Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 31, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Pulse Beverage Corp | ' | ' |
Entity Central Index Key | '0001420569 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $36,841,000 |
Entity Common Stock, Shares Outstanding | ' | 51,720,596 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash | $1,774,994 | $744,906 |
Accounts receivable | 431,399 | 202,755 |
Inventories | 1,187,978 | 715,517 |
Other current assets | 195,589 | 101,842 |
Total Current Assets | 3,589,960 | 1,765,020 |
Property and equipment, net of accumulated depreciation of $88,740 and $24,663, respectively | 340,052 | 482,874 |
Other Assets | ' | ' |
Loan receivable, net of current portion - related party | 182,738 | 188,030 |
Intangible assets, net of accumulated amortization of $54,228 and $30,597 | 1,150,851 | 1,104,948 |
Total Other Assets | 1,333,589 | 1,292,978 |
Total Assets | 5,263,601 | 3,540,872 |
Current Liabilities | ' | ' |
Accounts payable and accrued expenses | 401,418 | 347,579 |
Total Current Liabilities | 401,418 | 347,579 |
Preferred Stock, 1,000,000 shares authorized, $0.001 par value, none issued | ' | ' |
Common Stock, 100,000,000 shares authorized, $0.00001 par value, 51,654,135 and 40,701,402 issued and outstanding, respectively | 517 | 407 |
Additional Paid In Capital | 12,668,580 | 7,817,539 |
Deficit | -7,806,914 | -4,624,653 |
Total Stockholders' Equity | 4,862,183 | 3,193,293 |
Total Liabilities and Stockholders' Equity | $5,263,601 | $3,540,872 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred Stock, par value | $0.00 | $0.00 |
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 51,654,135 | 40,701,402 |
Common Stock, shares outstanding | 51,654,135 | 40,701,402 |
Accumulated Depreciation | $88,740 | $24,663 |
Accumulated Amortization | $54,228 | $30,597 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Statement [Abstract] | ' | ' |
Net Sales | $3,328,862 | $2,295,840 |
Cost of Sales | 2,271,270 | 1,540,668 |
Gross Profit | 1,057,592 | 755,172 |
Expenses | ' | ' |
Advertising, samples and displays | 289,440 | 176,289 |
Freight-out | 366,508 | 249,243 |
General and administration | 1,122,522 | 802,294 |
Research and development | 101,976 | ' |
Salaries and benefits and broker/agent's fees | 1,383,137 | 887,857 |
Stock-based compensation | 494,204 | 1,214,719 |
Shareholder, broker and investor relations | 388,703 | 459,130 |
Total Operating Expenses | 4,146,490 | 3,789,532 |
Net Operating Loss | -3,088,898 | -3,034,360 |
Other Income (Expense) | ' | ' |
Asset impairment | -115,385 | -483,208 |
Forgiveness of debt | 6,486 | 9,971 |
Interest income, net | 15,536 | 1,814 |
Total Other Income (Expense) | -93,363 | -471,423 |
Net Loss | ($3,182,261) | ($3,505,783) |
Net Loss Per Share - Basic and Diluted | ($0.06) | ($0.10) |
Weighted Average Shares Outstanding - Basic and Diluted | 49,850,000 | 34,762,000 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Operating Activities | ' | ' |
Net loss | ($3,182,261) | ($3,505,783) |
Less non-cash items: | ' | ' |
Amortization and depreciation | 94,674 | 37,407 |
Asset impairment | 115,385 | 483,208 |
Bad debt allowance | 13,680 | ' |
Shares and options issued for services | 790,987 | 1,646,736 |
Forgiveness of debt | -6,486 | -9,971 |
Changes in operating assets and liabilities: | ' | ' |
(Increase) in accounts receivable | -242,324 | -181,453 |
Decrease (increase) in prepaid expenses | -37,170 | 20,649 |
(Increase) in inventories | -453,381 | -355,257 |
(Decrease) Increase in accounts payable and accrued expenses | -13,560 | 183,420 |
Net Cash Used in Operating Activities | -2,920,456 | -1,681,044 |
Investing Activities | ' | ' |
Investment in loan receivable | ' | -63,000 |
Repayment of note receivable - related party | 5,084 | 4,885 |
Acquisition of property and equipment | -36,640 | -126,423 |
Acquisition of intangible assets | -76,500 | -89,042 |
Net Cash Used in Investing Activities | -108,056 | -273,580 |
Financing Activities | ' | ' |
Proceeds from short-term loans | ' | 250,000 |
Proceeds from the sale of common stock, net of costs | 4,058,600 | 2,361,612 |
Net Cash Provided by Financing Activities | 4,058,600 | 2,611,612 |
Increase in Cash | 1,030,088 | 656,988 |
Cash - Beginning of Year | 744,906 | 87,918 |
Cash - End of Year | 1,774,994 | 744,906 |
Shares issued for services, debt and prepaid expenses | 492,963 | 768,446 |
Supplemental Disclosures: | ' | ' |
Interest paid | 1,166 | ' |
Income taxes paid | ' | ' |
Shareholders_Equity
Shareholders Equity (USD $) | Common Stock | Additional Paid-In Capital | Deficit | Total |
Beginning Balance at Dec. 31, 2011 | $310 | $3,523,543 | ($1,118,870) | $2,404,983 |
Balance (Shares) at Dec. 31, 2011 | 31,011,667 | ' | ' | ' |
Shares issued at $0.30 - 2011 subscriptions | 4 | -4 | ' | ' |
Shares issued at $0.30 - 2011 subscriptions (Shares) | 400,000 | ' | ' | ' |
Shares issued for cash at $0.30 per share | 28 | 856,972 | ' | 857,000 |
Shares issued for cash at $0.30 per share (Shares) | 2,856,666 | ' | ' | ' |
Shares issued for cash at $0.40 per share | 41 | 1,619,959 | ' | 1,620,000 |
Shares issued for cash at $0.40 per share (Shares) | 4,050,000 | ' | ' | ' |
Shares issued for conversion of note at $0.40 per share | 6 | 249,994 | ' | 250,000 |
Shares issued for conversion of note at $0.40 per share (Shares) | 625,000 | ' | ' | ' |
Shares issued for services at an average fair value of $0.44 per share | 13 | 568,132 | ' | 568,145 |
Shares issued for services at an average fair value of $0.44 per share (Shares) | 1,278,069 | ' | ' | ' |
Shares issued pursuant to equity incentives awarded to management at a fair value of $0.52 per share | 5 | 249,595 | ' | 249,600 |
Shares issued pursuant to equity incentives awarded to management at a fair value of $0.52 per share (Shares) | 480,000 | ' | ' | ' |
Share issuance costs | ' | -164,688 | ' | -164,688 |
Stock-based compensation | ' | 914,036 | ' | 914,036 |
Net Loss | ' | ' | -3,505,783 | 3,505,783 |
Ending Balance at Dec. 31, 2012 | 407 | 7,817,539 | -4,624,653 | 3,193,293 |
Ending Balance (Shares) at Dec. 31, 2012 | 40,701,402 | ' | ' | 40,701,402 |
Shares issued for cash at $0.40 per share | 103 | 4,102,597 | ' | 4,102,700 |
Shares issued for cash at $0.40 per share (Shares) | 10,256,750 | ' | ' | ' |
Shares issued for debt settlement at $0.40 per share | 1 | 23,332 | ' | 23,332 |
(Shares)Shares issued for debt settlement at $0.40 per share (Shares) | 58,333 | ' | ' | ' |
Shares issued for cash at $0.80 per share | 1 | 99,999 | ' | 100,000 |
Shares issued for cash at $0.80 per share (Shares) | 125,000 | ' | ' | ' |
Shares issued for services at an average fair value of $0.82 per share | 3 | 299,647 | ' | 299,650 |
Shares issued for services at an average fair value of $0.82 per share (Shares) | 367,650 | ' | ' | ' |
Shares issued for advisory board agreement at an average fair value of $1.08 per share | ' | 21,500 | ' | 21,500 |
Shares issued for advisory board agreement at an average fair value of $1.08 per share (Shares) | 20,000 | ' | ' | ' |
Shares issued for services at an average fair value of $1.42 per share | 1 | 141,999 | ' | 142,000 |
Shares issued for services at an average fair value of $1.42 per share (Shares) | 100,000 | ' | ' | ' |
Shares issued for cash pursuant to the exercise of stock options | 1 | 12,499 | ' | 12,500 |
Shares issued for cash pursuant to the exercise of stock options (Shares) | 25,000 | ' | ' | ' |
Share issuance costs | ' | -395,820 | ' | -395,820 |
Stock-based compensation | ' | 545,288 | ' | 545,288 |
Net Loss | ' | ' | -3,182,261 | 3,182,261 |
Ending Balance at Dec. 31, 2013 | $517 | $12,668,580 | ($7,806,914) | $4,862,183 |
Ending Balance (Shares) at Dec. 31, 2013 | 51,654,135 | ' | ' | 51,654,135 |
1_Nature_of_Operations
1. Nature of Operations | 12 Months Ended | ||
Dec. 31, 2013 | |||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ||
Nature of Operations | ' | ||
1 | Nature of Operations | ||
The Pulse Beverage Corporation manufactures and distributes Natural Cabana™ Lemonade and Limeade, Natural Cabana™ Coconut Water and PULSE® brand of Heart Healthy functional beverages. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Summary of Significant Accounting Policies | ' |
2. Summary of Significant Accounting Policies | |
Use of Estimates | |
The preparation of financial statements in accordance with United States generally accepted accounting principles requires us 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 in the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on deposit in overnight deposit accounts and investments in money market accounts. | |
Accounts receivable | |
We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations to us, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our bad debt loss history and an overall assessment of past due trade accounts receivable outstanding. Accounts receivable is reported as the customers’ outstanding balances less any allowance for doubtful accounts. We record an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. An additional allowance is recorded based on certain percentages of aged receivables, which are determined based on historical experience and assessment of the general financial conditions affecting our customer base. If actual collections experience changes, revisions to the allowance may be required. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance. The allowance for doubtful accounts was $13,680 as at December 31, 2013 (2012 - $nil). | |
Inventory | |
Inventories are stated at the lower of cost to manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand, production availability and/or our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market and economic conditions or other factors that may result in cancellations of advance orders or reductions in the rate of reorders placed by customers and/or continued weakening of economic conditions. Additionally, our estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. | |
Property and Equipment | |
Property and equipment includes bottle molds, manufacturing equipment, office equipment, warehouse equipment and display coolers which are all stated at historical cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets which are estimated to be five years. | |
Long-Lived Assets | |
We account for long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. We assess recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. As of December 31, 2013 and 2012, we recognized an impairment of $115,385 and $483,208, respectively. | |
Intangible Assets | |
Intangible assets are comprised primarily of the cost of formulations of our products and of trademarks that represent our exclusive ownership of Natural Cabana®, PULSE® and PULSE: Nutrition Made Simple®, all used in connection with the manufacture, sale and distribution of our beverages. We evaluate our trademarks annually for impairment or earlier if there is an indication of impairment. If there is an indication of impairment of identified intangible assets not subject to amortization, we compare the estimated fair value with the carrying amount of the asset. An impairment loss is recognized to write-down the intangible asset to its fair value if it is less than the carrying amount. The fair value is calculated using the income approach. However, preparation of estimated expected future cash flows is inherently subjective and is based on our best estimate of assumptions concerning expected future conditions. Based on our impairment analysis performed for the year ended December 31, 2013, the estimated fair values of trademarks and other intangible assets exceeded their respective carrying values. | |
Revenue Recognition | |
Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products to customers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Net sales have been determined after deduction of discounts, slotting fees and other promotional allowances in accordance with ASC 605-50. | |
Fair Value | |
We comply with the provisions of ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. See Note 14. | |
Financial Instruments | |
We have financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis. Our financial instruments consist of cash, accounts and loans receivables, accounts payable and accrued expenses. The carrying amounts of our financial instruments approximate their fair values as of December 31, 2013 and 2012 due to their short-term nature. | |
Income Taxes | |
We follow ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. | |
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. | |
Concentration of Business and Credit Risk | |
Financial instruments and related items, which potentially subject us to concentrations of credit risk, consist primarily of cash and receivables. We place our cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. As of December 31, 2013 and 2012, we exceeded insurance limits by $1,534,703 and $494,906, respectively. | |
We review a customer’s credit history before extending credit. As at and for the year ended December 31, 2013 there was one individual customer with a balance in excess of 10% of the accounts receivable totaling 35% (2012 - 37%) of accounts receivable and there was one individual customer in excess of 10% of net sales; 12% (2012 – nil). | |
Stock-based Compensation | |
We account for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant. | |
We account for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. | |
We calculate the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. We estimate forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, we monitor both stock option and warrant exercises as well as employee termination patterns. | |
The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award. | |
Basic and Diluted Net Income (Loss) Per Share | |
Net loss per share is computed in accordance with ASC subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of our statements of operations. Basic EPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted EPS is computed by adding to the weighted average shares the dilutive effect if common stock was issued upon the exercise of stock options and warrants. For the years ended December 31, 2013 and 2012, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of outstanding warrants on our net loss. Total potentially dilutive common share equivalents relating to stock purchase warrants and options granted or issued, as at December 31, 2013 and 2012 is 23,234,247 and 10,647,213, respectively. | |
Recent Pronouncements | |
In July 2012, the FASB issued ASU 2012-02, "Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment" ("ASU 2012-02"), which permits an entity to make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit's indefinite-lived intangible asset is less than the asset's carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that the fair value of a reporting unit's indefinite-lived intangible asset is more likely than not greater than the asset's carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. ASU 2012-02 is effective for us for annual and interim indefinite-lived intangible asset impairment tests performed beginning October 1, 2012. We believe the adoption of ASU 2012-02 will not have a material impact on our financial statements. | |
We continually assess any new accounting pronouncements to determine their applicability to us. Where it is determined that a new accounting pronouncement affects our financial reporting, we undertake a study to determine the consequence of the change to our financial statements and assure that there are proper controls in place to ascertain that our financial statements properly reflect the change. |
3_Accounts_Receivable
3. Accounts Receivable | 12 Months Ended | ||
Dec. 31, 2013 | |||
Notes to Financial Statements | ' | ||
Accounts Receivable | ' | ||
3. Accounts Receivable | |||
Accounts receivable consist of the following as of December 31: | |||
2013 | 2012 | ||
$ | $ | ||
Trade accounts receivable | 396,014 | 202,255 | |
Less: Allowance for doubtful accounts | -13,680 | - | |
Trade accounts receivable - net | 382,334 | 202,255 | |
Employee advances | 4,366 | 500 | |
Volume rebate receivable | 7,000 | - | |
Due from a co-packer | 37,699 | - | |
431,399 | 202,755 | ||
4_Inventory
4. Inventory | 12 Months Ended | ||
Dec. 31, 2013 | |||
Inventory Disclosure [Abstract] | ' | ||
Inventory | ' | ||
4. Inventory | |||
2013 | 2012 | ||
$ | $ | ||
Finished goods | 398,848 | 407,560 | |
Finished goods in transit | 54,434 | - | |
Raw Materials | 734,696 | 307,957 | |
1,187,978 | 715,517 | ||
5_Loan_Receivable_Related_Part
5. Loan Receivable - Related Party | 12 Months Ended |
Dec. 31, 2013 | |
Receivables [Abstract] | ' |
Loan Receivable - Related Party | ' |
5. Loan Receivable – Related Party | |
Pursuant to a Letter Agreement dated December 24, 2010 between us and Catalyst Development Inc., (“Catalyst”) a company owned by our Chief of Product Development, we loaned $200,000 to Catalyst. The loan bears interest at a rate of 4% per annum, is amortized over 25 years and matures on May 16, 2016 with a balloon payment due in the amount of $174,000. Catalyst repays this loan on a monthly basis at $1,055 principal and interest. As of December 31, 2013, the remaining principal balance due is $188,030 of which $5,292 is current and included in Other Current Assets, the balance of $182,738 is long-term. |
6_Property_and_Equipment_and_I
6. Property and Equipment and Intangible Assets | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Property, Plant and Equipment [Abstract] | ' | ||||
Property and Equipment and Intangible Assets | ' | ||||
6. Property and Equipment and Intangible Assets | |||||
Property and equipment consists of the following as of December 31: | 2012 | ||||
2013 | $ | ||||
$ | |||||
Manufacturing, warehouse, display equipment and molds | 261,522 | 352,966 | |||
Office equipment and furniture | 33,570 | 29,570 | |||
Mobile display unit and vehicles | 133,700 | 125,000 | |||
Less: depreciation | -88,740 | -24,663 | |||
Total Property and Equipment | 340,052 | 482,874 | |||
Intangible assets consists of the following as of December 31: | |||||
2013 | 2012 | ||||
$ | $ | ||||
Formulations and manufacturing methods | 779,968 | 761,963 | |||
Trademarks | 187,276 | 159,706 | |||
Side panel statement rights | 125,000 | 125,000 | |||
Patents | 50,160 | 50,160 | |||
Website | 62,675 | 31,750 | |||
Less: amortization | -54,228 | -23,631 | |||
Total Intangible Assets | 1,150,851 | 1,104,948 |
7_Shortterm_Loan
7. Short-term Loan | 12 Months Ended |
Dec. 31, 2013 | |
Payables and Accruals [Abstract] | ' |
Short-term Loan | ' |
7. Short-term Loan | |
On July 17, 2012 we received $250,000 pursuant to a short-term bridge loan from an unrelated party. This loan bore interest at 6% per annum and was unsecured and due on demand. On December 21, 2012 the principal portion of this loan was converted into 625,000 of our $0.40 Units. Each unit contained one common share and one warrant. Each warrant is exercisable at $0.65 and expires December 21, 2015. During the year accrued interest of $6,486 was forgiven. |
8_Common_Stock
8. Common Stock | 12 Months Ended | ||
Dec. 31, 2013 | |||
Equity [Abstract] | ' | ||
Common Stock | ' | ||
8. Common Stock | |||
During the year ended December 31, 2013 we: | |||
a) | received $4,102,700 pursuant to our $0.40 Unit offering. Pursuant to subscription agreements received and accepted, we issued a total of 10,256,750 $0.40 Units. Each Unit consisted of one common share and one warrant. Each warrant entitles the holder to purchase one additional common share at $0.65 per share expiring February 22, 2016; | ||
b) | issued 125,000 Units at $0.80 per Unit for $100,000. Each Unit consisted of one common share and one warrant. Each warrant entitles the holder to purchase one additional share at $1.00 per share expiring April 18, 2016; | ||
c) | settled $23,333 of debt owing to two Advisory Board Members and a director by issuing 58,333 at $0.40 per unit. Each Unit consisted of one common share and one warrant. Each warrant entitles the holder to purchase one additional common share at $0.65 per share expiring February 22, 2016; | ||
d) | issued 337,650 common shares, having an average fair value of $0.84 per share, pursuant to service agreements; | ||
e) | issued 30,000 common shares, having a fair value of $0.63 per share, pursuant to a letter agreement, as compensation for services; | ||
f) | issued 20,000 common shares having a fair value of $21,500 as compensation pursuant to an Advisory Board Agreement; | ||
g) | issued 275,000 common share purchase warrants to purchase an additional common share at $0.65 expiring February 22, 2016; | ||
h) | issued 100,000 common shares, having a fair value of $1.42 per share, as compensation for introduction to an investor; and | ||
i) | issued 25,000 common shares at $0.50 per share for $12,500 cash pursuant to a consultant exercising a stock option. | ||
During the year ended December 31, 2012 we: | |||
a) | issued a total of 400,000 units at $0.30 per unit for proceeds of $120,000. Each Unit consisted of one common share and one warrant. Each warrant entitles the holder to purchase one additional common share at $0.45 per share expiring January 25, 2017; | ||
b) | issued 2,856,666 units at $0.30 per unit for proceeds of $857,000. Each Unit consisted of one common share and one warrant. Each warrant entitles the holder to purchase one additional common share at $0.45 per share expiring between February 9, 2017 and May 9, 2017; | ||
c) | issued 4,675,000 units at $0.40 per unit for proceeds of $1,870,000. Each Unit consisted of one common share and one warrant. Each warrant entitles the holder to purchase one additional common share at $0.60 per share as to 1,250,000 warrants and at $0.65 per share as to 3,425,000 units. These warrants expire between , all expiring three years from date of purchase; | ||
d) | issued 309,664 units at $0.30 per unit and 179,167 units at $0.40 per unit to settle a total of $164,566 of advisory and business consulting fees owing to Advisory Board members, a director, and an employee. A total of $29,166 was to settle amounts owing at December 31, 2011 and $135,400 was for services owing for the year ended December 31, 2012. Each Unit consisted of one common share and one warrant. Each $0.30 Unit entitles the holder to purchase one share at $0.45 per share expiring between January 25, 2017 and May 9, 2017. Each $0.40 Unit entitles the holder to purchase one share at $0.65 per share expires December 21, 2015; | ||
e) | issued a total of 81,667 common shares, having an average fair value of $46,279, pursuant to an Advisory Board Agreement. A total of $6,579 was to settle accrued amounts owing at December 31, 2011, $31,588 was for services rendered during the year and $8,112 was prepaid for services to June 15, 2013; | ||
f) | issued a total of 707,571 common shares, having an average fair value of $357,300, pursuant to agreements for services rendered. A total of $348,967 was charged to operations and $8,333 was prepaid for services to January 31, 2013; and | ||
g) | issued 480,000 common shares pursuant to our 2011 Equity Incentive Plan upon achieving the 200,000 case sale milestone provided therein. These shares had an average fair value of $249,600. A total of 240,000 of these common shares were issued to two directors and senior officers. |
9_Preferred_Stock
9. Preferred Stock | 12 Months Ended |
Dec. 31, 2013 | |
Equity [Abstract] | ' |
Preferred Stock | ' |
9. Preferred Stock | |
Pursuant to a Special Meeting of Shareholders held on July 29, 2011, the Shareholders resolved to amend our Articles of Incorporation to authorize the issuance of 1,000,000 shares of preferred stock, par value $0.001, issuable in series with rights, preferences and limitations to be determined by the Board of Directors from time to time. As of December 31, 2013 and 2012, there have been no issuances of preferred stock. |
10_Warrants
10. Warrants | 12 Months Ended |
Dec. 31, 2013 | |
Other Liabilities Disclosure [Abstract] | ' |
Warrants | ' |
10. Warrants | |
As at December 31, 2013 we had 20,234,247 common share purchase warrants outstanding having an average exercise price of $0.62 per common share and having an average expiration date of 2.4 years. |
11_Stockbased_Compensation
11. Stock-based Compensation | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Equity [Abstract] | ' | ||||
Stock-based Compensation | ' | ||||
11. Stock-based Compensation | |||||
On July 29, 2011, we adopted the 2011 Equity Incentive Plan (the “2011 Plan") under which we are authorized to grant up to 4,500,000 shares of common stock. Further, the 2011 Plan authorizes our Board of Directors to grant options, restricted stock awards, performance stock awards and stock appreciation rights as compensation for services rendered. | |||||
On April 27, 2012 we granted performance equity compensation awards to certain officers, directors and consultants (the “Performance Equity Recipients”). We were to issue 480,000 shares to Performance Equity Recipients for each 200,000 cases of any of our products sold to a maximum of 2,400,000 common shares issuable. As at September 28, 2012 we had sold 200,000 cases of product and thus, our Performance Equity Recipients earned, and were issued on December 21, 2012, 480,000 common shares having a fair value of $249,600. This amount was charged to operations as stock-based compensation. As of December 31, 2012 the Performance Equity Recipients had earned a further 93,000 common shares having a fair value of $51,083 which was recorded as accrued expenses as at December 31, 2012. On May 15, 2013 the Board of Directors resolved to postpone the Performance Equity Plan effective September 28, 2012. As a result $51,083 of accrued compensation was reversed. | |||||
On April 27, 2012 we granted stock options under the 2011 Plan to certain officers, directors, employees and consultants to purchase 3,100,000 common shares at $0.50 per common share on or before April 30, 2017. A total of 25% vested immediately with a further 25% vesting on October 31, 2012, April 30, 2013 and October 31, 2013. On May 2, 2013 a director resigned from the Board of Directors. As a result 25,000 stock options expired on that date being the unvested portion of his stock options and 75,000 stock options were cancelled on July 31, 2013 as result of the expiration of three months. As at October 31, 2013 a total of 3,000,000 stock options had fully vested. | |||||
On July 31, 2012 we granted a stock option to a consultant to purchase 100,000 common shares at $0.50 per common share on or before July 30, 2017. A total 25% vested immediately with a further 25% vesting on January 31, 2013, July 30, 2013 and January 31, 2014. As at December 31, 2013 75,000 stock options had fully vested and as at January 31, 2014 a further 25,000 stock options had vested. | |||||
During the year ended December 31, 2013, we recorded stock-based compensation of $545,288 (2012 - $914,036). | |||||
The fair values of stock options granted were estimated at the date of grant using the Black-Scholes option-pricing model. The weighted average fair values of stock options vested during the year ended December 31, 2013, was $0.76. The weighted average grant date fair values of stock options granted during the year ended December 31, 2012 was $0.37 per share as to 3,100,000 stock options and $0.33 per share as to 100,000 stock options. | |||||
The fair value of stock options granted was calculated using the Black-Scholes option-pricing model based on the following assumptions: | |||||
Risk-Free Interest Rate: Based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the options being valued; | |||||
Dividend Yield: Based on the projection of future stock prices and dividends expected to be paid; | |||||
Expected Term: Represents the period of time that stock options are expected to be outstanding based on historic exercise behaviour; and | |||||
Expected Volatility: Based on our historical stock prices for a period of time equal to the expected term of the award. | |||||
The weighted average assumptions used for each of the years ended December 31, 2013 and 2012 are as follows: | |||||
2013 | 2012 | ||||
Expected dividend yield | 0% | 0% | |||
Risk-free interest rate | 0.45% | 0.27% | |||
Expected volatility | 86% | 104% | |||
Expected option life (in years) | 3.78 | 5 | |||
The following table summarizes the continuity of our stock options: | |||||
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||
$ | (years) | $ | |||
Outstanding, December 31, 2011 | - | - | - | - | |
Granted | 3,200,000 | 0.5 | - | - | |
Outstanding, December 31, 2012 | 3,200,000 | 0.5 | 4.34 | 432,000 | |
Forfeited/Cancelled | -100,000 | 0.5 | - | - | |
Outstanding, December 31, 2013 | 3,100,000 | 0.5 | 3.34 | - | |
Exercisable, December 31, 2013 | 3,075,000 | 0.5 | 3.34 | - | |
A summary of the status of our non-vested stock options outstanding as of December 31, 2013, and changes during the years ended December 31, 2013 and 2012 is presented below: | |||||
Non-vested stock options | Number of Options | Weighted Average | |||
Grant Date | |||||
Fair Value | |||||
$ | |||||
Non-vested at December 31, 2011 | - | - | |||
Granted | 3,200,000 | 0.37 | |||
Vested | -1,575,000 | 0.37 | |||
Non-vested at December 31, 2012 | 1,625,000 | 0.37 | |||
Forfeited | -25,000 | 0.37 | |||
Vested | -1,575,000 | 0.37 | |||
Non-vested at December 31, 2013 | 25,000 | 0.33 | |||
As at December 31, 2013, there was $166 (2012 - $273,811) of unrecognized compensation cost related to non-vested stock options to be recognized during January, 2014. |
12_Related_Party_Transactions
12. Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' |
12. Related Party Transactions | ' |
12. Related Party Transactions | |
On December 29, 2010, we loaned $200,000 to a company controlled by our Chief of Product Development (See Note 5). During the year we received $5,084 (2012 - $4,885) as a principal repayment and $7,681 of interest (2012 - $7,831). |
13_Income_Taxes
13. Income Taxes | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Income Tax Disclosure [Abstract] | ' | |||||||
13. Income Taxes | ' | |||||||
13. Income Taxes | ||||||||
Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. | ||||||||
The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows: | ||||||||
December 31, | ||||||||
2013 | 2012 | |||||||
U.S statutory rate | 34% | 34% | ||||||
Less valuation allowance | (34% | ) | (34% | ) | ||||
Effective tax rate | 0% | 0% | ||||||
The significant components of deferred tax assets and liabilities are as follows: | ||||||||
December 31, | ||||||||
Deferred tax assets | 2013 | 2012 | ||||||
Stock-based compensation | $ | 268,936 | 42,700 | |||||
Net operating losses | 771,356 | 269,300 | ||||||
Asset impairment | 39,231 | 80,000 | ||||||
1,079,523 | 392,000 | |||||||
Deferred tax liability | ||||||||
Depreciation expense | (4,318 | ) | (2,517 | ) | ||||
Net deferred tax assets | 1,075,205 | 2,569,221 | ||||||
Less valuation allowance | (1,075,205 | ) | (2,569,221 | ) | ||||
Deferred tax asset - net valuation allowance | $ | - | $ | -- | ||||
The net change in the valuation allowance for the year ended December 31, 2013 was $685,722. | ||||||||
We have a net operating loss carryover of $5,110,650 available to offset future income for income tax reporting purposes, which will expire in various years through 2033, if not previously utilized. However, our ability to use the carryover net operating loss may be substantially limited or eliminated pursuant to Internal Revenue Code Section 382. | ||||||||
We adopted the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”. We had no material unrecognized income tax assets or liabilities for the years ended December 31, 2013 and 2012. | ||||||||
Our policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the years ended December 31, 2013 and 2012, there was no income tax or related interest and penalty items in the income statement, or liabilities on the balance sheet. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are no longer subject to U.S. federal income tax examinations by tax authorities for years beginning October 1, 2008 or state income tax examination by tax authorities for years beginning October 1, 2009. We are not currently involved in any income tax examinations. |
14_Fair_Value_Measurements
14. Fair Value Measurements | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Fair Value Disclosures [Abstract] | ' | ||||
14. Fair Value Measurements | ' | ||||
14. Fair Value Measurements | |||||
ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below: | |||||
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. | |||||
Level 2 – Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. | |||||
Level 3 – Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability. We have no level 3 assets or liabilities. | |||||
The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of December 31, 2013: | |||||
Level 1 | Level 2 | Level 3 | Total | ||
$ | $ | $ | $ | ||
Assets: | |||||
Note receivable | - | 188,030 | - | 188,030 | |
Liabilities: | - | - | - | - | |
The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of December 31, 2012: | |||||
Level 1 | Level 2 | Level 3 | Total | ||
$ | $ | $ | $ | ||
Assets: | |||||
Note receivable | - | 193,114 | - | 193,114 | |
Liabilities: | - | - | - | - |
15_Subsequent_Events
15. Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
15. Subsequent Events | ' |
15. Subsequent Events | |
The Company has evaluated all subsequent events through the date these financial statements were issued and determined that there are no subsequent events to record and the following subsequent events to disclose: we issued 66,461 common shares valued at $50,000 pursuant to a service agreement. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
Accounting Policies [Abstract] | ' |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in accordance with United States generally accepted accounting principles requires us 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 in the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on deposit in overnight deposit accounts and investments in money market accounts. | |
Accounts receivable | ' |
Accounts receivable | |
We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customer’s inability to meet its financial obligations to us, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount we believe will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on our bad debt loss history and an overall assessment of past due trade accounts receivable outstanding. Accounts receivable is reported as the customers’ outstanding balances less any allowance for doubtful accounts. We record an allowance for doubtful accounts based on specifically identified amounts that are believed to be uncollectible. An additional allowance is recorded based on certain percentages of aged receivables, which are determined based on historical experience and assessment of the general financial conditions affecting our customer base. If actual collections experience changes, revisions to the allowance may be required. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance. The allowance for doubtful accounts was $13,680 as at December 31, 2013 (2012 - $nil). | |
Inventory | ' |
Inventory | |
Inventories are stated at the lower of cost to manufacture the inventory or the current estimated market value of the inventory. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand, production availability and/or our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Factors that could affect demand for our products include unanticipated changes in consumer preferences, general market and economic conditions or other factors that may result in cancellations of advance orders or reductions in the rate of reorders placed by customers and/or continued weakening of economic conditions. Additionally, our estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. | |
Property and Equipment | ' |
Property and Equipment | |
Property and equipment includes bottle molds, manufacturing equipment, office equipment, warehouse equipment and display coolers which are all stated at historical cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets which are estimated to be five years. | |
Long-Lived Assets | ' |
Long-Lived Assets | |
We account for long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. We assess recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. As of December 31, 2013 and 2012, we recognized an impairment of $115,385 and $483,208, respectively. | |
Intangible Assets | ' |
Intangible Assets | |
Intangible assets are comprised primarily of the cost of formulations of our products and of trademarks that represent our exclusive ownership of Natural Cabana®, PULSE® and PULSE: Nutrition Made Simple®, all used in connection with the manufacture, sale and distribution of our beverages. We evaluate our trademarks annually for impairment or earlier if there is an indication of impairment. If there is an indication of impairment of identified intangible assets not subject to amortization, we compare the estimated fair value with the carrying amount of the asset. An impairment loss is recognized to write-down the intangible asset to its fair value if it is less than the carrying amount. The fair value is calculated using the income approach. However, preparation of estimated expected future cash flows is inherently subjective and is based on our best estimate of assumptions concerning expected future conditions. Based on our impairment analysis performed for the year ended December 31, 2013, the estimated fair values of trademarks and other intangible assets exceeded their respective carrying values. | |
Revenue Recognition | ' |
Revenue Recognition | |
Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products to customers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods. Net sales have been determined after deduction of discounts, slotting fees and other promotional allowances in accordance with ASC 605-50. | |
Fair Value | ' |
Fair Value | |
We comply with the provisions of ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. See Note 14. | |
Financial Instruments | ' |
Financial Instruments | |
We have financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis. Our financial instruments consist of cash, accounts and loans receivables, accounts payable and accrued expenses. The carrying amounts of our financial instruments approximate their fair values as of December 31, 2013 and 2012 due to their short-term nature. | |
Income Taxes | ' |
Income Taxes | |
We follow ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. | |
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. | |
Concentration of Business and Credit Risk | ' |
Concentration of Business and Credit Risk | |
Financial instruments and related items, which potentially subject us to concentrations of credit risk, consist primarily of cash and receivables. We place our cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. As of December 31, 2013 and 2012, we exceeded insurance limits by $1,534,703 and $494,906, respectively. | |
We review a customer’s credit history before extending credit. As at and for the year ended December 31, 2013 there was one individual customer with a balance in excess of 10% of the accounts receivable totaling 35% (2012 - 37%) of accounts receivable and there was one individual customer in excess of 10% of net sales; 12% (2012 – nil). | |
Stock-based Compensation | ' |
Stock-based Compensation | |
We account for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant. | |
We account for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. | |
We calculate the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. We estimate forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, we monitor both stock option and warrant exercises as well as employee termination patterns. | |
The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award. | |
Basic and Diluted Net Income (Loss) Per Share | ' |
Basic and Diluted Net Income (Loss) Per Share | |
Net loss per share is computed in accordance with ASC subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of our statements of operations. Basic EPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted EPS is computed by adding to the weighted average shares the dilutive effect if common stock was issued upon the exercise of stock options and warrants. For the years ended December 31, 2013 and 2012, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of outstanding warrants on our net loss. Total potentially dilutive common share equivalents relating to stock purchase warrants and options granted or issued, as at December 31, 2013 and 2012 is 23,234,247 and 10,647,213, respectively. | |
Recent Pronouncements | ' |
Recent Pronouncements | |
In July 2012, the FASB issued ASU 2012-02, "Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment" ("ASU 2012-02"), which permits an entity to make a qualitative assessment of whether it is more likely than not that the fair value of a reporting unit's indefinite-lived intangible asset is less than the asset's carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that the fair value of a reporting unit's indefinite-lived intangible asset is more likely than not greater than the asset's carrying value, the remaining impairment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. ASU 2012-02 is effective for us for annual and interim indefinite-lived intangible asset impairment tests performed beginning October 1, 2012. We believe the adoption of ASU 2012-02 will not have a material impact on our financial statements. | |
We continually assess any new accounting pronouncements to determine their applicability to us. Where it is determined that a new accounting pronouncement affects our financial reporting, we undertake a study to determine the consequence of the change to our financial statements and assure that there are proper controls in place to ascertain that our financial statements properly reflect the change. |
3_Accounts_Receivable_Tables
3. Accounts Receivable (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Accounts Receivable Tables | ' | ||
Schedule of Accounts Receivable | ' | ||
2013 | 2012 | ||
$ | $ | ||
Trade accounts receivable | 396,014 | 202,255 | |
Less: Allowance for doubtful accounts | -13,680 | - | |
Trade accounts receivable - net | 382,334 | 202,255 | |
Employee advances | 4,366 | 500 | |
Volume rebate receivable | 7,000 | - | |
Due from a co-packer | 37,699 | - | |
431,399 | 202,755 | ||
4_Inventory_Tables
4. Inventory (Tables) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Inventory Tables | ' | ||
Schedule of Inventory | ' | ||
2013 | 2012 | ||
$ | $ | ||
Finished goods | 398,848 | 407,560 | |
Finished goods in transit | 54,434 | - | |
Raw Materials | 734,696 | 307,957 | |
1,187,978 | 715,517 | ||
6_Property_and_Equipment_and_I1
6. Property and Equipment and Intangible Assets (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Property And Equipment And Intangible Assets Tables | ' | ||||
Schedule of Property and Equipment | ' | ||||
Property and equipment consists of the following as of December 31: | 2012 | ||||
2013 | $ | ||||
$ | |||||
Manufacturing, warehouse, display equipment and molds | 261,522 | 352,966 | |||
Office equipment and furniture | 33,570 | 29,570 | |||
Mobile display unit and vehicles | 133,700 | 125,000 | |||
Less: depreciation | -88,740 | -24,663 | |||
Total Property and Equipment | 340,052 | 482,874 | |||
Schedule of Intangible Assets | ' | ||||
Intangible assets consists of the following as of December 31: | |||||
2013 | 2012 | ||||
$ | $ | ||||
Formulations and manufacturing methods | 779,968 | 761,963 | |||
Trademarks | 187,276 | 159,706 | |||
Side panel statement rights | 125,000 | 125,000 | |||
Patents | 50,160 | 50,160 | |||
Website | 62,675 | 31,750 | |||
Less: amortization | -54,228 | -23,631 | |||
Total Intangible Assets | 1,150,851 | 1,104,948 |
11_Stockbased_Compensation_Tab
11. Stock-based Compensation (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
Stock-Based Compensation Tables | ' | ||||
Schedule of Weighted Average Assumptions | ' | ||||
2013 | 2012 | ||||
Expected dividend yield | 0% | 0% | |||
Risk-free interest rate | 0.45% | 0.27% | |||
Expected volatility | 86% | 104% | |||
Expected option life (in years) | 3.78 | 5 | |||
Schedule of Stock Options Roll Forward | ' | ||||
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value | ||
$ | (years) | $ | |||
Outstanding, December 31, 2011 | - | - | - | - | |
Granted | 3,200,000 | 0.5 | - | - | |
Outstanding, December 31, 2012 | 3,200,000 | 0.5 | 4.34 | 432,000 | |
Forfeited/Cancelled | -100,000 | 0.5 | - | - | |
Outstanding, December 31, 2013 | 3,100,000 | 0.5 | 3.34 | - | |
Exercisable, December 31, 2013 | 3,075,000 | 0.5 | 3.34 | - | |
Status of Non-Vested Stock Options Outstanding | ' | ||||
Non-vested stock options | Number of Options | Weighted Average | |||
Grant Date | |||||
Fair Value | |||||
$ | |||||
Non-vested at December 31, 2011 | - | - | |||
Granted | 3,200,000 | 0.37 | |||
Vested | -1,575,000 | 0.37 | |||
Non-vested at December 31, 2012 | 1,625,000 | 0.37 | |||
Forfeited | -25,000 | 0.37 | |||
Vested | -1,575,000 | 0.37 | |||
Non-vested at December 31, 2013 | 25,000 | 0.33 |
13_Income_Taxes_Tables
13. Income Taxes (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
Income Taxes Tables | ' | |||||||
Schedule Of Effective Income Tax Rate Reconciliation | ' | |||||||
December 31, | ||||||||
2013 | 2012 | |||||||
U.S statutory rate | 34% | 34% | ||||||
Less valuation allowance | (34% | ) | (34% | ) | ||||
Effective tax rate | 0% | 0% | ||||||
Schedule Of Deferred Tax Assets and Liabilities | ' | |||||||
The significant components of deferred tax assets and liabilities are as follows: | ||||||||
December 31, | ||||||||
Deferred tax assets | 2013 | 2012 | ||||||
Stock-based compensation | $ | 268,936 | 42,700 | |||||
Net operating losses | 771,356 | 269,300 | ||||||
Asset impairment | 39,231 | 80,000 | ||||||
1,079,523 | 392,000 | |||||||
Deferred tax liability | ||||||||
Depreciation expense | (4,318 | ) | (2,517 | ) | ||||
Net deferred tax assets | 1,075,205 | 2,569,221 | ||||||
Less valuation allowance | (1,075,205 | ) | (2,569,221 | ) | ||||
Deferred tax asset - net valuation allowance | $ | - | $ | -- |
14_Fair_Value_Measurements_Tab
14. Fair Value Measurements (Tables) | 12 Months Ended | |||||||||
Dec. 31, 2013 | Dec. 31, 2012 | |||||||||
Fair Value Measurements Tables | ' | ' | ||||||||
Schedule Of Fair Value Assets And Liabilities Measured On Recurring Basis | ' | ' | ||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||
$ | $ | $ | $ | $ | $ | $ | $ | |||
Assets: | Assets: | |||||||||
Note receivable | - | 188,030 | - | 188,030 | Note receivable | - | 193,114 | - | 193,114 | |
Liabilities: | - | - | - | - | Liabilities: | - | - | - | - |
3_Accounts_Receivable_Detail_S
3. Accounts Receivable (Detail) - Schedule of Accounts Receivable (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Accounts Receivable Detail - Schedule Of Accounts Receivable | ' | ' |
Trade accounts receivable | $396,014 | $202,255 |
Less: Allowance for doubtful accounts | -13,680 | ' |
Trade accounts receivable - net | 382,334 | 202,255 |
Employee advances | 4,366 | 500 |
Volume rebate receivable | 7,000 | ' |
Due from a co-packer | 37,699 | ' |
Total | $431,399 | $202,755 |
4_Inventory_Detail_Schedule_of
4. Inventory (Detail) - Schedule of Inventory (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Inventory Detail - Schedule Of Inventory | ' | ' |
Finished goods | $398,848 | $407,560 |
Finished goods in transit | 54,434 | ' |
Raw Materials | $734,696 | $307,957 |
6_Property_and_Equipment_and_I2
6. Property and Equipment and Intangible Assets (Detail) - Schedule of Property and Equipment (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property And Equipment And Intangible Assets Detail - Schedule Of Property And Equipment | ' | ' |
Manufacturing, warehouse, display equipment and molds | $261,522 | $352,966 |
Office equipment and furniture | 33,570 | 29,570 |
Mobile display unit and vehicles | 133,700 | 125,000 |
Less: depreciation | -88,740 | -24,663 |
Total Property and Equipment | $340,052 | $482,874 |
11_Stockbased_Compensation_Det
11. Stock-based Compensation (Detail) - Schedule of Weighted Average Assumptions | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Stock-Based Compensation Detail - Schedule Of Weighted Average Assumptions | ' | ' |
Expected dividend yield | 0.00% | 0.00% |
Risk-free interest rate | 45.00% | 27.00% |
Expected volatility | 86.00% | 104.00% |
Expected option life (in years) | '3.78 | '5 |
11_Stockbased_Compensation_Det1
11. Stock-based Compensation (Detail) - Schedule of Stock Options Roll Forward (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Outstanding [Member] | ' | ' | ' |
Number of Options | 3,100,000 | 3,200,000 | ' |
Weighted Average Exercise Price | $0.50 | $0.50 | ' |
Weighted - Average Remaining Contractual Term (years) | ' | 4.34 | ' |
Aggregate Intrinsic Value | ' | $432,000 | ' |
Granted [Member] | ' | ' | ' |
Number of Options | ' | ' | 3,200,000 |
Weighted Average Exercise Price | ' | ' | $0.50 |
Aggregate Intrinsic Value | ' | ' | ' |
Forfeited [Member] | ' | ' | ' |
Number of Options | ' | -100,000 | ' |
Weighted Average Exercise Price | ' | $0.50 | ' |
Aggregate Intrinsic Value | ' | ' | ' |
Exercisable [Member] | ' | ' | ' |
Number of Options | 3,075,000 | ' | ' |
Weighted Average Exercise Price | $0.50 | ' | ' |
Aggregate Intrinsic Value | ' | ' | ' |
11_Stockbased_Compensation_Det2
11. Stock-based Compensation (Detail) - Status of Non-Vested Stock Options Outstanding (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Non-Vested [Member] | ' | ' | ' |
Number of Options | 25,000 | 1,625,000 | ' |
Weighted Average Grant Date Fair Value | $0.33 | $0.37 | ' |
Granted [Member] | ' | ' | ' |
Number of Options | ' | ' | 3,200,000 |
Weighted Average Grant Date Fair Value | ' | ' | $0.37 |
Vested [Member] | ' | ' | ' |
Number of Options | ' | -1,575,000 | -1,575,000 |
Weighted Average Grant Date Fair Value | ' | $0.37 | $0.37 |
Forfeited [Member] | ' | ' | ' |
Number of Options | ' | -25,000 | ' |
Weighted Average Grant Date Fair Value | ' | $0.37 | ' |
13_Income_Taxes_Detail_Schedul
13. Income Taxes (Detail) - Schedule Of Effective Income Tax Rate Reconciliation | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes Detail - Schedule Of Effective Income Tax Rate Reconciliation | ' | ' |
U.S Statutory Rate | 34.00% | 34.00% |
Less Valuation Allowance | -34.00% | -34.00% |
Effective Tax Rate | 0.00% | 0.00% |
13_Income_Taxes_Detail_Schedul1
13. Income Taxes (Detail) - Schedule Of Deferred Tax Assets and Liabilities (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Deferred Tax Assets | ' | ' |
Stock based compensation | $268,936 | $42,700 |
Net Operating Losses | 771,356 | 269,300 |
Asset impairment | 39,231 | 80,000 |
us-gaap:DeferredTaxAssetsGross | 1,079,523 | 392,000 |
Depreciation expense | -4,318 | -2,517 |
Net deferred tax assets | 1,075,205 | 2,569,221 |
Less valuation allowance | -1,075,205 | -2,569,221 |
Deferred tax asset - net valuation allowance | ' | ' |
14_Fair_Value_Measurements_Det
14. Fair Value Measurements (Detail) - Schedule Of Fair Value Assets And Liabilities Measured On Recurring Basis (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Note receivable | $188,030 | $193,114 |
Liabilities: | ' | ' |
Level 1 [Member] | ' | ' |
Note receivable | ' | ' |
Liabilities: | ' | ' |
Level 2 [Member] | ' | ' |
Note receivable | 188,030 | 193,114 |
Liabilities: | ' | ' |
Level 3 [Member] | ' | ' |
Note receivable | ' | ' |
Liabilities: | ' | ' |
5_Loan_Receivable_Related_Part1
5. Loan Receivable - Related Party (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Loan Receivable - Related Party Details Narrative | ' |
Loan Value Related Party | $200,000 |
Loan Interest Rate | 4.00% |
Amortized Term | '25 |
Maturity Date | 16-May-16 |
Loan Remaining Balance | 174,000 |
Loan Payment Frequency | 'Monthly |
Loan Payments | 1,055 |
Loan Remaining Balance | $188,030 |
7_Shortterm_Loan_Details_Narra
7. Short-term Loan (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Short-Term Loan Details Narrative | ' |
Short-Term Bridge Loan | $250,000 |
Short-Term Bridge Loan Interest | 6.00% |
Loan To Shares Balance Conversion (shares) | 625,000 |
Loan To Shares Balance Conversion Units (per share) | $0.40 |
Conversion Terms | 'Each Unit Contained One Common Share And One Warrant. |
Warrant Excise Price | $0.65 |
Warrant Expiration Date | 21-Dec-15 |
Accrued Interest Forgiven | $6,486 |
8_Common_Stock_Details_Narrati
8. Common Stock (Details Narrative) - 2013 (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Subscription Agreements [Member] | ' |
Shares Issue Offering (units) | 10,256,750 |
Shares Issue Offering (per share) | $0.40 |
Shares Issue Offering (balance) | $4,102,700 |
Shares Issue Offering Terms | 'Each Unit consisted of one common share and one warrant. |
Shares Issue Offering Warrant (per share) | $0.65 |
Shares Issue Offering Warrant Expiration Date | 22-Feb-16 |
Issued 125,000 [Member] | ' |
Shares Issue Offering (units) | 125,000 |
Shares Issue Offering (per share) | $0.80 |
Shares Issue Offering (balance) | 100,000 |
Shares Issue Offering Terms | 'Each Unit consisted of one common share and one warrant. |
Shares Issue Offering Warrant (per share) | $1 |
Shares Issue Offering Warrant Expiration Date | 18-Apr-16 |
Debt Owing [Member] | ' |
Shares Issue Offering (units) | 58,333 |
Shares Issue Offering (per share) | $0.40 |
Shares Issue Offering Terms | 'Each Unit consisted of one common share and one warrant. |
Shares Issue Offering Warrant (per share) | $0.65 |
Shares Issue Offering Warrant Expiration Date | 22-Feb-16 |
Shares Issue Offering Debt Settled | 23,333 |
Service Agreements [Member] | ' |
Shares Issue Offering (units) | 337,650 |
Shares Issue Offering (per share) | $0.84 |
Compensation For Services [Member] | ' |
Shares Issue Offering (units) | 30,000 |
Shares Issue Offering (per share) | $0.63 |
Advisory Board Agreement [Member] | ' |
Shares Issue Offering (units) | 20,000 |
Shares Issue Offering (balance) | 21,500 |
Issued 275,000 [Member] | ' |
Shares Issue Offering (per share) | $0.65 |
Shares Issue Offering Terms | 'common share purchase warrants to purchase an additional common share |
Warrants Issued (Units) | 275,000 |
Shares Issue Offering Warrant Expiration Date | 22-Feb-16 |
Compensation For Introduction To An Investor [Member] | ' |
Shares Issue Offering (units) | 100,000 |
Shares Issue Offering (per share) | $1.42 |
Consultant Exercising [Member] | ' |
Shares Issue Offering (units) | 25,000 |
Shares Issue Offering (per share) | $0.50 |
Shares Issue Offering (balance) | $12,500 |
8_Common_Stock_Details_Narrati1
8. Common Stock (Details Narrative) - 2012 (USD $) | 12 Months Ended |
Dec. 31, 2012 | |
Issued 400,000 [Member] | ' |
Shares Issue Offering (units) | 400,000 |
Shares Issue Offering (per share) | $0.30 |
Shares Issue Offering (balance) | $120,000 |
Shares Issue Offering Terms | 'Each warrant entitles the holder to purchase one additional common share |
Shares Issue Offering Warrant (per share) | $0.45 |
Shares Issue Offering Warrant Expiration Date | 25-Jan-17 |
Issued 2,856,666 [Member] | ' |
Shares Issue Offering (units) | 2,856,666 |
Shares Issue Offering (per share) | $0.30 |
Shares Issue Offering (balance) | 857,000 |
Shares Issue Offering Terms | 'Each Unit consisted of one common share and one warrant. |
Shares Issue Offering Warrant (per share) | $0.45 |
Shares Issue Offering Warrant Expiration Date | 9-Feb-17 |
Issued 4,675,000 [Member] | ' |
Shares Issue Offering (units) | 4,675,000 |
Shares Issue Offering (per share) | $0.40 |
Shares Issue Offering (balance) | 1,870,000 |
Shares Issue Offering Terms | 'Each Unit consisted of one common share and one warrant. |
Shares Issue Offering Warrant (per share) | $0.60 |
Issued 309,664 [Member] | ' |
Shares Issue Offering (units) | 309,664 |
Shares Issue Offering (per share) | $0.30 |
Shares Issue Offering (balance) | 164,566 |
Shares Issue Offering Terms | 'Each Unit consisted of one common share and one warrant. |
Shares Issue Offering Warrant (per share) | $0.45 |
Shares Issue Offering Warrant Expiration Date | 25-Jan-17 |
Shares Issue Offering Debt Settled | 29,166 |
Issued 81,667 [Member] | ' |
Shares Issue Offering (units) | 81,667 |
Shares Issue Offering (balance) | 46,279 |
Shares Issue Offering Debt Settled | 6,579 |
Issued 707,571 [Member] | ' |
Shares Issue Offering (units) | 707,571 |
Shares Issue Offering (balance) | 357,300 |
Issued 480,000 [Member] | ' |
Shares Issue Offering (units) | 480,000 |
Shares Issue Offering (balance) | $249,600 |
11_Stockbased_Compensation_Det3
11. Stock-based Compensation (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Sep. 28, 2012 | |
Stock-Based Compensation Details Narrative | ' | ' | ' |
Shares Authorized Under Equity Incentive Plan | 4,500,000 | ' | ' |
Stock-Based Compensation (Shares) | ' | 93,000 | 480,000 |
Stock-Based Compensation (Fair Value) | ' | $51,083 | $249,600 |
Stock-Based Compensation Reversed | ' | $51,083 | ' |
12_Related_Party_Transactions_
12. Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 29, 2010 | |
Related Party Transactions Details Narrative | ' | ' | ' |
Related Party Loan | ' | ' | $200,000 |
Related Party Loan Principal Repayment | 5,084 | 4,885 | ' |
Related Party Loan Interest | $7,681 | $7,831 | ' |
13_Income_Taxes_Details_Narrat
13. Income Taxes (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Income Taxes Details Narrative | ' |
Net Change In Valuation Allowance | $685,722 |
Operating Loss Carry-Over | $5,110,650 |
15_Subsequent_Events_Details_N
15. Subsequent Events (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events Details Narrative | ' |
Shares Issued Pursuant to Service Agreement (Shares) | 66,461 |
Shares Issued Pursuant to Service Agreement | $50,000 |