Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | BARFRESH FOOD GROUP INC. | |
Entity Central Index Key | 1,487,197 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 118,428,967 | |
Trading Symbol | BRFH | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 3,548,107 | $ 9,180,947 |
Accounts Receivable | 611,468 | 131,088 |
Inventory | 751,586 | 317,948 |
Prepaid expenses and other current assets | 116,989 | 25,864 |
Total current assets | 5,028,150 | 9,655,847 |
Property, plant and equipment, net of depreciation | 1,726,963 | 1,494,478 |
Intangible asset, net of amortization | 601,352 | 619,863 |
Deposits | 48,144 | 53,202 |
Total Assets | 7,404,609 | 11,823,390 |
Current liabilities: | ||
Accounts payable | 401,606 | 153,756 |
Accrued expenses | 1,005,958 | 746,375 |
Deferred rent liability | 907 | 165 |
Current portion of long term debt | 3,849 | 3,849 |
Total current liabilities | 1,412,320 | 904,145 |
Long Term Debt, net of current portion | 6,079 | 8,958 |
Total liabilities | 1,418,399 | 913,103 |
Commitments and contingencies (Note 6) | ||
Stockholders' equity: | ||
Preferred stock, $0.000001 par value, 5,000,000 shares authorized, none issued or outstanding | ||
Common stock, $0.000001 par value; 300,000,000 shares authorized; 118,429,007 and 117,103,276 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 119 | 117 |
Additional paid in capital | 37,508,364 | 35,829,627 |
Accumulated deficit | (31,522,273) | (24,919,457) |
Total stockholders' equity | 5,986,210 | 10,910,287 |
Total Liabilities and Stockholders' Equity | $ 7,404,609 | $ 11,823,390 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.000001 | $ 0.000001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 118,429,007 | 117,103,276 |
Common stock, shares outstanding | 118,429,007 | 117,103,276 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenue, net | $ 679,952 | $ 478,680 | $ 1,621,119 | $ 1,313,178 |
Cost of revenue | 334,376 | 265,072 | 822,902 | 683,741 |
Gross profit | 345,576 | 213,608 | 798,217 | 629,437 |
Operating expenses: | ||||
General and administrative | 2,337,634 | 2,520,632 | 7,174,457 | 7,819,348 |
Depreciation and Amortization | 93,975 | 51,645 | 226,576 | 150,452 |
Total operating expenses | 2,431,609 | 2,572,277 | 7,401,033 | 7,969,800 |
Operating loss | (2,086,033) | (2,358,669) | (6,602,816) | (7,340,363) |
Other expenses | ||||
Interest | 7,677 | 243,150 | ||
Net (loss) | $ (2,086,033) | $ (2,366,346) | $ (6,602,816) | $ (7,583,513) |
Per share information - basic and fully diluted: | ||||
Weighted average shares outstanding | 118,382,934 | 95,857,003 | 117,790,039 | 93,256,264 |
Net (loss) per share | $ (0.02) | $ (0.02) | $ (0.06) | $ (0.08) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Cash Flows [Abstract] | ||
Net Cash used in operations | $ (5,224,812) | $ (5,590,671) |
Cash flow from investing activities: | ||
Investment in trademark | (27,684) | (56,028) |
Purchase of equipment | (412,865) | (985,315) |
Sale of equipment | 26,374 | |
Net Cash used in investing activities | (440,549) | (1,014,969) |
Cash flow from financing activities: | ||
Exercise of Warrants | 35,400 | 414,997 |
Repayment of long term debt | (2,879) | (20,504) |
Issuance of common stock and warrants for cash | 5,686,992 | |
Exercise of Options for cash | 25,500 | |
Net cash provided by financing activities | 32,521 | 6,106,985 |
Net (decrease) in cash | (5,632,840) | (498,655) |
Cash at beginning of period | 9,180,947 | 1,986,004 |
Cash at end of period | 3,548,107 | 1,487,349 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 6,143 | |
Cash paid for income taxes | ||
Non-cash financial activities | ||
Common Stock issued for services | 185,810 | 165,150 |
Common Stock issued on conversion of note | $ 2,479,456 | |
Common Stock issued on conversion of convertible note | 319,507 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | Note 1. Basis of Presentation and Significant Accounting Policies Throughout this report, the terms “our”, “we”, “us” and the “Company” refer to Barfresh Food Group Inc., including its subsidiaries. The accompanying unaudited condensed consolidated financial statements of Barfresh Food Group Inc. at September 30, 2017 and December 31, 2016 have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial statements, instructions to Form 10-Q, and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2016. In management’s opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation to make our financial statements not misleading have been included. The results of operations for the periods ended September 30, 2017 and 2016 presented are not necessarily indicative of the results to be expected for the full year. The December 31, 2016 balance sheet has been derived from our audited financial statements included in our annual report on Form 10-K for the year ended December 31, 2016. Basis of Consolidation The condensed consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries Barfresh Inc. and Barfresh Corporation, Inc. Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the years reported. Actual results may differ from these estimates. Concentration of Credit Risk The amount of cash on deposit with financial institutions exceeds the $250,000 federally insured limit at September 30, 2017 and December 31, 2016. However, we believe that the financial institution where the cash on deposit that exceeds $250,000 is financially sound and the risk of loss is minimal. Fair Value Measurement Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of accounts receivable, accounts payable, accrued expenses and installment debt. The carrying value of our financial instruments approximates their fair value due to their relative short maturities and the nature of the debt. Inventory Inventory consists of finished goods and is carried at the lower of cost or net realizable value on a first in first out basis. Intangible Assets Intangible assets are comprised of patents, net of amortization, and trademarks. The patent costs are being amortized over the life of the patents, which is twenty years from the date of filing the patent applications. In accordance with ASC Topic 350 Intangibles - Goodwill and Other Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are being amortized over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods deemed to be reasonably assured. The estimated useful lives used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years Revenue Recognition We recognize revenue from products sold when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable and collection is reasonably assured. Earnings per Share We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share Research and Development Expenditures for research activities relating to product development and improvement are charged to expense as incurred. We incurred $107,324 and $101,304 for the three-month periods ended September 30, 2017 and 2016, respectively. We incurred $447,927 and $256,874 in research and development expenses for the nine-month periods ended September 30, 2017 and 2016, respectively. Rent Expense We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases Recent pronouncements From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards not yet effective may have an impact on our results of operations and financial position. In May 2014, the FASB issued ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606), which converged guidance on recognizing revenue in contracts with customers on an effective date after our year ending December 31, 2017. The Company is in the initial stages of evaluating the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial evaluation, we do not expect there to be material changes to our current Revenue Recognition policies due to the non-complex contracts with our customers, including the definition of our performance obligations and the transaction prices in our contracts with our customers. The Company does not plan to adopt the standard until the interim period ended March 31, 2018. In July 2015, the FASB issued ASU 2015-11, Inventory, which simplifies the measurement principle of inventories valued under the First-In, First-Out (“FIFO”) or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 is effective for reporting periods beginning after December 15, 2016 including interim periods within those annual periods. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. Upon adoption, ASU 2015-17 may be applied either prospectively or retrospectively. The adoption of this guidance did not have a material impact on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU leaves the accounting for the organization that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The Company is in the initial stages of evaluating the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial evaluation, we do not expect there to be material changes to both our current and long-term lease liabilities and our fixed assets of our limited number of operating leases that will be converted to financing leases under the new guidance. The Company does not plan to adopt the standard until the interim period ended March 31, 2019. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”). The standard identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company previously adopted ASU 2016-09. In August 2014, the FASB issued FASB ASU2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern |
Property Plant and Equipment
Property Plant and Equipment | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property Plant and Equipment | Note 2. Property Plant and Equipment Major classes of property and equipment at September 30, 2017 and December 31, 2016 consist of the following: 2017 2016 Furniture and fixtures $ 1,524 $ 1,524 Equipment 1,833,791 1,605,317 Leasehold Improvements 4,886 4,800 Vehicles 29,696 29,696 1,869,897 1,641,337 Less: accumulated depreciation (577,243 ) (396,863 ) 1,292,654 1,244,474 Equipment not yet placed in service 434,309 250,004 Property and equipment, net of depreciation $ 1,726,963 $ 1,494,478 We recorded depreciation expense related to these assets of $78,576 and $36,268 for the three-month periods ended September 30, 2017 and 2016, respectively and $180,380 and $104,367 for the nine- months periods ended September 30, 2017 and 2016, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 3. Intangible Assets As of September 30, 2017, intangible assets consist of patent costs of $764,891, trademarks of $87,360 and accumulated amortization of $250,899. As of December 31, 2016, intangible assets consist of patent costs of $750,640, trademarks of $73,925 and accumulated amortization of $204,702. The amounts carried on the balance sheet represent cost to acquire, legal fees and similar costs relating to the patents incurred by the Company. Amortization is calculated through the expiration date of the patent, which is December 2025. The amount charged to expenses for amortization of the patent costs was $15,398 and $15,376 for the three months ended September 30, 2017 and 2016, respectively, and $46,196 and $46,085 for the nine months ended September 30, 2017 and 2016, respectively. Estimated future amortization expense related to patents as of September 30, 2017, is as follows: Total Amortization Years ending December 31, 2017 $ 15,902 2018 63,610 2019 63,610 2020 63,610 2022 63,610 2023 63,610 Later years 116,430 $ 513,992 |
Related Parties
Related Parties | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties | Note 4. Related Parties As disclosed below in Note 7, members of management and directors have received shares of stock and options in exchange for services. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Note 5. Long term Debt Long term debt at September 30, 2017 and December 31, 2016 consists of an installment agreement on one vehicle maturing in September 2020. The installment agreement bears no interest. Monthly payments are $320 per month. The annual maturities of long term debt are as follows: For years ending December 31, 2017 $ 970 2018 3,849 2019 3,849 2020 1,260 $ 9,928 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 6. Commitments and Contingencies We lease office space under non-cancelable operating leases, which expires on March 31, 2019. The aggregate minimum requirements are as follows: For years ending December 31, 2017 $ 37,545 2018 167,530 2019 43,462 $ 248,537 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | Note 7. Stockholders’ Equity During the nine months ended September 30, 2017, we issued 178,733 shares of common stock, valued at $112,250, for services. In addition, we issued 439,977 options to purchase our common stock to certain member of the Board of Directors in lieu of cash payments for Director fees. The exercise price of the options ranged from $0.74 to $0.79 per share, vest immediately, and are exercisable for periods of 8 years. In addition, we issued 1,480,000 options to purchase our common stock to employees and executives. The exercise price of the options ranged from $0.61 to $0.68 per share, vest after 3 years, and are exercisable for periods of 8 years. We also issued 95,995 shares of our common stock, with a value of $73,560, to a member of our Board of Directors in lieu of cash payments for Director fees. The fair value of the options ($266,000, in the aggregate) was calculated using the Black-Sholes option pricing model, based on the criteria shown below. Expected life (in years) 8 Volatility (based on a comparable company) 81.8% - 89 % Risk Free interest rate 2.01% to 2.35 % Dividend yield (on common stock) - The shares of our common stock were valued at the trading price on the date of grant, $0.75 and $0.79 per share During the same period, we cancelled 90,000 options to purchase our common stock. Holders of 59,000 warrants, exercised those warrants for cash proceeds of $35,400. The holders of 950,000 options elected to exercise those options on a cashless basis and received 276,171 shares of our common stock. Holders of 180,000 warrants, elected to exercise those warrants on a cashless basis and received 40,832 shares of our common stock. The total amount of equity based compensation included in additional paid in capital for the three-month periods ended September 30, 2017 and 2016 was $575,224 and $270,252, respectively, and for the nine-month period ended September 30, 2017 and 2016, was $1,181,798 and $515,041, respectively. The following is a summary of outstanding stock options issued to employees and directors as of September 30, 2017: Number of Options Exercise price per share $ Average remaining term in years Aggregate intrinsic value at date of grant $ Outstanding December 31, 2016 5,362,442 0.45 – 0.83 4.84 Issued 1,919,977 0.74 -0.79 7.75 Cancelled (90,000 ) Exercised (950,000 ) Outstanding, September 30, 2017 6,242,419 0.55 – 0.72 5.90 Exercisable, September 30, 2017 1,069,977 0.45 - 0.79 4.44 - |
Outstanding Warrants
Outstanding Warrants | 9 Months Ended |
Sep. 30, 2017 | |
Outstanding Warrants | |
Outstanding Warrants | Note 8. Outstanding Warrants The following is a summary of all outstanding warrants as of September 30, 2017: Number of warrants price per share remaining term in years intrinsic value at date of grant Warrants issued in connection with private placements of common stock 20,023,140 $ 0.25 - 1.50 1.20 $ 1,590,567 Warrants issued in connection with short-term notes payable 3,345,509 $ 0.45-$0.485 2.74 $ 64,583 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9. Income Taxes We account for income taxes in interim periods in accordance with ASC Topic 740, Income Taxes (“ASC 740”). We have determined an estimated annual effective tax rate. The rate will be revised, if necessary, as of the end of each successive interim period during our fiscal year to our best current estimate. As of September 30, 2017, the estimated effective tax rate for the year will be zero. There are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2009 through the current period. Our policy is to account for income tax related interest and penalties in income tax expense in the statement of operations. There have been no income tax related interest or penalties assessed or recorded. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This pronouncement also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. For the nine-month periods ended September 30, 2017 and 2016, we did not have any interest and penalties associated with tax positions. As of September 30, 2017, we did not have any significant unrecognized uncertain tax positions. |
Liquidity
Liquidity | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Liquidity | Note 10. Liquidity We have a history of operating losses and negative cash flow. As our operations grow, we expect to experience significant increases in our working capital requirements. These conditions raise substantial doubt over the Company’s ability to meet all of its obligations over the twelve months following the filing of this Form 10-Q. Management has evaluated these conditions, and concluded that current plans will alleviate this concern. We currently have no debt. In addition, we have significantly reduced core operating costs beginning in 2016, including reducing the number of our employees from 44 to 30 over this time period. In addition, we plan to address this concern by raising additional capital through a loan or loans, and by continuing to reduce core operating expenses as required. While these plans have not yet been implemented, management has concluded that it is probable that they will be implemented within one year of the issuance of the financial statements, and that they will mitigate the substantial doubt of our ability to continue as a going concern. However, the Company cannot predict, with certainty, the outcome of its action to generate liquidity, including the availability of additional financing, or whether such actions would generate the expect liquidity as planned. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 11. Subsequent Events Management has evaluated all activity and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements. |
Basis of Presentation and Sig17
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation The condensed consolidated financial statements include the financial statements of the Company and our wholly owned subsidiaries Barfresh Inc. and Barfresh Corporation, Inc. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses during the years reported. Actual results may differ from these estimates. |
Concentration of Credit Risk | Concentration of Credit Risk The amount of cash on deposit with financial institutions exceeds the $250,000 federally insured limit at September 30, 2017 and December 31, 2016. However, we believe that the financial institution where the cash on deposit that exceeds $250,000 is financially sound and the risk of loss is minimal. |
Fair Value Measurement | Fair Value Measurement Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange. Level 2 - Pricing inputs are other than quoted prices in active markets, but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs. Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights. Our financial instruments consist of accounts receivable, accounts payable, accrued expenses and installment debt. The carrying value of our financial instruments approximates their fair value due to their relative short maturities and the nature of the debt. |
Inventory | Inventory Inventory consists of finished goods and is carried at the lower of cost or net realizable value on a first in first out basis. |
Intangible Assets | Intangible Assets Intangible assets are comprised of patents, net of amortization, and trademarks. The patent costs are being amortized over the life of the patents, which is twenty years from the date of filing the patent applications. In accordance with ASC Topic 350 Intangibles - Goodwill and Other |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are being amortized over the shorter of the useful life of the asset or the lease term that includes any expected renewal periods deemed to be reasonably assured. The estimated useful lives used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years |
Revenue Recognition | Revenue Recognition We recognize revenue from products sold when there is persuasive evidence of an arrangement, delivery has occurred or services have been rendered, the sales price is determinable and collection is reasonably assured. |
Earnings Per Share | Earnings per Share We calculate net loss per share in accordance with ASC Topic 260, Earnings per Share |
Research and Development | Research and Development Expenditures for research activities relating to product development and improvement are charged to expense as incurred. We incurred $107,324 and $101,304 for the three-month periods ended September 30, 2017 and 2016, respectively. We incurred $447,927 and $256,874 in research and development expenses for the nine-month periods ended September 30, 2017 and 2016, respectively. |
Rent Expense | Rent Expense We recognize rent expense on a straight-line basis over the reasonably assured lease term as defined in ASC Topic 840, Leases |
Recent Pronouncements | Recent pronouncements From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards not yet effective may have an impact on our results of operations and financial position. In May 2014, the FASB issued ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606), which converged guidance on recognizing revenue in contracts with customers on an effective date after our year ending December 31, 2017. The Company is in the initial stages of evaluating the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial evaluation, we do not expect there to be material changes to our current Revenue Recognition policies due to the non-complex contracts with our customers, including the definition of our performance obligations and the transaction prices in our contracts with our customers. The Company does not plan to adopt the standard until the interim period ended March 31, 2018. In July 2015, the FASB issued ASU 2015-11, Inventory, which simplifies the measurement principle of inventories valued under the First-In, First-Out (“FIFO”) or weighted average methods from the lower of cost or market to the lower of cost and net realizable value. ASU 2015-11 is effective for reporting periods beginning after December 15, 2016 including interim periods within those annual periods. The adoption of this guidance did not have a material impact on our Consolidated Financial Statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which requires that deferred tax assets and liabilities be classified as noncurrent on the balance sheet. ASU 2015-17 is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an interim or annual reporting period. Upon adoption, ASU 2015-17 may be applied either prospectively or retrospectively. The adoption of this guidance did not have a material impact on our financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, to improve financial reporting about leasing transactions. This ASU will require organizations that lease assets (“lessees”) to recognize a lease liability and a right-of-use asset on its balance sheet for all leases with terms of more than twelve months. A lease liability is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and a right-of-use asset represents the lessee’s right to use, or control use of, a specified asset for the lease term. The amendments in this ASU leaves the accounting for the organization that own the assets leased to the lessee (“lessor”) largely unchanged except for targeted improvements to align it with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The Company is in the initial stages of evaluating the effect of the standard on our financial statements and continue to evaluate the available transition methods. However, based on our initial evaluation, we do not expect there to be material changes to both our current and long-term lease liabilities and our fixed assets of our limited number of operating leases that will be converted to financing leases under the new guidance. The Company does not plan to adopt the standard until the interim period ended March 31, 2019. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”). The standard identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The Company previously adopted ASU 2016-09. In August 2014, the FASB issued FASB ASU2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern |
Basis of Presentation and Sig18
Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Estimated Useful Lives of Assets | The estimated useful lives used for financial statement purposes are: Furniture and fixtures: 5 years Equipment: 7 years Leasehold improvements: 2 years Vehicle: 5 years |
Property Plant and Equipment (T
Property Plant and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Major Classes of Property and Equipment | Major classes of property and equipment at September 30, 2017 and December 31, 2016 consist of the following: 2017 2016 Furniture and fixtures $ 1,524 $ 1,524 Equipment 1,833,791 1,605,317 Leasehold Improvements 4,886 4,800 Vehicles 29,696 29,696 1,869,897 1,641,337 Less: accumulated depreciation (577,243 ) (396,863 ) 1,292,654 1,244,474 Equipment not yet placed in service 434,309 250,004 Property and equipment, net of depreciation $ 1,726,963 $ 1,494,478 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Estimated Amortization Expense Related to Patents | Estimated future amortization expense related to patents as of September 30, 2017, is as follows: Total Amortization Years ending December 31, 2017 $ 15,902 2018 63,610 2019 63,610 2020 63,610 2022 63,610 2023 63,610 Later years 116,430 $ 513,992 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Annual Maturities of Long Term Debt | The annual maturities of long term debt are as follows: For years ending December 31, 2017 $ 970 2018 3,849 2019 3,849 2020 1,260 $ 9,928 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Requirements Under Non-cancellable Leases | The aggregate minimum requirements are as follows: For years ending December 31, 2017 $ 37,545 2018 167,530 2019 43,462 $ 248,537 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of Fair Value Assumptions of Options Using Black Sholes Option Pricing Model | The fair value of the options ($266,000, in the aggregate) was calculated using the Black-Sholes option pricing model, based on the criteria shown below. Expected life (in years) 8 Volatility (based on a comparable company) 81.8% - 89 % Risk Free interest rate 2.01% to 2.35 % Dividend yield (on common stock) - |
Summary of Outstanding Stock Options Issued to Employees and Directors | The following is a summary of outstanding stock options issued to employees and directors as of September 30, 2017: Number of Options Exercise price per share $ Average remaining term in years Aggregate intrinsic value at date of grant $ Outstanding December 31, 2016 5,362,442 0.45 – 0.83 4.84 Issued 1,919,977 0.74 -0.79 7.75 Cancelled (90,000 ) Exercised (950,000 ) Outstanding, September 30, 2017 6,242,419 0.55 – 0.72 5.90 Exercisable, September 30, 2017 1,069,977 0.45 - 0.79 4.44 - |
Outstanding Warrants (Tables)
Outstanding Warrants (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Outstanding Warrants | |
Summary of Outstanding Warrants | The following is a summary of all outstanding warrants as of September 30, 2017: Number of warrants price per share remaining term in years intrinsic value at date of grant Warrants issued in connection with private placements of common stock 20,023,140 $ 0.25 - 1.50 1.20 $ 1,590,567 Warrants issued in connection with short-term notes payable 3,345,509 $ 0.45-$0.485 2.74 $ 64,583 |
Basis of Presentation and Sig25
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Accounting Policies [Abstract] | |||||
Cash federally insured limit value | $ 250,000 | $ 250,000 | $ 250,000 | ||
Cash on deposit exceeds | 250,000 | $ 250,000 | |||
Intangible assets useful life | 20 years | ||||
Research and development expenses | $ 107,324 | $ 101,304 | $ 447,927 | $ 256,874 |
Basis of Presentation and Sig26
Basis of Presentation and Significant Accounting Policies - Summary of Estimated Useful Lives of Assets (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 2 years |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Property Plant and Equipment (D
Property Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 78,576 | $ 36,268 | $ 180,380 | $ 104,367 |
Property Plant and Equipment -
Property Plant and Equipment - Schedule of Major Classes of Property and Equipment (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 1,869,897 | $ 1,641,337 |
Less: accumulated depreciation | (577,243) | (396,863) |
Property, plant and equipment | 1,292,654 | 1,244,474 |
Equipment not yet placed in service | 434,309 | 250,004 |
Property and equipment, net of depreciation | 1,726,963 | 1,494,478 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,524 | 1,524 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 1,833,791 | 1,605,317 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 4,886 | 4,800 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 29,696 | $ 29,696 |
Intangible Assets (Details Narr
Intangible Assets (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Patent costs | $ 764,891 | $ 764,891 | $ 750,640 | ||
Trademarks costs | 87,360 | 87,360 | 73,925 | ||
Accumulated amortization on patents and trademarks | 250,899 | $ 250,899 | $ 204,702 | ||
Expiration date of patent | 2025-12 | ||||
Amortization of patent costs | $ 15,398 | $ 15,376 | $ 46,196 | $ 46,085 |
Intangible Assets - Schedule of
Intangible Assets - Schedule of Estimated Amortization Expense Related to Patents (Details) | Sep. 30, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2,017 | $ 15,902 |
2,018 | 63,610 |
2,019 | 63,610 |
2,020 | 63,610 |
2,022 | 63,610 |
2,023 | 63,610 |
Later years | 116,430 |
Intangible asset, net of amortization | $ 513,992 |
Long Term Debt (Details Narrati
Long Term Debt (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Installment agreement bears interest rate | ||
Monthly installment payment | $ 320 | |
One Vehicle [Member] | ||
Long term debt maturing date | Sep. 30, 2020 | Sep. 30, 2020 |
Long Term Debt - Schedule of An
Long Term Debt - Schedule of Annual Maturities of Long Term Debt (Details) | Sep. 30, 2017USD ($) |
Debt Disclosure [Abstract] | |
2,017 | $ 970 |
2,018 | 3,849 |
2,019 | 3,849 |
2,020 | 1,260 |
Long Term Debt | $ 9,928 |
Commitments and Contingencies33
Commitments and Contingencies (Details Narrative) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease expire date | Mar. 31, 2019 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Minimum Requirements Under Non-cancellable Leases (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 37,545 |
2,018 | 167,530 |
2,019 | 43,462 |
Total | $ 248,537 |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Class of Stock [Line Items] | ||||
Number of common stock issued during period | 178,733 | |||
Number of common stock issued during period, value | $ 112,250 | |||
Exercisable term | 8 years | |||
Fair value of stock options | $ 266,000 | |||
Number of common stock shares issued for services, value | $ 185,810 | $ 165,150 | ||
Number of options cancelled during period | 90,000 | |||
Stock compensation expense | $ 575,224 | $ 270,252 | $ 1,181,798 | $ 515,041 |
Trading Price One [Member] | ||||
Class of Stock [Line Items] | ||||
Exercise price of options ranged | $ 0.75 | $ 0.75 | ||
Trading Price Two [Member] | ||||
Class of Stock [Line Items] | ||||
Exercise price of options ranged | 0.79 | 0.79 | ||
Minimum [Member] | ||||
Class of Stock [Line Items] | ||||
Exercise price of options ranged | 0.74 | 0.74 | ||
Maximum [Member] | ||||
Class of Stock [Line Items] | ||||
Exercise price of options ranged | 0.79 | $ 0.79 | ||
Board of Directors [Member] | ||||
Class of Stock [Line Items] | ||||
Number of common stock shares issued for services | 439,977 | |||
Employees and Executives [Member] | ||||
Class of Stock [Line Items] | ||||
Number of common stock shares issued for services | 1,480,000 | |||
Exercisable term | 8 years | |||
Stock option vesting period | 3 years | |||
Employees and Executives [Member] | Minimum [Member] | ||||
Class of Stock [Line Items] | ||||
Exercise price of options ranged | 0.61 | $ 0.61 | ||
Employees and Executives [Member] | Maximum [Member] | ||||
Class of Stock [Line Items] | ||||
Exercise price of options ranged | $ 0.68 | $ 0.68 | ||
Board of Directors One [Member] | ||||
Class of Stock [Line Items] | ||||
Number of common stock shares issued for services | 95,995 | |||
Number of common stock shares issued for services, value | $ 73,560 | |||
Holders One [Member] | Warrants [Member] | ||||
Class of Stock [Line Items] | ||||
Number of option issued during period | 59,000 | |||
Proceeds from issuance of warrants | $ 35,400 | |||
Holders of Options [Member] | ||||
Class of Stock [Line Items] | ||||
Number of option issued during period | 950,000 | |||
Number of cashless basis of common stock issued | 276,171 | |||
Holders Two [Member] | Warrants [Member] | ||||
Class of Stock [Line Items] | ||||
Number of option issued during period | 180,000 | |||
Number of cashless basis of common stock issued | 40,832 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Fair Value Assumptions of Options Using Black Sholes Option Pricing Model (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Expected life (in years) | 8 years |
Dividend yield (on common stock) | 0.00% |
Minimum [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Volatility (based on a comparable company) | 81.80% |
Risk free interest rate | 2.01% |
Maximum [Member] | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Volatility (based on a comparable company) | 89.00% |
Risk free interest rate | 2.35% |
Stockholders' Equity - Summary
Stockholders' Equity - Summary of Outstanding Stock Options Issued to Employees and Directors (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Number of options, cancelled | shares | 90,000 |
Minimum [Member] | |
Exercise price per share, outstanding, ending | $ 0.74 |
Maximum [Member] | |
Exercise price per share, outstanding, ending | $ 0.79 |
Employees and Directors [Member] | |
Number of options, outstanding, beginning balance | shares | 5,362,442 |
Number of options, issued | shares | 1,919,977 |
Number of options, cancelled | shares | (90,000) |
Number of options, exercised | shares | (950,000) |
Number of options, outstanding, ending balance | shares | 6,242,419 |
Number of options, exercisable | shares | 1,069,977 |
Options outstanding, average remaining term in years | 4 years 10 months 3 days |
Options issued, average remaining term in years | 7 years 9 months |
Options outstanding, average remaining term in years | 5 years 10 months 25 days |
Options exercisable, average remaining term in years | 4 years 5 months 9 days |
Aggregate intrinsic value at date of grant, outstanding, beginning balance | $ | |
Aggregate intrinsic value at date of grant, outstanding, ending balance | $ | |
Aggregate intrinsic value at date of grant, exercisable | $ | |
Employees and Directors [Member] | Minimum [Member] | |
Exercise price per share, outstanding, beginning | $ 0.45 |
Exercise price per share, issued | .74 |
Exercise price per share, cancelled | |
Number of options, exercised | |
Exercise price per share, outstanding, ending | 0.55 |
Exercise price per share, exercisable | .45 |
Employees and Directors [Member] | Maximum [Member] | |
Exercise price per share, outstanding, beginning | 0.83 |
Exercise price per share, issued | 0.79 |
Exercise price per share, cancelled | |
Number of options, exercised | |
Exercise price per share, outstanding, ending | 0.72 |
Exercise price per share, exercisable | $ 0.79 |
Outstanding Warrants - Summary
Outstanding Warrants - Summary of Outstanding Warrants (Details) - Warrants [Member] | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Short-Term Notes Payable [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants | shares | 3,345,509 |
Remaining term in years | 2 years 8 months 26 days |
Intrinsic value at date of grant | $ | $ 64,583 |
Minimum [Member] | Short-Term Notes Payable [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Price per share | $ 0.45 |
Maximum [Member] | Short-Term Notes Payable [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Price per share | $ 0.485 |
Private Placement [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants | shares | 20,023,140 |
Remaining term in years | 1 year 2 months 12 days |
Intrinsic value at date of grant | $ | $ 1,590,567 |
Private Placement [Member] | Minimum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Price per share | $ 0.25 |
Private Placement [Member] | Maximum [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Price per share | $ 1.50 |