercise and post-vesting cancellations of options by employees. Upon the adoption of the accounting guidance, we continued to use historical volatility in deriving its expected volatility assumption as allowed under GAAP because we believe that future volatility over the expected term of the stock options is not likely to differ materially from the past. The risk-free interest rate assumption is based on 5-year U.S Treasury zero-coupon rates appropriate for the expected term of the stock options. The expected dividend assumption is based on the history and expectation of dividend payouts. The fair values generated by the Black-Scholes model may not be indicative of the actual fair values of the equity awards, as we do not consider other factors important to those awards to employees, such as continued employment, periodic vesting requirements and limited transferability. The amount of stock based compensation expenses is net of an estimated forfeiture rate, which is also based on historical data. For the three month periods ended September 30, 2013 and 2012, stock based compensation expense was approximately $22,038 and $(3,200), respectively, which consisted primarily of stock-based compensation expense related to stock options issued to the employees and recognized under GAAP. | |||||||||
The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services to be provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The Company recognizes this expense over the period in which the services are provided. For each of the three month periods ended September 30, 2013 and 2012, stock based compensation expense was approximately $0 which consisted primarily of stock-based compensation expense related to stock options and warrants recognized under GAAP issued to consultants and other non-employees. | |||||||||
The following table shows the components of the Company’s stock based compensation expense for employees, consultants and other non-employees: | |||||||||
2012 | |||||||||
Three months ended | |||||||||
September 30, | |||||||||
2013 | |||||||||
Common Stock options issued for compensation | $ | 22,038 | $ | (3,200 | ) | ||||
Common Stock options and warrants issued for services | - | - | |||||||
Total | $ | 22,038 | $ | (3,200 | ) | ||||
Shipping and Handling Costs | ' | ||||||||
Shipping and Handling Costs - Shipping and handling charges to customers are included in net revenues, and the associated costs incurred are recorded in cost of revenues. | |||||||||
Advertising Costs | ' | ||||||||
Advertising Costs - Advertising costs are charged to operations when incurred. We incurred $77,841 and $7,234 in advertising and promotion costs during the three month periods ended September 30, 2013 and 2012, respectively. | |||||||||
Litigation and Settlement Costs | ' | ||||||||
Litigation and Settlement Costs - Legal costs are expensed as incurred. The Company records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and (ii) accrue the best estimate within a range of loss if there is a loss or, when there is no amount within a range that forms a better estimate, the Company will accrue the minimum amount in the range. The Company was not involved in any legal proceedings, litigation or other legal actions during the three months ended September 30, 2013. | |||||||||
Net Income (Loss) Per Share | ' | ||||||||
Net Income (Loss) Per Share - Basic earnings (loss) per share is computed based on the weighted average number of common shares outstanding. However, basic loss per share excludes anti-dilutive securities. Diluted earnings per share is computed based on the weighted average number of common shares outstanding, increased by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued, and reduced by the number of shares the Company could have repurchased from the proceeds from issuance of the potentially dilutive shares. Potentially dilutive shares of common stock include stock options and other stock-based awards granted under stock-based compensation plans and shares committed to be purchased under the employee stock purchase plan. | |||||||||
The table below sets forth the computation of basic and diluted earnings (loss) per share: | |||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Historical net loss per share: | |||||||||
Numerator | |||||||||
Net loss, as reported | (82,613 | ) | (133,779 | ) | |||||
Less: Effect of amortization of interest expense on convertible notes | - | - | |||||||
Net loss attributed to common stockholders (diluted) | (82,613 | ) | (133,779 | ) | |||||
Denominator | |||||||||
Weighted-average common shares outstanding | 24,076,789 | 20,761,595 | |||||||
Effect of dilutive securities | - | - | |||||||
Denominator for diluted net loss per share | 24,076,789 | 20,761,595 | |||||||
Basic and diluted net loss per share | $ | (0.00 | ) | $ | (0.01 | ) | |||
The following outstanding options, warrants, convertible preferred shares and convertible note shares were excluded from the computation of basic and diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect: | |||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Options to purchase common stock | 1,570,891 | 1,532,430 | |||||||
Warrants to purchase common stock | 1,894,534 | 1,822,034 | |||||||
Common shares issuable upon conversion of convertible preferred stock | 907,375 | 1,059,875 | |||||||
Convertible note shares outstanding | 810,147 | 1,696,331 | |||||||
Restatements and Reclassifications | ' | ||||||||
Restatements and Reclassifications - Certain financial statement items have been reclassified to conform to the current periods’ presentation. These reclassifications had no impact on previously reported net loss. | |||||||||
Recent Accounting Pronouncements | ' | ||||||||
Recent Accounting Pronouncements | |||||||||
In February 2013, the Financial Accounting Standards Board (“FASB”) issued guidance and disclosure requirements for reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires that an entity provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP. The guidance became effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. This standard was adopted in the first quarter of 2013. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Summary of Significant Accounting Policies [Abstract] | ' | ||||||||
Schedule of inventories | ' | ||||||||
September 30, | |||||||||
2013 | |||||||||
Parts inventory | $ | 169,880 | |||||||
Work in process | 73,200 | ||||||||
Finished goods | $ | 28,282 | |||||||
Total inventories | $ | 271,361 | |||||||
Schedule of stock based compensation expense | ' | ||||||||
Three months ended | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Common Stock options issued for compensation | $ | 22,038 | $ | (3,200 | ) | ||||
Common Stock options and warrants issued for services | - | - | |||||||
Total | $ | 22,038 | $ | (3,200 | ) | ||||
Schedule of numerator and denominator used in calculation of basic and diluted net loss per share | ' | ||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Historical net loss per share: | |||||||||
Numerator | |||||||||
Net loss, as reported | (82,613 | ) | (133,779 | ) | |||||
Less: Effect of amortization of interest expense on convertible notes | - | - | |||||||
Net loss attributed to common stockholders (diluted) | (82,613 | ) | (133,779 | ) | |||||
Denominator | |||||||||
Weighted-average common shares outstanding | 24,076,789 | 20,761,595 | |||||||
Effect of dilutive securities | - | - | |||||||
Denominator for diluted net loss per share | 24,076,789 | 20,761,595 | |||||||
Basic and diluted net loss per share | $ | (0.00 | ) | $ | (0.01 | ) | |||
Schedule of antidilutive securities excluded from computation of earnings per share | ' | ||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Options to purchase common stock | 1,570,891 | 1,532,430 | |||||||
Warrants to purchase common stock | 1,894,534 | 1,822,034 | |||||||
Common shares issuable upon conversion of convertible preferred stock | 907,375 | 1,059,875 | |||||||
Convertible note shares outstanding | 810,147 | 1,696,331 | |||||||
Intangible_Assets_Tables
Intangible Assets (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Intangible Assets [Abstract] | ' | ||||||||||||
Schedule of carrying values of amortized acquired intangible assets | ' | ||||||||||||
30-Sep-13 | |||||||||||||
Gross | Accumulated | Net | |||||||||||
Amortization | |||||||||||||
and write off | |||||||||||||
Patents | $ | 617,651 | $ | (253,335 | ) | $ | 364,316 | ||||||
Trademarks | $ | 45,723 | $ | (10,086 | ) | $ | 35,637 | ||||||
$ | 663,374 | $ | (263,421 | ) | $ | 399,953 | |||||||
Notes_Payable_Tables
Notes Payable (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Debt Instrument [Line Items] | ' | ||||||||||||||||
Carrying values of short-term and long-term notes payable | ' | ||||||||||||||||
Effective Interest Rate | Principal | Discount | 30-Sep-13 | ||||||||||||||
Current notes payable | |||||||||||||||||
Sinacola, Third Landlord Note | 0 | % | $ | 110,000 | - | $ | 110,000 | ||||||||||
Sinacola, Fourth Landlord Note | 0 | % | 110,715 | - | 110,715 | ||||||||||||
Sinacola, Fifth Landlord Note | 0 | % | 50,000 | - | 50,000 | ||||||||||||
Sinacola, Sixth Landlord Note | 0 | % | 50,000 | - | 50,000 | ||||||||||||
Sinacola, Seventh Landlord Note | 44 | % | 50,050 | 5,460 | 44,590 | ||||||||||||
Sinacola, Eighth Landlord Note | 42 | % | 50,050 | 5,210 | 44,840 | ||||||||||||
JMJ Financial Note1 | 78 | % | 50,834 | 31,643 | 19,191 | ||||||||||||
JMJ Financial Note2 | 113 | % | 25,000 | 18,600 | 6,400 | ||||||||||||
Tonaquint, Inc. Note | 96 | % | 106,925 | 52,444 | 54,481 | ||||||||||||
LG Capital | 112 | % | 51,998 | 38,912 | 13,086 | ||||||||||||
Frisco EDC | 12.3 | % | 44,000 | 3,103 | 40,897 | ||||||||||||
Total short-term notes payable | $ | 699,572 | 155,372 | $ | 544,200 | ||||||||||||
Long-term notes payable | |||||||||||||||||
Frisco EDC | 12.34 | % | $ | 104,000 | 27,928 | $ | 76,072 | ||||||||||
Total long-term notes payable | $ | 104,000 | $ | 27,928 | $ | 76,072 | |||||||||||
Total short-term and long-term notes payable | $ | 803,572 | $ | 183,300 | $ | 620,272 | |||||||||||
Summary of notes payable outstanding | ' | ||||||||||||||||
30-Sep-13 | 31-Dec-12 | ||||||||||||||||
Current portion of notes payable | $ | 40,897 | $ | 31,588 | |||||||||||||
Current portion of convertible notes payable | 503,303 | 367,001 | |||||||||||||||
Current portion of notes payable, net | $ | 544,200 | $ | 398,589 | |||||||||||||
Long-term portion of notes payable | $ | 104,000 | $ | 104,000 | |||||||||||||
Less: Unamortized discount | (27,928 | ) | (27,928 | ) | |||||||||||||
76,072 | 76,072 | ||||||||||||||||
Long-term portion of convertible notes payable | $ | $ | - | ||||||||||||||
Less: Unamortized discount | - | ||||||||||||||||
- | |||||||||||||||||
Long-term portion of notes payable, net | $ | 76,072 | $ | 76,072 | |||||||||||||
Frisco Note payable [Member] | ' | ||||||||||||||||
Debt Instrument [Line Items] | ' | ||||||||||||||||
Future principal payments of Frisco note payable | ' | ||||||||||||||||
2013 | $ | 44,000 | |||||||||||||||
2014 | 52,000 | ||||||||||||||||
2015 | 52,000 | ||||||||||||||||
$ | 148,000 | ||||||||||||||||
Stock_Options_and_Warrants_Tab
Stock Options and Warrants (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||||||
Stock Options and Warrants [Abstract] | ' | ||||||||||||||||||||
Summary of option activity | ' | ||||||||||||||||||||
- | |||||||||||||||||||||
Employee | Non-Employee | ||||||||||||||||||||
Weighted | Weighted | ||||||||||||||||||||
Number | Average | Number | Average | Combined | |||||||||||||||||
Of | Exercise | Of | Exercise | Total | |||||||||||||||||
Options | Price | Options | Price | Options | |||||||||||||||||
Outstanding at June 30, 2013 | 1,579,921 | * | $ | 0.36 | 18,180 | $ | 1.15 | 1,579,921 | |||||||||||||
Granted | - | $ | - | - | $ | - | |||||||||||||||
Exercised | - | $ | - | - | $ | - | - | ||||||||||||||
Forfeited/Cancelled | (6,750 | ) | $ | 2 | (2,280 | ) | $ | 2.5 | (9,030 | ) | |||||||||||
Outstanding at September 30, 2013 | 1,573,171 | $ | 0.36 | 15,900 | $ | 0.96 | 1,570,891 | ||||||||||||||
*Corrected from our June 30, 2013 financial statement footnotes. | |||||||||||||||||||||
Summary of assumptions to estimate the fair value of options granted | ' | ||||||||||||||||||||
Equity Incentive Plans for Quarter | |||||||||||||||||||||
Ended September 30, | |||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||
Expected terms (in years) | 10-May | 10-May | |||||||||||||||||||
Volatility (weighted ave.) | 38 | % | 26 | % | |||||||||||||||||
Risk-free interest rate (weighted ave.) | 1.39 | % | 1.04 | % | |||||||||||||||||
Expected dividend rate | 0 | % | 0 | % | |||||||||||||||||
Summary of warrant activity | ' | ||||||||||||||||||||
Weighted | |||||||||||||||||||||
Number | Average | ||||||||||||||||||||
Of | Exercise | ||||||||||||||||||||
Warrants | Price | ||||||||||||||||||||
Outstanding at June 30, 2013 | 1,519,534 | $ | 0.8 | ||||||||||||||||||
Granted | 375,000 | $ | 1.5 | ||||||||||||||||||
Exercised | - | $ | - | ||||||||||||||||||
Forfeited/Cancelled | - | $ | - | ||||||||||||||||||
Outstanding at September 30, 2013 | 1,894,534 | $ | 0.94 | ||||||||||||||||||
Related_Party_Transactions_Tab
Related Party Transactions (Tables) | 9 Months Ended | |||||
Sep. 30, 2013 | ||||||
Related Party Transactions [Abstract] | ' | |||||
Summary of the related party financings and notes payable | ' | |||||
Related party | Julian Ross (1) | |||||
Amount | $ | 108,483 | ||||
Stated interest rate | 0 | % | ||||
Maturity | n/a | |||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Fair Value Measurements [Abstract] | ' | ||||||||||||||||
Summary of Financial assets and liabilities measured at fair value on a recurring basis | ' | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||
Cash (1) | $ | 4,753 | $ | 4,753 | - | - | |||||||||||
Total cash equivalents as of September 30, 2013 | $ | 4,753 | $ | 4,753 | $ | - | $ | - | |||||||||
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Segment Information [Abstract] | ' | ||||||||
Revenue by geographic region | ' | ||||||||
Three months ended September 30, | |||||||||
2013 | 2012 | ||||||||
Product Revenue: | |||||||||
United States - product sales | $ | 284,540 | $ | 60,296 | |||||
ROW - product sales | 2,530 | 41,880 | |||||||
ROW - license fees/service revenue | 258,750 | - | |||||||
Totals | $ | 545,820 | $ | 102,176 | |||||
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Summary of Inventories | ' | ' |
Parts inventory | $169,880 | ' |
Work in process | 73,200 | ' |
Finished goods | 28,282 | ' |
Total inventories | $271,361 | $221,345 |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details 1) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Schedule of stock based compensation expense | ' | ' |
Common Stock options issued for compensation | $22,038 | $3,200 |
Common stock options and warrants issued for services | ' | ' |
Total | $22,038 | $3,200 |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Numerator | ' | ' | ' | ' |
Net income (loss) | ($82,613) | ($133,779) | ($444,571) | ($678,001) |
Less: Effect of amortization of interest expense on convertible notes | ' | ' | ' | ' |
Net loss attributed to common stockholders (diluted) | ($82,613) | ($133,779) | ' | ' |
Denominator | ' | ' | ' | ' |
Basic-Weighted-average common shares outstanding | 24,076,789 | 20,761,595 | 23,308,417 | 19,475,873 |
Effect of dilutive securities | ' | ' | ' | ' |
Denominator for diluted net loss per share | 24,076,789 | 20,761,595 | 23,308,417 | 19,475,873 |
Earnings Per Share, Basic and Diluted | $0 | ($0.01) | ' | ' |
Summary_of_Significant_Account6
Summary of Significant Accounting Policies (Details 3) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Options to purchase common stock | ' | ' |
Schedule of antidilutive securities excluded from computation of earnings per share | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 1,570,891 | 1,532,430 |
Warrants to purchase common stock | ' | ' |
Schedule of antidilutive securities excluded from computation of earnings per share | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 1,894,534 | 1,822,034 |
Convertible Preferred Stock | ' | ' |
Schedule of antidilutive securities excluded from computation of earnings per share | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 907,375 | 1,059,875 |
Convertible note shares outstanding | ' | ' |
Schedule of antidilutive securities excluded from computation of earnings per share | ' | ' |
Antidilutive securities excluded from computation of earnings per share | 810,147 | 1,696,331 |
Summary_of_Significant_Account7
Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Patent | |||||
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Expected term of the stock options | '5 years | ' | ' | ' | ' |
Number of issued patents owned by company | 9 | ' | ' | ' | ' |
Deferred revenue | $2,976 | ' | $2,976 | ' | $499,225 |
Credit period granted to recurring customers on sales | ' | ' | '30 months | ' | ' |
Depreciation | 4,593 | 40,899 | 14,147 | 122,718 | ' |
Amortization of intangible assets | 7,508 | 7,489 | 22,487 | 22,372 | ' |
Impairment charges for patents | 0 | 0 | ' | ' | ' |
Amortization expense of other assets | 23,237 | 0 | ' | ' | ' |
Bad debts expenses | 0 | 0 | ' | ' | ' |
Research and development expense | 134,357 | 579 | 354,515 | 1,814 | ' |
Stock-based compensation expense related to stock options issued to the employees | 22,038 | 3,200 | ' | ' | ' |
Common stock options and warrants issued for services | ' | ' | ' | ' | ' |
Advertising and promotion costs | $77,841 | $7,234 | ' | ' | ' |
Furniture and Fixtures [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '5 years | ' | ' |
Software [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '3 years | ' | ' |
Software [Member] | Minimum [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '3 years | ' | ' |
Software [Member] | Maximum [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '5 years | ' | ' |
Machinery and Equipment [Member] | Minimum [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '5 years | ' | ' |
Machinery and Equipment [Member] | Maximum [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '7 years | ' | ' |
Leasehold Improvements [Member] | Minimum [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '3 years | ' | ' |
Leasehold Improvements [Member] | Maximum [Member] | ' | ' | ' | ' | ' |
Summary of Significant Accounting Policies (Textual) | ' | ' | ' | ' | ' |
Property and equipment, useful life | ' | ' | '7 years | ' | ' |
Intangible_Assets_Details
Intangible Assets (Details) (USD $) | Sep. 30, 2013 |
Summary of carrying values of amortized acquired intangible assets | ' |
Intangible assets, Gross | $663,374 |
Intangible Assets, Accumulated Amortization | -263,421 |
Intangible assets, Net | 399,953 |
Patents [Member] | ' |
Summary of carrying values of amortized acquired intangible assets | ' |
Intangible assets, Gross | 617,651 |
Intangible Assets, Accumulated Amortization | -253,335 |
Intangible assets, Net | 364,316 |
Trademarks [Member] | ' |
Summary of carrying values of amortized acquired intangible assets | ' |
Intangible assets, Gross | 45,723 |
Intangible Assets, Accumulated Amortization | -10,086 |
Intangible assets, Net | $35,637 |
Intangible_Assets_Details_Text
Intangible Assets (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Jan. 15, 2004 | |
Intangible_Assets | Patents [Member] | Patents [Member] | Patents [Member] | Trademarks [Member] | Patents and Trademarks [Member] | ||||
Intangible Assets (Textual) | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment of intangible assets | $0 | $0 | ' | ' | $0 | $0 | ' | ' | ' |
Aggregate intangible assets, Asset percentage | ' | ' | ' | ' | ' | ' | 91.00% | 9.00% | ' |
Gross amount of acquired intangible assets | 663,374 | ' | 663,374 | ' | 617,651 | ' | 617,651 | 45,723 | 157,000 |
Amounts paid to third parties for legal fees, application fees and other direct costs | ' | ' | 506,374 | ' | ' | ' | ' | ' | ' |
Number of intangible assets | ' | ' | 2 | ' | ' | ' | ' | ' | ' |
Intangible assets, net | $399,954 | ' | $399,954 | $418,479 | ' | ' | ' | ' | ' |
Notes_Payable_Details
Notes Payable (Details) (Frisco Note payable [Member], USD $) | Sep. 30, 2013 |
Frisco Note payable [Member] | ' |
Summary of future principal payments of Frisco note payable | ' |
2013 | $44,000 |
2014 | 52,000 |
2015 | 52,000 |
Note payable, Total | $148,000 |
Notes_Payable_Details_1
Notes Payable (Details 1) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Carrying values of short-term and long-term notes payable | ' | ' |
Total short-term notes payable, Principal | $699,572 | ' |
Total short-term notes payable, Discount | 155,372 | ' |
Total short-term notes payable | 40,897 | 31,588 |
Total long-term notes payable, Principal | 104,000 | ' |
Total long-term notes payable, Discount | 27,928 | ' |
Total long-term notes payable | 76,072 | 76,072 |
Total short-term and long-term notes payable, Principal | 803,572 | ' |
Total short-term and long-term notes payable, Discount | 183,300 | ' |
Total short-term and long-term notes payable | 620,272 | ' |
Sinacola, Third Landlord Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 0.00% | ' |
Total short-term notes payable, Principal | 110,000 | ' |
Total short-term notes payable, Discount | ' | ' |
Total short-term notes payable | 110,000 | ' |
Sinacola, Fourth Landlord Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 0.00% | ' |
Total short-term notes payable, Principal | 110,715 | ' |
Total short-term notes payable, Discount | ' | ' |
Total short-term notes payable | 110,715 | ' |
Sinacola, Fifth Landlord Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 0.00% | ' |
Total short-term notes payable, Principal | 50,000 | ' |
Total short-term notes payable, Discount | ' | ' |
Total short-term notes payable | 50,000 | ' |
Sinacola, Sixth Landlord Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 0.00% | ' |
Total short-term notes payable, Principal | 50,000 | ' |
Total short-term notes payable, Discount | ' | ' |
Total short-term notes payable | 50,000 | ' |
Sinacola, Seventh Landlord Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 44.00% | ' |
Total short-term notes payable, Principal | 50,050 | ' |
Total short-term notes payable, Discount | 5,460 | ' |
Total short-term notes payable | 44,590 | ' |
Sinacola, Eighth Landlord Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 42.00% | ' |
Total short-term notes payable, Principal | 50,050 | ' |
Total short-term notes payable, Discount | 5,210 | ' |
Total short-term notes payable | 44,840 | ' |
JMJ Financial Note1 [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 78.00% | ' |
Total short-term notes payable, Principal | 50,834 | ' |
Total short-term notes payable, Discount | 31,643 | ' |
Total short-term notes payable | 19,191 | ' |
JMJ Financial Note2 [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 113.00% | ' |
Total short-term notes payable, Principal | 25,000 | ' |
Total short-term notes payable, Discount | 18,600 | ' |
Total short-term notes payable | 6,400 | ' |
Tonaquint Inc Note [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 96.00% | ' |
Total short-term notes payable, Principal | 106,925 | ' |
Total short-term notes payable, Discount | 52,444 | ' |
Total short-term notes payable | 54,481 | ' |
LG Capital [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 112.00% | ' |
Total short-term notes payable, Principal | 51,998 | ' |
Total short-term notes payable, Discount | 38,912 | ' |
Total short-term notes payable | 13,086 | ' |
Frisco EDC [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 12.30% | ' |
Total short-term notes payable, Principal | 44,000 | ' |
Total short-term notes payable, Discount | 3,103 | ' |
Total short-term notes payable | 40,897 | ' |
Frisco EDC, Long-term [Member] | ' | ' |
Carrying values of short-term and long-term notes payable | ' | ' |
Effective Interest Rate | 12.34% | ' |
Total long-term notes payable, Principal | 104,000 | ' |
Total long-term notes payable, Discount | 27,928 | ' |
Total long-term notes payable | $76,072 | ' |
Notes_Payable_Details_2
Notes Payable (Details 2) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Summary of notes payable outstanding | ' | ' |
Current portion of notes payable | $40,897 | $31,588 |
Current portion of convertible notes payable | 503,303 | 367,001 |
Total short-term notes payable | 40,897 | 31,588 |
Long-term portion of notes payable | 104,000 | 104,000 |
Less: Unamortized discount | -27,928 | -27,928 |
Long-term portion of notes payable, net | 76,072 | 76,072 |
Long-term portion of convertible notes payable | ' | ' |
Less: Unamortized discount | ' | ' |
Long-term convertible notes payable net of unamortized discount | ' | ' |
Total long-term notes payable | $76,072 | $76,072 |
Notes_Payable_Details_Textual
Notes Payable (Details Textual) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Mar. 22, 2011 | Sep. 30, 2013 | Dec. 01, 2012 | Dec. 01, 2011 | Apr. 03, 2007 | Mar. 23, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Mar. 23, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 15, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 15, 2011 | Sep. 30, 2013 | Sep. 30, 2012 | Aug. 15, 2011 | Mar. 23, 2011 | Dec. 31, 2010 |
Frisco Promissory Note [Member] | Frisco Promissory Note [Member] | Frisco Promissory Note [Member] | Frisco Promissory Note [Member] | Frisco Promissory Note [Member] | Fifth Landlord Note [Member] | Fifth Landlord Note [Member] | Fifth Landlord Note [Member] | Sixth Landlord Note [Member] | Sixth Landlord Note [Member] | Sixth Landlord Note [Member] | Seventh Landlord Note [Member] | Seventh Landlord Note [Member] | Seventh Landlord Note [Member] | Eighth Landlord Note [Member] | Eighth Landlord Note [Member] | Eighth Landlord Note [Member] | Sinacola Subordinated, Convertible Notes [Member] | Sinacola Subordinated, Convertible Notes [Member] | Sinacola Subordinated, Convertible Notes [Member] | |||
Notes Payable (Textual) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, face amount | ' | ' | ' | ' | ' | ' | $243,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stated interest | ' | ' | ' | ' | ' | ' | 12.18% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized discount related to notes payable | 27,928 | 27,928 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount of outstanding forgivable loan | ' | ' | 213,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument, payment terms | ' | ' | '(i) the full payment of the economic incentives; or (ii) March 31, 2016. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Period of performance for debt | ' | ' | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Face value of renewed note | ' | ' | 213,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Renewed debt instrument interest rate | ' | ' | 12.34% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Proceed from performance credit of the FEDC | ' | ' | ' | ' | 39,000 | 26,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized discount | 183,300 | ' | ' | 31,031 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt instrument outstanding amount | ' | ' | ' | 116,969 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65,065 | 65,065 | 143,465 |
Debt instrument, maturity date | ' | ' | ' | ' | ' | ' | ' | 30-Sep-13 | ' | ' | 30-Sep-13 | ' | ' | 30-Nov-13 | ' | ' | 30-Nov-13 | ' | ' | ' | ' | 31-Dec-15 |
Increased amount of draw down provision, maximum | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Conversion price of note(s) (aggregate) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1.50 | ' | ' | $1 | ' | ' | $1.50 | ' | ' | ' | ' | ' |
Fair value of warrant issued | ' | ' | ' | ' | ' | ' | ' | 32,207 | ' | ' | 32,207 | ' | ' | 32,223 | ' | ' | 32,223 | ' | ' | ' | ' | ' |
Amount of beneficial conversion feature recorded as debt discount | ' | ' | ' | ' | ' | ' | ' | 17,793 | ' | ' | 15,540 | ' | ' | 17,827 | ' | ' | 15,540 | ' | ' | ' | ' | ' |
Interest expenses | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 0 | ' | 0 | 0 | ' | 5,460 | 5,460 | ' | 5,210 | 5,210 | ' | ' | ' |
Principal amount of convertible note | ' | ' | ' | ' | ' | ' | ' | $50,000 | ' | ' | $50,000 | ' | ' | $50,050 | ' | ' | $50,050 | ' | ' | ' | ' | ' |
Warrants, aggregate exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.01 | $0.01 |
Condition for conversion of convertible notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Sixth Landlord Note is convertible at the Company's option. | ' | ' | ' | ' | ' | 'Common stock has traded at $1.50 or above for four (4) consecutive weeks on a nationally recognized market (based on daily closing prices) then the Sixth Landlord Note is convertible at the Company's option. | ' | ' | ' | ' | ' |
Warrant exercisable date, description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'On or before March 23, 2016 | ' |
Shares issuable on conversion of warrants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65,065 | 65,000 | 143,465 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2013 | Sep. 30, 2013 | Jul. 02, 2008 | Dec. 31, 2005 | Sep. 30, 2013 |
Series A Convertible Preferred Stock [Member] | Series A Convertible Preferred Stock [Member] | Series A Convertible Preferred Stock [Member] | Original Rights Agreement [Member] | Common stock [Member] | |||
Shareholders equity (Textual) | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 | ' | ' | 3,143,237 | 5,000,000 | ' |
Series A convertible preferred stock, shares issued | 743,750 | 818,750 | ' | ' | ' | ' | ' |
Series A convertible preferred stock, shares outstanding | 743,750 | 818,750 | ' | ' | ' | ' | ' |
Preferred stock, par value | $0.00 | $0.00 | ' | ' | ' | $0.00 | ' |
Original issue price of preferred stock | ' | ' | $1 | $1 | ' | ' | ' |
Series A preferred converted into common stock | ' | ' | 25,000 | ' | ' | ' | ' |
Convertible preferred stock, conversion ratio | ' | ' | '1.22:1 | ' | ' | ' | ' |
Dividend payable on Series A preferred stock, quarterly, non-cumulative | ' | ' | $0.01 | $0.01 | ' | ' | ' |
Percentage of claim upon liquidation | ' | ' | 100.00% | 100.00% | ' | ' | ' |
Cash proceeds from conversion | ' | ' | ' | $3,000,000 | ' | ' | ' |
Cash proceeds from conversion, price paid per share | ' | ' | ' | $5 | ' | ' | ' |
Redemption period, Maximum | ' | ' | ' | '10 years | ' | ' | ' |
Redemption period minimum | ' | ' | ' | '2 years | ' | ' | ' |
Redemption value per share | ' | ' | ' | $1 | ' | ' | ' |
Preferred stock, voting rights | ' | ' | ' | 'Holder of each share of Series A Preferred has the right to one vote for each share of common stock into which such share of Series A Preferred could be converted. | ' | ' | ' |
Common stock subscribed for but not issued, shares | 197,779 | 0 | ' | ' | ' | ' | 340,000 |
Common stock subscribed for but not issued, value | ' | ' | ' | ' | ' | ' | 170,000 |
Common stock, par value | $0.00 | $0.00 | ' | ' | ' | ' | ' |
Common stock, shares authorized | 100,000,000 | 100,000,000 | ' | ' | ' | ' | ' |
Common stock, Shares issued | 24,217,806 | 22,548,678 | ' | ' | ' | ' | ' |
Common stock, Shares outstanding | 24,217,806 | 22,548,678 | ' | ' | ' | ' | ' |
Other Stockholder Equity | $107,827 | ' | ' | ' | ' | ' | ' |
Stock_Options_and_Warrants_Det
Stock Options and Warrants (Details) (Stock Options [Member], USD $) | 3 Months Ended | |
Sep. 30, 2013 | ||
Summary of option activity | ' | |
Outstanding Options/Warrants, beginning balance | 1,579,921 | |
Granted | ' | |
Stock option/warrant exercised | ' | |
Forfeited/Cancelled | -9,030 | |
Outstanding Options/Warrants, ending balance | 1,570,891 | |
Outstanding Options, Weighted Average Exercise Price, ending balance | $0.80 | |
Non-Employee [Member] | ' | |
Summary of option activity | ' | |
Outstanding Options/Warrants, beginning balance | 18,180 | |
Outstanding options/Warrants, Weighted Average Exercise Price, beginning balance | $1.15 | |
Granted | ' | |
Granted, Weighted Average Exercise Price | ' | |
Stock option/warrant exercised | ' | |
Exercised, Weighted Average Exercise Price | ' | |
Forfeited/Cancelled | -2,280 | |
Forfeited/Cancelled, Weighted Average Exercise Price | $2.50 | |
Outstanding Options/Warrants, ending balance | 15,900 | |
Outstanding Options, Weighted Average Exercise Price, ending balance | $0.96 | |
Employee [Member] | ' | |
Summary of option activity | ' | |
Outstanding Options/Warrants, beginning balance | 1,579,921 | [1] |
Outstanding options/Warrants, Weighted Average Exercise Price, beginning balance | $0.36 | |
Granted | ' | |
Granted, Weighted Average Exercise Price | ' | |
Stock option/warrant exercised | ' | |
Exercised, Weighted Average Exercise Price | ' | |
Forfeited/Cancelled | -6,750 | |
Forfeited/Cancelled, Weighted Average Exercise Price | $2 | |
Outstanding Options/Warrants, ending balance | 1,573,171 | |
Outstanding Options, Weighted Average Exercise Price, ending balance | $0.36 | |
[1] | *Corrected from our June 30, 2013 financial statement footnotes. |
Stock_Options_and_Warrants_Det1
Stock Options and Warrants (Details 1) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model | ' | ' |
Volatility (weighted ave.) | 38.00% | 26.00% |
Risk-free interest rate (weighted ave.) | 1.39% | 1.04% |
Expected dividend rate | 0.00% | 0.00% |
Minimum [Member] | ' | ' |
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model | ' | ' |
Expected terms (in years) | '5 years | '5 years |
Maximum [Member] | ' | ' |
Summary of fair value of options granted were estimated at the date of grant using the Black-Scholes model | ' | ' |
Expected terms (in years) | '10 years | '10 years |
Stock_Options_and_Warrants_Det2
Stock Options and Warrants (Details 2) (Warrants to purchase common stock, USD $) | 3 Months Ended |
Sep. 30, 2013 | |
Warrants to purchase common stock | ' |
Summary of warrants activity | ' |
Outstanding Options/Warrants, beginning balance | 1,519,534 |
Outstanding options/Warrants, Weighted Average Exercise Price, beginning balance | $0.80 |
Granted | 375,000 |
Granted, Weighted Average Exercise Price | $1.50 |
Exercised | ' |
Exercised, Weighted Average Exercise Price | ' |
Forfeited/Cancelled | ' |
Forfeited/Cancelled, Weighted Average Exercise Price | ' |
Outstanding Options/Warrants, ending balance | 1,894,534 |
Outstanding Options, Weighted Average Exercise Price, ending balance | $0.94 |
Stock_Options_and_Warrants_Det3
Stock Options and Warrants (Details Textual) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2004 | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Stock option and warrants (Textual) | ' | ' | ' | ' | ' |
Maximum number of shares acquired under voting stock option plan | 5,000,000 | ' | ' | ' | ' |
Expiration period of option, Maximum | '10 years | ' | ' | ' | ' |
Expiration period of option, Minimum | '5 years | ' | ' | ' | ' |
Termination period of option for ineligible individual | '90 days | ' | ' | ' | ' |
Expected dividend rate | ' | 0.00% | 0.00% | ' | ' |
Unrecognized compensation costs related to non-vested stock option | ' | $44,142 | ' | $44,142 | ' |
Unrecognized compensation costs will be recognized over the weighted average remaining vesting period | ' | ' | ' | '4 months 13 days | ' |
Stock based compensation cost recognition description | ' | 'Each tranche (one fifth) of shares is earned (zero, one, two, three, and four years). | ' | ' | ' |
Stock based compensation expense | ' | $22,038 | ' | $1,525 | ' |
Related_Party_Transactions_Det
Related Party Transactions (Details) (Julian Ross [Member], USD $) | 9 Months Ended |
Sep. 30, 2013 | |
Julian Ross [Member] | ' |
Summary of related party financings and notes | ' |
Amount | $108,483 |
Stated interest rate | 0.00% |
Maturity | 'n/a |
Related_Party_Transactions_Det1
Related Party Transactions (Details 1) (USD $) | 3 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
Truck purchased | $2,600 |
Fair_Value_Measurements_Detail
Fair Value Measurements (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Dec. 30, 2011 |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | $4,753 | $13,514 | $116,447 | $65,118 |
Fair Value, Measurements, Recurring [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | 4,753 | ' | ' | ' |
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | 4,753 | ' | ' | ' |
Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | Cash [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | 4,753 | ' | ' | ' |
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | ' | ' | ' | ' |
Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Cash [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | ' | ' | ' | ' |
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | ' | ' | ' | ' |
Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | Cash [Member] | ' | ' | ' | ' |
Summary of financial assets and liabilities measured at fair value on a recurring basis | ' | ' | ' | ' |
Total cash equivalents | ' | ' | ' | ' |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Schedule of revenue and segment reporting | ' | ' |
Total revenues | $545,820 | $102,176 |
United States - product sales [Member] | ' | ' |
Schedule of revenue and segment reporting | ' | ' |
Total revenues | 284,540 | 60,296 |
ROW - product sales [Member] | ' | ' |
Schedule of revenue and segment reporting | ' | ' |
Total revenues | 2,530 | 41,880 |
ROW - license fees/service revenue [Member] | ' | ' |
Schedule of revenue and segment reporting | ' | ' |
Total revenues | $258,750 | ' |
Segment_Information_Details_Te
Segment Information (Details Textual) | 9 Months Ended |
Sep. 30, 2013 | |
Segments | |
Segment Information (Textual) | ' |
Number of reportable segments | 1 |
Going_Concern_Details
Going Concern (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Going Concern (Textual) | ' | ' |
Accumulated deficit | ($14,703,693) | ($14,258,667) |
Stockholders' deficits | ($310,451) | ($652,125) |