1. Nature of Operations and Basis of Presentation (Policies) | 12 Months Ended |
Dec. 31, 2014 |
Accounting Policies [Abstract] | |
Nature of Operations | Nature of Operations |
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Technology Applications International Corporation (“Technology”) was incorporated on October 14, 2009 under the laws of Florida. Rejuvel Int’l, Inc. and NueEarth, Inc., Technology’s wholly owned subsidiaries and Technology, collectively, are referred to here-in as the “Company”. The Company is engaged in developing market entry technology products and services into early and mainstream technology products and services. Through our subsidiaries, we are focused on developing and manufacturing a line of technologically advanced skin care products and providing environmental management solutions that use electron particle accelerator technology. |
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Principles of Consolidation | Principles of Consolidation |
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The consolidated financial statements include the accounts of Technology Applications International Corporation and its wholly owned subsidiaries, Rejuvel Int’l, Inc. and NueEarth, Inc. All significant inter-company accounts and transactions have been eliminated in consolidation. |
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Basis of Presentation and Going Concern Considerations | Basis of Presentation and Going Concern Considerations |
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The accompanying consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs. The Company’s ability to continue as a going concern is highly dependent upon management’s ability to increase near-term operating cash flows and obtain additional working capital through the issuance of debt and or equity. |
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Management intends to finance operating costs over the next twelve months with existing cash on hand, from the issuance of common shares, and additional related party borrowings. The Company's future operations are dependent upon external funding and its ability to execute its business plan, realize sales and control expenses. Management believes that sufficient funding will be available from additional borrowings and private placements to meet its business objectives including anticipated cash needs for working capital, for a reasonable period of time. However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its business operation, or if obtained, upon terms favorable to the Company. If the Company is unable to obtain adequate capital, it could be forced to cease operations. |
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Development Stage Risk | Development Stage Risk |
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Since its inception, the Company has been dependent upon the receipt of capital investment to fund its operating activities. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s business plans will be successfully executed. The Company’s ability to execute its business plans is dependent on its ability to obtain additional debt and equity financing and achieving a profitable level of operations. There can be no assurance that sufficient financing will be obtained or that we will achieve a profitable level of operations. |
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Use of Estimates | Use of Estimates |
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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and their reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
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Risks and Uncertainties | Risks and Uncertainties |
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The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements and limited operating history. |
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Contingencies | Contingencies |
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Certain conditions may exist as of the date the consolidated financial statements are issued which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. |
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If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be provided for in the Company's consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. |
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There were no contingencies which could be evaluated at December 31, 2014. |
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Cash and Cash Equivalents | Cash and Cash Equivalents |
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Cash and cash equivalents consist of highly-liquid investments with a maturity of less than three months when purchased. |
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Inventories | Inventories |
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Inventories are stated at the lower of cost or market value using the FIFO (first-in, first-out) method. |
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The Company maintains a reserve for the inventory based on the estimated losses that result from inventory that becomes obsolete or for which the Company has excess inventory levels as of period end. In determining these estimates, the Company performs an analysis on current demand and usage for each inventory item over historical time periods. Based on that analysis, the Company reserves a percentage of the inventory amount within each time period based on historical demand and usage patterns of specific items in inventory. |
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Machinery and Equipment | Machinery and Equipment |
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Machinery and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to earnings as incurred whereas additions, renewals and betterments are capitalized. When machinery and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of machinery and equipment is provided using the straight-line method over the assets estimated useful lives of approximately 5 to 7 years. Leasehold improvements, if any, are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter. |
Intangible Assets | Intangible Assets |
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Intangible consist of trademarks and licenses (Trademarks have a 20 year life and licenses have a 7 year life.) which are being amortized using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. No impairments of intangible assets have been identified during any of the periods presented. |
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2015 | 2,252 |
2016 | 2,252 |
2017 | 2,252 |
2018 | 2,252 |
2019 | 2,252 |
Thereafter | 4,599 |
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Amortization expense for the years ended December 31, 2014 and 2013 was $1,082 and $109, respectively. |
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Long-Lived Assets | Long-Lived Assets |
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The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of definite-lived assets to be held and used is measured by comparison of the carrying amount of an asset to future undiscounted cash flow expected to be generated by the asset. If such assets are impaired, the impairment is recognized as the amount by which the carrying amount exceeds the estimated future cash flows. Assets to be sold are reported at the lower of the carrying amount or the fair value less costs to sell. Indefinite-lived assets are tested for impairment annually or when impairment is suspected by a comparison of the carrying amount of the asset to the net present value of future cash flows expected to be generated by the asset. There were no impaired assets at December 31, 2014. |
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Revenue Recognition | Revenue Recognition |
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The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin No. 104, "Revenue Recognition." Sales revenue which has been insignificant to December 31, 2014, is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. |
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Research and Development Costs | Research and Development Costs |
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Research and development costs, which relate primarily to the development, design and testing of products, are expensed as incurred. Such costs were approximately $6,563 and $8,319 for the years ended December 31, 2014 and 2013, respectively. |
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Advertising and Marketing | Advertising and Marketing |
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Advertising and marketing expenses are expensed as incurred. Expense recorded for the years ended December 31, 2014 and 2013 were approximately $102,886 and $86,442, respectively. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments |
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In accordance with FASB ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. |
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In determining fair value, the Company uses various valuation approaches. In accordance with GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows: |
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· Level 1 — Inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets. |
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· Level 2 — Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs. |
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· Level 3 — Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk. |
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As of December 31, 2014 and December 31, 2013, the derivative liabilities amounted to $48,851 and $349,940, respectively. In accordance with the accounting standards, the Company determined that the carrying value of these derivatives approximated the fair value using the level 2 inputs. |
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Derivative Financial Instruments | Derivative Financial Instruments |
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Derivative financial instruments, as defined in Financial Accounting Standards, consist of financial instruments or other contracts that contain a notional amount and one or more underlying components (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets. The Company generally does not use derivative financial instruments to hedge exposures to cash-flow or market or foreign-currency risks. However, the Company has entered into various types of financing arrangements to fund its business capital requirements, including convertible debt and other financial instruments indexed to the Company’s own stock. These contracts require careful evaluation to determine whether derivative features embedded in host contracts require bifurcation and fair value measurement or, in the case of freestanding derivatives (principally warrants) whether certain conditions for equity classification have been achieved. In instances where derivative financial instruments require liability classification, the Company is required to initially, and subsequently, measure such instruments at fair value. Accordingly, the Company adjusts the fair value of these derivative components at each reporting period through a charge to income until such time as the instruments acquire classification in stockholders’ equity. See Note 8 for additional information. |
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As previously stated, derivative financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period. The Company estimates fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objective measuring fair values. In selecting the appropriate technique, management considers, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company uses the Black-Scholes-Merton option valuation technique because it embodies all of the requisite assumptions (including trading volatility, dividend yield, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility. Since derivative financial instruments are initially, and subsequently, carried at fair values, our income (loss) will reflect the volatility in these estimate and assumption changes. |
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Income Taxes | Income Taxes |
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Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income during the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in interest expense and penalties in general and administrative expenses. No interest expense or penalties have been assessed as of, and for the years ended, December 31, 2014 and 2013. |
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Concentration of Credit Risk | Concentration of Credit Risk |
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Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash accounts. The Company places its cash in what it believes to be credit-worthy financial institutions. Accounts at each financial institution are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. At December 31, 2014 and 2013, the Company’s cash balances did not exceed federally insured limits. |
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Earnings (Loss) Per Common Share | Earnings (Loss) Per Common Share |
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The Company computes earnings per share in accordance with ASC 260, Earnings Per Share (“ASC 260”). Basic earnings (loss) per share are computed by dividing the net income (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings per share adjusts basic earnings per share for the effects of stock options and other potentially dilutive financial instruments, only in the periods in which the effects are dilutive. |
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For the years ended December 31, 2014 and 2013, there were warrants to purchase 189,963 shares and 100,000 shares, respectively, of common stock that were excluded from the diluted earnings per share computation because the impact of the assumed exercise of such warrants would have been anti-dilutive, based on the fact that their exercise price exceeded the market price of the common stock as of December 31, 2014 and 2013. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements |
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On June 10, 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-10 (ASU 2014-10), Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU 2014-10 eliminates the requirement to present inception-to-date information about income statement line items, cash flows, and equity transactions, and clarifies how entities should disclosure the risks and uncertainties related to their activities. ASU 2014-10 also eliminates an exception provided to development stage entities in Consolidations (ASC Topic 810) for determining whether an entity is a variable interest entity on the basis of the amount of investment equity that is at risk. The presentation and disclosure requirements in Topic 915 will no longer be required for interim and annual reporting periods beginning after December 15, 2014, and the revised consolidation standards will take effect in annual periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted the provisions of ASU 2014-10 effective for its financial statements for the interim period ended September 30, 2014. The adoption of ASU 2014-10 did not have any effect on the Company’s financial statement presentation or disclosures. |
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From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position or results of operations upon adoption. |
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