Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 30, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Pulse Beverage Corp | ||
Entity Central Index Key | 1,420,569 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | true | ||
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 | $ 10,845,000 | ||
Entity Common Stock, Shares Outstanding | 68,924,980 | ||
Amendment Description | AMENDMENT TO INCLUDE XBRL | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Current Assets | ||
Cash | $ 431,270 | $ 49,517 |
Accounts receivable, net | 386,462 | 544,749 |
Inventories | 988,910 | 1,146,120 |
Prepaid expenses | $ 15,461 | 268,267 |
Other current assets | 15,057 | |
Total Current Assets | $ 1,822,103 | 2,044,857 |
Property and equipment, net of accumulated depreciation of $266,099 and $174,613, respectively | $ 247,235 | 266,553 |
Other Assets | ||
Loan receivable, net of current portion | 177,232 | |
Intangible assets, net of accumulated amortization of $52,683 and $39,548 | $ 1,131,793 | 1,156,115 |
Total Other Assets | 1,131,793 | 1,333,347 |
Total Assets | 3,201,131 | 3,644,757 |
Current Liabilities | ||
Accounts payable and accrued expenses | 790,616 | 883,587 |
Credit card indebtedness | 22,066 | $ 21,147 |
Loans Payable | 755,771 | |
Total Current Liabilities | $ 1,568,453 | $ 904,734 |
Stockholders' Equity | ||
Preferred Stock, 1,000,000 shares authorized, $0.001 par value, none issued | ||
Common stock, 100,000,000 shares authorized, $0.00001 par value 68,447,202 and 54,276,037 issued and outstanding, respectively | $ 684 | $ 543 |
Additional paid-in capital | $ 14,879,160 | 13,177,720 |
Subscriptions received | 100,000 | |
Accumulated Deficit | $ (13,247,166) | (10,538,240) |
Total Stockholders' Equity | 1,632,678 | 2,740,023 |
Total Liabilities and Stockholders' Equity | $ 3,201,131 | $ 3,644,757 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value | $ 0.00001 | $ 0.00001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 68,447,202 | 54,276,037 |
Property And Equipment, Accumulated Depreciation | $ 266,099 | $ 174,613 |
Intangible Assets, Accumulated Amortization | $ 52,682 | $ 39,547 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||
Gross Sales | $ 3,730,676 | $ 3,802,136 |
Less: Promotional Allowances and Slotting Fees | (247,162) | (438,821) |
Net Sales | 3,483,514 | 3,363,315 |
Cost of Sales | 2,405,874 | 2,402,869 |
Gross Profit | 1,077,640 | 960,446 |
Expenses | ||
Advertising, samples and displays | 80,269 | 136,971 |
Freight-out | 359,266 | 391,242 |
General and administration | 1,288,224 | 1,578,363 |
Research and development | 995 | 55,674 |
Salaries and benefits and broker/agent's fees | 1,208,603 | 1,401,742 |
Stock-based compensation | 166 | |
Total Operating Expenses | 3,543,913 | 3,564,158 |
Net Operating Loss | (2,466,273) | (2,603,712) |
Other Income (Expense) | ||
Asset impairment | (159,597) | $ (55,996) |
Contract settlement | (7,009) | |
Financing expense | (10,000) | $ (26,000) |
Interest (expense) income, net | (69,885) | 5,027 |
Gain (loss) on disposal of equipment | 3,838 | (31,764) |
Total Other Income (Expense) | $ (242,653) | $ (127,614) |
Net Loss Per Share - Basic and Diluted | $ (0.04) | $ (0.05) |
Weighted Average Shares Outstanding - Basic and Diluted | 62,861,000 | 52,007,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock | Additional Paid-In Capital | Subscriptions Received | Accumulated Deficit | Total |
Beginning Balance at Dec. 31, 2013 | $ 517 | $ 12,668,580 | $ (7,806,914) | $ 4,862,183 | |
Balance (Shares) at Dec. 31, 2013 | 51,654,135 | ||||
Shares issued for services rendered or to be rendered in a future period at an average fair value of $0.95 | $ 26 | $ 508,974 | 509,000 | ||
Shares issued for services rendered or to be rendered in a future period at an average fair value of $0.95 (Shares) | 2,621,902 | ||||
Common stock issuable at Dec. 31, 2014 | $ 100,000 | 100,000 | |||
Stock-based compensation | $ 166 | 166 | |||
Net Loss | $ (2,731,326) | ||||
Ending Balance at Dec. 31, 2014 | $ 543 | $ 13,177,720 | $ 100,000 | $ (10,538,240) | $ 2,740,023 |
Ending Balance (Shares) at Dec. 31, 2014 | 54,276,037 | ||||
Common stock issuable at Dec. 31, 2015 | |||||
Shares issued for cash at $0.10 | $ 105 | 1,049,895 | $ (100,000) | $ 950,000 | |
Shares issued for cash at $0.10 (Shares) | 10,500,000 | ||||
Shares issued for debt settlement at $0.10 | $ 1 | 9,999 | $ 10,000 | ||
Shares issued for debt settlement at $0.10 (Shares) | 100,000 | ||||
Shares issued for share issuance costs at a fair value of $0.10 per share | $ 2 | (2) | |||
Shares issued for share issuance costs at a fair value of $0.10 per share (Shares) | 200,000 | ||||
Shares issued for employment services at an average fair value of $0.14 per share | $ 1 | 13,024 | $ 13,024 | ||
Shares issued for employment services at an average fair value of $0.14 per share | 96,165 | ||||
Shares issued to a director pursuant to an employment contract at a fair value of $0.08 per share | $ 2 | 21,998 | $ 22,000 | ||
Shares issued to a director pursuant to an employment contract at a fair value of $0.08 per share | 275,000 | ||||
Shares issued as security for an accrued liability | $ 30 | (30) | |||
Shares issued as security for an accrued liability | 3,000,000 | ||||
Stock-based compensation | $ 606,556 | $ 606,556 | |||
Net Loss | $ (2,708,926) | ||||
Ending Balance at Dec. 31, 2015 | $ 684 | $ 14,879,160 | $ (13,247,166) | $ 1,632,678 | |
Ending Balance (Shares) at Dec. 31, 2015 | 68,447,202 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flow from Operating Activities | ||
Net loss | $ (2,708,926) | $ (2,731,326) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Amortization and depreciation | 106,423 | 117,314 |
Asset impairment | 159,597 | 55,996 |
Bad debt allowance | 156,091 | $ 16,500 |
Amortization of deferred financing fees | $ 47,961 | |
Financing fee paid with shares | $ 26,000 | |
(Gain) loss on sale of assets | $ (3,838) | $ 31,764 |
Reduction of long-term note for services | 92,800 | |
Shares and options issued for services | 871,581 | $ 333,999 |
Changes in operating assets and liabilities: | ||
Decrease (increase) in accounts receivable | 2,196 | (134,216) |
Decrease in prepaid expenses | 22,806 | 19,777 |
Decrease (increase) in inventories | 24,369 | (10,767) |
Decrease (increase) in other assets | 9,550 | (5,184) |
(Decrease) increase in accounts payable and accrued expenses | (127,970) | 482,169 |
Net Cash Used in Operating Activities | $ (1,347,360) | (1,797,974) |
Cash flow to Investing Activities | ||
Proceeds from note receivable | 5,292 | |
Proceeds from disposal of asset | $ 6,736 | 18,000 |
Purchase of property and equipment | (76,868) | (14,089) |
Acquisition of intangible assets | (8,576) | (36,706) |
Net Cash Used in Investing Activities | (78,708) | $ (27,503) |
Cash Flow from Financing Activities | ||
Proceeds from loans, net of finance costs | 913,770 | |
Repayment of loans payable | (55,949) | |
Net Cash Provided by Financing Activities | 1,807,821 | $ 100,000 |
Increase (Decrease) in Cash | 381,753 | (1,725,477) |
Cash - Beginning of Period | 49,517 | 1,774,994 |
Cash - End of Period | 431,270 | 49,517 |
Non-cash Financing and Investing Activities: | ||
Shares issued for services, prepaid expenses and debt settlement | 881,581 | 509,166 |
Supplemental Disclosures: | ||
Interest paid | $ 13,296 | $ 3,129 |
Income taxes paid |
Nature of Operations
Nature of Operations | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | 1. Nature of Operations Darlington Mines Ltd. (Darlington) was incorporated in the State of Nevada on August 23, 2006. On February 15, 2011 Darlington Mines Ltd. closed a voluntary share exchange transaction with a private Colorado company, The Pulse Beverage Corporation, which was formed on March 17, 2010, by and among us, The Pulse Beverage Corporation and the stockholders of The Pulse Beverage Corporation. The Pulse Beverage Corporation became a wholly-owned subsidiary. On February 16, 2011 Darlingtons name was changed to The Pulse Beverage Corporation. We manufacture and distribute Natural Cabana® Lemonade, Limeade and Coconut Water and PULSE® Heart & Body Health functional beverages. Our products are distributed nationwide primarily through a series of distribution agreements with various independent local and regional distributors and on a warehouse direct basis with major retail chain stores. Our products are also distributed internationally in Canada, China and Mexico. As of December 31, 2015, we had cash of $431,270 and working capital of $253,651. On March 22, 2016, we entered into Amendment No. 1 to Senior Secured Revolving Credit Facility Agreement (the Amended Credit Facility) whereby we were approved for an additional $1,000,000 loan under the Amended Credit Facility having the same terms as the initial $900,000 loan (See Note 6). The Amended and Restated Senior Secured Revolving Convertible Promissory Note matures November 6, 2016 unless extended by the Lender. We received $455,860, net of $44,140 of closing costs, on March 22, 2016 and will receive a further $250,000 once we collect an account receivable from our Mexico distributor. A further $250,000 will be received once we have met certain other performance criteria. In connection with this additional loan, we agreed to issue 10,558,069 shares of our restricted common stock to the Lender as an Advisory Fee. Notwithstanding the above, the Lender is restricted from receiving these shares to the extent that, after giving effect to the receipt of the shares, the Lender would beneficially own more than 4.99% of our common stock. Any shares not issued as a result of this limitation will be issued at a later date, and from time to time, when the issuance of these will not result in the Lender beneficially owning more than 4.99% of our common stock. We have the right to purchase these shares by paying $350,000 to the Lender on or before September 22, 2016. These additional sources of cash will allow us to meet our working capital needs through to the middle of 2017. Cash used in operations during the year ended December 31, 2015 totaled $1,347,360 compared to $1,797,974 for 2014. The decrease in cash used in operations compared to 2014 is primarily driven by increasing our overall gross profit by $117,194 (12%), achieving greater operational efficiencies and reducing operating expenses. We intend to continually monitor and adjust our business plan as necessary to respond to developments in our business, our markets and the broader economy. We believe our credit facility and equity financing alternatives will be made available to us to support our working capital needs in the future. These alternatives may require significant cash payments for interest and other costs or could be highly dilutive to our existing shareholders. As of March 30, 2016, we believe that our cash on hand, available working capital and financing alternatives will be sufficient to meet our anticipated cash needs through the first half of 2017 and is sufficient to alleviate the uncertainties relating to our ability to successfully execute on our business plan and finance our operations through the middle of 2017. Our financial statements for the years presented were prepared assuming we will continue in operation for the foreseeable future and will be able to realize assets and settle liabilities and commitments in the normal course of business. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of presentation The accompanying consolidated financial statements include the accounts of our wholly-owned Mexico subsidiary, Natural Cabana SA de CV and have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and the Securities and Exchange Commission (SEC) rules and regulations applicable to financial reporting. All intercompany transactions are eliminated upon consolidation. 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 as to 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 We maintain cash balances with financial institutions that may exceed federally insured limits. We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash invested in money market accounts. As of December 31, 2015, there were no cash equivalents. Accounts receivable Accounts receivable primarily consists of trade receivables due from wholesalers, distributors and large chain stores. We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customers 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. 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. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance. The allowance for doubtful accounts was $156,090 and $16,500 at December 31, 2015 and 2014, respectively. Inventory Inventories consist of raw materials and finished goods and are stated at the lower of cost or market and include adjustments for estimated obsolete or excess inventory. Cost is based on actual cost on a first-in first-out basis. Raw materials that will be used in production in the next twelve months are recorded in 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 are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are expensed as incurred; renewals and betterments are capitalized. Upon disposal of equipment and leasehold improvements, the accounts are relieved of the costs and related accumulated depreciation or amortization, and resulting gains or losses are reflected in the Statements of Operations. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Equipment consists of bottle molds, office and warehouse equipment, and display coolers, all of which have an estimated life of 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 assets carrying value and fair value or disposable value. There is an impairment charge in 2015 and 2014 related to trademarks written-down of $19,763 and $18,881, 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 products. We do not amortize trademarks as they have an indefinite life; we amortize our website over a period of 5 years on a straight-line basis and our formulations and related intangible assets based on case sales divided by 2,000,000 cases 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 years ended December 31, 2015 and 2014, we identified impairment of trademarks of $19,763 and $18,881, respectively. Revenue Recognition Revenue is recognized 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. All sales to distributors and customers are final; however, in limited instances, due to product quality issues or distributor terminations, we may accept returned product. To date, such returns have been de minimis. Shipping and handling costs The actual costs of shipping and handling for freight to our customers are included in operating expenses. Comprehensive loss We have no elements of comprehensive income or loss during the years ended December 31, 2015 and 2014. Seasonality Our sales are seasonal and we experience fluctuations in quarterly results as a result of many factors. Historically, we have generated a higher percentage of our revenues during the warm weather months of April through September. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. As a result, we believe that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the entire fiscal year. Advertising costs Advertising costs are expensed as incurred. During the years ended December 31, 2015 and 2014, we incurred advertising costs of $80,269 and $136,971, respectively. Fair Value 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 factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. 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, 2015 and 2014 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. The determination of taxes payable includes estimates. We believe that we have appropriate support for the income tax positions taken, and to be taken, on our tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. No reserves for an uncertain income tax position have been recorded for the years ended December 31, 2015 or 2014. 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, 2015 and 2014, we exceeded insurance limits by $139,381 and $nil, respectively. We review a customers credit history before extending credit. At and for the year ended December 31, 2015 there was one customer with a balance owing to us of 39% of accounts receivable. In 2014 there was one customer with a balance owing to us of 25% of accounts receivable. There was one customer representing 13% of net sales in 2015 and no sales to a customer exceeding 10% for 2014. 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, 2015 and 2014, 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, at December 31, 2015 and 2014 were 34,230,080 and 23,309,247, respectively. At March 30, 2016 there were 23,214,997 potentially dilutive common share equivalents. Reclassification of Prior Period Certain prior-year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no impact on reported net loss, total assets or liabilities. Recent Pronouncements We continually assess any new accounting pronouncements to determine their applicability to our operations and financial reporting. 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. During the fourth quarter of 2014, we adopted Accounting Standards Update ("ASU") 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity," which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. This ASU was effective for fiscal years beginning on or after December 15, 2014, and interim periods within those years. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows. During the first quarter of 2015, we adopted FASBs guidance on reporting discontinued operations and disclosures of disposals of components of an entity. This standard raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The guidance is effective for annual reporting periods ending after December 15, 2014. Early adoption was permitted but only for disposals that have not been reported in financial statements previously issued. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows. During the fourth quarter of 2015, we adopted ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, and amortization of those costs should be reported as interest expense. This ASU is effective for annual and interim periods beginning after December 15, 2015, and early adoption is permitted for financial statements that have not been previously issued. The new guidance should be applied on a retrospective basis for each period presented in the balance sheet. We adopted this change concurrently with our senior revolving loan secured together with related costs during the fourth quarter of 2015. Recent Accounting Pronouncements Issued But Not Adopted as of December 31, 2015 In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. We are currently evaluating the impact of adopting this guidance. In November 2015, the FASB issued (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes . In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement Period Adjustments. Changes to the accounting for measurement-period adjustments relate to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the balance sheet amounts of the acquiree. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective adjustments, and, instead require the acquiring entity to record these adjustments in the reporting period they are determined. The new standard is effective for both public and private companies for periods beginning after December 15, 2015. We are currently evaluating the impact of adopting this guidance. In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, first-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In May 2015, the FASB issued ASU 2015-07, "Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. Further, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015, and early adoption is permitted. The new guidance should be applied on a retrospective basis to all periods presented. We are currently evaluating the impact of adopting this guidance. In April 2015, the FASB issued ASU 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement," which provides guidance about whether a cloud computing arrangement includes a software license. It also provides guidance related to a customers accounting for fees paid in a cloud computing arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and early adoption is permitted. We will adopt this guidance on January 1, 2016. The adoption of this guidance is not expected to have a material impact on our financial position, results of operations or cash flows. In February 2015, the FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis," which makes changes to both the variable interest model and voting interest model and eliminates the indefinite deferral of FASB Statement No. 167, included in ASU 2010-10, for certain investment funds. All reporting entities that hold a variable interest in other legal entities will need to re-evaluate their consolidation conclusions as well as disclosure requirements. This ASU is effective for annual periods beginning after December 15, 2015, and early adoption is permitted, including any interim period. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, "Income Statement Extraordinary and Unusual Items (Subtopic 225-20)," effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. This update eliminates from GAAP the concept of extraordinary items. The adoption of ASU 2014-16 will not have a significant impact on our financial position or results of operations. In November 2014, the FASB issued ASU 2014-16, "Derivatives and Hedging (Topic 815)." Entities commonly raise capital by issuing different classes of shares, including preferred stock, that entitle the holders to certain preferences and rights over the other shareholders. The specific terms of those shares may include conversion rights, redemption rights, voting rights, and liquidation and dividend payment preferences, among other features. One or more of those features may meet the definition of a derivative under GAAP. Shares that include such embedded derivative features are referred to as hybrid financial instruments. The objective of this update is to eliminate the use of different methods in practice and thereby reduce existing diversity under GAAP in the accounting for hybrid financial instruments issued in the form of a share. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU 2014-16 will not have a significant impact on ouir financial position or results of operations. In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements Going Concern (Subtopic 205-40), effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. This standard provides guidance about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017. We are currently evaluating the potential impact, if any, the adoption of ASU 2014-15 will have on footnote disclosures, however, we do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows, if any. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Accounts Receivable | 3. Accounts Receivable Accounts receivable consists of the following as of December 31: 2015 2014 Trade accounts receivable $534,727 $540,355 Less: Allowance for doubtful accounts (156,090) (16,500) Trade accounts receivable - net 378,637 523,855 Value added tax recoverable 2,290 - Due from suppliers of services 5,535 20,894 $386,462 $544,749 |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories consists of the following as of December 31: 2015 2014 Finished goods $344,764 $543,548 Deposit on finished goods - 67,706 Raw materials 644,146 534,866 $988,910 $1,146,120 |
Loan Receivable
Loan Receivable | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Loan Receivable | 5. Loan Receivable In 2011 we loaned $200,000 to a company owned by our Chief of Product Development. The loan bears interest at a rate of 4% per annum and matures on May 16, 2016 when a final payment of $174,000 is due. Catalyst repays this loan on a monthly basis at $1,060 principal and interest. This company was owed fees of $164,931 at June 30, 2015 and it was agreed that these outstanding fees would offset the loan receivable due from this company after applying a 4% interest charge and the balance of the note, being $24,993, be written-down to $18,000. As a result we incurred an asset impairment charge of $6,993. As of December 31, 2015 the balance of the note receivable was $10,000 and the fees owing to Catalyst was $10,000. It was agreed that these two balances would offset, as a result, at December 31, 2015 the loan receivable balance was $nil. |
Property and Equipment and Inta
Property and Equipment and Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
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: 2015 2014 Manufacturing, warehouse, display equipment and molds $337,253 $272,272 Office equipment and furniture 41,581 35,194 Mobile display unit and vehicles 134,500 133,700 Less: depreciation (266,099) (174,613) Total Property and Equipment $247,235 $266,553 For the years ended December 31, 2015 and 2014, depreciation expense was $93,288 and $85,873, respectively Intangible assets consists of the following as of December 31: 2015 2014 Formulations, rights and patents $969,696 $965,694 Website 62,675 62,675 Less: amortization (52,682) (39,547) Trademarks not amortized due to indefinite life 152,104 167,293 Total Intangible Assets $1,131,793 $1,156,115 For the years ended December 31, 2015 and 2014, amortization expense was $13,135 and $12,560, respectively. Estimated amortization expense to be recorded for the next five fiscal years and thereafter is as follows: 2016 $25,098 2017 $36,989 2018 $48,320 2019 $72,480 2020 $96,640 Thereafter $700,160 |
Loans Payable
Loans Payable | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Loans Payable | 7. Loans Payable Loans payable consists of the following as of December 31: 2015 2014 Short-term loan (a) below $15,000 $- Short-term loan related party (a) below 130,000 - 145,000 - Senior Secured Revolving Note (b) below (Note 15) 844,040 - Less: unamortized debt issuance costs (233,269) - Net carrying value 610,771 - $755,771 $- a) In September, 2015 we received short-term loans totaling $145,000 of which $130,000 was received by a family trust of our Chief Executive Officer. These loans are unsecured and are due on demand. Interest of $8,663 has been accrued at December 31, 2015 and included in accounts payable and accrued expenses. At March 30, 2016 these loans have not been demanded. b) On November 6, 2015, we entered into a Credit Agreement with TCA Global Credit Master Fund, LP (the Lender). Under the terms of the Credit Agreement, the Lender has committed to lend a total of $3,500,000 (the Credit Facility) to us pursuant to a senior secured revolving note (the Note). The initial tranche of $650,000 was funded on November 6, 2015 and a second tranche of $250,000 was funded on December 22, 2015 for a total of $900,000 advanced against this Credit Facility. This loan matures on November 6, 2016 unless extended by the Lender. We must meet specific monthly collateral requirements to further draw upon the Credit Facility (See Note 15). The Credit Facility is secured by a senior secured interest in all of our assets. We are charged a 12% per annum rate of interest plus a 6% per annum administration fee on the daily loan balance outstanding. Repayment terms are 20% of gross receipts until we reach $130,000 of repayments after which we pay 10% of gross receipts. During the year we repaid $55,949 leaving a balance owing of $844,040 at December 31, 2015. Associated with the closing of the Credit Facility we incurred $281,230 of debt issuance costs which will be amortized to interest expense over the term of the loan to November 6, 2016. A total of $47,961 was charged to interest expense during the year ended December 31, 2015. The Lender has the right, in the Event of Default, to convert any outstanding amounts under the Note into restricted shares of the Companys common stock based on 85% of the weighted value average price of the Companys common shares over the prior 5 trading days prior to conversion. However, the Lender may not convert any portion of the Note to the extent that after giving effect to the shares which would be received on conversion, the Lender would beneficially own more than 4.99% of the Companys common stock. In connection with the Credit Facility, we are obligated to pay a $150,000 facility fee which has been included in accounts payable and accrued liabilities. As security for this fee we issued 3,000,000 shares of restricted common stock to the Lender who has the right to sell enough shares to recover its fee. These shares are issued and outstanding as of December 31, 2015, however, the value will be recognized as the related liability is extinguished. Any excess shares not sold by the Lender will be returned to us for cancellation. We have the right to buy-back these shares by paying the $150,000 facility fee to the Lender on or before May 6, 2016. |
Common Stock
Common Stock | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Common Stock | 8. Common Stock We have 100,000,000 shares of common stock authorized at a par value of $0.00001. Equity transactions during the year ended December 31, 2015 a) On March 27, 2015 we sold 10,050,000 Units at $0.10 per Unit for cash proceeds of $1,005,000 of which $100,000 was received at December 31, 2014. On May 27, 2015 we sold 750,000 Units at $0.10 per Unit for cash proceeds of $45,000, debt settlement of $30,000. Each Unit consisted of one share of restricted common stock and one-half of a warrant. Each whole warrant allows the holder to purchase one additional share at a price of $0.20 per share at any time between March 10, 2016 and May 27, 2016. b) During 2015 we issued a total of 96,165 common shares, having an aggregate fair value of $13,025 to three employees for services rendered. c) On November 6, 2015 we issued 3,000,000 restricted common shares. See Note 7 (c). d) On December 31, 2015 we issued 275,000 restricted common shares, having a fair value of $22,000, pursuant to an employment contract with a director. Equity transactions during the year ended December 31, 2014 a) During 2014 we issued a total of 2,621,902 common shares, having an aggregate fair value of $0.95 per share, pursuant to service agreements. On December 31, 2014 we reserved 1,000,000 common shares pursuant to subscriptions of $100,000 received at December 31, 2014. |
Warrants
Warrants | 12 Months Ended |
Dec. 31, 2015 | |
Other Liabilities Disclosure [Abstract] | |
Warrants | 9. Warrants At December 31, 2015 we had 21,080,080 common stock purchases warrants outstanding having an average exercise price of $0.44 per common share and having an average expiration date of .39 years. During the year warrants to acquire 4,554,167 common shares expired unexercised and a further 16,415,083 common shares expired unexercised subsequent to December 31, 2015. |
Preferred Stock
Preferred Stock | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Preferred Stock | 10. Preferred Stock Pursuant to a Special Meeting of Shareholders held on July 29, 2011, the Shareholders amended 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, 2015 and 2014, there have been no issuances of preferred stock. |
Stock Options and Stock-based C
Stock Options and Stock-based Compensation | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Stock-based Compensation | 11. Stock Options and Stock-based Compensation On July 29, 2011, we adopted the 2011 Equity Incentive Plan (the 2011 Plan") under which were authorized to grant up to 4,500,000 shares of common stock. On December 31, 2015 we approved the increase in the amount of shares authorized to be issued pursuant to the plan to 20,000,000 shares (the Amended 2011 Plan). In 2012 we granted stock options under the 2011 Plan to certain officers, directors, employees and consultants to purchase 3,200,000 common shares at $0.50 per common share. On December 31, 2015 we cancelled 675,000 stock options to certain employees and consultants due to the expiry or cancellation of a contract. We also cancelled 1,950,000 stock options granted to two directors and a consultant per agreement to issue new stock options. On December 31, 2015 we granted stock options under the Amended 2011 Plan to certain officers, directors, employees and consultants to purchase 12,700,000 common shares at $0.10 per common share. A total of 10,375,000 stock options vested on December 31, 2015 and a further 2,325,000 stock options vest monthly at a rate of 138,889 shares per month for sixteen months and the remaining 102,776 shares and $6,009 vest on May 23, 2017. Of the 12,700,000 stock options granted a total of 7,500,000 were granted to three directors/officers valued at $438,474 of which $302,547 was charged to operations at December 31, 2015. The fair values of stock options granted were estimated at the date of grant using the Black-Scholes option-pricing model. During the years ended December 31, 2015 and 2014, we recorded stock-based compensation of $606,556 and $166. The weighted average fair values of stock options vested during the year ended December 31, 2015 was $.06. The weighted average assumptions used for each of the years ended December 31, 2015 and 2014 are as follows: 2015 2014 Expected dividend yield 0% - Risk-free interest rate 1.71% - Expected volatility 103% - Expected option life (in years) 5 - The following table summarizes the continuity of our stock options: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding, December 31, 2013 3,075,000 $0.50 3.34 $- Granted - - - - Forfeited/Cancelled - - - - Exercised - - - - Outstanding, December 31, 2014 3,075,000 0.50 3.34 - Granted 12,700,000 0.10 5.00 - Forfeited/cancelled (2,625,000) - - - Exercised - - - - Outstanding, December 31, 2015 13,150,000 $0.11 4.87 $- Exercisable, December 31, 2015 10,825,000 $0.12 4.85 $- A summary of the status of our non-vested stock options outstanding as of December 31, 2015, and changes during the years ended December 31, 2015 and 2014 is presented below: Non-vested stock options Number of Options Weighted Average Grant Date Fair Value Non-vested at December 31, 2013 25,000 $0.37 Granted - - Vested (25,000) 0.37 Non-vested at December 31, 2014 - $- Granted 12,700,000 $.06 Vested (10,375,000) 0.06 Non-vested at December 31, 2015 2,325,000 $0.06 The following table summarizes information about stock options outstanding and exercisable under our stock incentive plan at December 31, 2015: Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $0.10 12,700,000 5.00 $0.10 $0.50 450,000 1.33 $0.50 13,150,000 4.87 $0.11 Number Exercisable Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $0.10 10,375,000 5.00 $0.10 $0.50 450,000 1.33 $0.50 10,825,000 4.85 $0.12 Stock-based compensation expense: Stock-based compensation expense is recognized using the straight-line attribution method over the employees requisite service period. We recognize compensation expense for only the portion of stock options or restricted stock expected to vest. Therefore, we apply estimated forfeiture rates that are derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to stock-based compensation expense may be required in future periods. At December 31, 2015, we had unrecognized compensation expense related to unvested stock options of $135,927 to be recognized over a weighted-average period of 1.42 years. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 12. 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 significant components of deferred tax assets and liabilities are as follows: 2015 2014 Deferred tax assets: Net operating loss 4,074,383 $3,331,573 Stock-based compensation 859,192 634,428 Other reserves 52,899 9,068 Asset impairment - 32,524 4,986,475 4,002,971 Deferred tax liabilities: Property, Plant & Equipment (59,022) (78,362) Intangible assets (354,507) (361,479) Net deferred tax assets 4,572,946 3,563,130 Less: Valuation allowance (4,572,946) (3,563,130) Deferred tax asset, net of valuation allowance $- $- The net change in the valuation allowance for the year ended December 31, 2015 was $1,009,816. We have a net operating loss carryover of $10,995,265 available to offset future income for income tax reporting purposes, which will expire in various years through 2035, 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. 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, 2015 and 2014, 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 January 1, 2011 or state income tax examination by tax authorities for years beginning January 1, 2010. We are not currently involved in any income tax examinations. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 13. Fair Value Measurements There were no financial instruments that were measured at fair value on a recurring basis as of December 31, 2015 and 2014. The carrying amounts of our financial assets and liabilities, including cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses as of December 31, 2015 and 2014 approximate fair value because of the short maturity of these instruments. Based on borrowing rates currently available to us for loans with similar terms, the carrying value of the notes payable approximates fair value. There were no changes in valuation technique from prior periods. |
Commitments
Commitments | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 14. Commitments Operating Leases We lease office, warehouse and storage space, under operating leases that expire at various dates through the year ending December 31, 2017. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices. Certain leases require that we pay for insurance, taxes and maintenance applicable to the leased property. Minimum aggregate future lease payments under non-cancelable operating leases as of December 31, 2015 are as follows: 2016 $38,640 2017 $37,739 Rent expense under all operating leases, including short-term rentals as well as cancelable and non-cancelable operating leases, gross, was $65,278 and $90,825 for the years ended December 31, 2015 and 2014, respectively. Legal Proceedings We are or may be involved from time to time in various claims and legal actions arising in the ordinary course of business, including proceedings involving employee claims, contract disputes, product liability and other general liability claims, as well as trademark, copyright, and related claims and legal actions. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | 15. Subsequent Events On January 31, 2016 we issued 238,889 common shares and on February 29, 2016 we issued 238,889 common shares having an aggregate fair value of $40,611 pursuant to an employment contract with an officer/director. On March 22, 2016, we entered into Amendment No. 1 to Senior Secured Revolving Credit Facility Agreement (the Amended Credit Facility) whereby we were approved for an additional $1,000,000 loan under the Amended Credit Facility having the same terms as the initial $900,000 loan (See Note 7). The Amended and Restated Senior Secured Revolving Convertible Promissory Note matures November 6, 2016 unless extended by the Lender. We received $455,860, net of $44,140 of closing costs, on March 22, 2016 and will receive a further $250,000 once we collect an account receivable from our Mexico distributor. A further $250,000 will be received once we have met certain other performance criteria. In connection with this additional loan, we agreed to issue 10,558,069 shares of our restricted common stock to the Lender as an Advisory Fee. Notwithstanding the above, the Lender is restricted from receiving these shares to the extent that, after giving effect to the receipt of the shares, the Lender would beneficially own more than 4.99% of our common stock. Any shares not issued as a result of this limitation will be issued at a later date, and from time to time, when the issuance of these will not result in the Lender beneficially owning more than 4.99% of our common stock. We have the right to purchase these shares by paying $350,000 to the Lender on or before September 22, 2016. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements include the accounts of our wholly-owned Mexico subsidiary, Natural Cabana SA de CV and have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and the Securities and Exchange Commission (SEC) rules and regulations applicable to financial reporting. All intercompany transactions are eliminated upon consolidation. |
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 as to 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 We maintain cash balances with financial institutions that may exceed federally insured limits. We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash equivalents include cash invested in money market accounts. As of December 31, 2015, there were no cash equivalents. |
Accounts receivable | Accounts receivable Accounts receivable primarily consists of trade receivables due from wholesalers, distributors and large chain stores. We evaluate the collectability of our trade accounts receivable based on a number of factors. In circumstances where we become aware of a specific customers 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. 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. After all attempts to collect a receivable have failed, the receivable is written-off against the allowance. The allowance for doubtful accounts was $156,090 and $16,500 at December 31, 2015 and 2014, respectively. |
Inventory | Inventory Inventories consist of raw materials and finished goods and are stated at the lower of cost or market and include adjustments for estimated obsolete or excess inventory. Cost is based on actual cost on a first-in first-out basis. Raw materials that will be used in production in the next twelve months are recorded in 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 are stated at cost, less accumulated depreciation. Expenditures for repairs and maintenance are expensed as incurred; renewals and betterments are capitalized. Upon disposal of equipment and leasehold improvements, the accounts are relieved of the costs and related accumulated depreciation or amortization, and resulting gains or losses are reflected in the Statements of Operations. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Equipment consists of bottle molds, office and warehouse equipment, and display coolers, all of which have an estimated life of 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 assets carrying value and fair value or disposable value. There is an impairment charge in 2015 and 2014 related to trademarks written-down of $19,763 and $18,881, 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 products. We do not amortize trademarks as they have an indefinite life; we amortize our website over a period of 5 years on a straight-line basis and our formulations and related intangible assets based on case sales divided by 2,000,000 cases 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 years ended December 31, 2015 and 2014, we identified impairment of trademarks of $19,763 and $18,881, respectively. |
Revenue Recognition | Revenue Recognition Revenue is recognized 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. All sales to distributors and customers are final; however, in limited instances, due to product quality issues or distributor terminations, we may accept returned product. To date, such returns have been de minimis. |
Shipping and handling costs | Shipping and handling costs The actual costs of shipping and handling for freight to our customers are included in operating expenses. |
Comprehensive loss | Comprehensive loss We have no elements of comprehensive income or loss during the years ended December 31, 2015 and 2014. |
Seasonality | Seasonality Our sales are seasonal and we experience fluctuations in quarterly results as a result of many factors. Historically, we have generated a higher percentage of our revenues during the warm weather months of April through September. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. As a result, we believe that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the entire fiscal year. |
Advertising costs | Advertising costs Advertising costs are expensed as incurred. During the years ended December 31, 2015 and 2014, we incurred advertising costs of $80,269 and $136,971, respectively. |
Fair Value | Fair Value 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 factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. |
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, 2015 and 2014 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. The determination of taxes payable includes estimates. We believe that we have appropriate support for the income tax positions taken, and to be taken, on our tax returns and that our accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. No reserves for an uncertain income tax position have been recorded for the years ended December 31, 2015 or 2014. |
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, 2015 and 2014, we exceeded insurance limits by $139,381 and $nil, respectively. We review a customers credit history before extending credit. At and for the year ended December 31, 2015 there was one customer with a balance owing to us of 39% of accounts receivable. In 2014 there was one customer with a balance owing to us of 25% of accounts receivable. There was one customer representing 13% of net sales in 2015 and no sales to a customer exceeding 10% for 2014. |
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, 2015 and 2014, 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, at December 31, 2015 and 2014 were 34,230,080 and 23,309,247, respectively. At March 30, 2016 there were 23,214,997 potentially dilutive common share equivalents. |
Reclassification of Prior Period | Reclassification of Prior Period Certain prior-year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no impact on reported net loss, total assets or liabilities. |
Recent Pronouncements | Recent Pronouncements We continually assess any new accounting pronouncements to determine their applicability to our operations and financial reporting. 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. During the fourth quarter of 2014, we adopted Accounting Standards Update ("ASU") 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity," which changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. This ASU was effective for fiscal years beginning on or after December 15, 2014, and interim periods within those years. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows. During the first quarter of 2015, we adopted FASBs guidance on reporting discontinued operations and disclosures of disposals of components of an entity. This standard raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The guidance is effective for annual reporting periods ending after December 15, 2014. Early adoption was permitted but only for disposals that have not been reported in financial statements previously issued. The adoption of this guidance has not had a material impact on our financial position, results of operations or cash flows. During the fourth quarter of 2015, we adopted ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, and amortization of those costs should be reported as interest expense. This ASU is effective for annual and interim periods beginning after December 15, 2015, and early adoption is permitted for financial statements that have not been previously issued. The new guidance should be applied on a retrospective basis for each period presented in the balance sheet. We adopted this change concurrently with our senior revolving loan secured together with related costs during the fourth quarter of 2015. Recent Accounting Pronouncements Issued But Not Adopted as of December 31, 2015 In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. We are currently evaluating the impact of adopting this guidance. In November 2015, the FASB issued (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes . In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement Period Adjustments. Changes to the accounting for measurement-period adjustments relate to business combinations. Currently, an acquiring entity is required to retrospectively adjust the balance sheet amounts of the acquiree recognized at the acquisition date with a corresponding adjustment to goodwill as a result of changes made to the balance sheet amounts of the acquiree. The measurement period is the period after the acquisition date during which the acquirer may adjust the balance sheet amounts recognized for a business combination (generally up to one year from the date of acquisition). The changes eliminate the requirement to make such retrospective adjustments, and, instead require the acquiring entity to record these adjustments in the reporting period they are determined. The new standard is effective for both public and private companies for periods beginning after December 15, 2015. We are currently evaluating the impact of adopting this guidance. In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory," which applies to inventory that is measured using first-in, first-out ("FIFO") or average cost. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, first-out ("LIFO"). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In May 2015, the FASB issued ASU 2015-07, "Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. Further, the amendments remove the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015, and early adoption is permitted. The new guidance should be applied on a retrospective basis to all periods presented. We are currently evaluating the impact of adopting this guidance. In April 2015, the FASB issued ASU 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement," which provides guidance about whether a cloud computing arrangement includes a software license. It also provides guidance related to a customers accounting for fees paid in a cloud computing arrangement. This standard provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, and early adoption is permitted. We will adopt this guidance on January 1, 2016. The adoption of this guidance is not expected to have a material impact on our financial position, results of operations or cash flows. In February 2015, the FASB issued ASU 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis," which makes changes to both the variable interest model and voting interest model and eliminates the indefinite deferral of FASB Statement No. 167, included in ASU 2010-10, for certain investment funds. All reporting entities that hold a variable interest in other legal entities will need to re-evaluate their consolidation conclusions as well as disclosure requirements. This ASU is effective for annual periods beginning after December 15, 2015, and early adoption is permitted, including any interim period. We do not expect the adoption of this guidance to have an impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015-01, "Income Statement Extraordinary and Unusual Items (Subtopic 225-20)," effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. This update eliminates from GAAP the concept of extraordinary items. The adoption of ASU 2014-16 will not have a significant impact on our financial position or results of operations. In November 2014, the FASB issued ASU 2014-16, "Derivatives and Hedging (Topic 815)." Entities commonly raise capital by issuing different classes of shares, including preferred stock, that entitle the holders to certain preferences and rights over the other shareholders. The specific terms of those shares may include conversion rights, redemption rights, voting rights, and liquidation and dividend payment preferences, among other features. One or more of those features may meet the definition of a derivative under GAAP. Shares that include such embedded derivative features are referred to as hybrid financial instruments. The objective of this update is to eliminate the use of different methods in practice and thereby reduce existing diversity under GAAP in the accounting for hybrid financial instruments issued in the form of a share. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU 2014-16 will not have a significant impact on ouir financial position or results of operations. In August 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements Going Concern (Subtopic 205-40), effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. This standard provides guidance about managements responsibility to evaluate whether there is substantial doubt about an entitys ability to continue as a going concern and to provide related footnote disclosures. The guidance is effective for annual reporting periods ending after December 15, 2016, and early adoption is permitted. We expect to adopt this guidance on January 1, 2017. We are currently evaluating the potential impact, if any, the adoption of ASU 2014-15 will have on footnote disclosures, however, we do not expect the adoption of this guidance to have any impact on our financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), on revenue recognition. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The original effective date of this guidance was for interim and annual reporting periods beginning after December 15, 2016, early adoption is not permitted, and the guidance must be applied retrospectively or modified retrospectively. In July 2015, the FASB approved an optional one-year deferral of the effective date. As a result, we expect to adopt this guidance on January 1, 2018. We have not yet determined our approach to adoption or the impact the adoption of this guidance will have on our financial position, results of operations or cash flows, if any. |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable consists of the following as of December 31: 2015 2014 Trade accounts receivable $534,727 $540,355 Less: Allowance for doubtful accounts (156,090) (16,500) Trade accounts receivable - net 378,637 523,855 Value added tax recoverable 2,290 - Due from suppliers of services 5,535 20,894 $386,462 $544,749 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consists of the following as of December 31: 2015 2014 Finished goods $344,764 $543,548 Deposit on finished goods - 67,706 Raw materials 644,146 534,866 $988,910 $1,146,120 |
Property and Equipment and In25
Property and Equipment and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Property and equipment consists of the following as of December 31: 2015 2014 Manufacturing, warehouse, display equipment and molds $337,253 $272,272 Office equipment and furniture 41,581 35,194 Mobile display unit and vehicles 134,500 133,700 Less: depreciation (266,099) (174,613) Total Property and Equipment $247,235 $266,553 |
Schedule of Intangible Assets | Intangible assets consists of the following as of December 31: 2015 2014 Formulations, rights and patents $969,696 $965,694 Website 62,675 62,675 Less: amortization (52,682) (39,547) Trademarks not amortized due to indefinite life 152,104 167,293 Total Intangible Assets $1,131,793 $1,156,115 |
Intangible Assets Estimated Amortization Expense | 2016 $25,098 2017 $36,989 2018 $48,320 2019 $72,480 2020 $96,640 Thereafter $700,160 |
Loans Payable (Tables)
Loans Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Loans Payable | Loans payable consists of the following as of December 31: 2015 2014 Short-term loan (a) below $15,000 $- Short-term loan related party (a) below 130,000 - 145,000 - Senior Secured Revolving Note (b) below (Note 15) 844,040 - Less: unamortized debt issuance costs (233,269) - Net carrying value 610,771 - $755,771 $- |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Weighted Average Assumptions | 2015 2014 Expected dividend yield 0% - Risk-free interest rate 1.71% - Expected volatility 103% - Expected option life (in years) 5 - |
Summary of Stock Option Activity | Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding, December 31, 2013 3,075,000 $0.50 3.34 $- Granted - - - - Forfeited/Cancelled - - - - Exercised - - - - Outstanding, December 31, 2014 3,075,000 0.50 3.34 - Granted 12,700,000 0.10 5.00 - Forfeited/cancelled (2,625,000) - - - Exercised - - - - Outstanding, December 31, 2015 13,150,000 $0.11 4.87 $- Exercisable, December 31, 2015 10,825,000 $0.12 4.85 $- |
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, 2013 25,000 $0.37 Granted - - Vested (25,000) 0.37 Non-vested at December 31, 2014 - $- Granted 12,700,000 $.06 Vested (10,375,000) 0.06 Non-vested at December 31, 2015 2,325,000 $0.06 |
Summary of Stock Options Outstanding And Exercisable Under Our Stock Incentive Plan | Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $0.10 12,700,000 5.00 $0.10 $0.50 450,000 1.33 $0.50 13,150,000 4.87 $0.11 Number Exercisable Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price $0.10 10,375,000 5.00 $0.10 $0.50 450,000 1.33 $0.50 10,825,000 4.85 $0.12 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule Of Deferred Tax Assets and Liabilities | 2015 2014 Deferred tax assets: Net operating loss 4,074,383 $3,331,573 Stock-based compensation 859,192 634,428 Other reserves 52,899 9,068 Asset impairment - 32,524 4,986,475 4,002,971 Deferred tax liabilities: Property, Plant & Equipment (59,022) (78,362) Intangible assets (354,507) (361,479) Net deferred tax assets 4,572,946 3,563,130 Less: Valuation allowance (4,572,946) (3,563,130) Deferred tax asset, net of valuation allowance $- $- |
Commitments (Tables)
Commitments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Lease Payments | 2016 $38,640 2017 $37,739 |
Accounts Receivable (Detail) -
Accounts Receivable (Detail) - Schedule of Accounts Receivable - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Receivables [Abstract] | ||
Trade accounts receivable | $ 534,727 | $ 540,355 |
Less: Allowance for doubtful accounts | (156,090) | (16,500) |
Trade accounts receivable - net | 378,637 | $ 523,855 |
Value added tax recoverable | 2,290 | |
Due from suppliers of services | 5,535 | $ 20,894 |
Total | $ 386,462 | $ 544,749 |
Inventories (Detail) - Schedule
Inventories (Detail) - Schedule of Inventory - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 344,764 | $ 543,548 |
Deposits on Finished Goods | 67,706 | |
Raw materials | $ 644,146 | 534,866 |
Total | $ 988,910 | $ 1,146,120 |
Property and Equipment and In32
Property and Equipment and Intangible Assets (Detail) - Schedule of Property and Equipment - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Manufacturing, warehouse, display equipment and molds | $ 337,253 | $ 272,272 |
Office equipment and furniture | 41,581 | 35,194 |
Mobile display unit and vehicles | 134,500 | 133,700 |
Less: depreciation | (266,099) | (174,613) |
Total Property and Equipment | $ 247,235 | $ 266,553 |
Property and Equipment and In33
Property and Equipment and Intangible Assets (Detail) - Schedule of Intangible Assets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Formulations, rights and patents | $ 969,696 | $ 965,694 |
Website | 62,675 | 62,675 |
Less: amortization | (52,682) | (39,547) |
Trademarks, side-panel rights and patents | 152,104 | 167,293 |
Total Intangible Assets | $ 1,131,793 | $ 1,156,115 |
Property and Equipment and In34
Property and Equipment and Intangible Assets (Detail) - Intangible Assets Estimated Amortization Expense | Dec. 31, 2015USD ($) |
Intangible Assets Estimated Amortization Expense | |
2,016 | $ 25,098 |
2,017 | 36,989 |
2,018 | 48,320 |
2,019 | 72,480 |
2,020 | 96,640 |
Thereafter | $ 700,160 |
Loans Payable (Detail) - Schedu
Loans Payable (Detail) - Schedule of Loans Payable - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Short-term loan | $ 15,000 | |
Short-term loan - related party | 130,000 | |
Total | 145,000 | |
Senior Secured Revolving Note | 844,040 | |
Less: unamortized debt issuance costs | (233,269) | |
Net carrying value | 610,771 | |
Total | $ 755,771 |
Stock-based Compensation (Detai
Stock-based Compensation (Detail) - Schedule of Weighted Average Assumptions | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Expected dividend yield | 0.00% | |
Risk-free interest rate | 1.71% | |
Expected volatility | 103.00% | |
Expected option life (in years) | 5 Years |
Stock-based Compensation (Det37
Stock-based Compensation (Detail) - Summary of Stock Option Activity - USD ($) | 12 Months Ended | |||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Oustanding, Beginning (in Shares) | 3,075,000 | 3,075,000 | ||
Granted, (in Shares) | 12,700,000 | 3,200,000 | ||
Forfeited/Cancelled, (in Shares) | $ (2,625,000) | |||
Oustanding, End (in Shares) | 13,150,000 | 3,075,000 | 3,075,000 | |
Exercisable, End (in Shares) | 10,825,000 | |||
Oustanding, Weighted Average Exercise Price | $ 0.11 | $ 0.50 | ||
Oustanding, Weighted - Average Remaining Contractual Term (years) | 4 years 10 months 13 days | 3 years 4 months 2 days | 4 years 4 months | |
Oustanding, Aggregate Intrinsic Value | $ 432,000 | |||
Granted, Weighted Average Exercise Price | $ 0.10 | $ 0.50 | ||
Granted, Weighted Average Remaining Contractual Term (Years) | 5 years | |||
Exercisable, Weighted Average Exercise Price | $ 0.12 | |||
Exercisable, Weighted Average Remaining Contractual Term (Years) | 4 years 10 months 6 days | |||
Exercisable, Aggregate Intrinsic Value |
Stock-based Compensation (Det38
Stock-based Compensation (Detail) - Status of Non-Vested Stock Options Outstanding - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Balance Beginning of Nonvested Options (in shares) | 25,000 | |
Granted (in shares) | 12,700,000 | |
Forfeited/Cancelled (in shares) | ||
Vested (in shares) | (10,375,000) | (25,000) |
Balance Beginning of Nonvested Options (in shares) | 2,325,000 | |
Nonvested stock options, Weighted Average Fair Value at Grant Date | ||
Balance, Beginning | $ 0.37 | |
Granted | ||
Forfeited | ||
Vested | $ 0.06 | $ 0.37 |
Balance, End | $ 0.06 |
Stock-based Compensation (Det39
Stock-based Compensation (Detail) - Summary of Stock Options Outstanding And Exercisable Under Our Stock Incentive Plan - $ / shares | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Number Outstanding | 13,150,000 | 3,075,000 | 3,075,000 |
0.10 Price | |||
Number Outstanding | 12,700,000 | ||
Weighted Average Remaining Contractual Life (Years) | 5 years | ||
Weighted Average Exercise Price | $ 0.10 | ||
Number Exercisable | 10,375,000 | ||
Weighted Average Remaining Contractual Life (Years) | 5 years | ||
Weighted Average Exercise Price | $ 0.10 | ||
0.50 Price | |||
Number Outstanding | 450,000 | ||
Weighted Average Remaining Contractual Life (Years) | 1 year 3 months 29 days | ||
Weighted Average Exercise Price | $ 0.50 | ||
Number Exercisable | 450,000 | ||
Weighted Average Remaining Contractual Life (Years) | 1 year 3 months 29 days | ||
Weighted Average Exercise Price | $ 0.50 | ||
Oustanding Total | |||
Number Outstanding | 13,150,000 | ||
Weighted Average Remaining Contractual Life (Years) | 4 years 10 months 13 days | ||
Weighted Average Exercise Price | $ 0.11 | ||
Exercisable Total | |||
Number Exercisable | 10,825,000 | ||
Weighted Average Remaining Contractual Life (Years) | 4 years 10 months 6 days | ||
Weighted Average Exercise Price | $ 0.12 |
Income Taxes (Detail) - Schedul
Income Taxes (Detail) - Schedule Of Deferred Tax Assets and Liabilities - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred Tax Assets | ||
Net Operating Losses | $ 4,074,383 | $ 3,331,573 |
Stock based compensation | 859,192 | 634,428 |
Other deferrals | $ 52,899 | 9,068 |
Asset impairment | 32,524 | |
us-gaap:DeferredTaxAssetsGross | $ 4,986,475 | 4,002,971 |
Deferred Tax liabilities | ||
Property, Plant & Equipment | (59,022) | (78,362) |
Intangible assets | (354,507) | (361,479) |
Net deferred tax assets | 4,572,946 | 3,563,130 |
Less valuation allowance | $ (4,572,946) | $ (3,563,130) |
Deferred tax asset - net valuation allowance |
Commitments (Details) - Schedul
Commitments (Details) - Schedule of Future Lease Payments | Dec. 31, 2015USD ($) |
Minimum Aggregate Future Lease Payments | |
2,016 | $ 38,640 |
2,017 | $ 37,739 |
Nature of Operations (Details N
Nature of Operations (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash | $ 431,270 | |
Working Capital | 253,651 | |
Net Cash Used in Operating Activities | 1,347,360 | $ 1,797,974 |
Increase in Gross Profit | $ 117,194 |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Abstract] | ||
Allowance For Doubtful Accounts | $ 156,090 | $ 16,500 |
Long Lived Assets Impairment | 19,763 | 18,881 |
Advertising Costs | 80,269 | $ 136,971 |
Exceeded FDIC Insurance Limits | $ 139,381 | |
Dilutive Common Share Equivalents | 34,230,080 | 23,309,247 |
Loan Receivable (Details Narrat
Loan Receivable (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Receivables [Abstract] | |
Loan Receivable | $ 200,000 |
Interest Rate | 4.00% |
Final Payment | $ 174,000 |
Repayment Description | This company was owed fees of $164,931 at June 30, 2015 and it was agreed that these outstanding fees would offset the loan receivable due from this company after applying a 4% interest charge and the balance of the note, being $24,993, be written-down to $18,000. As a result we incurred an asset impairment charge of $6,993. As of December 31, 2015 the balance of the note receivable was $10,000 and the fees owing to Catalyst was $10,000. It was agreed that these two balances would offset, as a result, at December 31, 2015 the loan receivable balance was $nil. |
Property and Equipment and In45
Property and Equipment and Intangible Assets (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation Expense | $ 93,288 | $ 85,873 |
Loans Payable (Details Narrativ
Loans Payable (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Dec. 31, 2015 | Dec. 22, 2015 | Nov. 06, 2015 | |
Short-Term Loans | $ 145,000 | |||
Interest | 8,663 | |||
Line of Credit | $ 3,500,000 | |||
Intial Tranche | $ 650,000 | |||
Second Tranche | $ 250,000 | |||
Total Advanced | $ 900,000 | |||
Loan Maturity Date | Nov. 6, 2016 | |||
Interest | 12.00% | |||
Repayment terms | Repayment terms are 20% of gross receipts until we reach $130,000 of repayments after which we pay 10% of gross receipts. | |||
Repayment | $ 55,949 | |||
Balance Owing | $ 844,040 | |||
family trust of our Chief Executive Officer | ||||
Short-Term Loans | $ 130,000 |
Common Stock (Details Narrative
Common Stock (Details Narrative) - USD ($) | Nov. 06, 2015 | Dec. 31, 2015 | May. 27, 2015 | Mar. 27, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Common Stock, par value | $ 0.00001 | $ 0.00001 | $ 0.00001 | |||
Common Stock, shares authorized | 100,000,000 | 100,000,000 | 100,000,000 | |||
Shares Issued, shares | 3,000,000 | 750,000 | 10,050,000 | |||
Shares Issued, value | $ 45,000 | $ 1,005,000 | ||||
Shares Issued, debt settlement | $ 30,000 | |||||
Shares Issued, per share value | $ 0.10 | $ 0.10 | ||||
Warrants/Options | Each Unit consisted of one share of restricted common stock and one-half of a warrant. Each whole warrant allows the holder to purchase one additional share at a price of $0.20 per share at any time between March 10, 2016 and May 27, 2016. | Each Unit consisted of one share of restricted common stock and one-half of a warrant. Each whole warrant allows the holder to purchase one additional share at a price of $0.20 per share at any time between March 10, 2016 and May 27, 2016. | ||||
Service Agreements | ||||||
Shares Issued, shares | 2,621,902 | |||||
Shares Issued, per share value | $ 0.95 | |||||
Three Employees For Services Rendered | ||||||
Shares Issued, shares | 96,165 | |||||
Shares Issued, value | $ 13,025 | |||||
Employment Contract With A Director | ||||||
Shares Issued, shares | 275,000 | |||||
Shares Issued, value | $ 22,000 |
Warrants (Details Narrative)
Warrants (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($)$ / sharesshares | |
Other Liabilities Disclosure [Abstract] | |
Common Stock Purchase Warrants Outstanding | $ | $ 21,080,080 |
Average Exercise Price | $ / shares | $ 0.44 |
Average Expiration Date | 4 months 20 days |
Warrants To Acquire Common Shares Expired | 4,554,167 |
Common Shares Expired Unexercised | 16,415,083 |
Preferred Stock (Details Narrat
Preferred Stock (Details Narrative) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 | Jul. 29, 2011 |
Equity [Abstract] | |||
Preferred Stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred Stock, par value | $ 0.001 | $ 0.001 | $ 0.001 |
Preferred Stock, shares issued | 0 | 0 | 0 |
Stock-based Compensation (Det50
Stock-based Compensation (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | |
Stock Options Granted, shares | 12,700,000 | 3,200,000 | |
Stock Options Granted, per share price | $ 0.10 | $ 0.50 | |
Stock Options Vested, shares | 10,375,000 | 25,000 | |
Stock Options, Vested, terms | and a further 2,325,000 stock options vest monthly at a rate of 138,889 shares per month for sixteen months and the remaining 102,776 shares and $6,009 vest on May 23, 2017. | ||
Stock Options Cancelled | |||
Stock-Based Compensation | $ 606,556 | $ 166 | |
Average Fair Values Of Stock Options Vested | $ .06 | ||
Unrecognized Compensation Expense | $ 135,927 | ||
Weighted-Average Period | 1 year 5 months 1 day | ||
Certain Employees and Consultants | |||
Stock Options Cancelled | 675,000 | ||
Two Directors And A Consultant | |||
Stock Options Cancelled | 1,950,000 | ||
Three Directors, Officers | |||
Stock Options Granted, shares | 7,500,000 | ||
Stock-Based Compensation | $ 438,474 | ||
Stock-Based Compensation, operational expense | $ 302,547 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Net Change In The Valuation Allowance | $ 1,009,816 |
Net Operating Loss Carryover | $ 10,995,265 |
Commitments (Details Narrative)
Commitments (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent Expense | $ 65,278 | $ 90,825 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | 1 Months Ended | |
Mar. 22, 2016 | Jan. 31, 2016 | |
Subsequent Events [Abstract] | ||
Event Date | Mar. 22, 2016 | Jan. 31, 2016 |
Event Description | On March 22, 2016, we entered into Amendment No. 1 to Senior Secured Revolving Credit Facility Agreement (the "Amended Credit Facility") whereby we were approved for an additional $1,000,000 loan under the Amended Credit Facility having the same terms as the initial $900,000 loan (See Note 7). The Amended and Restated Senior Secured Revolving Convertible Promissory Note matures November 6, 2016 unless extended by the Lender. We received $455,860, net of $44,140 of closing costs, on March 22, 2016 and will receive a further $250,000 once we collect an account receivable from our Mexico distributor. A further $250,000 will be received once we have met certain other performance criteria. In connection with this additional loan, we agreed to issue 10,558,069 shares of our restricted common stock to the Lender as an Advisory Fee. Notwithstanding the above, the Lender is restricted from receiving these shares to the extent that, after giving effect to the receipt of the shares, the Lender would beneficially own more than 4.99% of our common stock. Any shares not issued as a result of this limitation will be issued at a later date, and from time to time, when the issuance of these will not result in the Lender beneficially owning more than 4.99% of our common stock. We have the right to purchase these shares by paying $350,000 to the Lender on or before September 22, 2016. | On January 31, 2016 we issued 238,889 common shares and on February 29, 2016 we issued 238,889 common shares having an aggregate fair value of $40,611 pursuant to an employment contract with an officer/director. |